Digital Public Infrastructure (DPI) has transformed the country by leveraging technology driven automation and driving nation-wide convenience. Focusing on open technology standards, collaboration, and integration; it has paved a way for small businesses to enter a larger market, reducing gap between industry players and binging forward options that was unthinkable in the past.
As of March 2024, the ministry of micro, small and medium enterprise (MSME) reported that 40.04 million people are in the MSME sector, among which 97.7% are
Digital Public Infrastructure (DPI) has transformed the country by leveraging technology driven automation and driving nation-wide convenience. Focusing on open technology standards, collaboration, and integration; it has paved a way for small businesses to enter a larger market, reducing gap between industry players and binging forward options that was unthinkable in the past.
As of March 2024, the ministry of micro, small and medium enterprise (MSME) reported that 40.04 million people are in the MSME sector, among which 97.7% are micro businesses. Advantages accrued to MSMEs by leveraging DPI and other digital means, directly and significantly contributes to the national economy.
Aadhaar based authentication is at the core of many systems across the country. Being supremely reliable and uniformly available across the country, this is a significant innovation that drives convenience and operational efficiency. Across industries, Aadhaar is the easiest option to identify new customers reliably and securing the business against malicious disruptors. The government has introduced Udyam Aadhaar for uniquely identifying MSMEs. Udyam aadhaar streamlines MSMEs access to government programmes and benefits. Aadhaar stands as a pillar for the identity layer of the Bharat Stack of Digital public infrastructure, that the MSMEs are leveraging.
The most widely used digital public infrastructure is certainly UPI. The convenience of UPI payments by buyers and payment acceptance by seller is unparalleled at a global scale. The payments are fast, reliable and directly credits into the bank account of the MSMEs. For small value transactions, it is further simplified by the introduction of UPI Lite.
A key accelerator for MSMEs growth is access to formal lending. Account aggregator (AA) framework introduced by RBI democratises accessibility to financial information. It is a consent-based data sharing mechanism, enabling fast and accurate financial information that is critical for credit decisions. Most major banks and financial institutions in the country are already on-board with this framework as both provider (FIP) and user (FIU) of this data, thus making it comprehensive. MSMEs are benefiting significantly from this initiative, as we can see in the large number of instances of unsecured credit disbursed to MSMEs leveraging AA data. Same concept can be extended to sectors beyond just credit, including health care and insurance.
DPIs are also helping MSMEs connect to their customers. ONDC helps extend market access. ONDC brings level playing field to MSMEs to participate in offering their goods and services digitally. Scaled at national level, this can turn out a major transformation for MSMEs. Here, we also have the Bharat Connect platform by NPCI, which connects buyers and sellers digitally, for streamlining invoice presentation and payments. Together, these platforms can drive viral adoption of digital tools by small businesses.
Overall, DPIs has served the small and medium businesses immensely by simplifying identity, payment, lending and importantly helping connect with consumers and other businesses. The digital public infrastructure of India serves as a role model at the global stage. With the advent of Artificial Intelligence (AI), it is likely that the next level of innovation in DPI will come via leveraging of this technology. There are many possibilities using AI, including threat assessment, fraud detection, credit assessment, business insights and so on. India’s success via DPIs have come for its approach towards inclusivity, and this is what will continue helping MSMEs.
This article is authored by Nabendu Das, chief, engineering and head of products, Tally Solutions Pvt. Ltd.
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