If India is to sustain its onward march of 7 percent-8 percent of annual economic growth, the 50-million strong Small and Medium Enterprises (SME) sector has a vital role to play. However, in their quest for growth, SMEs find working capital and timely access to it as serious concerns.
As India slips on the Ease of Doing Business Index, it is imperative to understand why businesses are struggling to operate at maximum efficiency levels. Our survey of 1500+ key decision-makers from emerging large organisations established another major problem – More than 75% organisations today are running their key business functions in isolation.
With enhanced technological advances and constantly depleting natural resources, there is an increasing need for companies to factor in alternative energy resources while not just devising new industry solutions, but also in planning organization’s sustainable future. Enterprises are now seeing the need to reduce carbon footprint and cut down energy costs to improve productivity and efficiency, but beyond that, it is essential for them to explore the opportunities in implementing renewable energy solutions.
If Narendra Modi plans to keep his promise to the electorate of creating more jobs for our youth, this is one group he can’t afford to ignore: the small and medium (SMEs) enterprises which provide the bulk of the jobs outside agriculture. With the Union budget to be presented by Arun Jaitley just three days away, these are the people worth listening to.
Lack of adequate infrastructure is an oft cited problem by Indian industry, but nowhere is it more acutely felt than in small and medium enterprises and they’re hoping that Finance Minister Arun Jaitley will come up with a whole new roadmap in his first union budget to make facilities like electricity and waste management available.
Indian small and medium enterprises employ over 40 percent of the total workforce in the country, but they only contribute to 17 percent of GDP. In fact after agriculture, SMEs are the second to fostering employment opportunities. Yet in January-February 2013, SMEs saw a decline of 51 percent in investments by private equity investments. The fact remains that SMEs are the unsung backbone of the Indian economy, which is why the finance minister should address various issues affecting MSME performance in the current recessionary economic climate.
It doesn’t help to be small in Indian industry with a majority of SMEs complaining that they are constantly being shouldered aside by their bigger competitors when it comes to marketing and having access to technology solutions, and they’re hoping Finance Minister Arun Jaitley can do something about it.
The Firstbiz-Greyhound Knowledge Group survey of small and medium enterprises in India found that 68 percent of all the respondents said they were constantly losing to larger competitors.
Fund raising is the biggest challenge faced by small and medium enterprises in India, limiting their ability to retain talents, innovate and do necessary research and development, a pre-budget survey conducted among 540 SMEs has found.
Not surprisingly almost all of the companies surveyed expect the Narendra Modi government’s budget to introduce schemes to obtain credit without complex collaterals and to get term loans at lower interest rates. Interestingly, Goods and Services Tax is not the biggest pain point and hence not the most expected outcome from this budget.
Is money flowing into the small and medium enterprises (SME) sector in India? Is there a spurt in the growth in the SMEs sector? We believe so given that the news reports are gung ho about either startup A or startup B having received private equity funding.
We at Firstbiz were in for a surprise in a survey we did with the Greyhound Knowledge Group. What we found was that while e-commerce continues to remain the favourite milch cow of PE investors, while other enterprises struggle to find backers.