The Hindu Business Line : PM for easier capital access to SMEs

Mumbai June 22 A sensible policy framework must address the issue of market imperfections that put small enterprises at a competitive disadvantage vis-à-vis large enterprises, said the Prime Minister, Dr Manmohan Singh, speaking at the Small & Medium Enterprise awards function organised by CNBC TV 18 here on Friday.

"In particular, our financial system must be adequately sensitive to the capital needs of small enterprises. I will request the Finance Minister to look at possible ways for expanding access to capital — in particular, risk capital — to SMEs," said Dr Singh.

"The boom in many parts of our IT sector has been a result of its easy access to foreign venture capital. We need much more of that domestically," he noted.

"The Government is committed to the growth of SMEs and to the emergence of new enterprises in India. We have passed the Micro, Small & Medium Enterprise Development Act to promote the growth of SMEs. We have announced a policy package for doubling credit flow to this sector.

"As our economy grows, new growth opportunities are emerging for SMEs in sectors like defence, civil aviation, tourism, bio-technology and agri-business. Our Government is open to new ideas on how we can spread industrialisation across the country and encourage new enterprises."

"We also need a policy regime that can enable SMEs to make a smooth transition to a larger scale without unnecessary impediments," he added. "Lack of technological upgradation and shortage of skilled manpower can be constraints on the growth of this sector. Our Vocational Education Mission, which will be operationalised soon will address part of the problem. The massive investments we are making in education will certainly relax the labour constraint."

Taking a wider sociological view, SMEs have proved to be the largest creators of employment opportunities, he said: "They account for more than one-third of our manufacturing output and exports. They will be the best bet for the future in creating more and more employment opportunities that are essential if we have to reduce the proportion of our population dependent on agriculture."

"International experience shows that it is possible for SMEs to remain globally competitive even in an increasingly integrated global market," said the Prime Minister.

"In fact, the increasing need for greater customer choice and the move away from mass production of uniform products to small batch production of differentiated products have made SMEs more relevant in our times. Technological advances are also in favour of SMEs as small scale production becomes more viable."

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