All firms with an investment of over Rs 5cr but less than Rs 10cr in plant and machinery are called Small and Medium Enterprises.
But private and foreign banks have their own definitions of SME’s, which can be a turnover of anything between Rs 10cr and Rs 700cr.
Huge contribution to the economy
Employment – more than 28 million people
Contributes 40 % of gross industrial value addition
Accounts for 50 % of direct and indirect exports
SME’s are generally more labour intensive than large firms and therefore have lower capital costs associated with job creation.
Indian SME’s have become globally competitive in sectors like Auto components, textiles, food processing, pharma, engineering and chemicals and it is expected average growth rate of 32% over the next two years.
It was said that the sectors under capitalized, technology-deficient, skill starved companies would drop like flies in the face of global competition.
Small and Medium enterprises have become the darlings of corporate India.
Today SME’s are a different breed, they have acquired companies abroad become part and parcel of global supply chains and are even convincing foreign manufacturers to outsource patented design work to them.
Current trends indicate a smooth run for the auto component industry. In fact, since 2000, this is one sector which has made a global mark and has been identified as a sunrise industry. The industry is transforming from being highly domestic-centric, to a force ready to face global competition.