How Is SME Sector Growing in India: An Analysis

Small and Medium Enterprises (SMEs) are rightly tagged as the engine of the modern Indian economy. As per the experts, the small and medium enterprises in India must be encouraged to achieve the stable Gross Domestic Project growth trajectory.

The SME sector in India is definitely growing at an exceptional rate. Still, there are some important things that need to be focused upon so that best out of these enterprises can be obtained. Here is a brief analysis of the Indian SME sector.

Some Figures of Interest

• The Indian SME market is worth $5 billion.
• There are over 11 million SME units in India that produce more than 8,000 products.
• Nearly 90 percent of the Indian industrial units belong to the sector of small and medium enterprises.
• The SMEs contribute 40 percent to the overall industrial output of the country.
• These enterprises contribute almost 35 percent to the Indian industrial export.
• Finally, these enterprises are estimated to grow at the rate of 20 percent per year for upcoming years.

Main Reasons for SME Growth

• Foreign and local fund providers are taking huge interest in the small and medium enterprises of India.
• Banking sector has also shown a keen interest in lending credit to these enterprises.
• Many recent mergers have taken place in the sector.
• The sector has significantly contributed towards the domestic production as well as the export earnings.
• Low investment is required to start and maintain these enterprises.
• The sector has contributed impressively towards job creation and increase in individual incomes.
• Technological growth is also a factor for growth of SME's in india as there are several trade portals and business directories available online with huge database of buyers, sellers, manufacturers who are basically back bone of SME's.

Challenges Ahead
Even after recording an impressive growth in the recent years, the small and medium enterprises of India face many challenges:

• Infrastructure needs to be developed for setting up the SMEs in the rural sector of the country. Transportation, electricity and communication are the main parts of the infrastructure required.
• Technology need to be evolved so that quality products are manufactured by the sector.
• Lack of information about the inputs, including raw material, machinery and skills, is one critical challenge in front of the owners of these enterprises.
• High level of research and development is required.

It has been confirmed that the small and medium enterprises sector has the potential to drive the Indian economy. Some sincere attempts by government, finance providers and enterprise owners are required.