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Small firms still struggling with slowdown, says survey
Monday, 27 July 2009, 14:35 IST
New Delhi: A majority of small and medium enterprises (SMEs) in India are still struggling to cope with the global slowdown and remain unaware about the stimulus measures taken by the government to help them, says an industry survey.
"Ninety-four percent of the respondents reported that their overall business has been affected 'severely or moderately' due to the current economic slowdown," said the survey conducted by the Federation of Indian Chambers of Commerce and Industry (FICCI).
FICCI said 116 SMEs manufacturing a diverse range of products from 20 locations across the country participated in the survey.
It said 73 percent of the firms did not know about any stimulus steps announced by the government to support their sector.
"This indicates a serious problem with information dissemination at the ground level," said the report.
"A majority of those who were aware of the incentives indicated that these measures have not really enabled them to regain the business momentum. The interest subvention announced for SME exporters is not reaching the intended beneficiaries," it added.
Though the government in the budget had set up a refinancing facility of 
4,000 crore ($832 million) for the SME sector to make credit readily available, SMEs across the sectors are still finding it difficult to raise funds.
SMEs have put "financial accommodation by the banks at lower interest rates" as their single most important demand.
With about 90 percent of small and medium firms being dependent on banks to raise funds, the survey said: "Fifty-nine percent of the respondents said the high cost of financing persists to be a problem, while 62 percent felt that banks do not encourage financing in the SME sector."
The survey also highlights rising cost of raw materials and falling demand of products.
The reporting companies also indicated that they were witnessing stiff competition from Chinese goods as these products are being dumped in India.
However, about 66 percent of the surveyed firms said the situation may improve in the next six months, and expected market conditions to improve significantly over the next two quarters.
Source: IANS
4,000 crore ($832 million) for the SME sector to make credit readily available, SMEs across the sectors are still finding it difficult to raise funds.
SMEs have put "financial accommodation by the banks at lower interest rates" as their single most important demand.
With about 90 percent of small and medium firms being dependent on banks to raise funds, the survey said: "Fifty-nine percent of the respondents said the high cost of financing persists to be a problem, while 62 percent felt that banks do not encourage financing in the SME sector."
The survey also highlights rising cost of raw materials and falling demand of products.
The reporting companies also indicated that they were witnessing stiff competition from Chinese goods as these products are being dumped in India.
However, about 66 percent of the surveyed firms said the situation may improve in the next six months, and expected market conditions to improve significantly over the next two quarters.
Source: IANS