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MSMEs - still languishing in the backwaters
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Bikky Khosla | 29 Jun, 2010
While we are all discussing the external factors that have added to the woes of the MSME sector, we tend to forget that despite its contribution to the economy, the sector does not get the required support from the concerned government departments, banking sector, and financial institutions, proving to be a handicap in its effort to becoming more competitive in the domestic and global markets. These issues which we usually tend to sweep under the carpet now need to be taken up for immediate and proper redressal.
The sector's main challenges are that of lack of funds in acquiring technological know-how, research and development (R&D) and global exposure apart from poor financial situations, poor adaptability to changing trade trends, desire to avoid risk, non-availability of technically trained human resources, emphasis on production and not on production costs, lack of management skills, and isolation from technology hubs and more.
I think the government should take into account these areas while providing grants to the sector. We need to formulate appropriate national policies and programmes to enhance technological capacity, provide knowledge flows and technology databases and find ways for inter-firm linkages.
The poor financial situation and having to pay high rates of interest on the funds that they borrow and also difficulties in providing stringent collateral security as per the requirements of the financing banks, are the main hurdles faced by MSMEs. I think the government can think of more flexibility.
Low levels of R&D and limited access to technology, product innovations and consultancy services are hampering the growth of SMEs. The technological know-how to SMEs is not enough. Moreover, information gathering, knowledge acquisition and competence consolidation and development are areas where the SMEs are still in the backwaters. I believe the government should provide grants in these areas.
Participation in fairs - both domestic and international - is of utmost importance for the MSMEs. It is a great platform to meet prospective buyers/ sellers. It also gives the opportunity to know what the competitors are doing. However in several cases, the MSME holders are unable to attend these fairs owing to financial crunch. Despite the fact that there are several grants provided by the government, they are not enough. We need to give them more grants to facilitate their participation in not only domestic but also international fairs. This will give them the exposure they need.
Information dissemination is a crucial area where the MSMEs are lagging behind and with lack of information on new markets and practices, they are unable to forge ahead. Grants to them to conduct indigenous research would help. Due to lack of research, they are also finding the existing markets saturated. Govt-sponsored skill development training programmes or grants for sending them abroad to acquire the required knowledge is a must. They need to explore new markets and this is not possible without the help of the government.
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Pls. go to your Historical Facts also.
Mathew K. Mathai | Wed Jun 30 05:02:01 2010
In the past also we can see too many stories of failure of honesty in our societies. This applies to Indian Industry also. Our Society is not keeping ethics and moral values at esteem.
Those Industries, I mean indeginous Industrial Empires, who had birth and primitive growth from the Indian soil was also not spared. Present Big Gtoups like, Kirloskars and Tatas had their growth from humble situations and their own generation of Funds.
I meant to say that, people depending on Govt. Assistance, whether it is Corporate or personal level, never sustained during adverse natural situations too.
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Re: Pls. go to your Historical Facts also.
anand305@gmail.com | Thu Jul 1 06:53:22 2010
Off course a personal must have ethical and moral values in business but governement also must push towards development of SMEs as it can strenghthen Indian Economy within short period. It is for the benefit of whole society, Government and finally all of us. We are in totally wrong concept that first we need to have finance and then start business. So many people have great ideas, research but they can't implement due to lack of funds. If Government through RBI and other bankers help to manage financially, India can be developed country within 5 years of time period.
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MSMEs and the difficulties
RUPANAGUDI RAVI SHANKAR | Wed Jun 30 00:41:24 2010
it is really sad that neither the govt nor the RBI is really focusing on the issues faced by the MSMEs. committees after committees are formed but nothing happens.
the RBI rules which are applicable for large scale units are also applied to micro and small scale units. especially the NPA guidelines which are quite harsh for the survival of the small scale sector in this country. govt and rbi is going with the premise that what is good for goose is good for gander. meaning if large scale units are made to fall into a specific rule of NPA guidelines, even small scale units will also have to fall in the same line. large scale units have structured functioning whereas small scale units cannot and do not have such luxury.
bankers keep threatening with dire consequences on not meeting the EMIs and clearance of monthly interest. they really are acting like the proverbial Shylocks who really do not care for the betterment of small scale units. each manager is focused on his /her career growth and wants a clean progress card to get the promotion. the performance of the bank officials can be delinked from the performance or nonperformance of MSME sector. working capital cycles are severely effected due to the high handed behavior of the bank managers. RBI and min.of fin and commerce should address this aspect IMMEDIATELY especially at the slow down and recessionary impact is not yet over for MSME sector yet. NPA NORMS SHOULD BE DIFFERENT FOR MSME SECTOR. PLEASE LOOK INTO IT.
Buying Sector
J.P. Barbwire | Tue Jun 29 18:01:37 2010
1. In my lowly opinion India does not study/research the markets in America, those expanding, those retracting, those steady, to enable them to make informed decisions about entering a particular market in America. And the "thinking" is based on what you think it should be, not on the buying patterns within specific markets. Need vs want marketing.
2. it's too hard to get capital from India to take advantage of the American market. Therefore, you limit yourself to your wants and needs, and capital spreads.
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