Small and Medium Enterprises (SME) sector is thekey driver of any economy but are facing many problems in globalized market.Hurdles faced by Indian SMEs are even more serious.
An audit of SME bottlenecks
Small and Medium Enterprises (SME) sector is thekey driver of the Indian economic growth with a input of over 40 per cent tothe country's industrial output and around 35 per cent to direct exports. Itaccounts for over 90 per cent of the industrial units in the country. In termsof employment, this sector plays a very crucial role, being the second largestemployer after agriculture.
Despite their economic significance, SMEs face anumber of bottlenecks that prevent them from achieving their full potential.Major obstacles for business development for SMEs relate to a wide range ofissues:
Low Utilization of Installed Capacity
Industrial success depends upon a maximumutilisation of installed capacity.
Poor Awareness About Intellectual PropertyRights (IPR)
IPR protection plays a key role in gainingcompetitive advantage in terms of technological gains for achieving highereconomic growth in a market driven economy. The Indian MSME sector needs moreinformation, orientation and facilities for protecting their intellectualpowers.
Problem of Specialised Training
In a present global scenario there is an urgentneed for creating skilled human resources so as to build capacity and developthe SME's sector that is compatible with commercialization requirements. Toachieve this objective there is need to conduct training programmes forenhancement of knowledge and capacity building of SMEs sector in all fields ofIntellectual Property.
Problem of Skilled Management
In a market with low entrance barriers, trainedapprentices usually leave the enterprise to start their own. Managementconstraints include inter alias the lack of skills in basic businessmanagement, accounting, book keeping and the lack of accessible consulting andsupport services.
Access to Credit Facilities
The non-availability of institutional finance onaffordable and easy terms is hindering access to new technologies. In India the situation is further complicated by the fact that the preferred mode of financeis either self or other sources.
Less Innovative Actions In SMEs
Innovation is the means by which theentrepreneur either creates new wealth producing resources or endows existingresources with enhanced potential for creating wealth. There is need of Productinnovation, Process innovation and Organizational innovation.
Lack of Proper Market Information
Information about market is the core factor ofany business activity. Even it is an essential part of marketing strategy. But,according to the survey of ministry of small scale industries, nearlytwo-thirds of small businesses consider the lack of market information to be avery severe constraint.
Research and Development (R&D)
Another hurdle faced by the SMEs is low levels of research and development (R&D). R&D is most important requirement of the industrial and service units in the era of globalized market. SMEs are still falling down on R&D due to weak links between business and academic research.
Small and Medium enterprises are facing many problems in globalized market. But hurdles faced by Indian SMEs are even more serious. While government are taking many initiatives to help entrepreneurs at a macro level, SMEs should themselves should understand the global change and try to change self for survival & growth in the changing world.
About the Author:
Author is an SME Expert from India. He is the Director- Expanza Access Limited .Being a technocrat and businessman, he empathises with the limitations and problems faced by small to medium scale enterprises. He has taken the leadership to spread the professional approach in SME organisations and supporting them to use their entrepreneurship skills to the fullest. He writes and speaks with his own experience and convictions
Source: www.articlealley.com
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