Challenges of MSMEs growth

MSMEs playing a vital role in the economic growth of India but this sector is not getting required support from
the concerned Government Departments, banks, financial institutions and corporates. Presently, the Indian
MSMEs are undergoing different types of problems. Many of the challenges are controllable while rests are
uncontrollable. This proves hurdle in the growing path of the MSMEs. MSMEs face a number of challenges such
as absence of adequate and timely credit finance, limited knowledge and non-availability of required
technology, low production capability, follow up with various agencies in solving regular activities and lack of
interaction with government agencies on several matters. The financial challenges of MSMEs are the Root
Cause for all the other challenges faced by this sector. Few challenges are as follows:

Increased competition because of MNCs: In present time of globalization, the MSME`S are facing the great
challenges from the international manufacturing companies who are producing quality goods at cheapest
price. Therefore, it is very difficult to compete with the MNCs.

Lack of advanced technology- The all owners of MSMEs are not so skilled and aware about the advanced
technologies of production. Their methodology for production of material is outdated. The owners are using
older method in the field of fabricated metal and textile, where the challenges of skills affect the production
time & cost as well.

Lack of marketing channels- The MSMEs are not opting the methods of marketing. Their advertisement and
sales promotional activities are comparatively weaker than the multinational companies. The ineffective
advertisement and poor marketing channels lead to a very poor revenue as well.

Lack of training and skill development program-The training and development programs in respect of MSME`S
development concern is very low. So, skilled manpower is not being available to MSMEs. The owners are aware
of the innovative methods of production. The skill developmental schemes conducted by the government are
not sufficient.
Poor infrastructure-Though, MSME`S are growing so rapidly but many of them have very poor
infrastructure. With poor infrastructure, their production capacity is very low however production
cost is very high.

Lack of credit from banks- although govt announced many schemes in favour of MSMEs, the
problem of credit is somehow still there. The MSME`S are presently facing the problems of credit
from the banks. The loan providing process of the many banks is very long and formalistic. The
owners of the MSME`S has to produce different types of documents to give authentic proof of their
worthiness.