SME City

Common Business Hurdles Indian SMEs Face

By SiliconIndia     
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Bangalore: Small and Medium Enterprises in developing countries such as India face a number of hurdles when trying to achieve the growth they want to. But Indian SMEs, being a hardy lot, have faced problems such as lack of proper infrastructure and inadequate working capital, lack of marketing facilities, and stiff government policies, only to grow at an unprecedented rate.
However, their challenges are tangible, and are not to be brushed aside. Obstacles specific to particular domains are completely different from common problems of SMEs, and the recent global economic meltdown only adds to these setbacks.
Spanning across the manufacturing, IT, educational and financial sectors, here are some of the common business challenges faced by SMEs in the country.
Although SMEs are predicted (according to a report from the ASSOCHAM) to contribute to 22 percent o the Indian GDP by 2012, one of the biggest challenges faced by the sector includes the lack of required financial support from banks and government departments, which included unavailability of credit facilities, high interest rates, and availing project as well as working capital finance. These difficulties put SMEs at a disadvantage especially since they prevent the enterprises from gaining a foothold in the face of international competition.
More than 50 percent of Indian SMBs said they felt that the Indian govt. didn't provide sufficient support in terms of tax subsidies, labor laws, and other such areas. Other challenges include absence of skilled manpower to recognize business opportunities at the right time, improper implementation of labor laws, timely alerts about market information are crucial to key decision making, but that too is a problem-area faced by enterprises in this sector.
SMEs want and need to improve efficiency and productivity, but when business is down, a hurdle that is faced by most SMEs is that of keeping expenditure under control.
These businesses also see a challenge in using technology that is obsolete. What is interesting is that about 60 percent of SMEs in India use up-to-date equipment and 50 percent think that IT could solve the problems faced by their businesses.
Finding new markets and customers for their products remained as a major concern for SMEs in India, but one of the most critical challenges faced by this sector includes that of efficient planning and execution of projects, which could be solved by the adaptation of technology.


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Reader's comments(1)
1: I'm new to SMEs, but I think this piece sums up the hurdles faces by SMEs very well. But there might be a few more that I don't know of.
Posted by:Rahul - 20 Mar, 2012
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