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SMEs role in india's economy
- 1. SMEs role in India's Economy
- 2. Introduction What is an SME ? Employs 60 million people Small and medium enterprises (SMEs) or small and medium-sized businesses (SMBs) are companies whose personnel numbers fall below certain limits-Wikipedia SME contributes 45% of the industrial output Produces more than 8000 quality products No. of SMEs(in million) 50 40 30 40% of India’s exports Creates 1.3 million jobs every year 20 39.1 40.9 42.7 44.7 46.7 48.8 2008 2009 2010 2011 2012 2013 10 0
- 3. • Contribute 40-50% export* • This takes place through merchant exporters, trading houses and export houses • Product groups which dominate the exports from SMEs sector include sports goods, readymade garments, woolen garments and knitwear, plastic products, processe d food and leather products Technological Innovation • Accounts for about 40% of the value added in the manufacturing sector • SMEs are considered very important members of supply chain Increased Export • Largest employment opportunities next only to Agriculture • Food products industry has ranked first in generating employment, provi ding employment to 0.48 million persons (13.1%) • Non-metallic products contributed 22.7% to employment generated in rural areas. • As for urban areas, Food Products and Metal Products almost equally shared 22.8% of employment High contribution to Manufacturing Employment SMEs role in India's Economy • Ability of SMEs to innovate assumes significance because innovation lends competitive edge to firms, industries and ultimately, economi es • SMEs) have been considered one of the ‘driving forces’ of modern economies due to their multifaceted contributions in terms of technological innovations • With approximately 30 million SMEs in India, 12 million people expected to join the workforce in next 3 years and the sector growing at a rate of 8% per year • Contribution of the sector to India's GDP has been growing consistently at 11.5 per cent annually, which is higher than the overall GDP growth of 8 per cent *National Conference on Emerging Challenges for Sustainable Business 2012
- 4. Opportunity CHALLENGES FACED BY SME • The opportunities in the small-scale sector are enormous due to the following factors: • SMEs faces a number of problems – • • absence of adequate and timely banking finance, • • limited capital and knowledge, nonavailability of suitable technology, • • low production capacity, • • Ineffective marketing strategy, • • Identification of new markets, • • Constraints on modernization & expansions, • • Non availability of highly skilled labor at affordable cost, • • Follow-up with various government agencies to resolve problems etc. • • • • • • • • • • • • • Less Capital Intensive Extensive Promotion & Support by Government Reservation for Exclusive Manufacture by small scale sector Project Profiles Funding - Finance & Subsidies Machinery Procurement Raw Material Procurement Manpower Training Technical & Managerial skills Tooling & Testing support Reservation for Exclusive Purchase by Government Export Promotion Growth in demand in the domestic market size due to overall economic growth • Increasing Export Potential for Indian products • Growth in Requirements for ancillary units due to the increase in number of greenfield units coming up in the large scale sector. Small industry sector has performed exceedingly well and enabled our country to achieve a wide measure of industrial growth and diversification.