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BW Businessworld

Challenges Of SMEs

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The backbone of the indian industry, the small and medium enterprises (SMEs) were given a strong voice by Businessworld at a glittering event held at Le Meridien, New Delhi, on 18 June 2009. The occasion was the launch of the Businessworld SME Whitebook 2009. The event was well attended by industry heavyweights and professionals.

The evening began with the welcome speech given by ABP's CEO and Managing Director, D.D. Purkayastha (ABP is the parent company of BW), who welcomed the Minister of State, Corporate and Minority Affairs, Salman Khurshid. Speaking to a packed hall, the minister showed great sensitivity and understanding of the SME industry. In his speech, he applauded the SME sector for "making a silent transition to being huge movers in the big world of competition". The opening up of the economy had brought great challenges to the protected environment that they previously enjoyed.

Yet, the SMEs have survived and continued to contribute to India's industrial growth in a big way.

Khurshid was also appreciative of the SME Whitebook. "This is a marvelous book not only for those who are deeply involved in the structuring and in manufacturing of SMEs, but for anyone who wants to be well-informed. This book has something for the serious businessman and industrialist as well as a lay person who wants to know what his country is doing to prosper," he said.

Following his speech, the minister was joined on stage by Purkayastha and Prosenjit Datta, editor of BW, for the unveiling of the book.

The ceremony was followed by a panel discussion on SMEs, ‘The Challenges Ahead'. The panel comprised leading professionals of the industry representing different verticals. The financial aspect was put into perspective by Sudip Bandyopadhyay, managing director of Reliance Money; the technology aspect was covered by Satyen Vyas, director, enterprise product sales, SMB, Dell India while Anil Bharadwaj, secretary general of the Federation of Indian Micro, Small and Medium Enterprises (FISME) was the face of the SME industry. Madhav Lal, additional secretary and development commissioner, represented the government perspective. The session was moderated by Rajeev Dubey, deputy editor, BW.

View 'BW SME Whitebook' launch in pictures


Dubey initiated the discussion by asking Madhav Lal about the government's realistic assessment of how badly the SMEs had been hit by the current downturn.

SMEs, Lal said, had come a long way since the government protection had ceased. Broadly, the government is looking at the issues of enterprise development in which all aspects such as development of human resources or nurturing of leadership skills were important. He also said competition was going to get tougher and the SME sector has to look at ways to increase production through upgradation of technology and labour skills.

The second panellist, Reliance Money's Sudip Bandyopadhyay, added that the greatest challenge facing the SMEs today was access to capital. He felt capital was the single-most important factor that was holding back the growth of the SMEs in India. Fundamentally, the SMEs had been shut out of the capital market. Also, SMEs cannot dream of getting listed on the NSE and getting access to public money. They still do not have access to the kind of terms and conditions that big corporations had. The rate of interest was also prohibitive. The system needs to look at these issues very carefully.

Bharadwaj then took the discussion forward saying the character of the SME sector itself made it difficult to aspire to greater levels of efficiency. There are areas of organised and unorganised industries, listed and unlisted companies and these differing levels make policy implementation difficult.

He felt that there were three main challenges that the SMEs need to address: penetrate the market; access finance, skilled manpower and infrastructure; and lastly influence the external environment and check unfair trade practices and illegal dealings.

Dubey agreed that the challenges were enormous and felt that lack of technology innovation was also a stumbling block.

Satyen Vyas from Dell India said technology was difficult to keep pace with in a fast-moving global environment. Therefore, it was important for the SMEs to have an IT strategy as part of its long-term business plan. This would also help SMEs manage costs better.

After the panel discussion, the floor was thrown open for question and answers. The audience was involved and the questions were well informed and hard hitting. Some of the questions related to the frustrations that they face in everyday business dealings.

Once the question-answer session got over, it was time for the lucky draw. Ten lucky people in the audience won the book free, which is priced at Rs 299. J. C. Malhotra, chairman, Autoflex, won a return ticket to Dubai, courtesy our travel partner Jet Airways. The presenting sponsor was Maruti Suzuki and the asociate sponsors were UTVI, Jet Airways, Le Meridien, New Delhi and FISME.

The event was just a curtain raiser of many more book launches that BW plans for the future.

View 'BW SME Whitebook' launch in pictures