State of Supply Chain Finance for Micro, Small and Medium Enterprise in India

Abstract

This paper examines the state of adoption of Supply Chain Finance (SCF) in India's Micro, Small, and Medium Enterprise (MSME) sector. Statistical techniques are applied to the critical parameters from publicly available information to ascertain the level of adoption of SCF specific to the Automotive Industry. Results indicate that the health of working capital management as understood by the cash conversion cycle (CCC) days are different across different tiers within the supply chain, leaving the deep tier suppliers vulnerable to financial risks. This study is limited to Automotive Industry within the Indian MSME sector. Extensive research covering other industries and services is needed to derive a common trend. The current research contributes a suggestive framework and critical strategies to fast-track the coverage and adoption of SCF for Indian MSME. Current research helps to exploit the untapped opportunity and propel economic prosperity. Further, the extended impact of pricing, risk, and profitability within the supply chain networks due to SCF adoption are to be explored.