SMEs Playing Big in Employment Generation, SMEs Outperformed in Term of Job Creation, Indian SMEs Outperforming in Employment Generation

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SME Times News Bureau | 15 Jun, 2010
The Small and Medium Enterprises (SMEs) have outperformed the large industries in the country in terms of job creation in the aftermath of the global economic meltdown, says a new study, which, however, cautions that a lot more still need to be done to boost the crucial sector in the economy.

"The SME sector reported about 25 percent job losses during the recent global recession. However, it has been one of the fastest to tide over the gloom with figures of job creation coming up on a steady pace," the analysis by the Associated Chamber of Commerce and Industry (ASSOCHAM) said.

The study adds that the labour intensive SME sector has consistently registered higher growth compared to the overall industrial sector, adding "And owing to its size, these units are more adaptable to the changing market scenario and show remarkable innovativeness in each vertical."

"However, a lot remains to be done for the sector to make it all the more dynamic and self-reliant. For instance, there are several gaps to be filled where support from the banking sector," the study cautioned.

"The biggest culprit of SMEs is the unduly delayed payments by large industry players," the analysis also pointed out.

The ASSOCHAM analysis has noted that SMEs not only play a significant role as one of the growth engines of the economy but also play a critical role in the socio-economic developments in the country.

According to the fourth census of the MSME sector, the sector employs nearly 59.7 million people in over 26.1 million enterprises.

SMEs contributes to 45 percent of the industrial output, 40 percent of exports, provides employment to nearly 60 million people and creates as many as 10 lakh jobs each year. The SME sector also produces more than 8,000 different products annually not only for the Indian markets but also international shores.

Further push is being given to the SME sector in the areas such as pharma, food processing, auto ancillary, IT, retails, textiles and garments, agro, nano technology, financial sector and service sectors, the study says.

The study has also pointed out that there has been a clear shift in the mindset of Indian firms, and an increasing number of SMEs foraying into global joint ventures, alliances, and mergers and acquisitions.