Karnataka calls upon SMEs to move to rural areas

Bangalore, Oct 31 (UNI) Toeing the line of other States wooing IT companies to tier-II and III cities by offering various facilities, Karnataka Deputy Chief Minister B S Yediyurappa today appealed to the IT majors and the Small and Medium Enterprises (SMEs) to move to smaller towns.

Inaugurating the SME Forum, organised as part of the State-sponsored IT event Bangalore IT.in, he said the smaller towns, apart from being cost-effective, would also help the State bridge the urban-rural divide.

The Deputy Chief Minister said Karnataka had the largest number of SMEs in the IT and ITeS sector at 1,500. The Government, under its new Industrial Policy, had set up a separate fund to help the SMEs in general achieve higher rate of success. With the tax collections being satisfactory this year, the Government had set GDP growth target of nine per cent from last year's 8.75 per cent.

IBM India Managing Director Shankar Annaswamy, speaking at the forum, called upon the IT-based SMEs to think big as size was not critical in this field, but innovation was what mattered the most.

''Ninety per cent of the IT companies coming under SME tag are small companies, but the revenues contributed by these companies remained little over 40 per cent,'' he said.

Speaking at a session titled 'Need for Balanced Eco-system to Support SMEs', Mr Vivek Kulkarni, Chairman and Managing Director of software consultancy firm Brikwork India, said the SMEs were contributing 40 per cent of the Rs 100,000 crore IT-based exports the country had achieved last year. The exports stood at 23 billion US Dollars, which had to be scaled up to 60 billion Dollars by the end of the decade. While there were 800 large IT companies contributing 13 billion dollars in revenue, the SMEs amounted to over 4,000 in the country.

However, SMEs had failed to match the growth rates of big companies. While big companies accounted for 30 to 31 per cent growth, the growth rate of small companies remained at 17 per cent.

The profit after tax achieved by the SMEs was also 30 to 40 per cent less than the big companies, he said.

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