New Delhi: The 19th CII business outlook survey (1st in the 2007 series) on policy impact and future scenario for micro, small and medium enterprises (MSME) for Dec 2006 - Mar 2007 captures the prevailing mood in the MSME sector and maps out the future of Indian enterprises in addition to prioritizing key policy initiatives.
The survey brought out three important financial obstacles to growth and operation of Small Industry, namely, high interest rates, collaterel requirements of banks and financial institutions and bank paperwork/bureaucracy.
35% respondents felt that Small and Medium Industries are still struggling to find their ground, 39% expect to graduate from small to medium industry by 2010 and 38% foresee a positive shift in the business situation in the country over the next 5-10 years.
72% respondents do not agree for raising the FDI limit in MSME sector whereas only 26% respondents suggest raising the FDI limit.
The poll findings further revealed that 83% respondents foresee a dominant role of non traditional sources of finance substituting traditional (banking) sources.
On the credit guarantee front, 49% respondents see the credit guarantee fund launched by SIDBI with an initial corpus of Rs 125 crore for guarantee loans upto Rs 25 lakhs as a substitute for collateral security while 80% feel that the limit of Rs 25 lakhs insufficient.
Regarding innovation 37% of surveyed respondents felt that transformative change and quantum improvement in organizational skills and capabilities of MSME will impact innovation strategy across the country.
39% respondents suggest the policy of reservation for the small industry in its present form providing the right to manufacture reserved items only for MSME while including the majority of items list for trading whereas 24% are not sure about it.
CII National SME Forum had the theme for 2006-07 as “ Competitiveness for Sustainable and Inclusive growth of the Indian SMEs.” With the goal (over a five year cycle) expected to move Indian SMEs among developed international SMEs, priority is on developing a competitive policy framework and on adopting best practices.