Strengthening SMEs for Building a New India

For the large number of SMEs that dot India’s landscape the business may perhaps be demonstrably smaller than the industries that rely on it. It is the role played by SMEs that make them critical for manufacturing industry’s success. SMEs are considered the backbone of industrial development with a remarkable contribution in industrial development, a big share in industrial production and total manufactured exports and a stellar role in terms of generating employment.

SMEs have a strong presence but face numerous challenges which hinder their growth. Continuous quality improvement, scope and scale are primary trials to be overcome. Sustainable development of manufacturing will happen only when SMEs upgrade the technologies which they deploy for shop-floor activities and enhance the skill-set of workers who work on the machines. This will reduce the extensive manual interventions in processes and smooth flow of data.

Digitalisation will help SMEs to enhance their efficiency to fight scale, overcome manufacturing defects, reduce production cost and shorten production lifecycle. We will see them meeting global quality standards and strengthening their position as proficient suppliers. Automotive industry is a glaring example where entrepreneurs have used modern technologies in their production process. Catering to the demands of automotive industry kept them firmly on their feet in terms of R&D, innovations and investments and we today see them as primary suppliers for many auto companies.

Metal forming and metal cutting exhibitions such as IMTEX provide a large platform for manufacturing industry to sharpen their everyday activities with advanced technologies and create extraordinary competitive advantage as well as sell machine tools to a global market. Companies which have fully understood the power of digitalisation and are utilizing it for their business are leading a new wave of growth.

The announcements spelled out in Union Budget 2019 is widely seen as a favourable one for SMEs. The lower 25% corporate tax on companies with turnover of upto Rs. 400 crore is expected to boost investments. It is a positive step towards development of SME sector and enhancing their production capacities. Machine tool industry is the backbone of SMEs and this bodes well for machine tool manufacturers. Indian machine tool industry has around 1000 units engaged in production of machine tools, accessories / attachments, subsystems and parts. More than 90% of these are in the SME sector which are likely to benefit from this budget. The ministry’s move is expected to eventually give an uptick to machine tool industry’s business.

Moving forward the Government of India may implement suitable measures to extend credit to SMEs along with connected financial reforms. With India targeting to become a $5 trillion economy by 2024-25 and manufacturing sector contributing $1 trillion to it, SMEs have a large role to play.