Micro, small and medium enterprises (MSME) in Tier-II and Tier-III cities are at par with their counterparts in metros in terms of revenue and growth in the last quarter, according to integrated solutions provider Instamojo.
Over the past year, MSMEs in Tier-I cities saw annual revenue more than double while small businesses from Tier-II and Tier-III markets registered 75 per cent growth in turnover.
However, in the last quarter, MSMEs from Tier-II and Tier-III markets from the events and financial services sector have witnessed a higher growth than Tier-I cities.
“Indian MSMEs in Tier-II markets have recognised the potential of the internet and how it can help their business grow. Businesses that have gone digital are now exposed to consumers, manufacturers, exporters and suppliers across the country. Tier-II and Tier-III markets have the potential to emerge as SME
hubs,” said Instamojo
Chief Executive Officer and Co-founder Sampad Swain.
Only 32 per cent out of 52 million SMEs in India have gone online or have accepted digital modes of business. Instamojo
has acquired 10 per cent of the digitally-active SMEs in India and enables 30 per cent of their total annual sales.
The company aims to extend its wallet share to 70 per cent by 2019 and grow its merchant base to one million in 2018. While SMEs in financial and travel sectors grew two times in these cities, event facilitators saw four-fold growth in revenue.
A recent report by Boston Consulting Group and Ficci
reported that MSMEs will be the key growth-driver for banks, thanks to the formalisation of the economy. Small lending solutions, implementation of goods and services tax (GST) and digital payments will only help this category grow faster in the coming years.
“Typically our client acquisitions are pushed by buyers who are also small-scale sellers on their own. The fact that these non-metro cities do not have a lot of other options adds to the growth in usage of such services here,” Instamojo
Headquartered in Bengaluru, Instamojo
says it provides integrated solutions to 300,000 SMEs in India and claims to be the fastest-growing on-demand payments firm.
A number of large corporate technology and financial solutions providers are increasingly turning to SMEs as the next big area of growth. PayPal, Facebook and SAP are just some of the global names vying for the SME
market with their services. A large pool of start-ups dealing in short-term credit, logistics and analytics services have also cropped up to cater to this group, which has formalised to a great extent since the twin impact of demonetisation
over the past year.