Ease of doing business for MSMEs: In order to achieve more sustainable development and quicker poverty alleviation, micro, small and medium enterprises (MSMEs) need to be part of this transformation as the pandemic induces a gradual change towards automation. The spread of the Coronavirus caught digitally unschooled enterprises on the back foot. Industrial automation has seen an expansion across industries in the wake of the pandemic; when it has a visible effect on operations in factories due to fear of infections. Conversely, since they were familiar with the remote operating paradigm, digital natives tended to keep activities ticking from the onset.
Indeed, from its early days, technologically savvy firms have been part of the ongoing Industry 4.0 paradigm; incorporating automation through the introduction of smart technology in their conventional manufacturing and industrial operations. In addition to robotics, smart enterprise and industrial activities include the Internet of Things, artificial intelligence, deep learning, and more with broad data capabilities.
Fourth Industrial Revolution Benefits
The pandemic only accelerated this transition as more corporates quickly realized the advantages of remotely managing industry operations backed by the right levels of cybersecurity. As a result, these companies kept their BCPs (business continuity plans) going notwithstanding lockdown restrictions and minimal access to their physical units.
Learning from how the digitally connected entities better-managed supply chain disruptions, some of the digital latecomers have been fast-tracking digital and automation programmes. Supported by 24×7 connectivity, automation, advanced analytics, and smart manufacturing practices; ‘acceleration’ is the buzzword in adopting norms of Industry 4.0 or the Fourth Industrial Revolution. Additionally, automation and AI-enabled tools are especially beneficial for sectors grappling with a severe shortage of workers. Some of the latter migrated to their native towns due to the closure of manufacturing units during the nationwide lockdown.
Despite multiple advantages of Industry 4.0, one crucial segment is missing the digital journey — MSMEs.
Significantly, MSMEs play a pivotal role in India’s economic development by driving employment, exports, and inclusive growth opportunities. A silent pillar of India’s socio-economic progress; with about 60 million players the segment contributes to 45 per cent of the total industrial production and 40 per cent of its total exports. As per a report by the SME Chamber of India, MSMEs, manufacturing segment accounts for 7.9 per cent of GDP; while its total contribution to GDP is 37.54 per cent and it also contributes to 30.50 per cent of services.
Most MSMEs confront major barriers in adopting Industry 4.0 practices; continuing with their old-world business practices and technologies based on Industry 3.0 or Industry 2.0 environments. This can be addressed by the adoption of a known standard IEC 61499 which allows for interoperability; which is quite required for this segment. By eliminating much of the hard work involved with adopting automation technologies; IEC 61499 makes automation potentially universal (ensuring interoperability and portability) — able to streamline processes from raw material handling to machine maintenance to finished goods and services.
Not just India, MSMEs are crucial for the global economy too, where they have made sizeable contributions over the decades. In the era of automation, however, these smaller players are steadily ceding ground to larger companies; because of technology, the adoption of which will help them scale up and stay competitive.
Business Barriers and Inclusive Development
Given their position in fostering inclusive growth, it would intensify economic disparity if MSMEs skip the global journey of automation. MSMEs need to harness the resources provided by the government and business community in tackling this problem and work for the common cause in solving these challenges.
Any of them include a shortage of trained workers, no simple access to finance; and a plethora of regulations and drivers to follow new industrial methods that are better suited to servicing big firms. Remember the lack of expertise. A 2019 Deloitte conclave of specialists in higher education discovered that 64 percent acknowledged that their curricula are not completely in line with global expectations.
Furthermore, even large sections of the present workforce may be unemployable in an Industry 4.0 ambience. Accordingly, apart from upgrading academic curricula, working persons must be provided opportunities to reskill or upskill in ascertaining they remain relevant for the new roles in the age of automation. In such a scenario, the industry, academia, and the government must all collaborate in enabling the emergence of an Industry 4.0-compatible workforce. Such skilling initiatives can be fast-tracked via subsidies, tax incentives; and other supportive measures for MSMEs to acquire the requisite Industry 4.0 talent.
In emerging economies such as India, inclusive development is particularly pertinent in addressing COVID-19’s impact. MSMEs are critical for ensuring that economically vulnerable people have suitable opportunities to rise above the poverty line. These cohorts include women, migrants, and minorities; who have a better chance of exiting poverty by taking up employment in MSMEs spread across India. The sector assumes a pivotal role in driving the government’s Make in India initiative for an Aatma Nirbhar Bharat.
Through the Fourth Industrial Revolution’s new-age business model; smart corporations and digitally-enabled MSMEs can enjoy a symbiotic relationship that promotes greater production efficiency, ensures lower time to market as well as higher service satisfaction for customers and other stakeholders.