While many of us may think, it is large companies that dominate but in reality it is over 5.5 crore (55 million) small units that drive our economy through manufacturing trading, services etc. With huge potential to grow across the country and beyond, the sector consists of 36 million units contributing 8% to country’s GDP. Along with this, the sector is successful in providing large employment opportunities to over 80 million people.
Reflecting on the same, Chandrakant Salunkhe, Founder & President of SME Chamber of India, also founder and CMD of Macro Group shared his vital viewpoints on the importance of the SME ecosystem for economic growth of the country.
He says, “SME sector of India is growth engine of the Indian economy. It is a broad sector comprising of manufacturing, service industry, infrastructure, packaging, chemicals, food processing, even venturing into IT sector now. The sector contributes 45% to the total manufacturing output and 40% to the exports from the country. Most importantly SME in India is employing more than a million people per annum. The SME sector is the largest sector which is also the training sector for many unemployed and unskilled people and for last 10 years efforts are being made to encourage young entrepreneurs and youth to start their own business.”
Though SME sector has progressed and evolved rapidly in past few years, still it faces several challenges. Despite its commendable contribution to the Indian economy, the SME sector faces problem in getting adequate support from Banks, Government Departments, Financial Institutions and Corporates etc. They have limited capital and knowledge, non-availability of suitable technology and ineffective marketing strategy. Another growing concern for SMEs is attrition of talented people with the tech-savvy background.
“I feel the revolution came in 90’s when people largely felt the urge to start their own businesses. They preferred the option of entering into SME sector than to work for large corporates or multinational companies. Some even preferred to join family businesses. It is then when the great amount of technological advancement entered into the SME sector and is doing very well now. Today, youth with good technical knowledge and understanding of market, finance and other domains are leading the sector effectively. It is important for those in the SME sector to focus on quality, productivity, and accuracy. There is a drastic transformation in the sector for sure but with the advent of overseas companies in the sector, the challenge that SMEs might face is the attrition of skilled manpower which was trained and developed by the sector itself,” adds Salunkhe.
Though National Skill Development Council is active in providing necessary training to youth to work in the SME sector still many people prefer to travel to metro cities for jobs which again is another concern for the sector. To survive such issues SMEs need to establish strong technological base, competitive spirit and adopt an innovative approach to survive in the current competitive environment .