New Delhi: A new stock exchange exclusively devoted to Small and Medium Enterprises (SMEs), a deep bond market and a move from debt to equity are among the principal requirements if SMEs are to thrive fully in India, said Jawahar Sircar, additional secretary and development commissioner, Ministry of Small Scale Industries on Tuesday.
Sircar, while offering the keynote address in the Mint SME Vision 2010 conference here, blamed bill defaulters as being the biggest deterrents to the success of SMEs.
“Bill defaulters have been the main reason for the collapse and downfall of many SMEs,” he said, adding, “the MSME Act of 2006 strictly deals with these defaulters.”
He was unhappy with the Small Scale Industries (SSI) as “people complained against the inefficiency of SSI due to the government protection they enjoy”.
“The SSI is coming to an end and the government is working to create an atmosphere where the MSMEs (Micro Small and Medium Enterprises) can get a bigger turnover,” Sircar said.
India currently has a headcount of 31 million employed in 13 million MSMEs. The MSMEs at present contribute to 45% of manufacturing and the country’s export of over 40% comes from this sector.
Concern was expressed amongst many SMEs present on the occasion. They felt that India is currently facing an acute shortage of human resources as people with different cutting edge skills like welders, plumbers, mechanics and electricians are slipping down the availability graph.
Make loan procurement easier
Referring to the upcoming 11th Five Year Plan (2007-12) for MSMEs, Sircar hoped it carries specific guidelines to save the small entrepreneurs from troubles while securing a loan. This community at present contributes 8% of the country’s gross domestic product.
“There is also a need for clear venture capital, private equity and external commercial borrowing policy for MSMEs,” he said, considering the usual reluctance of the public sector banks and other financial institutions to offer loans to small entrepreneurs.
Putting forward his views, SME Rating Agency of India Ltd., CEO Rajesh Dubey, said globalization has increased market risks in the form of stiff competition and threats from across borders. There is shortage in infrastructure and information asymmetry,” he added.
Networking to broaden scope and reach of SMEs
“Talking about the role of networking in the growth of SMEs, Amit Malik, head, Cisco India pointed out “customer responsiveness, operational efficiency and security” as being the three focus areas for small entrepreneurs to concentrate on.