Editorials

by Rajen Kumar

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For over four years now, we have been making relentless efforts to fill information deficit that painfully exists in the country's Micro, Small and Medium Sector. Encouragingly enough,...

Special Reports

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Be Skeptical. Be very Skeptical. Mistake upon Mistake

In recent months, we've had a few slip-ups by the official statistical system in India: • Yesterday's IIP release was preceded by a mistake. Mint says: On Monday, the...

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SEBI Chairman Bhave Confers Award on SME WORLD for promoting SMEs Sector

SME WORLD Bureau
Aug 2010

(A UNI Story)

New Delhi, July 31 (UNI) Taking a cue from the development experience of countries like Japan and Germany, where Small and Medium Enterprises (SMEs) have been the backbone of these economies, India of late is implementing strategies to promote this sector. Various government agencies are involved in providing marketing assistance to these enterprises, a number of programmes have been launched entailing technological up gradation, and credit to the sector is being provided under priority sector lending by the banking sector.

The fact of the matter is that many tiny and small enterprises are in the unorganised sector. SME's are also large contributors to foreign exchange, as they are involved in exports in a major way, such as garments, leather, electronics, gems and jewellery, handicrafts and apparel, to name but a few. There is realisation now that media needs to play an important role in dissemination of information and contribute to a better understanding of the issues involved in their growth and development.

It has also dawned upon policy makers to reward innovation, develop entrepreneurial skills and harness Information Technology for the advantage of the SME segment. A testimony of this is the recent event in Mumbai, where Securities and Exchange Board of India Chairman C B Bhave facilitated young entrepreneurs who have established a niche by developing successful and innovative models.

The awardees included now a well established journal entitled 'SME WORLD'. The award was received by Founder Editor of the magazine Rajen Kumar. Mr Bhave spoke about the contribution of the SME sector to the development of the Indian economy and the role that innovation can play in propelling this sector.

He eulogised the strengths of this sector as an employment generator and where only an entrepreneur in the real sense of the world can swim to safety.

'SME WORLD' brings news to the country relating to the government schemes and programmes, subjects of relevance to the sector and views of experts relating to the world of tiny, small and medium enterprises.

The event was jointly organised by the 'Small & Medium Business Development Chamber of India (SME)' and 'Indian Young Entrepreneurs Forum.' The award to the media was for 'propagating the news concepts, ideas and opportunities to enhance the knowledge of SMEs.'

The panel of judges included Secretary, Ministry of Micro, Small and Medium Enterprises Dinesh Rai, Managing Director and Chief Executive Officer, Bombay Stock Exchange Madhu Kannan, Chairman and Managing Director, Bank of India, A K Misra, and Managing Director and Chief Executive Officer, Multi Commodity Exchange Stock Exchange, Joseph Massey and Consul General of US E Paul Folmsbee.

Experts speak off the role of the SME sector in Japan after the Second World War, where growth of industries like the electronics goods industry took place largely in this sector. Women with their nimble hands were deployed in large numbers in these industries and a well known fact is that they were often underpaid. While opinions on the development experience of Japan varies, the new left thesis is that it was the success of exploitation.

Similarly, in Germany the SME sector has emerged, like in Japan, as ancillaries selling goods and services to large corporations. Germany worldwide is an exporter of capital goods and machine tools, where SME's play a critical role. So also are the fast growing economies of China, South Korea and Vietnam, where the SME sector continues to play a major role in the economy. The problem with the economies of Japan and Germany,however, is that of their food security, for their growth is by and large a two sector model-- large corporates on the one hand and SME's on the other.

Prof J S Sodhi, Director of New Delhi-based Shri Ram Centre for Industrial Relations and Human Resources, cites the example of
the auto sector in India, where ancillaries are feeding big car makers, like Maruti, Tata Motors, Suzuki and Honda. Prof Sodhi speaks off the growing cult of Corporate Social Responsibility (CSR) among the SME sector and the need for emulating this on a larger scale. Vikram Hoon, former Vice- President (HR) of the Oberoi Group of Hotels and a well known HR consultant to small and medium enterprises, says the old model of development is breaking down and companies which are successful are those which are able to retain talent.

He says a formidable problem that the SME sector faces relates to retaining and recruiting talent and highlights the success of the cluster development in the Indian context.

In this regard, Mr Hoon lauds the assistance that United Nations Industrial Development Organisation(UNIDO) is playing in the cluster development of the country.

According to a UNIDO survey of Indian SSI clusters undertaken in 1996, there are 350 SSI clusters and approximately 2000 rural and artisan based clusters in India. It is estimated that these clusters contribute 60 per cent of the manufactured exports from the country.

Among the larger clusters, some are well known. The Panipat cluster accounts for more than 75 per cent of the total blankets produced in the country; Tirupur in Tamil Nadu, which is responsible for 80 per cent of the country's cotton hosiery exports; Agra with 800 registered and 6,000 unregistered small scale units make about 150,000 pairs of shoes per day with a daily production value of 1.3 million dollars and exports worth 60 million dollar per year; Ludhiana, a city that is known as the Manchester of India, alone contributes to 95 per cent of the country's woolen knitwear, 85 per cent of the country's sewing machines and 60 per cent of the nation's bicycle and bicycle parts. Finally, the world famous cluster of Bangalore, operate in the software sector.

Garment Export association Secretary General Surinder Anand says exporting and small scale units need to have a separate set of labour laws, both necessary for their survival and dispensing with labour in times of financial difficulties faced by units.

Anand says in the recent global financial crisis the brunt of the slowdown was faced by the SME sector, for instance cycle and sewing machine industries in Ludhiana.

The catastrophe which struck the global financial arena, saw a new manifestation in the recent debt crisis of Europe, both of which took their toll on the SME sector, especially exporting units.

Famous economist Joseph Schumpeter spoke of the perennial gale of innovation and competition that ensures the fittest among them survive, leading to the growth of capitalism. According to Schumpeter the death and decay of capitalism results from giant co es, where private bureaucracies kill innovation.

Faced with a squeeze from every where, the small companies and the unsung heroes their promoters, often a one man show, are left with no option, but to innovate, be it technology. marketing, sales, finance or human resources. But experts are unanimous on one issue-- in the information age the need for more knowledge as to what is happening around in India and around the globe.

Rajen Kumar regrets that most mainstream journalism, pink papers and the rest of it pertains to large corporates, where the small man is lost sight of. ''Where information and knowledge is most required it is missing,'' he says adding that big companies any way have all the money to buy ''whatever they like and whomever they like.''

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