Relevance: GS-3: Indian Economy and issues relating to planning, mobilization, of resources, growth, development, and employment; Conservation, Environmental Pollution, and Degradation, Environmental Impact Assessment.
Key Phrases: Micro, Small, and Medium Enterprises (MSMEs) sector, greenhouse gases (GHGs), energy-intensive, clean energy, Digitalisation, Global Horizontal Irradiation (GHI), Rooftop Solar (RTS), SCADA system, Machine learning, Artificial Intelligence.
Context:
- MSME sector contributes significantly to greenhouse gases (GHGs), as it is energy-intensive.
- Studies indicate that India’s small business sector’s energy consumption is equivalent to about 50 million tonnes of oil and gas annually.
- As 70 percent of the country’s power consumption is met by coal, the segment’s indirect contribution to global warming is significant.
- So, addressing how to reduce MSMEs’ energy consumption is vital for climate mitigation.
Importance of the MSME for the Indian Economy
- In India, the MSME sector contributes approximately 30 percent of GDP.
- It is apparent that the Indian economy’s backbone is the Micro, Small, and Medium Enterprises (MSMEs) sector.
- This sector consists of nearly 64 million enterprises, second only in size to China’s in terms of GDP.
- MSMEs also created about 600,000 new jobs this past year, besides employing over 110 million people and contributing to nearly 50 percent of the country’s exports.
Problems with the MSME sector:
- Demand for MSMEs’ products is unpredictable,
- Their working capital needs are considerable,
- They lack a steady labour supply and institutional finance,
- They find it hard to repay loans.
- Lack of knowledge of the most energy and resource-efficient
production processes and technologies.
- This significantly contributes to the sector’s energy use intensity, which often has a direct bearing on profit margins.
- There are several government initiatives to reduce GHG emissions in this sector. But, scalability, lack of data, capacity building, and finance are still major barriers.
Digitalisation promise:
- One of the solutions that hold promise is the digitalization of small business production processes.
- Digitalization would mean embracing automation and artificial intelligence as integral parts of business strategies.
- Other efforts include developing and adopting appropriate software for workflow management.
- Digitalization could accelerate the MSME sector’s clean energy transition, improve energy efficiency and reduce resource use and waste.
| Revised Classification of MSME | |||
| Composite Criteria: Investment in Plant & Machinery/equipment and Annual Turnover | |||
| Classification | Micro | Small | Medium |
| Investment in Plant and Machinery or Equipment | Not more than Rs.1 crore | Not more than Rs.10 crore | Not more than Rs.50 crore |
| Annual Turnover | not more than Rs. 5 crores | not more than Rs. 50 crores | not more than Rs. 250 crores |
How digitalization could help:
- Mapping solar potential using GIS:
- India’s small businesses are being encouraged to adopt rooftop solar (RTS). Global Horizontal Irradiation (GHI) can be calculated using satellite data products.
- GHI is the total amount of shortwave radiation received from the Sun by a surface horizontal to the ground.
- Since these values measure the solar potential in an area, they are of particular interest to solar PV developers.
- Using high-resolution satellite images, the total footprint of MSME buildings, or, available real estate where RTS could be installed, can be mapped.
- Feature extraction can be scaled using machine learning tools. By correlating the feature extraction data to GHI, and peak power consumption, and allowing for a spike in demand, one can estimate the yearly potential for solar electricity generation in kilowatt-hours.
- This will allow owners of small businesses, cluster associations, solar developers, and financial institutions to build an evidence-based solar potential estimation and create solutions.
What is Feature Extraction?
- Feature extraction is a process of dimensionality reduction by which an initial set of raw data is reduced to more manageable groups for processing.
- A characteristic of these large data sets is a large number of variables that require a lot of computing resources to process.
- Feature extraction is the name for methods that select and /or combine variables into features, effectively reducing the amount of data that must be processed, while still accurately and completely describing the original data set.
- Data monitoring, synthesis, and analysis:
- Machine learning enables businesses to use data for better results. It also fills a gap in sectors without deep technical knowledge.
- Machine learning provides an in-depth understanding of operations in a digestible format.
- A GIS-enabled SCADA system can allow MSMEs to monitor dynamic processes with fixed geographical locations.
- When there is an error, the SCADA system immediately raises an alert to enable timely fixes.
- Sensors and site controllers could regularly monitor the health of electronic components.
- Smart meters would provide past power consumption data, consumer behaviour, and consumption patterns to predict future demand.
- This will eventually allow businesses to optimize their production, and reduce consumption, leading to greater revenue margins.
SCADA system
- Supervisory control and data acquisition (SCADA) is a
system of software and hardware elements that allows industrial
organizations to:
- Control industrial processes locally or at remote locations
- Monitor, gather, and process real-time data
- Directly interact with devices such as sensors, valves, pumps, motors, and more through human-machine interface (HMI) software.
- Digital platforms:
- Digital platforms with or without AI, will allow users to track orders, manage warehouses, and optimize processes.
- Data dashboards allow for remote monitoring and effective prioritization to find optimal solutions for manufacturing problems.
Conclusion:
- These efforts focus on financial support, marketing, infrastructure, and skill development.
- There is a need for digitalization policies, funding for technology upgrades, and improving technical expertise.
- The Centre and various States have extended support to the MSME sector. West Bengal has begun a geospatial survey of MSMEs aiming to provide technologically advanced infrastructure.
- It is envisaged that as MSMEs digitize, their already significant contribution to the economy will only increase, while also enabling a transition to cleaner forms of energy, thereby reducing GHG emissions.
Source: The Hindu BL
Mains Question:
Q. How can digitalization help in improving the MSME sector’s energy efficiency along with reducing resource use and waste generation?
