When the bank management starts to monitor the loan applications then obviously more SMEs will find loans. The banking sector is not doing much for the SMEs now. Not just this, even the venture capitalists are not doing enough to boost the SME sector. Many SMEs as of now do not have expertise in financial management. They need consultancy services to manage their financial condition.

Chakrabarty said that banks should maintain transparency in interest rates and should keep disclosing the interest rate that they are charging. Top banking officials, however, say that bank officials are compassionate and are willing to grant loans to business enterprises.

FDI in retail can be a good initiative to mobilize the Indian economy and also benefit the supply chain infrastructure as a whole. Extinction of the Kirana stores and several Small and Medium Sized Enterprises (SMEs) have been cause of deep concern for the government. It is being anticipated that retail giants in long run can abuse SMEs for they will become stronger and hold dominant positions.

With the advent of big foreign retail stores in cities, Kirana stores will face increased competition. But this does not necessarily mean that small businesses would also be wiped off from cities. After-all, big retails depend on them for raw materials and finished products. You can’t expect a big retail giant like ‘Walmart’ to gain the same margin advantage from a big supplier like ‘Colgate’. It has to depend on SMEs to keep profitability intact.

Again there is the concern that big retailers that often play on volumes can approach large suppliers. Also big retailers have a tendency of having large credit cycle that means they pay to suppliers slowly. This is not congenial to SMEs as their cost of borrowing is much higher.

Keeping these factors into consideration, the Government has made it mandatory for big retailers to source 30% of goods from SMEs in India. But then the asset limit of small enterprises set by government is 50 m, which means many big suppliers will get listed. This is why the concern of SMEs is not being addressed. Small industry experts feel that they should have been consulted for better framing of laws.

Emphasis is laid on the challenges for substantial growth of SMEs. Lakhsman Guguluthu, CEO, BSE-SME who recently attended a session organized by CII Eastern Region laid stress on SME growth that currently contribute to 8 percent of the country’s GDP.

SMEs are found to make contribution of up to 45 percent in India’s manufactured output and 40 percent in exports. But for this purpose they need investment. Small investors need to be attracted but then informed investors who are willing to make medium or long term investments should be preferred more for SME growth.

SEBI has approved setting up of an SME exchange. Already 4000 companies are listed that can qualify for SME exchange. Out of the 4000 companies, there are 1,500 firms having paid-up capital of less than Rs 10 crore and 2,500 companies have Rs 10-25 crore as paid-up capital.

This SME segment pact has been inked by Dr. HP Kumar, CMD of National Small Industries Corporation (NSIC). Mr. Meskelchalla DG, Federal Micro and Small Enterprises Development Agency (FeMSEDA), Ethiopia is among the other members who helped in drafting the agreement. The drafting of the agreement is being done in the presence of Dr. Manmohan Singh and Meles Zenawi, prime minister of Ethopia.

India intends to foster cooperation with Ethiopia in a number of areas that include science &technology, education, research on agriculture and information technology.

Input cost of SMEs will definitely increase and shall have an adverse impact on Indian exports of drug formulations. Total Pharma exports done by SMEs are Rs 20,000 crore. All over the country, the number of SMEs in the Pharma industry is around 6,000.

Director General of Foreign Trade (DGFT) has passed an order that makes bar coding essential for exports. If this is not the case, Pharma industry SMEs shall be wiped out from formulations business. Jagdeep Singh, Secretary General of SPIC (SME Pharma Industries Confederation) says, “We are already facing tough competition from China, and with the guidelines in place, we fear that our exports will decline, as it will make products costlier.” Singh says that the bar coding order should be withdrawn.

Each SME’s registration cost is around Rs 2000 and then there are other recurring expenses of at-least Rs 1 lakh per month. Machine installation may also require at-least Rs1 crore for a packaging line. This is going to surge on the input cost and if this continues, eventually export market shall get transferred on to China and multinationals. This is definitely going to bring the downfall of Indian SME exporters.

N R Munjal, Indian Drug Manufacturers’ Association President says that there is no need to implement bar coding for the spurious drugs found in retail pharmacies is meager only 0.003 per cent. This step is going to help out small Pharma units.

IDMA recommended that soft loans should be given out to SMEs. IDMA is pharmacy companies’ oldest association. It has got 800 members that consist of small, medium and large companies.

The company has witnessed exponential growth in India during past years. Souma Das, Infor’s vice president, says, “We are expanding our footprint in India by moving from mid-market to large enterprises.”

To increase the inflow of large enterprise customers and to further expand the Infor’s overall business in India, Das wants the growth momentum to continue. This is possible only if the economy remains stable.

Infor has partnered with local and global system integrators (SIs). This has helped it to scale its reach to customers of large enterprise.  The R&D wing of the company at Hyderabad is working to customize solutions according to the Indian laws, compliance and tax regulatory norms.

The company has seen growth globally with 17 percent growth recorded in third quarter and the addition of more 2000 customers. Infor has entered into Indian market in 2006, but its product Baan or Baan ERP has been popular for over a decade now.

“We don’t want to sell one solution to every customer, but we have some of the best breed of solutions for specific segments such as retail, manufacturing, distribution, finance and others.” Das Said.

Consumer sentiment remained on a high in 2010. On an average, the improvement remained 65 percent. Many chemical units have also reported growth in sales of over 20 percent in 2011. More than half, 53.3 per cent of respondent, have also reported 20 percent in export in 2010.

But price hikes of raw materials also seem to be inevitable, as fifty percent of respondents have found input prices to increase in 2010. Hence, product prices too increased according to 33.3 percent of respondents.

Sebi is expected to modify certain guidelines so as to make the SME platform more attractive at-least for the initial period. The regulator is also introducing 15 minute call auction windows at regular intervals during the trading sessions.

Apprehension and concerns, however, are been expressed by bankers over two issues. This includes compulsory market making for three year period and at-least a minimum Rs 100,000 of trading lot size. Investment bankers have discussed the issues with exchange regulators and want both to be reduced. As part of the discussion, members of Association of Merchant Bankers of India (AMBI) were also involved.

There are many views on stock exchange’s role to popularize this whole new segment. Websites would be brought to use to disseminate information. There is no doubt that there has been the willingness to establish a separate trading platform for SMEs. In November 2009, the initial draft regulations have been announced. The regulator later notified the norm in May 2010. An upper limit of Rs 25 crore has been fixed by the regulator at face value for a company that intends to list in the segment.

One of the most significant employment-intensive segments of the economy is comprised of MSMEs. They contribute to national exports and manufacturing output. MSMEs account for 45 per cent of manufacturing output and 40 percent of total exports. In order to encourage entrepreneurship and to foster growth, government can take several initiatives and provide access to capital.

Internationally, SMEs raise fund from ‘business angels’ and venture capitalists. It is found that Angel funds and venture capitalists are important for MSMEs’ growth and the government needs to take steps to help in the development of both.

Business Angels is a new concept in India and so needs serious encouragement with positive policies that would attract people into becoming “Angel Investors”. Business Angels are successful CEOs or entrepreneurs who provide SMEs with funds and guide them by proper mentoring and advice. This helps MSMEs to access markets and create right organizational structure.

A good policy environment will lead to creation and encouragement of seed funds or early stage funds. A thriving MSME sector can be formed by

• Higher equity participation so as to enable better debt-equity mix.
• Endorse and Stimulate MSMEs to increase exports and go global.
• Improve on competitiveness by entertaining foreign technical collaboration.

In recent years, there has been attempt from Government to promote Venture capital funds and flow of angels to the MSME sector by the active participation of Small Industries Development Bank of India (SIDBI).

Exemption of excise duty is estimated to increase to 25 crore. “Start-up companies should get proper support from banks and financial institutions to convert brilliant, innovative and potentially viable ideas into commercial ventures,” according to President SME Chamber of India, Chandrakant Salunkhe.

For companies oriented toward exports, the excise duty exemption limit should be enhanced to Rs 25 crore. Last year has been a period of struggle for textile industry as cotton prices hiked and ‘Technology Up gradation Fund Scheme’ ended. In the current year, textile companies are demanding reduction in customs duty and machinery under the export promotion capital goods (EPCG) scheme.

Auto part makers primarily want to have proper infrastructure sector in this budget.  Power is very crucial for auto industry and availability often falls short as opposed to that of what is required. Survey reveals announcement of tax breaks for employment intensive units during this current budget.