Highlighting skill development as the most sensitive area for Indian SMEs, Joshi emphasized, “Skill development and workshops should be organized more actively in the country for SMEs to make them more competitive in the market. We will play a key role in this area.”Edited excerpts:
Assocham is an important business chamber in India. What is its focus towards SMEs?
Assocham understands that Indian SMEs have enormous potential and the chamber has been supportive to the needs of SMEs -- by conducting various seminars; skill development programs; and workshops throughout the country in association with Ministry of MSME and respective departments of state governments.
Assocham has also been actively providing its inputs, suggestions and recommendations to the central and state governments to improve and strengthen the SME Sector. Our organization believes that SMEs lack skilled workforce and in technological up-gradation. Therefore, the prime focus of the chamber in future would be on organising skill development programs and workshops on technological infusion, with the support of various technology providers and government agencies.
What are the broad challenges for the SME segment?
Challenges open new doors of opportunities. With respect to SMEs, the challenges at the broad levels are limited access to institution finance; lack of awareness about current marketing trends; demand; inadequate infrastructure facilities; under-utilization of resources due to obsolete technology; and an unskilled and semi-skilled workforce. These challenges should be addressed effectively to enable SMEs to play a more significant role in the economic development of the country.
Also, at the macro level, slowdown in demand due to the economic downturn and sharp volatilities in the market are also acting as a roadblock for growth.
In the present scenario, especially with regards to tough economic conditions worldwide. What are the expectations from SMEs?
The current economic downturn is a big concern for the entire industry. Companies are facing harder times in terms of high costs of production and low profitability. However, this situation has brought significant opportunities for Indian SMEs. SMEs could provide high quality goods on cheaper and competitive prices to MNCs and big corporate houses. Basically it will be a win-win situation for both parties. The trade of the future will be determined by the availability of cheaper resources and the destination of final demand. It has been observed that large organizations in developed economies have already begun to question whether the challenges of outsourcing their production processes outweigh the benefits of producing locally. Indian SMEs must tap the opportunities by attracting greater attention from such organizations.
Manufacturing in India is struggling. What level of advocacy is required for this segment, especially for SMEs in the segment?
The challenges before the manufacturing sector in the country are high import duties; high incidence of direct taxes and low operating efficiency. Considering the scenario, SMEs should be helped in terms of providing tax rebates on manufactured goods, extending help in promoting products of small manufacturing houses, and preference in customs clearance to reduce the gestation period for SMEs becuase they operate with lower working capital. Government should consider establishing an agency which should coordinate with foreign buyers and also help in the marketing of SMEs’ products. Government should also prepare a framework for SMEs in the manufacturing sector to provide them the same facilities as being provided to the big players, to reduce the disparities in the sector.
What business prospects do you foresee for SMEs over the next 12 months?
Though the current economic scenario depicts a bleak picture for the future, the times ahead are full of opportunities for SMEs. Big organizations from developed countries have already moved to the developing economies to hire small production houses to reduce their production cost. This is the time when Indian SMEs could grab opportunities. Moreover, there is a huge potential for SMEs in emerging business trends like green projects, CSR activities, small retail chains, creating innovative services like ‘gifting anywhere’ and in the ICT sector. SMEs need to focus on these areas of business and explore the opportunities. The price of devices like tablets, netbooks, and smartphones are coming down and becoming accessible to the masses. Considering the overall business scenario, the future seems to be bright for small entrepreneurs provided they grab the right opportunity at the right time.