Small And Medium Enterprises In India

The Small and medium industries are the backbone of any economy. An inception of planned economy in India evolved from 1951 with subsequent industrial policy between the Government and the planners. These industries always emphasized on the right use of foreign exchange for import of capital goods, employment opportunities diffusion of powers and prevent monopoly.

India has nearly three million SMEs, which account for almost 50 percent of industrial output and 42 percent of India’s total exports.  SME’S in India have contributed in high production in the domestic front, significant export earnings, low investment requirements, technology based industries and ample competition in domestic and Indian markets. Similarly, it has its own limitations as the capital base is low, inadequate exposure to international markets, inability to face the WTO regime (World Trade Organization) and lack of professionalism too.

The food processing, chemicals and pharmaceuticals, engineering, bio engineering and software industries have already established themselves. Not to forget the quality of products in states like Maharashtra along with progressive industrial policies are high also the budget for research and development are ample. The engineering industries along with food processing, pharmaceutical and chemical industries in Maharashtra and Gujarat have a very bright future. The products are exported to Japan, South Korea, Taiwan and China besides West European and North American Countries.

The question today is that are these SME’s in India facing a challenge and what are the measures to curb them? Indian industries are very dynamic as they focus on modern marketing and scientific plans. To be able to match with the strong international needs India has to imbibe in new technological methods.  Indian SME’s generally face poor financial conditions and the levels of Research and Development are low along with low management skills. To improve on these parameters and to face the new challenging international market has to build up technological facilities along with their research and development unit.

However, we cannot forget the development of SME’s after 1991 where reforms and policies have changed the outlook of these industries. Industries have expanded their role and have secured a higher platform in curbing income inequality and unemployment. Companies like CSIR (Council of Scientific and Industrial Research), ITC (Indigenous Technological Capacity) and NSIC (National Small Industries Corporation) are few of them who provide ample development plans to small scale industries. Talking about Research and Development institutions in India there are as many as 2, 900 institutions in India which provide cooperation to small industries in acquiring latest technologies.

In order to support these industries various Government and private banks provide loan facilities to micro, medium and small enterprise.  The amounts vary depending upon the investment in plant and machinery requirements. There is also a strong marketing team in banks who facilitate the relationship between the enterprise and the banks for addressing financial requirements by choosing the right product to match the credit needs.

Government of India, since the inception of small scale industries has been very supportive and open to the changes. With a vast landscape with indigenous cultures many enterprises has been successful in promoting and saving our endangered art and artisans. Technological growth and international trade is not the only nucleus of any enterprise but understanding its peoples need makes the business environment meaningful.  Bodies like National Small Industries Corporation Ltd. (NSIC), an ISO 9001 certified company, established in 1955, has been aiding the small scale industries. SMEs play a key role in providing employment to the middle and aged people, as well as women in the village, who can no longer work in the urban formal sectors. India strictly follows the pollution control measures and has world class manufacturing capabilities and cost structures. Government of India and Financial Institutions has launched business awards for excellent SMEs which recognize SMEs who are at par with the global players. Also, consumer buying has revived and liquidity is high. Therefore, enterprises now are organized professionally, technologically sound and are competent.

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