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Small and Medium Enterprises (SMEs) play a crucial role in the development of the Indian economy, responsible for generating substantial employment (nearly 110 million), exporting goods, creating new ways for innovation and boosting inclusive growth. SME contributes approximately 30% to the Gross Domestic Product (GDP).
The SME Act was introduced to ensure easy credit facility to small and medium units, ensuring the development and promotion of a business. Through this act, the Government of India encourages several small and medium units to register themselves to get access to SME finance, and other facilities.
Widely touted as the ‘engine of growth’, this sector provides a considerable solution to a number of issues like income inequalities, regional imbalances etc., in a developing country like India. Below is discussed the significant role SME finance plays in the Indian economy’s growth.
SME sectors hold a large employment base in India. As per recent data, approximately 36 million SMEs generate 80 million employment opportunities in India. To be precise, this sector is responsible for engaging the second-largest employees (comparatively at a lower capital cost than large enterprises) of the workforce after agriculture. SMEs in India function mostly in the unorganised sector and serve as the primary source of livelihood for millions of people.
Balancing economic development
For many years, large enterprises gained considerable financial support, but the government’s intervention in a small business sector and in providing SME finance has changed the Indian economy’s face considerably. Development of SMEs contributed to India’s socio-economic development. Small enterprises have been successful in providing social goals of equitable growth. The outcome of it can be perceived in the industrialisation of backward and rural classes through the assurance of equitable distribution of national wealth and reduction in the regional economic imbalances.
Small and Medium Enterprises serve as an integral part of the Indian economy in terms of supply chain and contribute approximately 40% of total exports. With an increasing number of government initiatives to fuel this sector by providing SME finance and other consumer-friendly schemes, production rate has improved significantly.
Encouraging new business
SME finance encourages small businesses by continuously upgrading business set-up, infrastructure, buying new machinery, acquiring the latest technology. This, in turn, helped to enhance the competitiveness of SME enterprises. With easy credit facility and other factors, this sector supported small units, which eventually boosted the Indian economy’s growth.
It is an undeniable fact that the government has introduced several schemes, subsidies and other incentives, various financial products like SME loans to support and encourage the SME units. However, the stringent MSME loan eligibility criteria and extensive documentation to avail the SME financing from government bodies sometimes create hindrances for small business owners, especially those who do not maintain financial records or register themselves.
In cases like this, small business owners looking for SME finance can opt for an unsecured business loan from reputed financial institutions like Bajaj Finserv.You should know about the MSME loan eligibility criteria beore applying an MSME or SME loan.
Businesses can choose from a range of types of business loans available in India. Individuals can select any of them as per their requirement.
This financial institution offers unsecured business loans (working capital loan, machinery loans, business loan for women) up to Rs.45 lakh at favourable terms and also offers other consumer-friendly features like Flexi-loans, online account access etc.
Also, to make this loan availing process hassle-free and less time consuming, they offer pre-approved offers. Individuals can enjoy such offers on other financial products like credit cards, personal loans and several others. Check your pre-approved offer by entering your full name and contact information.
In the past few years, this SME sector has performed well and contributed considerably to the growth of the Indian economy. With further support and easy availability of SME finance, the sector can grow further and bolster the economy more.