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The Modi government has been talking about encourage entrepreneurship. However, the SMEs’ share in GDP is only 8% in India as compared to 85% in Taiwan, 50% in UK, USA, France, and Germany. Also, their contribution to employment is only 22% as opposed to 90% in Canada, 50% in USA and UK.  Now, the question arises that why is there such a huge gap? What should be done to improve the situation?

Banks encouraging SMEs with credit and support services
Statistics apart, banks are upbeat about the potential of Indian SMEs as they find their NPAs are very low and they are growing with evolving needs .They are building systems to specifically cater to the requirements of the SMEs. These systems support in financing as well as help them in collections and payments, connect them with clients in India and abroad, provide macro- economic updates for better decision making and much more.

Demonetisation and GST – Bringing positive changes: Demonetisation

GST have been a boon for the SMEs with industries becoming better organized with business operating in the grey areas moving on to doing cleaner business. The positive effect is expected to be visible in a year’s time.

Areas needing improvement

Lower interest rates and better access to funds:  Across Europe, the interest rate is as low as 2-2.5% whereas in India the rates are much higher. However, banks and government are trying to use technology to do transaction-based lending thereby cut down risk and interest rates.
Timely payments:  Although there are many laws for payment terms, however, the SMEs are most often in a situation that the large customers squeeze them and bank credits don’t reach in time. Industry-specific credit rating could solve the issue.

Infrastructure availability and funding: Special zones to cater to specific needs of different types of industries with angel investors showing more confidence in the SMEs.
Other areas
•    Ease processes for setting up businesses
•    Protection to Indian SMEs in the global and domestic market
•    Restructure of duty on raw materials and finished products




About the author


Business Updater is that one website which ardently supports business habits across the globe. We highly appreciate all types of business ideas whether it is big or small, tried-and-tested one or an innovative one, whether it runs on online medium or offline. Each business idea worth praises and the brain behind it is even more laudable. The growth which the world has been experiencing so far is only the outcome of the efforts of several innovative minds. It takes plenty of intellectual skills to understand the need of the people and a lot of creativity to offer them the right solution or product. Therefore, we can conclude that a successful business is a combination of intelligence and creativity.

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