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Rising input cost, liquidity crunch hits SMEs growth

Press Trust of India  |  New Delhi 

Rising input costs and liquidity crunch are creating hurdles in the growth of small and medium enterprises (SMEs) mainly engaged in apparel business, says a survey.


Over 50% of the respondents participated in the survey of Indiamart.Com said that input costs have significantly increased. Indiamart.Com is a webportal of SME sector.


It said that liquidity crunch is restricting growth of the sector as "funds are required to grow existing business, foray into international markets, invest in research and development".


Besides, small and medium units are also facing problems in getting credit at easy and affordable rates from banks, it added.

According to experts, the continuous monetary tightening by the Reserve Bank of India is one of the reasons for liquidity crunch in the market.

The survey further said that SMEs must adopt modern technology to cut costs and enhance business operations.

Micro, Small and Medium Enterprises contribute over 40% to the country's total exports, 45% to manufacturing output and 8% to the country's GDP. The sector employs about 60 million people.


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First Published: Sun, May 22 2011. 12:38 IST