Month: December 2014

Small and Medium Enterprises (SMEs) are key

by Kalyan S, posted in Indian Economy, Views

 

Certainly, India is on a growing path. However, our economy still struggles to generate enough employment to match the eligible population. One reason is because the economic and financial institutions are not able to provide support the small and micro enterprises (SME). It seems banks are able to support only 4% of this small and micro enterprises sector. I have mentioned the significance of the small and micro enterprises in one of my previous articles: http://thekalyan.com/2014/05/29/india-should-focus-on-micro-small-and-medium-enterprises-now/

SME

(image taken from “The Hindu”)

As per the statistics, these small and medium enterprises provide 90% of employment to decentralized manufacturing, services industries. Majorly known as “unorganized”, this sector is owned by self-employed people. Also the numbers shows that 45 per cent of GDP is contributed by this sector. Once properly recognized, trained, this sector can be of great value to our nation.

Some of the recent positive events can help SME develop

  • Sebi has proposed that bank funding to listed SMEs. This move will give a huge boost to the SME trading platform and eases the financing needs of smaller companies. Another
  • As a part of its strategy to strengthen itself in India, foreign lender DBS is now focusing on SMEs as well, typically one that has a loan requirement of Rs. 5 crore or below.
  • The recent comments by Joe Hockey, Australian treasurer that SMEs can play a major role in strengthening trade ties between Australia and India has made us remind the significance of SMEs.

Well, “Make in India” initiative by our PM is majorly to improve the manufacturing areas of SME sector, we hope there will be new initiatives also taken for other areas of SMEs.

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