Stepping up technology, increasing hiring, and focusing on sustainability are among the priorities of MSMEs operating in India, according to an MSME business confidence study.
The findings of the report reveal that 66% of MSME owners are planning to step up technology or digital investments in 2023. Online selling, increased social media presence and digitising accounts and payments will be the main priorities for them.
Close to 38% of MSMEs said they would focus on online selling, 23% planning to build a social media presence, and 24% of MSMEs plan to digitise their accounts and payments to track cash flows in 2023.
Around 61% of those surveyed said they intended to expand their workforce in 2023 with higher hiring. Jobs are expected to be in the services and manufacturing industry segments. Three out of four Chennai-based MSMEs planned to hire more employees in 2023, the highest in the country.
Focus on sustainability
Sustainable business practice is another focus area for the MSME units in 2023. Eliminating plastic usage is the main priority for them as part of sustainable business practices. Other sustainable business practices include initiatives around energy conservation/ renewable energy, tree plantation, reducing carbon emissions, reducing plastic and paper usage & controlling/ reducing air/ water pollution.
Additionally, MSME industry from Chennai is positive on consumer demand in 2023 suggests the study released by NeoGrowth, an MSME-focused digital lender in India.
The MSME Business Confidence Study was conducted nationwide with responses from close to 3,000 MSME owners. The study covered the expectations of India's MSME owners across 25+ cities and 70+ business segments, as they step into 2023 amidst global volatility.
Arun Nayyar, Managing Director and CEO, NeoGrowth, said, “It is heartening that MSMEs are confident about their growth, profitability and other business indicator. We believe that the strong digital ecosystem in India will be a catalyst for MSME lending in the coming year. MSMEs are capitalising on new credit options to build and scale their businesses easily, unimpeded by traditional methods of credit underwriting. 2023 will be a crucial year for MSMEs, which will play a pivotal role as India moves a step closer to realising its vision of a $5-trillion economy.”
Besides, MSMEs are optimistic and confident of economic growth in 2023. They also expect an increase in consumer demand in 2023, 21% of MSME owners felt it would remain the same and only 4% of MSME owners anticipated that it would decrease.
In terms of industry segment, MSME owners in the retail and trading segment said they were positive about witnessing a strong consumer demand in 2023. Women-led MSMEs from the trading and wholesale industry anticipated a healthy consumer demand in the coming year compared to other respondents.
Expectations for business profitability
Ninety-six percent of MSMEs expected their profits to increase in 2023; out of these, 66% anticipated profits to rise by over 30%, while 30% of MSMEs felt that it would increase by less than 30%. Only 4% of MSMEs expected business profitability to decrease.
MSMEs in Chennai were most confident about profitability in 2023 with 80% expecting an over 30% increase in profits. In contrast, the profit expectations of MSME owners in Mumbai and Pune were more conservative.