Issues of SMEs in India in times of globalisation

Issues of SMEs in India in times of globalisation


The small and medium enterprise sector is widely regarded as the engine of the Indian economy. Small and medium enterprises (SMEs) contribute significantly to industrial, economic, technological and regional development in all developed and developing economies

Since the early 1990s, Indian SMEs have been exposed to intense competition due to increasing globalisation. This has made survival and growth of this sector difficult.

Infrastructure development
The quality of the infrastructure affects the growth prospects of SMEs to a great extent, especially in a developing country like India. many rural areas still suffer due to the state of basic infrastructure like transport, telecommunications and electricity. The integration of rural industries with mainstream industries is proving to be difficult for these reasons

Technologically handicapped
Technology plays a crucial role in the development of SMEs. Technology not only helps in evolving a strategy but also in maximising business opportunities for these enterprises. Today, most SMEs in rural areas undertake manufacturing using old methods and outdated technology. But today, the competition is fierce, unlike in the past, when buyers were simply looked forward to purchasing the best products at the lowest prices.

Upcoming Market Trends and Information
One of the factors limiting the growth of SMEs is the lack of adequate information. Once SMEs start the business, they may be interested in knowing about the suppliers of specific machinery that suit their needs, technical information and market trends for their products. This information is rarely available.

New Product Development
The SME market requires a strong new product development base. In India, most SMEs work on the designs given to them by domestic or foreign buyers. There is very little innovation in product design development, and even the technology used by the SMEs in India is outdated.

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