Talking to SupportBiz, D.S.Verma, executive director, IIA, shares an overview about the challenges that this segment is facing. Edited excerpts:
What are the key challenges that SMEs are facing in today’s business?
Even though SMEs have been recognized as one of the most important enablers for Indian economy, the segment feels neglected.
There is a long list of challenges that SMEs are facing. Although policies are drafted in favour of SMEs but the ground realities are different from what is in writing. For example, the proper implementation of policies is the missing leg in the game. Micro and small enterprise facilitation councils have been set up by the government at the local level. But the ground reality tells us a different story from the SMEperspective.
Finance management is big challenge for SMEs in India. Those SMEs who opt to close down their operations often complain that their financial cycle is the main cause for their closure. Although there is a law, which clearly defines the timelines for payment cycle in the case of SMEs, the same is broadly ignored.
Manpower management is a big hurdle for entrepreneurs. How is it impacting the operations side of business?
The other major challenge that MSMEs are facing is with regards to the Llabour laws. The labour laws of our country do not differentiate between a large company and a micro/small company. This is a great pain point as there is a huge difference between a MSME and a large organization. The labour laws must be changed or redesigned for SMEs.
The complexity of these labour laws requires a proper knowledge and systematic approach towards this subject. In case of a large company, this is a not a big problem as they have a team to manage all this, but in case of MSMEs, this becomes a major challenge for the entrepreneur himself as he is the sole person running the whole show in his organization.
MSMEs majorly contribute to India’s exports. What is the situation in this area?
Apart from taxation complexity, policy framework and marketing, I have noticed a different infrastructure related challenge faced by the export units. Usually, the export manufacturing units are situated in industrial areas. It becomes a challenge for the entrepreneur, if his client or buyer shows interest to visit their facility. The lack of basic infrastructure is a major hurdle for businesses. It has been 15 years or so, the manufacturing segment is struggling. It is high time the government nurtures expertise and competencies in the manufacturing segment. This requires attention from policy makers and government stakeholders. According to my own observation, the most dangerous market trend indicates that manufacturers are becoming traders in the business. This conversion is happening due to the hassles that they face in their business.