BS Marketing Initiative

SME Landscape in India - Growth, Challenges and Opportunities


June 21, 2019 11:54 IST
Small and Medium Enterprises

India is one of the fastest growing economies of the world. In the last half-decade, the economic growth has steadily accelerated and most importantly, remained very stable. This growth has been driven by robust socio-economic policies of the government, an influx in the domestic and foreign capital and rise in disposable income and consumption among many other positive attributes. One other major factor that is being touted as the backbone of India’s economy is Small and Medium Enterprises (SME) sector.

Whether it is agriculture, manufacturing or service industry, SMEs are mushrooming in a myriad of sectors across the country. Statistics show that SME accounts for 45% of industrial output and 40% of the total exports in India. It generates employment for 60 million people and creates 1.3 million jobs every year. Given that a majority of India’s population lives in villages and Tier-1/Tier 2 cities, the SME sector has also emerged as a key factor to urbanize rural India.

However, in spite of its contribution to the socio-economic growth of India, SMEs face a number of challenges:

  • Lack of capital due to inadequate access to finance and credit
  • Inability to attract talented and tech-savvy manpower
  • Poor infrastructure and utilities resulting in low production capacity
  • Lack of innovation
  • Technology and digital knowledge gap
  • Lack of marketing know-how

Due to these challenges, the Indian SMEs are unable to scale to their full potential, rise up to the standards of their international peers and become self-sustainable. On the positive side, these challenges should be perceived as untapped opportunities for the SME sector. These challenges offer a broad scope to strengthen the foundation of SMEs in India.

The Indian government has been making commendable efforts to empower SMEs to overcome these hurdles. The National Manufacturing Competitiveness Programme encourages SMEs to adopt Information and Communication Technology tools and applications for their business processes. Then, there is Assistance to Training Institutions Scheme, which provides financial assistance to national level training institutions operating under the Ministry of MSME to strengthen SME infrastructure and create entrepreneurship skill development programs.

NASSCOM, India’s industry association for the IT and IT-enabled products has formed SME Council for its SME members who account for 80% its total member-base. NASSCOM aims to empower SME to grow the next level and provide end-to-end assistance in terms of knowledge dissemination, best industry practices, networking, policy advocacy and brand building. The Indian corporate sector is also doing their bit to give a push to the SME sector in India. Facebook and Google have launched digital training programs and hubs exclusively targeted at digital skill development of SMEs in India. Many banks have introduced easy finance and credit schemes to help SMEs avail capital without any hassles. Some technology companies have also launched tailormade products, services and solutions for SMEs.

The SME sector has also gained recognition from the United Nations. According to the United Nations, these type of enterprises act as the first responders of the needs of the society, provide a safety net for inclusiveness and are a primary driver of poverty alleviation and development. Hence, the United Nations celebrates ‘Micro-, Small and Medium-sized Enterprises Day’ on 27th June every year to raise public awareness of this sector’s contribution to sustainable development.

There are immense opportunities for the Indian SME sector to grow and thrive. All it needs to do is to adapt to the changing trends and embrace digital skills.


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