×
Home Companies Industry Politics Money Opinion LoungeMultimedia Science Education Sports TechnologyConsumerSpecialsMint on Sunday
×

SME’s productivity slides 30%

SME’s productivity slides 30%
Comment E-mail Print Share
First Published: Tue, Jun 05 2007. 02 35 PM IST
Updated: Tue, Jun 05 2007. 02 35 PM IST
New Delhi: Small and medium industries in the country have been struggling to keep pace with rising interest rates (from 7% to 15%) and competition levels. Increasing the number of inspectors to 45 has also not helped, rather their productivity levels have dipped by nearly 30%.
According to a joint survey carried out by Assocham and Tradeindia.com on “How to make SMEs more competitive” If the trend is not reversed, SME’s contribution of 60% to total export proceeds will be severely impacted.
Survey findings
*The survey was carried out amongst 934 SMEs : 85% expressed resentment saying that banks have not been forthcoming in lending to SMEs at the desired interest rates as its actual costs work out to be about 15%.
* Number of inspectors who examine SME records has increased to 45 with new services being brought into the tax net.
* Rate of interest for SMEs which should have been ideally @10% is 15%; this is unserviceable and it hurts productivity of SMEs to the extent of 25%.
* The chamber pointed out that procedural issues faced in raising loans include lot of paperwork, collateral security, high processing fees and prepayment charges.
*75% respondents felt that time taken by banks to process request of loans adversely affects growth.
* Over 70% SMEs felt that internal barriers in the path of SMEs are lack of information, capability to build up an international market position/ international business relations and insufficient management skills.
* External barriers tht impeded smooth functioning included technical trade restrictions like standardization, quality requirements, conformity assessment, packaging and labelling, ecology requirements, bureaucratic procedures, marketing and distribution problems, lack of risk assurance and in distant countries, high transportation costs and communication problems.
Recommendations
* Proposal to PM urges him to bring down number of inspectors to 15 in the next two years and later to less than five subsequently, so that SMEs can breathe easy.
* Have one inspector for examining records of SMEs in PF, excise, bonus, sales tax.
* Make sectoral arrangements that put one inspector incharge of five different SME functions.
* Banks to be more cooperative in promoting new projects; to take less time to sanction loans to new facilities and not be so risk averse
* Help SMEs to adopt expensive quality management systems and certification procedures that sometimes need frequent replacement.
* Speedy integration of small and medium enterprises and counter heavy burden of untenable constraints and hurdles.
* Step up research and development, access to technology and product innovations.
* 60% respondents wanted to change the legal and administrative framework wherever necessary and tackle inspector raj, harassment and corruption more effectively.
* Provide training and technical knowledge to SMEs so they can upgrade their skills and enhance their manufacturing output.
* Equip them with skills on safety measures and pollution-control measures.
Conclusion
The controversy over the Special Economic Zones (SEZ) appears to be unending with the survey indicating a fractured opinion on how they can be of assistance to SMEs.
While 39% respondents were of the opinion that SEZs can be of help to SMEs, an equal number of respondents thought otherwise. Remainder 22% had no opinion on the matter.
Comment E-mail Print Share
First Published: Tue, Jun 05 2007. 02 35 PM IST