Excessive data, digital tools regulation can slow MSMEs expansion: Survey

A majority of respondents said that excessive regulation could create constraints for MSMEs, depriving them of digital tools necessary for scaling their businesses and reaching new markets

A majority of MSMEs surveyed expressed that excessive regulation over data and digital tools can create constraints for them and deprive them of tech gears necessary for scaling the business and reaching new markets and customers, a report has said.

India SME Forum conducted a survey among more than 1,000 MSMEs for insights into the integration of digital tools within their operations, the report said. 

A majority of respondents said that excessive regulation could create constraints for MSMEs, depriving them of digital tools necessary for scaling their businesses, reaching new markets, and sustaining competitiveness, it said.

Digital tools serve as a cost-effective and scalable means to compete with larger enterprises and establish their brands.

"Many MSME members have expressed that the current overall regulatory framework for personal data and non-personal data is overly restrictive, creating compliance burdens that hinder their ability to market effectively and engage with customers," the report said  Around 71 per cent of MSMEs advertising on Google Search, 70 per cent on YouTube, and 69 per cent on Amazon are apprehensive that losing ad targeting would be a major problem, the report said.

About 73 per cent of Facebook advertisers and 70 per cent of Instagram advertisers say that losing WhatsApp data for ad targeting would negatively impact their business, it added.

Around 60 per cent of MSMEs rely on WhatsApp for Business for direct sales, marketing, and customer interaction, and 76 per cent say losing these features would be a serious operational setback.

The report called for reducing compliance burdens on small businesses that rely on third-party advertising and data analytics. It also suggested ensuring the protection and availability of targeted marketing solutions for MSMEs in India.