Significance of SMEs

What is the issue?

Export growth is necessary for sustaining high growth and to create jobs in labour-intensive activities of the Small and Medium Enterprises (SMEs).

What is the importance of SMEs?

What are the issues with Indian SMEs?

Limited Access - Indian SMEs lag behind due to limited access of information and technology.
Workforce of Indian SMEs lacks the necessary skills to operate in a high-tech GVC environment.
Quality Standards - Due to their inability to meet international product quality standards, demanded by an increasingly sophisticated international buyer, they have difficulty to be part of the GVC.
Location - Unlike the large enterprises, several SMEs operate outside the main cities and suffer from lack of business environment and access to trade services.
Representation - SMEs are also poorly represented in apex chambers of commerce and industry in India, which are dominated by large enterprises, who receive preferential access to trade services.
Private sector - There is lack of private sector participation in the supply of trade services.

What needs to be done?

Institutional reforms in trade policy are urgently required to make SMEs effective in promoting exports directly.
The Ministry of MSME have no role in export promotion. This should be altered.
An enlarged Department of Industrial Policy and Promotion could replace the Ministries of Commerce and Industry, Heavy Industry, and MSME, and promote development of industry, especially SMEs.
Enterprises need to periodically train their workers in new design and packaging that satisfy fast-changing consumer trends.

Source: Business Standard