With the remarkable development of SMEs in various sectors like Food Processing, E-commerce, Textile, Pharmaceutical, Automotive, Energy, Supply Chain, Retail, IT and Service sectors, the Indian economy is expected to grow by 8% per annum by 2020 thereby making it the largest economy in the world by 2050. The SMEs contribute towards the holistic and balanced growth of the country by providing employment and growth opportunities through industrialization in rural and backward areas, ensuring equitable distribution of national income, thereby reducing regional imbalances across the states.

SMEs (Small and Medium Enterprises) are the most diversified businesses which play a crucial role in the growth and development of Indian economy. Most importantly, around 36 million SMEs contribute towards 45% of the industrial output, employs 42 million people, generates 100 million job opportunities every year and contribute to 40% of exports by manufacturing around 8000 – 10000 type of products to fulfill the rising demand of Indian as well as International market.

The government data suggests that urban area comprises 857,000 enterprises accounting for 54.77% of the total working enterprises in registered MSME sector whereas the rural areas having around 707,000 enterprises accounts for 45.23% of the working enterprises.

Looking at the stupendous development opportunities ahead, the government has undertaken a plethora of measures to boost this sector. These measures include international free trade agreements, launching new policies like adopting cluster based approach to enhance the productivity and prepare for stiff foreign competition and reservation of 20 exclusive items for manufacturing by SMEs only. The government has also set up an India Opportunities Venture Fund worth 50 billion rupees in collaboration with SIDBI (Small Industries Development Bank of India) for providing equity to the sector. In fact, the recent report by Credit Suisse estimates that SME Loan Market will grow by $3,020 billion over the next decade.

A Case for CSR Compliance

A recent survey report by the Avian Media and PHD Chamber ‘Bolstering MSMEs for Make in India: With Special Emphasis on Corporate Social Responsibility’, conducted on the MSMEs based around Delhi-NCR has identified the various challenges faced by the sector. These challenges include optimum utilization of resources, fund raising avenues, shortage of skilled manpower, obsolete government policies, multiple taxation system, absence of quality infrastructure and lack of focus on research for developing innovative solutions and products.

The report suggests CSR as a solution for addressing these challenges faced by SMEs. Hence, it is an imperative that the government should take adequate measures to make SMEs CSR compliant, so that they can integrate CSR and Sustainability in their business processes.

SMEs should also invest towards the implementation of sustainable business solutions for improving the overall business efficiency, creating a healthy work culture and green job opportunities, improvised operational procedures like supply chain management, sales processes, lean manufacturing for producing high-quality products and services for boosting up the economy ethically.

Pro-active Attitude

In this fast pace of economic development and evolving global economic landscape, SMEs should embrace change and develop pro-active attitude towards fostering progressive development in society and environment through effective utilisation of resources. They should remember the fact that their business will flourish only if the society flourishes. Hence, before embarking on bigger initiatives, they should focus on improvising their operational efficiency to enhance the positive impact.

Hence, to provide further boost to the MSME sector, the government has planned various other initiatives such as introducing rating for MSMEs on 50 parameters which will enable the sector to improve their manufacturing and operational efficiency. Incorporating best practices will certainly help MSMEs to further strengthen their position in the International market. Other initiatives include setting up of Bankruptcy Bill and introducing GST Bill for improving the ease of doing business.

The GST Bill will certainly provide boost to the SME sector by providing them reprieve from various level of taxes for starting business and transfer of goods in multiple states. With GST in place, SMEs can enjoy the benefits such as ease in business expansion, single point tax, elimination of cascading tax system, no extra tax on interstate goods transfer, lower logistics overheads and will create a unified market space for its products.

In future, the SMEs should not only focus to levy the associated benefits. Rather, they should incorporate these changes into their business strategies to work towards the sustainable development of the society. The big corporations should also put in additional efforts to incorporate sustainability and inclusiveness within the supply chain as the SMEs are suppliers to bigger corporations. The culture of giving back to the society should be inbuilt in all the businesses whether big or small, thereby enabling an environment conducive for sustainable development of the nation.

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