SME Development Is Key to India's Economic Growth - Arun Kapoor, Founder - GadgetsGuru & Ok Sir
Mumbai, India, March 18, 2016 (Newswire.com) - The Small and Medium sized enterprises (SME) play a central role for driving India’s economic growth and development at the regional, national and global platforms. The MSE sector in India has demonstrated remarkable resilience in the last few years to sustain an annual growth rate of over 10% even in the face of the global and domestic economic slowdown.
The sector plays a pivotal role in employment generation, low capital requirements, usage of technology, industrial development across rural regions, use of traditional and inherited skills and mobilization of local resources. As more than 65% of population reside in rural and semi rural areas, small business are a major source of income for local residents and after agriculture, small business in India is the second largest employer of human resources generating over 100 million jobs across the 46 million units in India employing nearly 40 percent of India's workforce and contributing 45 percent to country's manufacturing output.
The Make in India is a nation transforming initiative and this initiative has helped to boost the business confidence in India. With timely policy intervention and support, India is now ready for a larger share of global business. The Make in India initiative has the potential to transform the country into a major manufacturing hub has already attracted investment commitments to the tune of INR 15.2 trillion and had received investment enquiries of about INR 1.5 lakh crore in its first year.
Even at the state levels, the Make in India initiative is taking roots with the example of Maharashtra government asking SME’s to set up plants in the state and the state government will provide land at half of the market price in various industrial clusters. Under this initiative, the SMEs are free to apply for two-acre land anywhere falling under MIDC areas across the state for setting up a plant and the Maharashtra government will provide 50 per cent subsidy on those plots of land.
Recognizing the potential of the SME sector, the Fiscal Budget this year had a series of policy initiatives and schemes that were aimed to boost the start-ups and MSME sector. The budget took into consideration various measures for improving the ease of doing business, simplifying of the tax structure, manufacturing competitiveness, conducive policy regime for Industrial Parks, power and land availability, infrastructure development, labor laws reforms, good governance and focusing on massive skill development programmes like Skill India Mission and macro-economic stability.
The two important initiatives - Pradhan Mantri Kaushal Vikas Yojna aiming at setting up over 1500 skill training institutes across India for training over 1 crore youths in the next 3 years and the Pradhan Mantri Mudra Yojna that focuses on self-employed people that help in providing jobs to nearly 12 crore people are laudable and will have a huge positive impact on the SME sector in the coming years. Similarly, the provision to enable registration of a company in one day for start-ups is a very important initiative to boost aspiring entrepreneurs.
The Prime Ministers Start up India initiative announced few months earlier is also an encouraging step for budding entrepreneurs that eases out the start up process from one point online registration, funding provision (a corpus of INR 10,000 crore has been announced), patent & legal support, credit guarantee to tax exemptions. It is a clear indication that the present government is looking at creating a conducive environment for start-ups and help create millions of job opportunities across sectors.
E commerce has now become the new driving force of growth for small and medium enterprises (SME) in India and has been a major contributor to new job opportunities and to the GDP. As per available data, the e-commerce sector in India is projected to cross $80 billion by 2020 and will account for 2.5 percent of India’s GDP by 2030.
As per an earlier study, nearly 60 percent of the SME’s in India fall within the unorganised sector. With the recent policy and support initiatives announced by the government through initiatives like Make in India and in the fiscal budget for start-ups and SME’s, the sector is now poised to grow at a stronger pace and is expected to contribute around 22 percent to GDP in the next 3 years.
With important initiative like Make in India, easing of the policy framework, overall focus to strengthen the SME sector and investment commitment to the tune of trillion rupees, India is soon poised to become the major manufacturing hub for the world. The setting up of manufacturing hubs will boost employment, improve social and technology infrastructure across states in the country and will create new pathways for start-ups to provide services on a national platform.