Size brings scale and scale generally brings growth and profitability. This economic maxim is not only time tested and trusted but universally lauded.
There, however, are other well bred but grossly ignored truths that define the handsome strides made by the Indian economy in recent decades.
The twin drivers of economy in India are the unsung heroes of the Small and Medium Enterprises (SME) who have proved to be rock solid pillars even in times of sheer adversity.
The spirit of entrepreneurship manifest in ever growing start-up culture has served as the perfect foil to the SME engine to push growth.
That the contribution of the SMEs is largely glossed over is an understatement. The India growth story has come about not just because of a few men dominating share of voice but by tirelessly working innumerable boys and girls in the business. Here boys are no less if not more than men.
The big picture is well articulated where contribution of the SME is beyond doubt. There is strong positive evidence sans celebration. At eight per cent plus contribution to India’s GDP and 40 per cent share of exports, SMEs matter no less.
At the micro level, the contribution is evidenced on a day-to-day basis. Consider the latest industry output figures: the credit for sharp 9.8 per cent factory output growth in October 2015 goes to small and medium enterprises.
According to Central Statistics Organization (CSO), segment-wise, growth was witnessed in gems and jewellery (372.5 percent), sugar machinery (103.4 percent), telephone instruments (61.5 percent), PVC pipes and tubes (48.5 percent), steel structures (35.5 percent), colour TV sets (34.5 percent), rubber insulated cable (31.3 percent), scooter and mopeds (24.5 percent) and passenger cars (21.4 percent).
A CRISL Research study rightly argues that “it has been wonderful of late to see the sector driving innovation and process/product development in this age of e-commerce. Yet, MSEs tend to be overlooked by institutional finance, for reasons such as information asymmetry, lack of awareness and adequate financial infrastructure.”
Access to capital yet remains the biggest hurdle to the growth of the SME sector. The estimated total medium term requirement for the SME sector is billed at about Rs 45 trillion, including Rs 5.15 trillion in the near-term.
The irony of the SME sector is that the ever mounting non-performing assets of big corporate curtail at times credit due to it. But the never say die spirit of small entrepreneurs alongside agriculture ensures that India’s about 80 million workforce gets sustained employment.
Small is big. Let us help make it bigger!