With the R-word hitting the global economy the hardest after the great depression of the 30s, the MSMEs in India might have reasons to worry.
“It is true that there is a lot of anxiety and nervousness that the SMEs are facing right now. The banking sector, and the government in particular, needs to step in to prevent the small-scale industries (SSIs)from being wiped out,” confirmed Neeraj Roy, MD & CEO, Hungama Digital Media Entertainment Pvt. Ltd.
The industries that are in a grave state are those dependent on external markets. “There are many SMEs that supply raw and processed materials to larger enterprises. Many small players exporting to clients abroad are facing deferred payments and order cuts. They are in a dire state,” pointed out Ashwini Kakkar, Executive Vice-Chairman, Mercury Travels Ltd.
His views were affirmed by Vikram Sakhuja, CEO, Group M South Asia, “The export sector is the worst hit and at this stage, it is essential to boost confidence by making credit easily available.”
However, according to a latest study by the Associated Chamber of Commerce and Industry (ASSOCHAM), SME’s contribution to the nation’s GDP is expected to touch 22% by 2012.
Roy added, “The upside to the SME story is that this sector is not too leveraged by external factors and with help from the government, there can be very high positive growth.”
It is also important to realise that demand for basic products will never freeze and new demand for other sectors can be initiated with product innovation. “There are individual cases of small enterprises doing very well in healthcare, telecom, hardware and value added segments. The recession is indeed a good time to reevaluate your business models and strengthen brands,” clarified Kakkar.
According to experts, the downturn will result in many enterprises to cut down on expenses, reduce manpower and even lower quality. However, this is the best time to win consumer confidence by being real to consumers.
Roy pointed out, “Companies, even competitors must come together to guarantee sector growth. Related or even unrelated brands can work together to maximise consumer satisfaction.” Sakhuja added, “Market sentiments should be revised to make sure that consumption does not stop.”
SSIs in India have the dual role of generating employment and maintaining production level. This makes it even more important for financial institutes to continue funding these ventures. “Though the small enterprises have the flexibility to adapt to situations faster than larger companies, they are sometimes agile and need credit backing,” asserted Roy.
For more detail on
B2B log on to http://www.bizxchange.in
David Parks is a well known author and has written articles on
B2b Marketplaces ,and
International B2B Trade Leads, suppliers, Manufactures and many other subjects.
