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Introduction

  • The UN General Assembly has designated June 27 as “Micro-, Small and Medium-Sized Enterprises Day” to highlight the vital role MSMEs play in achieving the Sustainable Development Goals.
  • In India, MSMEs contribute about 30% to the GDP, employ 110 million workers, and account for 49% of exports. Small companies make up 96% of industrial units, contributing 38.4% of total manufacturing output and 45.03% of the country’s total exports.
  • Despite their growth, MSMEs face challenges such as limited access to finance, technology, and skills, inadequate infrastructure, complex regulatory requirements, and low productivity and competitiveness.
  • To ensure future readiness, MSMEs must align their business activities with sustainable principles. Adopting sustainability is crucial for meeting stakeholder expectations, reducing costs, enhancing efficiency, improving brand reputation, creating corporate value, and benefiting the environment and society.

Body

Adoption of Sustainable Practices in MSMEs:

  • Implement the Environment, Social, and Governance (ESG) Framework and the Ministry of Corporate Affairs’ National Guidelines for Responsible Business Conduct (NGRBC) as starting points.
  • Decode the ESG framework and NGRBC guidelines to address energy, waste, carbon emissions, and ensure good labor practices, minimum wages, decent working conditions, and women’s safety.
  • Adopt practices such as low energy strategies, renewable energy, waste management, women’s safety, and timely wage payment.
  • Governments, industry associations, civil society organizations, and other stakeholders can raise awareness, share best practices, and provide training and resources.
  • Offer financial and non-financial incentives to encourage sustainability adoption, including tax benefits, subsidies, grants, and low-interest loans.
  • Example: SIDBI’s “Greening MSME” program provides financial assistance up to INR 20 crores for energy-efficient and sustainable technologies.
  • Larger corporations can assist MSMEs with training, technical assistance, and financing. Example: CII’s “GreenCo Rating System” drives sustainability improvements across the value chain by ranking enterprises on their environmental performance.

Conclusion

MSMEs constitute 90% of businesses, 60-70% of employment, and 50% of GDP globally. In India, MSMEs have emerged as one of the fastest-growing sectors over the last five decades.

By adopting sustainable practices, MSMEs can save money, increase efficiency, and differentiate themselves from competitors, gaining a competitive edge. Governments and other stakeholders can promote these practices to further boost MSMEs’ growth and contribution.

Legacy Editor Changed status to publish August 6, 2024