Strengthening SMEs to Survive in Competitive Markets

Mumbai 30th January 2016. Indian Small and Medium Enterprises (SME) sector has emerged as a highly vibrant and dynamic sector of the Indian economy over the last five decades. SMEs not only play crucial role in providing large employment opportunities at comparatively lower capital cost than large industries but also help in industrialization of rural areas. SMEs are complementary to large industries as ancillary units and this sector contributes enormously to the socio-economic development of the country. The Sector consisting of 36 million units, as of today, provides employment to over 80 million persons. The Sector through more than 6,000 products contributes about 8% to GDP besides 45% to the total manufacturing output and 40% to the exports from the country. The SME sector has the potential to spread industrial growth across the country and can be a major partner in the process of inclusive growth. SMEs have also played a significant role in Nation development through high contribution to Domestic Production, Significant Export Earnings, Low Investment Requirements, Operational Flexibility, Location Wise Mobility, Low Intensive Imports, Capacities to Develop Appropriate Indigenous Technology, Import Substitution, Contribution towards Defence Production, Technology – Oriented Industries, Competitiveness in Domestic and Export Markets thereby generating new entrepreneurs by providing knowledge and training. Despite their high enthusiasm and inherent capabilities to grow, SMEs in India are also facing a number of problems like supply chain inefficiencies, sub-optimal scale of operation, technological obsolescence, , increasing domestic and  global competition, working capital shortages, not getting trade receivables from large and multinational companies as well as Government agencies  on time, insufficient skilled manpower, change in manufacturing strategies and turbulent and uncertain market scenario. To survive with such issues and compete with large and global enterprises, SMEs need to adopt innovative approaches in their operations. SMEs that are innovative, inventive, international in their business outlook, have a strong technological base, competitive spirit and a willingness to restructure themselves can withstand the present challenges and come out successfully to contribute 22% to GDP.  To discuss problems and challenges before the SME sector, Small and Medium Business Chamber of India has organised a day long India Banking Conclave in Hotel Sahara Star, Mumbai today. The Chamber was able to bring various stakeholders on the same platform. Speaking in the inaugural session of the conclave, Jyoti Prasad Gadia, Managing Director of Resurgent India has made an important point. He said that suicide of 10,000 farmers become headlines on TV as well as newspapers because farmers are a captive vote bank in our country, but suicide of 20,000 SME unit owners did not find space it deserves as SME segment is not an en block vote bank. The sector need to raise its voice loud and clear at the top forums and political space. Then only sector will get the dues it deserves. Speaking on the occasion, Ashish Kumar Chauhan, Managing Director & CEO Bombay Stock Exchange made a very important point. He said that SME units need to change the way they look for their financial needs. Instead of going to bank for the financial requirement, the unit should go to stock market for public listing.  Going public provides much needed  capital to the SME units, which is  the big idea  to keep robust health of the  unit.Those who have gone for public issue in the recent past they receive cheaper funds to run the business. Rajnish Kumar, Managing Director, State Bank of India in his key note address said that whenever there are distress signals in business, the owner should share with Banker to find way out, and as in family the elders in family take special care of the sick member of the family, the bank should treat the sickness of unit in the similar manners. Yes, the operating staff do not pay much needed timely assistance, they do so with the fear of accountability. Speaking on the occasion, Chandra Kant Salunke, Founder and President of SME Chamber tried to sumarise problems SME segment facing today. he said the Government is talking a lot about encourage foreign companies but SME segment should also be encouraged.

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