SME Expansion Faces Bottlenecks due to Lack  of Capital and IT

SMEs are the growth engine for economy of any nation across the world.  Indian SMEs contribute 8 per cent GDP, 45 per cent manufactured output, 40 per cent exports, and manufactures over 6000 products. In-spite of this heavy contribution to the Indian economy, SMEs face a bag of numerous hurdles. “Entrepreneurs in Indian SMB/SME segment have faced challenges accessing initial capital, inability to plan the business, failure to market their business and understanding of business laws that is required to run and grow a business,” says Swati Gupta.  The sector does not get the required support from the concerned Government Departments, Banks, Financial Institutions and Corporate, which is a handicap in becoming more competitive in the National and International Markets.

Role of IT and Challenges in SMBs

While implementing IT, SMBs face two important challenges: initial investment required to set up the IT infrastructure and lack of skilled resource required to keep the IT infrastructure updated. “We are a technology driven company and almost all of our clients and vendors that we deal with use IT in some shape or form, hence it is an integral part of doing business today in the sector that we operate in,” says Gupta. IT is what connects SMBs with the clients or buyers, it helps them pre-empt their needs and deliver exactly what they are looking for and in time. The B2B e-commerce sector is growing at an exponential rate and IT will definitely play an important role to keep the momentum going.

Swati Gupta CEO, Industrybuying.com

“Entrepreneurs in Indian SMB/SME segment have faced challenges accessing initial capital, inability to plan the business, failure to market their business and understanding of business laws that is required to run and grow a business.”

“Technology is an enabler for any SMBs and we being in e-commerce space the foundations of the company are laid on usage of IT across departments. IT is key for us and for every SMEs, both short and long term,” added Gupta.

Role of Ministry of MSME in Helping SMBs

The governing body, SME chamber of India, has various initiatives in place to promote and support SMEs in the country. They have set up technology development council, start-up council, Indian knowledge forum, Industrial and SME Research Centre if India and Employment exchange for Indian SMEs to provide much needed assistance for SME and Start-ups.

Current Govt. has been very active to promote this sector by bringing in initiatives like Make In India, Startup India – Stand Up India and Digital India.  The seeds have been sown, but there has to be much more action-oriented approach in the areas of:

• Doing ease of business – Red-tape and bureaucracy needs to be removed to help budding entrepreneurs grow their businesses in this sector.
• Clarity on GST – This has been pending for a while and would be a welcome move to everyone in the sector if it goes through.
• Relaxation of taxes – The govt. announced recently in the Start-up initiative that there would be 3 year tax relief since inception of the startup. A typical start-up in ecommerce space needs more time to be profitable and hence, the tax relaxation scenario needs to be re-thought so that the companies in this sector actually benefit out of it.