Indian SMEs remain bullish on growth

Mumbai, Apr 11 (UNI) With India's growing importance in global trade and its businesses gaining a stronger foothold in the world economy, Indian small- and medium-sized enterprises (SMEs) are bullish on the country's economic growth, a UPS Asia Business Monitor (UPS ABM) 2007 survey revealed today.

The Indian SME leaders have emerged as being most optimistic about their current business growth prospects as compared to other SME leaders in Asia Pacific, it said.

The UPS ABM 2007 is an annual survey designed to gauge the competitiveness of SMEs in Asia.

The survey was conducted on 1,200 decision-makers of SMEs between November 15 last year and January 10. It encompassed 12 markets, including Australia, China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, the Philippines, Singapore, Taiwan and Thailand.

The study found that 81 per cent of Indian SMEs are optimistic about economic growth in India. This is a big jump as compared to the 69 per cent recorded last year.

Eighty-nine per cent of Indian SMEs are confident about their company's growth prospects, which is a consistent rise in growth expectations from 2006. This positive sentiment is reflected in Indian SMEs' expectation to increase or maintain their current workforce in 2007.

However, although the overall reading about India is ranked among the most optimistic in the region, there are roadblocks to competitiveness such as lack of qualified workers, innovation and government support.

The study found that SME leaders in India cite a lack of supply chain efficiency, transportation and infrastructure as the biggest obstacles to their competitiveness, factors considered both important and lacking. These obstacles need to be addressed to ensure their sustainable growth and competitive position in the global marketplace.

Across Asia, the top three business concerns that keep business leaders up at night include quality of their services (50 per cent), customer loyalty (48 per cent) and the retention of quality employees (47 per cent).

Indian SME leaders have echoed the same business concerns. With regard to the problems encountered by Indian SMEs in financing their businesses, 57 per cent stated bureaucracy and red tape in processing applications, 40 per cent stated insufficient collaterals and 34 per cent mentioned a lack of institutions willing to lend to small businesses.

Indian SMEs also highlight the problems faced in supply chain management. Fourty-two per cent of SMEs in India expressed difficulty in forecasting demand, affecting the efficiency of their supply chain. Of these, 33 per cent stated a lack of knowledge and expertise in supply chain management and that their supply chain was fragmented with too many parties involved.

With all eyes on India, this year's ABM study also posed a number of questions specifically on the country.

India's business and legislative environment was viewed as positive and encouraging to foreign companies and multinationals (52 per cent). Of the respondents, 13 per cent felt that this was because of India's low production and labour costs, 12 per cent believed that it was because India has a good business and investment climate, while 11 per cent believed that India's government policies encouraged foreign investment.

As China and India continue to emerge as two of the fastest growing economies in the world, SME leaders in Asia remain more sceptical about the growing dominance of China than India. While China is consistently rated by SME leaders with the greatest prospects for economic growth (92 per cent) in this year across the region, India's prospects were viewed as very positive in the coming year (81 per cent).

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