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Current Economy Trends That Can Help SME's Grow’

With the Indian economy becoming $5 trillion by the year 2025, SMEs are bound to be the largest contributor to that growth; not just with the economic contribution, but also with more jobs, more skills and talent.

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Most often when we think of economic growth, we acknowledge that growth to large enterprises or billion dollar conglomerates who are news makers. However, we miss the massive contribution of the SME’s in the larger landscape. There is a silent but steady revolution happening in India right in front of our eyes. A revolution led by the growth and vibrancy of SME’s or more commonly known as small and medium enterprises. This is the new India, an India which will put us on the global map. 

With its early seeds in the 90’s, the indian middle class was going through that transformation and struggle of whether to stay in their regular Govt./PSu jobs or building their own dream companies and becoming entrepreneurs. Today at 48 million, India has the second largest number of SMEs, edging close to China. 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. They are the backbone of the new India. 

This journey however hasn't been all that smooth and easy. SMEs face multiple challenges from lack of capital to inability to attract talent to even marketing know-how. At the onset of this revolution, India as a country was still finding its own footing and was caught unaware of how best to service the SME needs. Today however, a variety of both government and private initiatives are enabling the sector to flourish. 

  1. Ease in private funding - Today with as many as 518 Private equity funds, over 150 venture capital funds, increase in family office investors, there are multiple options to receive funding. It basically stems to a great idea which is well executed and has scope of expansion. Publications, business organisations and even funds are organising pitching competitions for budding companies to present their ideas and get funded. 
  2. Credit guarantee free scheme - The ministry in association with SIDBI established the trust that facilitates a working capital loan of up to Rs. 100 Lakh per borrowing unit. Many banks have introduced easy finance and credit schemes to help SMEs avail capital without any hassles. Banks such as CitiBank have launched specialty verticals assisting SMEs and startups with easy banking facilities. 
  3. Technological advancement - NASSCOM, India’s industry association for the IT and IT-enabled products has formed a SME Council for its SME members. It aims to empower SME’s to grow to the next level and provide end-to-end assistance in terms of knowledge dissemination, best industry practices, networking, policy advocacy and brand building. Some technology companies have also launched tailor made products, services and solutions for SMEs.
  4. Co-working - There are over 850 coworking spaces in India, and while most of these are concentrated in Delhi, Mumbai, and Bengaluru, over 179 are in Tier II and III cities. Rapid increase in co-working spaces have enabled startups and SMEs to kickstart without incurring hefty operational setup costs. A company can be setup with as low as one working desk and can expand to floors within a co-working space. These spaces provide for all the operational requirements, legal know how, CA facilities as well as mentoring options to a new enterprise. 

With the Indian economy becoming $5 trillion by the year 2025, SMEs are bound to be the largest contributor to that growth; not just with the economic contribution, but also with more jobs, more skills and talent.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

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Urvi Agarwal

The author is Founder & Director of JOP Network

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