Indian SMEs bullish on economic growth

Over 80 per cent of Indian small- and medium-sized enterprises (SMEs) are optimistic about India's growth story, according to the UPS Asia Business Monitor (UPS ABM) 2007 report. Last year, only 69 per cent expressed bullishness, which reflects that the level of confidence has risen by 17 per cent.

Moreover, 89 per cent of Indian SMEs are confident about their company's growth prospects, which is a consistent rise in growth expectations from 2006. This positive sentiment is reflected in Indian

SMEs' expectation to increase or maintain their current workforce in 2007.

However, there are roadblocks to competitiveness such as a lack of qualified workers, innovation, and government support. SME leaders in India cite a lack of supply chain efficiency and transportation infrastructure as the biggest obstacles to their competitiveness, factors considered both important and lacking. These obstacles need to be addressed to ensure their sustainable growth and competitive position in the global marketplace, states the report.

Meanwhile, across Asia, the top three business concerns that keep business leaders up at night include quality of their services (50 per cent), customer loyalty (48 per cent), and retention of quality employees (47 per cent).

Indian SME leaders have echoed the same business concerns. With regard to the problems encountered by Indian SMEs in financing their businesses, 57 per cent state bureaucracy and red tape in processing applications, 40 per cent state insufficient collaterals and 34 per cent mention a lack of institutions willing to lend to small businesses.

Indian SMEs also highlight the problems faced in supply chain management. Fourty-two percent of SMEs in India express difficulty in forecasting demand which affects the efficiency of their supply chain. Of these, 33 per cent state a lack of knowledge and expertise in supply chain management and that their supply chain was fragmented with too many parties involved.

India's business and legislative environment is viewed as positive and encouraging to foreign companies and multinationals (52 per cent).

Of these respondents, 13 per cent feel this is because of India's low production and labour costs; 12 per cent believe it is because India has a good business and investment climate; while 11 per cent believe India's government policies encourage foreign investment.

Emerging leaders As China and India continue to emerge as two of the fastest growing economies in the world, SME leaders in Asia remain more skeptical about the growing dominance of China than India.

While China is consistently rated by SME leaders with the greatest prospects for economic growth (92 per cent) in 2007, across the region India's prospects are also viewed as very positive in the coming year (81 per cent).

The majority of Asia's SMEs are bullish on the region's economy, with 74 per cent expecting to see growth in intra-Asia trade. Indian SMEs, however, have rated the U S as the strongest prospect for growth in trade volume for the third consecutive year.

"According to this year's ABM findings, Asia's SMEs believe that India will be a future leader, and has already established itself as a leader in the IT sector," said Pirojshaw Sarkari, Managing Director of UPS Jetair Express.

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SMES ARE

Confident in India's growth story

Their own growth story

Plan to increase or maintain workforce by 79%

IT, manufacturing, building & construction are main growth areas

BUT

Infrastructure is the biggest hurdle

Lack qualified workers, innovation, government support

Rate China as most competitive