TIME TO UNLEASH THE POTENTIAL OF SMEs
Indian SME is second largest after China. It consists of almost 63.05 million micro industries, 0.33 million small scale industries and 5000 medium enterprises. MSME’s direct and indirect contribution in export is around 45%. Even though the interest rate for SME’s is almost 1-1.5% lower in comparison to ordinary business loan. Currently India has total 3.61 million units of MSME’s that generates 120 million employments. The manufacturing based SME’s contribute 6.11% in G.D.P where as service sector units have 25% contribution in G.D.P. However, it has been observed that Banks and NBFCs are acting as a risk averter to finance them. Since SMEs required recurring liquidity to run their operations as a result the numbers of vulnerable SMEs become very high. To overcome this issue and to support MSMEs, The finance minister of India made a significant change in MSME development Act, 2006 and the new definition of MSME drawn. The reason for change was basically redefining the MSME’s i