SME City

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SMEs: Its Survival of the Fittest
Shailendra Phule
Shailendra Phule
Chief Executive Officer,MindGrid Technologies
Shailendra's, 27 years of career spanned from Systems Engineer at R&D Center, Project leader ... more>>
It’s official ! Globalization is DEAD,and the aftermath is just starting to take effect.
The last 2 decades of outsourcing from the developed world (which also happens to be the biggest consumer) due to globalization has culminated into zombification of the economies in the developed world..
All the real wealth creation and value addition jobs have migrated to the cheaper labor force in the third world… rendering the working class in the developed countries unfit for any real jobs.

So the natural reaction from the governments and the public sectors in the developed economies is to turn towards protectionist policies for political survival and avoiding civil unrest resulting into food riots and collapse of the economic and federal structures.
And how does this augur for the vulnerable SME segment in developing countries like ours?  One word…. TOUGH !!!

I am not stating anything new or largely unknown… just putting a better perspective on things troubling us in the SME arena:
1.The order books are not toting up new sales in any significant numbers as customers wait and watch for signs of recovery and governmental support..
2.The current clients are wary of putting new and additional budgets on line for future growth in their businesses and the ripple effect on additional business from the clients is almost absent.
3.Margins  and profitability are under tremendous pressure as human and other resource costs in the super hot Indian economy escalate significantly…
4.Even SME segment companies are making plans for expansion in other countries like Philippines and  CIS countries.  This flight of investments and jobs would hurt the Indian economy badly.

In spite of being the backbone of the Indian economy’s vibrant  sector and important contributor to wealth and value creation, the SME segment suffers from neglect by lobbyist organisations (CII, FICCI, various chambers of commerce etc.) as well as the government.  
 And what shall the Indian government should do to protect the SME export segment during the 2012-2015 period?
a. Offer a tax holiday for 3 years
b. Offer guaranteed business opportunities in the government and public sector and
c. Turnover subsidy (15% support pricing for reported turnover) for the SME organisations to operate and offer their services in the domestic and export marketplace
If our populace and workforce benefits from government subsidies and guarantees such as NREGA etc., our  SME segment deserves similar if not better..

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