Small and Medium Enterprises (SMEs) play
a catalytic role in the development of any country. They
are the engines of growth in developing and transition
economies. Going by the experience of developed countries
like Japan, USA, France, China, Korea, etc. The Table 1
reflects the contribution of SMEs in some of the developed
economies.
The SMEs will continue to remain as the
powerful instrument of economic growth even in the era
of unprecedented technological revolution and globalization.
Within the SME sector, the small sector serves as a green
field for nurturing entrepreneurial talent and helping
the units to grow into medium and larger sector. The promotion
of SMEs, therefore, becomes a major area for policy focus,
both in developed and developing countries. Today, in India,
it accounts for 80% of the country's industrial employment,
40% of total manufactured goods, 35% of country's exports
and produces nearly 6000 items.
As the sector is characterized by information asymmetries and high processing costs often exceeding the returns, banks are generally reluctant to extend credit to the SMEs. With the advent of rapid globalization and the WTO commitments, the SME sector faces new challenges and threats that are more than the larger business ventures. With the opening up of national economies, the removal of trade barriers, the constant arrival of new products and the introduction of ever new processes of production and services provision, there is a transformation of the business operations of SMEs. |
