Business: Micro, small and medium enterprises (MSMEs) in India face several structural challenges such as limited access to formal credit. This is affecting the productivity of these industries. However, their digital preparedness is a bright spot. Despite demonstrating higher levels of digital readiness than their Organization for Economic Co-operation and Development (OECD) counterparts, Indian MSMEs operate at just 18 per cent of the productivity of larger enterprises, according to a Deloitte India report released on Wednesday.

Comparison with global peers
In OECD economies it is 45-70 percent. This gap limits their competitiveness compared to global counterparts. Rumki Majumdar, economist at Deloitte India, said India’s MSME sector, which contributes about 30 per cent of GDP, is also struggling with outdated technology, regulatory complexities and infrastructure problems.

Deloitte MSME Challenge Index
According to Deloitte’s MSME Challenge Index, MSMEs in sectors like tailored apparel face serious credit constraints as the risks are so high. These include low profits and intense global competition, making their products difficult to substitute. MSME sector contributes 45 percent to exports. It provides livelihood to more than 24 crore people.