They are small, fragmented and unheralded. The majority are first-generation enterprises. Yet, over the years, small and medium enterprises, or SMEs, have emerged as the backbone of most economies. In India, too, SMEs provide the economy both mass and muscle - they account for 40 per cent exports and around 45 per cent manufacturing output, according to the Ministry of Micro, Small and Medium Enterprises. That's not all. The 51 million SMEs employ over 117 million people - 14 per cent of India's working age population. That's why we at Business Today have been honouring the best of the lot for the past seven years. The Seventh Business Today survey of SMEs covered companies with a turnover of Rs1-500 crore. They were divided into three categories based on revenues: Rs1-100 crore; Rs101-250 crore; and Rs251-500 crore. The groups included both listed and unlisted companies in manufacturing and services. As reports over the next few pages show, despite challenges, the entrepreneurs behind India's SMEs are examples of grit and passion.
While that may be true, many SMEs were hit badly when the government demonetised currency notes of Rs500 and Rs1,000. Yet, as our stories show, SMEs such as Manpasand Beverages gained because the products they sold were much cheaper than those offered by the bigger players and they operated in regions where most transactions started and ended with the Rs100 note. Satin Creditcare Network, which took baby steps in the initial years, is now emerging as a strong non-banking financial company. Tirth Agro Technology has used its R&D strength to challenge established global agricultural harvester companies. Even among SMEs, just like the big businesses, there is a focus on the service industry.
The government, too, is well aware of the role played by SMEs in the economy. The really small ones got a shot in the arm in this years Budget when Finance Minister Arun Jaitley reduced the corporate tax rate for those with revenues of less than Rs50 crore from 30 per cent to 25 per cent. The government has also come up with various schemes for SMEs that cover technology upgrade, credit support, marketing and skill development. The coverage of loans under the Credit Guarantee Fund Scheme for Micro and Small Enterprises has been doubled to Rs2 crore; the fund has been enhanced to Rs7,500 crore.
Though funding is critical, the SME of the future has to look at global markets. That's where the problem lies now. Not many Indian SMEs have adopted the digital route. According to a recent study - Impact of Internet and Digitisation on SMBs in India - by KPMG and Google, adoption of digital among Indian SMEs is extremely low. Close to 68 per cent are totally offline and only 2 per cent are digitally engaged. The other 30 per cent do not actively sell or promote their business online. To ensure digitisation, the MSME ministry has developed a My MSME mobile app that provides all information an SME would want from the government. That should provide the first step for companies to integrate with the global market. This is important if SMEs of today have to graduate to becoming large companies. For now, over to this year's winners.
Copyright©2022 Living Media India Limited. For reprint rights: Syndications Today