MSMEs must harness technology to greater degree: CII

Technology must play a pivotal role in MSMEs if they are to bridge the gap between themselves and large organisations, according to a CII study, Technology Imperatives for MSMEs. Technology will help increase productivity as well as competitiveness, it says.

The paper concedes that for MSMEs to embrace technology can be difficult, because employees are either not equipped to handle technology or fear loss of jobs, and technology also involves additional costs. However, with proper training and counselling, the fear of technology can be alleviated, the study says.

It notes that countries such as Japan, Malaysia, Singapore, Mexico, Australia, South Africa, Germany and Italy have all introduced programmes of technology support for small businesses.

Improvements in technology will not only bring about innovations in the processes by which products are produced, but in products as well. Technically efficient products will help MSMEs expand their markets and grow into bigger and better organisations, the study says.

It cites a study conducted by the Asian Development Bank, titled Key Indicators for Asia and the Pacific 2009, to point to the lack of new product innovation in Asian economies.

The CII study suggests that making good use of information and communication technology (ICT) can help MSMEs gain better access to real time market information and enable them to understand a variety of internal and external issues. It says very few MSMEs use ICT, . The reasons range from affordability to availability of support systems and training issues.

It adds that cloud computing (an online service model by which hardware and software services are delivered to customers depending on their requirements) can help overcome the cost constraints to greater use of ICT by MSMEs. It says cloud computing solutions will be the next generation IT solution for MSMEs.

To encourage ICT use by MSMEs the paper recommends that the government should consider granting 100 per cent depreciation to MSMEs, once in a block of three financial years, for an annual investment in IT equipment and software up to a limit of Rs 25 lakh.