SMEs - help yourself to succeed

It seems nothing has changed for the Small and Medium Enterprises (SMEs). Surveys, studies came and went, but SMEs are still languishing in the alleys of darkness. Indian SMEs have opportunities for higher growth and exports, through linking with global supply chains. However these opportunities require structured policies, sustained learning, innovation and competence building by the locally-owned SMEs. Despite successive government's initiatives, it is a fact all will agree with that a large portion of SMEs remain untouched by these initiatives and schemes.

With fierce competition - both domestic and global - the only way ahead for SMEs is to innovate. As such, innovation is the necessary core competence to remain competitive in the new landscape.

Meanwhile finance -- which is the lifeline of an SME -- is still a distant Utopian dream. SMEs have limited access to finances and a majority of them run on the promoter's investment which severely limits the growth of these enterprises. To provide better access to finance in form of loans at the grass-root level, it is important to give a boost to the financing innovations like micro credit and factoring solutions. While institutions like NABARD and SIDBI were specifically created to provide loans to SMEs, somewhere down the line the plight of the small enterprises is still pronounced and evident.

On the other hand, the level of adoption of IT is still low due to lack of understanding of the benefits of IT as well as lack of investment.

Even those SMEs which have invested in Information and Communications Technology (ICT) view it as an enabler. Above that, SMEs have the financial constraints in going global and ability to invest in ICT. Many of the SMEs are not able to appreciate the value in ICT investments due to limited exposure to ICT.

SMEs have to adher to industry best practices and harness the power of the internet. The future of SMEs will depend on overcoming the challenges encountered in a liberalized world and by enhancing their competitiveness in an increasingly global economy.

Monthly Economic & Commercial Report on Algeria for February 2008 giving latest updates on developments directly affecting India's foreign trade and investment. Read More...