Indian PM meets Big industry and ignores the SME segment - livemint.com

Credit taps dry up for small industries - Home - livemint.com

The credit squeeze cuts across all sectors of the economy, but small and medium enterprises (SMEs) that lack the deep pockets, endurance power, credit worthiness and alternative funding sources of big business, have been hardest hit by banks’ reluctance to lend and the high cost of money.

SMEs account for nearly half of India’s manufacturing output and 40% of its exports. The sector provides livelihood to 45 million employees, according to data from the ministry of micro, small and medium enterprises.

“The first sector to be hit when there is a credit problem is the small and medium sector,” says a spokesperson for the Confederation of Indian Industry (CII).

PM to meet India Inc chiefs on Monday

Prime Minister Manmohan Singh has invited top industry leaders for a meeting on Monday morning to discuss the current economic slowdown and seek their views.

The main agenda of the meeting would be to increase public spending through public-private partnerships in creating infrastructure and jobs, said sources from the prime minister’s office.

The industry side will be represented by the two Ambani brothers, DLF’s Chairman KP Singh, Ratan Tata and Sunil Bharti Mittal of Bharti Group. Reserve Bank of India (RBI) Governor D Subbarao and Finance Minister P Chidambaram will also attend the meeting.

Strange ...

The capital output ratio of the SME segment is better. Indian exports are based on SME efforts. SMEs generate greater employment. 10 out of the 30 Sensex stocks were SMEs 20 years ago. So, while Manmohan Singh has time for the Big industry, the SME get no attention. The compliance load on the SME sector increases their costs by about 10% TO 20%. Simpler compliance itself will make the Indian SME more competitive.