This document provides information and recommendations to support small and medium enterprises (SMEs) in India. It notes that SMEs face challenges including a lack of reliable infrastructure like electricity and water, access to financing, distribution networks, and government support. It analyzes India's economic and demographic statistics and "Doing Business" rankings. It recommends the government focus on expanding financial access, developing renewable energy sources, improving water management, and reforming to better support and enable SME growth through programs and infrastructure development.

1. Policy recommendations on the
Small and Medium
Enterprises of India

2. A few facts about India
Labor Force Composition: Agriculture: 53% Industry: 19% Services: 28%
GDP Composition Agriculture: 17% Industry: 18% services: 65%
Total GDP: $4.784 trillion
GDP per capita: $3900
40.4% of the population in the age group of 25 – 54 years
Second Largest Population of the World : 1.2 billion

3. Manufacturing Enterprises – Investment in Plant & Machinery
Description INR USD($)
Micro Enterprises upto Rs. 25Lakhs upto $ 62,500
Small Enterprises
above Rs. 25 Lakhs & upto Rs. 5
Crores
above $ 62,500 & upto $ 1.25
million
above Rs. 5 Crores & upto Rs. 10
Crores
above $ 1.25 million & upto $
2.5 million
Definition of Micro Small & Medium
Enterprises in India
Service Enterprises – Investment in Equipment
Description INR USD($)
Micro Enterprises upto Rs. 10Lakhs upto $ 25,000
Small Enterprises
above Rs. 10 Lakhs & upto Rs. 2
Crores
above $ 25,000 & upto $ 0.5
million
Medium Enterprises
above Rs. 2 Crores & upto Rs. 5
Crores
above $ 0.5 million & upto $
1.5 million

4. According to the Indian Ministry of
Micro Small & Medium Enterprises
Micro Small and Medium Enterprises Growth Rate

5. 1.2 Billion people
Nearly half under 25
years of age
Only 16% report
owning their
businesses
The Reality – Gallup Report

6. Where does India stand?
Economy Name Rank
Procedures
(number)
Time
(days)
Cost (% of income per
capita)
Paid-in Min. Capital (% of income
per capita)
New Zealand 1 1 1 0.4 0
Indonesia 166 9 47 22.7 42
Niger 167 9 17 112.8 572.8
Comoros 168 9 20 150 261.9
Ecuador 169 13 56 29.9 4.5
Central African Republic 170 8 22 172.6 444.1
Angola 171 8 68 105.4 24.6
Guatemala 172 12 40 48.1 20.9
India 173 12 27 49.8 140.1
Bolivia 174 15 50 74.1 1.9
Cambodia 175 9 85 100.5 28.5
Côte d'Ivoire 176 10 32 130 184.6
Iraq 177 10 74 81.1 25.2
Suriname 178 13 694 110.9 0.4
West Bank and Gaza 179 11 48 91 206.7
Congo, Rep. 180 11 161 55.3 80.5
Chad 181 9 62 202 289.4
Equatorial Guinea 182 18 135 98.2 11.7
Eritrea 183 13 84 52.3 203.1
Haiti 183 12 105 286.6 21
Djibouti 185 11 37 150.7 383.6
“Doing Business Project” Ranking data June 2012
http://www.doingbusiness.org/data/exploretopics/starting-a-business

7. Let’s come to the basics
68.7% of the Indian
population lives under
$2 a day.

8. Lack of reliable
and efficient
government
support structure
Lack of access to
mentorship and
training
opportunities
Lack of easy
access to funds
Failure
considered to be
a taboo
Issues hampering the growth of
SME’S

9. Bottlenecks in the existing system
Slow
growth in
the SME
sector
Fragmented
distribution
network
Low
penetration of
financial
services
Lack of
power/energy
(electricity)
Lack of water
supply in the
farm areas

10. Top constraints reported by South Asian
benchmark firm in the urban formal
sector – Electricity wins!
Electricity has
been reported
as the top
constraint
hampering
the growth of
businesses

11. Current Water Situation in India

12. Demand is
more
India’s
current water
supply: 740
billion m3
Future Projections for Water

13. Low Penetration of Financial Services
Only 40% of the total population have bank accounts
The lighter the color the
lower the bank branches

14. Percentage of firms with credit line
or loan from a financial institution
Low penetration of financial services is visible in the percentages

15. Fragmented Distribution Network

16. Key Issues in India Distribution
Network

17. Focused policy in the form of a National Support Program
for the next ten years to support SME’s in creating
nationwide distribution networks
The National Support program to be headed by Industry
leaders and practioners having the know how and
expertise
This should be done in mind with an aim to create
sustainable infrastructure for future generations to use
Recommendations

18. Expand the reach of banking sector and the flow of
money to the rural area and Tier II – III city
entrepreneurs by opening up the banking sector for
public private partnership
Mobile technology should be leveraged to reach the
remote areas for financial inclusion
Recommendations

19. Leverage the abundant natural resources India has in
its different states, like wind in the coastal regions,
solar in Rajasthan, to supplement its power
generation.
Reduce T&D losses by laying underground wiring
Reliable and continuous supply of power to
businesses in the Tier II – III using renewable sources
will help in the growth of SME’s
Recommendations

20. The use of established water management
techniques such as watershed management,
rainwater harvesting, river interlinking and
desalination should be expedited
An independent regulator should be appointed to
control and coordinate implementation efforts
Strict legislation should be instituted for the
exploitation of groundwater
Recommendations

21. Focused policy for a complete paradigm shift of the
government departments to work as enablers and
facilitators to help the public
The red-tapism and the shylock image of the
government has to be shunned at the earliest.
Primary Recommendation

22. THANK YOU