"Govt. Aims to Make India a Manufacturing Hub, by Creating 100 Million Jobs by 2022." Even though SMEs are the backbone of the Indian economy, still the sector lags behind globally, in comparison to other nations.

By R Naryanan

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The Indian economy is expected to emerge as one of the leading economies in the world and is likely to become a USD 5 trillion economy by 2025. The SME sector therefore, is crucial to the Indian economic diaspora.


Even though SMEs are the backbone of the Indian economy, still the sector lags behind globally, in comparison to other nations. For instance, Indian SME sector falls behind China, where they contribute 60 per cent to industrial output creating 80 per cent jobs. Acknowledging this gap, the government of India, in recent times has taken drastic measures to improve the business environment for the SME sector. Some of the schemes have been helpful and are propelling the sector forward. For instance:

>>Pradhan Mantri MUDRA Yojana

It was launched to benefit the bottom of the pyramid entrepreneurs with loan amounts.

>>Goods and Services Taxes aims to plug

In loopholes such as "Indirect Taxation' replacing it with one-step tax system, thereby mitigating the issue of multiple pricing pan-India. Along with providing a great relief from current cascading tax system, GST will also provide level playing field for SMEs.

>>Make-In-India, a flagship initiative of the Indian government

The campaign aims to make India an attractive manufacturing hub, thereby creating 100 million jobs by 2022. >>Digital India- This campaign ensures large amounts of investments and FDIs, Efficient Manufacturing Plants and promoting the spirit of entrepreneurship across India. It guarantees a well-equipped IT infrastructure and smooth technological operations in the country for the manufacturers.


Digital transformation of SMEs – With penetration of internet and smartphones, digital transformation will no longer be a fancy word for the SME sector. As per an EY report, companies have increased focus on mobility as compared to social, resulting in a change of priority from S-M-A-C to M-A-C-S.

>>Rise of B2B ecommerce

Given the age of IT, with innovative technological platforms shaping the way we do business, it is not shocking then that large number of small and medium enterprises, and a few big ones are picking online platforms. This is useful as it boosts the sector's prospects by making the process of transactions smoother, especially more so in case of unorganized markets.

>>Modern Fin

Tech firms to improve SME lending with niche SME service Avant-garde financial institutes, with their online presence are making it easier for the asset light SMEs and entrepreneurs to receive loans. These NBFCs analyse the credit worthiness of the sellers using analytics and other scanning metrics like their sales and fulfilment records and can disburse loans in less than 48 hours.

>>Improved participation of SMEs towards Indian economy

With positive interventions being taken by the government such as the "Make in India' and "Digital India' campaigns- the Indian SMEs now have a sturdy infrastructure to carry out the business activities. These policy initiatives help the SMEs perform better thereby increasing the total national revenue generated.


Overall 2017 will see a progressive trajectory for the Indian SME sector, where technology will play an important role. Another positive is the multiple policy interventions in the sector as they help increase the sales footprint and reduces tariff pressure on the enterprises. Further, the rapidly expanding Indian economy will boost the sector.

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