On The Cusp Of A Bright Future

The last week of October saw the launch of the Businessworld SME Whitebook 2012-13 at a glittering event at the Le Meridien in New Delhi. The evening, attended by the who’s who of the SME industry, was an ode to the 3 crore-plus SMEs in the country which form the backbone of the economy. In fact, the same was reiterated by Prosenjit Datta, the editor of Businessworld, in his opening remarks. “While big business often takes up a disproportionate share of media attention, it is the over 3 crore small and medium enterprises in the country which provide crucial fuel for economic growth. By some estimates, small and medium enterprises account for over 35 per cent of Indian manufacturing output and almost 40 per cent of India’s exports.” In the course of his address, he said that while SMEs had to contend with a challenging environment in every aspect, the picture was not totally bleak — factors like cloud computing were helping to level the playing field.

 

The theme of the book this year was small and medium enterprises in the new world order and this was also the topic of discussion before the eminent panel to mark its launch. Remarking on the three-year association with the SME Whitebook project, Reliance Commercial Finance CEO K.V. Srinivasan (also one of the panellists) said that the greatest need for an SME today was information and handholding on its journey from a ‘small’ to a ‘large’ enterprise. While lamenting the lack of institutional support for SMEs, he praised Businessworld for its initiative in this respect and for its choice of subject for the panel discussion, which he added was “very topical”.

 

The panellists represented a cross-section of opinion across the SME space. Anil Bhardwaj, secretary general of the Federation of Indian Micro and Small and Medium Enterprises; Manish Pant, managing director of Luminous Power Technologies; Dinesh Agarwal, founder and CEO of IndiaMART.com; Ramesh Pandey, joint development commissioner, Ministry of Micro, Small and Medium Enterprises; and Srinivasan, were joined on stage by Businessworld executive editor Rajeev Dubey, who moderated the dicussion.

 

To a question from Dubey on what it takes to make SMEs force multipliers, Pant listed skill development, technology and efforts from the government as well as large enterprises. Bhardwaj painted a more gloomy picture, drawing attention to the fact that India ranked a poor 132nd in the World Bank’s ‘ease of doing business’ report, but went on to list finance, roads and policy initiatives such as Goods and Services Tax as some of the measures needed. Srinivasan’s prescription was that more players were needed to extend finance to SMEs as 93 per cent of them remained financially excluded. 

 
Click here to view slide show on SME Whitebook 2012-13

To a question on whether small enterprises were open to collaborations, Pant was categorical: not enough. He called on industry associations to facilitate greater collaboration. Bhardwaj rued that knowledge was flowing vertically; not in a horizontal fashion. Agarwal, while emphasising that SMEs were smart and adept at acquiring technological prowess, said the need of the hour was simplification of procedures and better infrastructure. He signed off his argument with: if Tata has to run around to set up a business, what chance does an SME have? Pande, from the ministry, responded by saying that the government was pushing the cluster model in a big way to promote tie-ups.

 

On FDI in multi-brand retail, Bhardwaj said the government should have taken a more nuanced approach, bargained harder for greater inflow of technology and information from foreign players. Pant, on the other hand, said he favoured any move that brought the consumer value. SMEs, he insisted, would be partners in any such value chain.
 

Asked about the high cost of funds, Srinivasan said with mortality among SMEs being as high as 50 per cent in the first five years, there was a crying need for more sustainable models of business; this, according to him, would inspire greater confidence among lenders.

 

The panellists were upbeat about technology improving the lot of SMEs. Srinivasan said social media provided a viral platform at zero cost for brand creation; Pande highlighted his ministry’s cloud computing project — Project Badal — a national portal to link entrepreneurs and suppliers; and Bhardwaj urged large software companies to come up with solutions tailored for SMEs.

 

The discussion was rounded off by the audience’s lively interaction with the panel during the Q&A session. This was followed by the launch of the Businessworld SME Whitebook 2012-13 to thunderous applause.

 

Reliance Commercial Finance was the title sponsor, Airtel and Airfrance KLM were the associate sponsors, Black Dog was a partner, Mercedes Benz Financial was the mobility partner and NDTV Profit was the television partner for the event.

 

(This story was published in Businessworld Issue Dated 19-11-2012)