Technology, branding must for MSME growth: Experts

The micro, small and medium enterprises (MSMEs) in India should pay special attention to technology up-gradation and brand building to expand growth avenues in the global markets, informed industry experts at the second global convention on MSMEs held here on Saturday.

Experts and entrepreneurs from the MSME sector in India discussed growth prospects and factors affecting it for the MSME sector in the country. "The big challenge for the MSMEs is to build a brand. There is a need for proper branding of the products to win consumer confidence over other established multinational corporation (MNC) brands. Young India is brand conscious hence in the modern era focus on brand management is an essential requirement," said JS Juneja, Chairmain - SME Taskforce, All India Management Association (AIMA), the apex body for management professionals in the country.

Recognising the growth potential of Gujarat-based MSMEs, the experts noted that the state had conducive atmosphere for growth of MSMEs over other peer states.

"Gujarat has all the potential for a healthy growth of MSME segment. However, so far there seemed a lack of professional approach among the entrepreneurs. Also the language barrier constrained the growth till recently. But as the young generation has become pro-active in adopting professionalism, it would give a big boost to this sector," said a Mumbai-based MSME consultant and advisor.

The entrepreneurs also expressed their plight of a restricted access to finances. Even though, the funding to MSMEs has been considered as priority finances for the lenders, the banks have been slow in lending to the MSME sector.

As per the data provided by the AIMA, there has been a fall in the share of MSME sector in the total advances made by the banks. The share has fallen from 22.3 per cent in March 2008 to 15.2 per cent in March 2009. Although the net advances have been rising at a robust growth of about 22-25 per cent per year.

Meanwhile, leading public sector lenders maintained that the policies were becoming more conducive for MSMEs to avail bank finance. Bankers like State Bank of India, Bank of Baroda and Punjab National Bank informed that with the importance of MSMEs rising, the collateral-free finances for up to Rs one crore had also become available.

Further, the industry called for a need of credit ratings for the MSME units. "The credit ratings would not only add value to the company's business but it will also increase the chances of getting advances from a bank," said an official from ONICRA Credit Rating Agency.

The global convention on "Taking MSMEs to higher level: The way forward", organised by AIMA, saw participation of entrepreneurs, bankers, investors, venture capitalists, consultants and students.