MSME Challenges from COVID-19 And How Can Small-Businesses Survive A Potential Third Wave

This article covers the challenges from Covid-19 and the impact on MSMEs/ Small-businesses and surviving the potential third wave.

MSMEs comprise all the small-scale and medium-scale businesses in India. These businesses play a major role in contributing to our economy. They are spread over almost 6.35 crore MSME units all across the country.

These small and medium scale businesses occupy 34 percent of the manufacturing output of our country. These businesses also help form up to 24.69 percent of our services GDP and 34 percent of our manufacturing output.

Forty-five percent of all the exports from this country come from these small and medium scale businesses. These businesses also help broaden the employment sector in this country. Statistics have indicated that over 120 million of our citizens have found employment thanks to these businesses.

The annual reports up until two years ago have always indicated that these MSMEs had been growing at a rapid and healthy rate. They were seen to have maintained around a 10 percent growth rate every year. However, all of this was challenged once the Covid-19 pandemic reared its ugly head.

Small-business Challenges from Covid-19

Most of the MSME challenges from Covid-19 during the lockdown conditions basically boil down to limitations that were caused by a drastic overhaul in the economic policies set up to work in accordance with the regulations imposed during the Covid-19 lockdown.

These policies prevented people seeking to start their own businesses from getting easy access to all the necessary permissions, licenses, and paperwork. Earlier all these prerequisite materials used to be available with relative ease. People who already owned small businesses found it difficult to apply for the subsidies and grants issued by our Government to aid such businesses.

It also became increasingly more and more difficult to acquire capital to aid your small business as the pandemic went on. These issues were primarily caused by a series of miscalculations and misjudgements at an administrative level. Apart from these, small and medium businesses also found it difficult to amass the necessary workforce required to carry out their operations.

One of the most important processes that go into the makings of a successful business is hiring a dedicated team of skilled and efficient individuals to make up the organization of your business. Given the restrictions imposed during the lockdown, no such recruitment was feasible anymore.

The Vast Spectrum of Small-business Challenges from Covid-19 Pandemic can be Categorized as Follows:

1. MSME Challenges from Covid-19 Pertaining to Adaptability

Among all the small-business challenges from Covid-19 pandemic, the most fundamental one was simply to stay afloat. Due to the widespread panic in the initial days of the pandemic, almost every potential customer had ended up in months of home quarantine.

The demand for products that were deemed essential skyrocketed, as a lot of people at this time started hoarding supplies of food, grains, hand sanitizers, soaps, sanitary pads, toilet paper, and all other medical and hygienic products.

The sale of other products, which at the time were seen as commodities, plummeted below the horizon. Certain small businesses managed to stay afloat by completely revising their business model. A lot of clothing and cosmetic brands started manufacturing face masks and hand sanitizers, respectively.

2. MSME Challenges from Covid-19 Pertaining to Growth

The small-business challenges from Covid-19 presented somewhat of a litmus test to the Indian economy. The MSMEs that managed to stay afloat during this period grew exponentially, and the ones that failed to deliver were crushed beyond repair.

Apart from the pharmaceutical and healthcare sectors, other sectors that showed significant growth during the pandemic period and even peaked the stock market a few times include online learning, online delivery, and gaming. All of these are business models that specifically target people quarantined in their homes.

Surviving a Potential Third Wave

For the MSMEs to survive a potential third wave of Covid-19, it is essential from an administrative standpoint to take measures and execute policies to assist these small and medium businesses. The Government needs to make sure that these businesses have enough capital to feed off in case they need to halt their operations once again. Finance Minister Nirmala Sitharaman has recently issued a policy to prevent delays in Government grants from being issued.

The other important step is for the MSMEs to adopt the digital mode of operation. It has been observed that most of the small and medium businesses that were forced to shut down their operations due to the small-business challenges from Covid-19 used to employ the traditional business model. Conversely, most businesses that managed to stay afloat or even displayed growth during that period had to conduct their operations on the internet in some form or the other.


In the wake of the pandemic, MSMEs in our country have been observed to endure a lot of challenges from Covid-19. The strict lockdown regulations imposed to prevent the spread of the virus have caused several small businesses to go under.

Due to MSME challenges from Covid-19, Several small business owners, shopkeepers, and store owners have been forced to shut down their operations. Several shops and factories that had to be closed during the first lockdown period have never been reopened and are unlikely to ever resurface again.

The lockdown restrictions also caused hindrances to the supply chains that most small businesses in our country rely on in order to stay ahead of their competition in the free market.

Studying these small-business challenges from Covid-19 also sheds light on the systemic inequalities and bureaucratic mismanagement that has always existed within our economic system.