SMEs in India

The Indian economy is growing and the two most important sectors that influence India’s Economic Business are the SMEs (Small & Medium Enterprises) and Multinational Corporations.  It is a known fact that in the growing phase the domestic sector is dominated by the Multi-National companies as well as the SME’s. This creates a muggy environment for the Small and Medium Enterprises and the reasons are obvious.

India is growing and the pace is steady. To sustain the current pace the foremost thing India needs is to support the core micro factors and the most important of them is the SME’s of the country. So, apart from the challenge of expanding and not getting overshadowed by the multinationals, there are other challenges which these companies face.

The business consultants often guide/navigate way out to these companies and provide solutions to them. However, there are common challenges which are faced by almost every type and kind of small and medium-sized companies.


We here list some key challenges faced by these companies

·         Limited resources- raw material and labor are the two main components for any business to grow and any barrier to the required flow means not performing to the capacity of any company. Often the business consultants have the solutions to these issues which are largely under control by experts, experienced, and qualified professionals.

But there are some other grave issues which need more focused solutions. In any developing country which is often crippled by corruption, there can be the wrong allocation of resources from the government. The fund allocated by the government to invest in the public resources for uneconomic high profile projects goes in the erroneous direction. They rather go away rather than necessary projects such as infrastructure development or development of rural India.

·         Lack of FDI’s- foreign direct investment or FDI’s are beyond the means of SME’s mainly as the Multi-national Corporation have a high influence on these companies. The foreign investors hesitate and are not confident to invest in projects governed by the SMEs. Due to these factors and to provide aid to these companies the Indian government has eased the rules for foreign investors for the small companies to provide favorable growth options to the Indian economy. But, we yet have to see the impact which is actually a long process and need a lot more effort form the owner of these companies as well. There can be proposals and business ideas which can be proposed by the business consultants who can show a pool of money to the entrepreneurs but very few of them provide the support to get the right help which these companies actually require.






·         Limited use of technology- with increasing digitalization, the companies need to create their online presence and remain active for internet users. But the SME’s still shy away from it as they do not realize the potential of the online platform. This keeps them far behind in the cutthroat competition. It also has an important role in reducing the reduce cost of production, improve productivity and brings in more efficiency than the current operational module. In India, the SMEs often fail to cope up with the latest technology due to lack of finance.

·         Inadequate marketing assistance- the scarcity of budget also hits these companies as they fail to hire the marketing help which is very necessary for any business to survive. The sellers can list their businesses free of cost on the digital platform which is B2B and can yield them direct revenue source. But, due to lack of updated technology and inadequate infrastructure, they often miss out the tools for effective marketing. Hiring business consultants that will only recommend and not get down to work will not help. These SME’s may hire the expert services but what they need to know that only those who are ready to roll up their sleeves and get down working will help.

·         Unskilled and amateurish labor- these companies need Labor that has an active part and simply do not work to fill in the number of employees. But, workers who lack training facilities are actually a burden in the small-scale sector. The irony is that the SME’s have most of the workers unskilled, inefficient, untrained along with having the low level of education. Therefore, they fail to cope up with the challenges and lack the capacity of a modern production system.

·         Inappropriate location- a lot of factors depends on the availability of skilled laborinfrastructural facility, cost of location, markets and raw materials and are hugely dependant on the location of the company. The SME’s need to set up the company in a favorable location.

The business consultants provide the desired help to these companies which not only give them the right direction but also work as a hired gun for them. They are well aware of the requirement and so can give strategic and expert guidance to these company owners.