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Why do most SMEs remain SMEs through their entire lifecycle?

Gaurav Shah
Tuesday, November 1, 2011
 Gaurav Shah
India has been the talk of the world markets for quite a few years now from an economic growth perspective. It is a no brainer that the SMEs play an extremely important role in driving this growth for any economy and India is no different. The Indian landscape boasts of having more than 30 million SMEs and more than 60 million people being employed by them. Currently, the SMEs contribute to more than 20 percent to the GDP. These basic numbers are just to understand how important the segment is especially for India.

Obviously, a growth spurt in the SME segment will provide a booster doze to the growth of our overall economy. However, most SMEs have remained SMEs through their entire lifecycle, which is a pressing issue, if India has to sustain the economic growth in the coming two decades.

The two logical sides are the policy makers and the entrepreneurs themselves.

Policy makers are working hard to create reforms that may be suitable, however, the real thrust hasn’t been given as yet to the SME segment. They are still busy tweaking the law to benefit only a few. However, we can not completely blame them since they have done a commendable job in significantly opening up the economy in the last two decades.

After having interacted with more than 2000 Indian entrepreneurs in the last 4-5 years, there have been some key observations that I would like to share. There are two parts to these key observations, the entrepreneurs’ mindset and the entrepreneurs’ wherewithal; the mindset being a much bigger issue.

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