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Characteristic of SME industry

Micro, Small and Medium Enterprises (MSMEs) are
referred as the back-bone of the Indian economy.
It is the largest employment providing sector
employing more than 600 lakh persons.
This sector of economy uses local resources and do
value addition to it.
In recent years it has emerged as most dynamic
displaying phenomenal growth & contributes around
10% in the GDP of the country.
It contributes 40% in the total export of the country
and produces around 7500 products involving
technology upgradation
Most of the MSME are family owned business
& lacks leadership.
Most of the MSME have simple flat structure
rather than a hierarchical one.
It is One man show & single person, the
entrepreneur plays a role of marketing, HR,
Finance head.
Owner has complete involvement & remains
the final decision maker.
Problems faced by MSME sector in India
The list of the problems that are faced by existing/new companies in SME sector
are as under:
1. Absence of adequate and timely banking finance
2. Limited capital and knowledge
3. Non-availability of suitable technology
4. Low production capacity
5. Ineffective marketing strategy
6. Constraints on modernisation & expansions
7. Non availability of skilled labour at affordable cost
8. Follow up with various government agencies to resolve problems due to lack of
man power and knowledge etc.
9. There supply is to the large industries and they are solely dependant on LCB for
10. The pricing strategy is decided by the large industries.
11. As such SME sector lacks bargaining power.

It is very important to empower the SME sector to utilize the limited

resources (human & economic) they have in an optimum manner.
The SMEs need to be educated and informed of the latest
developments taking place globally and helped to acquire skills
necessary to keep pace with the global developments.
SMEs are now exposed to greater opportunities than ever for
expansion and diversification across the sectors.
Indian market is growing rapidly and Indian entrepreneurs are making
remarkable progress in various Industries like Manufacturing,
Precision Engineering Design, Food Processing, Pharmaceutical,
Textile & Garments, Retail, IT and ITES, Agro and Service sector.
To counter the challenges faced by SME sector and grab the
opportunities in the market, strategies to promote and support the
SME sector has to be developed.
SMEs should be encouraged to adopt innovative ideas and concepts
for the promotion of their business.