Rise of fintech will have far-reaching impact on the Indian SME sector, says Power2SME founder
Despite having one of the largest SME bases in the world, the potential of India’s MSME sector remains largely untapped. […]
Mastufa Ahmed August 21, 2018
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Despite having one of the largest SME bases in the world, the potential of India’s MSME sector remains largely untapped. While the sector’s average contribution to GDP numbers in developing and developed economies, like China, the US and the UK, is around 50 per cent, SMEs’ contribution to India’s GDP is less in comparison.The government of India has been active in its approach to implementing a plethora of initiatives to help MSMEs grow. However, there remain a few areas where government intervention will help to give a boost to the sector. These issues are of imminent importance to the health of the sector and include issues like easy access to credit at a nominal rate of interest, which can be addressed through initiatives like classifying loans given by NBFCs to various MSMEs as the priority sector lending (PSL), says R Narayan, founder of Power2SME, in an interaction with SME Futures.What’s the current landscape of SMEs in India and what is the way forward to drive the next level of growth?According to the annual report of 2017-18 released by the Ministry of MSME, the sector employs over 100 million people, contributing 28.77 per cent to the nation’s GDP, 40 per cent to exports and 45 per cent to industrial inputs. However, despite having one of the largest SME bases in the world, the sector’s potential is still largely untapped. Therefore, it is imperative that the SME sector in India gets a shot in its arm through the implementation of favourable policies and campaigns that would help in boosting the sector.For India, pushing the growth of the MSME sector would entail
- improving the financial inclusion of the MSMEs through initiatives on behalf of the government and policy implementation on issues like the waterfall mechanism and listing non-banking financial loans to the MSME sector under priority sector lending
- supporting next-gen entrepreneurs and innovation/indigenisation across the urban as well as the rural landscape
- broaden its product portfolio in construction, metals, polymers, chemicals and yarns
- consolidate and expand vendor relationships and access international markets to source material
- deepen engagement with SMEs pan-India by developing deeper routes for new products for SMEs