Impact of Automation on Small & Medium Scale Enterprises through Digital Transformation (A case analysis of India: study of effect of macro factors to the industry)

Abstract

The goods produced by a small and medium scale industry (SME’s) are consumable in nature and are made using the traditional techniques. Such commodities included, for example stationary, napkins, paper, water bottles, small toys and chocolates etc. In India it generally starts as a small industry often in the countryside or places where there is high degree of unemployment. Therefore, this industry actually helps the Indian economy by absorbing excessive labor from the rural economy. Automation in this industry on the other hand will lead towards betterment and sustained life of laborer in Indian economy. Also, the industry is liable for 45% of the manufacturing sector of the economy and around 40% of the total exports also rely on small scale industries. In lieu of improving the quality of the products implementation of automation strategy might boost the growth. This it becomes imperative to maintain and grow this sector in terms of technology and digitalization. There are multiple factors affecting the growth of this industry, one of them being that it is not a mass producer, hence it faces risk of existence and improvement as it cannot compete with high scale industrial products which are technologically skillful. While large scale industries often utilize cost effective technologies which give them an edge of providing the market with low priced commodities, the SME’s rely upon low capital investment and traditional methods of production which, in turn, increases the cost of the commodity. Thus, the smallscale industry faces the risk of extinction if it is not supported by means of appropriate government policies, funding, and automation with technological advancement.