Small Size, Big Change
legal and tax framework has to be put in place, if the new government wants to attract investments to MSMEs.
Despite being critical to the economy MSMEs currently face significant challenges. The key challenge is the availability of adequate and timely finance. The need for collaterals, high interest rates, long lead times and the lack of financial information are just some of the challenges that small enterprises face in their effort to access finance. Limited access to infrastructure such as power, water and roads coupled with red-tape further add to their woes as it increases operational costs rendering MSMEs uncompetitive.
Small enterprises also have to contend with the risk of technological obsolescence as they are unable to adopt newer technologies at a rapid rate. In the short term, policy initiatives and incentives by the government to promote domestic manufacturing can deliver quick and significant results. Take the example of set-top boxes which is a small sub-segment of electronics hardware industry but is the third largest import item after oil and gold. If locally manufactured, this industry can help generate more than 15,000 jobs.
Cutting across sectors, products and services, micro, small and medium enterprises are truly a strategic asset for the economy and thus it is imperative for the new government to focus on MSMEs to achieve overall growth objectives.