India: A Rising Small Business Economy

Sangamitha J., SY BAJMC

Celebrating 75 years of independence, India has come a long way. It is an occasion to remember and celebrate its arduous but fruitful history. The India we know today is the consequence of many reforms, movements and sacrifices. It has revolutionized and grown over the years. Today, India is an economic powerhouse. Agriculture, space technology, industries, educational institutions, healthcare, etc., are some of the examples of matters in which we pride ourselves as Indians in regard to how far we’ve come. Throughout history, India’s darkest days were followed by its most gratifying moments. While looking back at our past and acknowledging how far we’ve come adds meaning to the occasion, so does setting goals and aiming to move forward as a country. The next thirty or so years could be a 'golden age' for India if we capitalize on the development and advancement of the nation.

A large part of the innovation in India comes from the industry of small businesses (65-75%). Small businesses play a crucial role in shaping our economy. Small businesses create job opportunities, They run the country’s economic growth in smaller geographical areas. They also make the market more competitive. They bring prosperity to people and play a crucial role in running the economy. In every economy, they represent more than 90 percent of all employers and create 60 to 80 percent of all new jobs, every year. A survey conducted by Randstad Work Monitor shows that entrepreneurial ambition was the highest in India with 83 percent of the Indian workforce wanting to be entrepreneurs. This is way above the global standard of 53 percent.

Digitization of small businesses has been prevalent for a good period of time, but the pandemic really accelerated the process. Small businesses were the hardest hit when the pandemic started, but they have since evolved and learned to survive in a digital environment, and have come to realize that it is way more effective in reaching more people. Entrepreneurs and small businesses are fundamental contributors to the nation’s GDP. According to preliminary findings from company surveys conducted globally, up to 70% of small to medium enterprises have increased their utilization of digital technologies as a result of the pandemic. By 2030, the national association of software and services firms and technopark advisors predict that India’s retail industry will be worth roughly 1.5 trillion dollars. Advancements in digital media in the upcoming years will shape entrepreneurship and innovation for the decade to come. Suppliers on e-commerce platforms, like Amazon, for example, have seen the revenues of small businesses rise significantly over the last few years.

India has already started taking steps on moving forward in regard to boosting the economy through small businesses. The GST Council has waived mandatory registration for small sellers below the INR 40 lakh threshold. This shows how we have already taken the first steps towards harnessing the power of India’s MSMEs, who contribute around 30% of our economic output. Nowadays, there is a greater focus on virtual and mobile-led experiences. These are being powered by video, AR, and messaging, which are playing a huge role in engaging consumers and increasing sales. In addition, there is a stronger community among small businesses that is flourishing slowly as many small businesses are stepping forward to lift each other up. Social media has made it very easy for just about anyone to start a business and become an entrepreneur. This also means that women-run businesses will emerge. With social distancing becoming the norm, people are making more and more digital transactions. This widespread digitization is what will help transform the small business landscape and do the economy of the nation right.

India is on the right track in terms of vision for the future of small businesses, it is important to build on that momentum and take steps to better the economy of the nation. Here’s to 75 years of independence, and here’s to a lot more.