Fast forward to January 2022, we have seen decades of volatility compressed in two years. The global trade industry has tested supply chain resilience to its breaking point. Complete lockdowns, severe bottlenecks, rising freight prices and inflation have made us conscious of the vulnerability of global supply chains. Further, the pandemic has taken a new detour and is threatening to derail optimistic plans of a robust economic bounce back.
An incredible 82 percent of MSMEs reported facing a cash shortage, temporary closure or both due to the adverse effects of the COVID19 pandemic. And yet, this year has the potential for the country to make a strong comeback due to the increased supply chain digitization, bullish B2B lending, and demand for exports.
Here are some reasons why Tech-led Supply Chain Finance could hold the key to unlocking rapid growth in 2022.
- Improved Visibility on Creditworthiness
With an increased number of large enterprises and their supplier networks adopting digital supply chain platforms and payment mechanisms, the key to data and credit underwriting has been unlocked.
- Fintech and Governments to the Rescue
The MSME Report of 2021 makes a note of a whopping Rs.3 lakh crore collateral-free loan scheme institutionalized by the Government of India for the benefit of lakhs of MSMEs. Fintechs plus lender incentives and government-backed schemes will create a credit-rich environment.
- Need for Speed
A digital supply chain financing solution allows tracking and predictability of orders, hence increased visibility on the end use of working capital financing.
- Export-led Growth
The Global Manufacturing Hub Risk Index 2021 ranks India ahead of the US as an attractive destination for manufacturing primarily on cost competitiveness parameters. The first three quarters of FY22 have witnessed phenomenal and best ever growth in merchandise exports from India to the world. Global macroeconomic factors and ample liquidity have helped in this revival for manufacturing-led exports from India
- The Demand is Back, Baby
After two years of muted spending patterns, consumer spending is set to hit record levels. As the demand for goods and products increases, large manufacturers and OEMs will turn to their supplier networks to deliver faster, better and stronger. The role of credit in enabling this rise in supply will be vital
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