Indian SMEs: Exciting Times Ahead
There is a lot that is currently happening on India’s SME landscape. With 95% of establishments and 80% of employment in manufacturing sector alone, and an economy that is slated to touch $5 bullion by 2015, it was about time that the SMEs took the centrestage in the policy imperatives. Beginning with the change in legal definition of what is a SME, encouraging announcements in the Union Budget, implementation of GST and demonetization, the SME sector has been impacted by many of the macro-economic steps that the government has initiated.
Unlike the story in many countries, the Indian SMEs have had it tough in last few decades. From eighties, when the first steps in opening the economy up, to the advent of GST last year, the small entrepreneur in India was not the first beneficiary of a majority of policy steps. The interim political instability till few years ago, lack of clarity among policy makers, infrastructural challenges, absence of dependable sources of growth funding, corruption, urban-rural divide, skilled labour, etc. have been the reasons for their lower than expected performance. There have been several other challenges. The will to succeed among the entrepreneurs has been the primary cause for their success. The spirit of enterprise in India deserves a bow!
No doubt that many of the pains will continue to remain, my guess is that the worst is behind for India’s small enterprises. The political stability (I am told that we are into the fourth year of ten-year phase of political stability), enhanced access to growth funding, Banks’ support on working capital, increasing access to innovation & latest technology, government programs like Make in India, Skill India, Digital India, Startup India, Standup India, Jan Dhan and other macro-economic tailwinds augur well for over 50 million small and medium enterprises of India.
The immediate suggestions to SMEs are nothing beyond conventional wisdom. Think aggressive, stay lean, stay hungry, stay future-ready, stay invested in technology and nurture talent. But the God would be in the execution. The two critical elements in execution would be timely access to capital and an ability to think beyond three years while designing a product, a marketing strategy, HR strategy, etc.
With five successful years of SME exchanges and over 330 IPO listings, it is expected that thousands of companies would tap the equity route to fund their growth in next few years. The SME IPOs are expected to overshadow their bigger counterparts due to their sheer numbers. It is the change in mindset that is about to happen among smaller enterprises about their strategies to grow. Expectedly, the first off the block are younger first-generation entrepreneurs or those where the baton will be handed over to a younger generation with a infusion of fresh and modern thinking. It is also observed that the younger generation of entrepreneurs has been quicker in understanding the relevance of unlocking the enterprises’ value. Ultimately, the growth tsunami will engulf SMEs of every hue and shade. Exciting times indeed!