The focus has invariably been on the manufacturing space among SMEs since the government took it upon itself to increase its share in the economic pie. Since it announced its flagship programme Make in India to boost manufacturing in India, the sector has seen a renewed interest among stakeholders. That SMEs play a pivotal role in accelerating growth in manufacturing is widely accepted. Its importance in fuelling employment growth is little disputed.
Yet, within SMEs, services is brimming at least as far as credit off-take from banks is concerned. The sector has gained momentum and is proving to be a great value for investors. The Bank credit growth to the services sector has risen pointing to its robustness. There has been an overall shift in bank credit moving towards SMEs even as banks grapple with existing NPAs largely owing to stalled projects in the core sector. In the recently held Banking Conclave, top bankers have shown interest in retail and SMEs.
Within SMEs, services like travel, hospitality and food sectors are showing growth potential. As economic growth continues to remain robust, higher disposable incomes will create more opportunities in these areas. A recent report by National Restaurant Association of India has pointed to the huge growth potential in restaurant chains, which includes cafes and quick service restaurants. It is expected, according to the report, that the market for such outlets will grow to Rs. 51,000 cr. by 2021.
The current fiscal looks promising for the SME sector as far as credit growth from banks is concerned. Both public as well as private sector banks are betting big on SMEs. Services like travel, healthcare and hospitality have steadily seen a rise in their revenue. Topline growth for Crisil-rated SMEs was 20 per cent in the services segment and 13 per cent in the manufacturing segment compared to just 2-3 per cent for mid and large corporates, according to a report in a national business daily.
The SMEs will continue to be the growth engine of our economy and mainstay of employment generation. Within that services are offering exciting vistas of growth and vitality. Cheers to the SME story!
