- India’s small businesses crowned innovation leaders for third year.
- Record high recruitment and strong expansion planned for 2023.
- Increasing costs, especially fuel, and internet connectivity are key challenges.
NEW DELHI, INDIA – Media OutReach – 3 May 2023 – Over three quarters of India’s small businesses are primed for growth in 2023, driven by innovation, digital technologies and customer satisfaction, a new survey shows.
Indian small businesses are among the fastest-growing in CPA Australia’s annual Asia-Pacific Small Business Survey. The survey collected views from 4280 small businesses in 11 Asia-Pacific markets, including 561 respondents from India.
Seventy-three per cent of Indian small businesses grew last year, up from 62 per cent in 2021. This momentum is set to continue, with 77 per cent expecting to grow in 2023. Indian businesses topped the survey for expectations they will grow strongly in 2023 (61 per cent).
Indian small businesses are the most bullish in the region with their plans to hire more staff. Eighty percent of respondents increased their employee headcount last year. A record high of 85 per cent plan to add staff this year.
“The robust growth of India’s small businesses can be attributed to their constant improvement in customer satisfaction, strategy and management,” CPA Australia Regional Manager for Emerging Markets Mr Nicklaus Wee said.
“The booming trend in business process outsourcing and IT outsourcing is creating many opportunities for small businesses in India. The deepening collaboration between foreign customers and local service providers has fostered a dynamic ecosystem. This nurtures small companies, attracts talent and brings more knowledge about cutting-edge technologies. It’s not surprising that over half of local small businesses anticipate revenue from overseas sales to increase significantly this year.”
The competitive advantages for India’s small businesses include their innovative culture and adoption of technology. A record high (79 per cent) plan to introduce new products, processes or services to the market this year, the highest result in Asia-Pacific region for a third consecutive year.
India continues to be a regional leader in digital transformation, with very high rates of e-commerce, digital payment options and social media adoption. This strong digital mindset is supported by high rates of investment in technology.
The survey shows that when Indian small businesses invest in technology, they do so with a high degree of success. Most found their investment in technology last year improved their profitability (83 per cent). This was the highest result of all markets surveyed and well above the survey average (55 per cent). They were also the most likely to seek advice from IT consultants (42 per cent) last year.
However, 78 per cent said internet connectivity issues had affected their business operations. This was the worst result across surveyed markets (survey average 31 per cent).
“India is a leader in transforming to the digital economy. However, weaknesses in digital public infrastructure are hindering development. To promote digital inclusion and facilitate technology upgrades, the government should continue with schemes like Production Linked Incentive (PLI) and Bharat Net Project. These should enhance public internet accessibility, especially in underdeveloped districts where many small businesses are located.”
Thirty-four per cent said increasing costs had the most negative impact on them in 2022. Of this, fuel costs (44 per cent) were most detrimental, followed by transportation and storage costs. In surveyed Indian cities, Mumbai businesses were most likely to face increasing fuel costs.
“Soaring energy prices have become a major concern for India’s economy and a financial burden on many small businesses. This is a catalyst to look for savings by reducing energy use and transitioning to green energy. Last year, many respondents monitored energy and water use (32 per cent). Some invested in green and renewable energy (28 per cent).”
Many of India’s small businesses required external finance to cover rising costs and investment in technologies. Eighty-eight per cent sought external finance last year, mainly for business growth (52 per cent). Seventy-six per cent plan to seek funding this year and 64 per cent expect easy access to such funds.
“India’s small businesses are expanding aggressively due to a strong local economy and investments in innovation and technology. Government schemes, such as Pradhan Mantri MUDRA Yojana (PMMY), have helped to improve financial conditions for micro and small businesses. Businesses need to focus on managing increasing costs. They should seek professional advice to improve cashflow for sustainable growth.”
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About CPA Australia
CPA Australia is one of the largest professional accounting bodies in the world, with more than 172,000 members in over 100 countries and regions, including nearly 2000 members in South Asia. Our core services include education, training, technical support and advocacy. CPA Australia provides thought leadership on local, national and international issues affecting the accounting profession and public interest. We engage with governments, regulators and industries to advocate policies that stimulate sustainable economic growth and have positive business and public outcomes. Find out more at cpaaustralia.com.au