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  • Subject area(s): Marketing
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  • Published on: 14th September 2019
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In the last few decades there has been a revolution happening in India. This is due to India powered by SME also known as Small & Medium Enterprises. Today it's not just that only large corporations who are making the change, SME sector is the one who brought the change in the last few decades. In India, SMEs are classified into two categories on the basis of nature of the business (Hero FinCorp, 2018). Manufacturing Enterprises which are involved in making of goods, these are measured on the bases of their investments: As Micro Enterprises are the ones who have investment up to 25 Lakhs, Small Enterprises are the ones which have investment above 25 Lakhs but does not exceed 5 Crore, and then the medium Enterprises which have investment above 5 Crore and up to 10 Crore. Then comes the Service Enterprise which are involved in providing service to the industry these are measured on the basis of their investment in equipment: Micro Enterprises are the ones which have invested up to 10 Lakhs in their Equipment's. Medium Enterprises are the ones which have invested above 10 lakhs and up to 2 crore. Medium enterprises are which have invested above 2 crore but less than 5 crore.  (SME Chamber of India, 2018). India is a highly populated country as it has a population of 1.22 billion people and is expected to become the most populated country in future. The majority of India's population is dependent on small business due to the high unemployment rate. (Gill and Mand, 2013). Currently India has a estimate of 42.50 million SMEs which employ about 106 million people which is 40% of India's workforce. In terms of employment SMEs are just next to agricultural sector. SMEs produce more than 6000 products. The GDP contribution of SMEs is around 6.11% in manufacturing sector and 24.63% in service sector. The growth rate of SMEs is over 10%.(Evoma, 2017)

The current population of India is around 1.22 billion people.

The population of India is expected to be 1.53 billion by 2030 (Indiaonline, 2012). The

majority of Indian population relies on small business/self-employment because of the

high unemployment rate

Small and Medium enterprises has highly contributed to the Indian economy, like equality of income and balanced regional development. SMEs are found to be more efficient in providing job opportunities as compared to large scale enterprises . The most important contribution of SMEs to Indian economy is the balanced economic development of the economy. (MBA Rendezvous, 2015).

Over the time when the large enterprises were busy in focusing on their own growth and prosperity , on the other side SMEs were successful in fulfilling their social objectives by equitable economic growth. This was also helpful in industrializing of backward and rural areas and assuring equal distribution and reducing imbalances. Small and Medium Enterprises have also helped large industries by supplying them by machines and other technical services (SME Venture, 2017). SMEs have contributed by increasing the exports and also by increasing the Gross Domestic Product (GDP) of the country. India has nearly 3 million SMEs which contribute around 50% of the output of the industry and around 42% of India's exports. SMEs have also helped by increasing the employment level in the country,

SMEs currently employ around 40% of the country's labour, the sector provides over 1.3 million jobs per year (Vashist et al., 2016).

SMEs may have contributed a lot in the Indian economy but it isn't easy for them to survive, as there are many barriers for them. The barriers are in different sectors : people, government policy, infrastructure, market constraints, finance.

The barrier discussed here will be People and Skills As A Barrier To Innovation

Today for development the most important thing which is required is skilled labour. There are various needs of the industry like scientists, technicians and engineers are required in case of research and development region and in non-research and development regions require people who are in the field of management and marketing. The challenge for SMEs is that more than 85% of enterprises face unavailability of skilled labour and workers which becomes a barrier to innovation .

SMEs face problem in recruiting highly skilled labour due to financial restrictions and lack of infrastructure. This problem also raises a question on the internal management  of the enterprises as lack of internal management impacts the firms capability and overall performance due to lack of direction. More than 38% of SMEs face internal management as a barrier to innovation. After seeing this situation it can be said that companies should focus on its internal management and its innovation and it also needs a system where SMEs can have access to skilled labour so that they can concentrate on specialised work (Pachouri and Sharma, 2016). To overcome the other barriers it can be suggested that SMEs should increase their technology adaption. Government should make technology solutions more accessible by giving SMEs government credits or financing options . Training programs should be conducted to overcome the problem skill gaps in the enterprises (Firstpost, 2018).

So after the above research it can be concluded that SMEs play a vital role in the Indian economy as they have emerged as the leading sector in terms of their contribution to Indian exports and employability. SMEs provide employment to almost 40% of the workforce in India. SMEs highly contribute in the economy as they provide high employment opportunities and help in the balanced economic development, it also helps in uplifting of rural areas and also provides great support to the large industries by giving them ancillary products. SMEs help in increasing the country's GDP. The sector also faces many barriers to its growth such as  government policies, technological advancements and the most important is availability of skilled labour. People and skills is a great challenge for SMEs. Overcoming these challenges can be a huge issue due to the lack of infrastructure to face these kinds of problems. Hence, the best possible solution to this problem is to promote education in rural areas especially in the manufacturing sector where majority of the country's products are produced. Implementing training programs is also a great way to provide the required knowledge to the uneducated population. If the SME sector is to grow in the near future, it will also need to quickly adapt to ongoing technological trends such as Internet of Technology (IoT), and big data, all which are a part of the fourth industrial revolution which is going to revolutionize India's growth and drastically increase the contribution of SMEs to the Indian economy. If aided by the government through fund injections such as grants and subsidies, SMEs can increase their involvement in terms of the innovation they provide and can drastically expand into other activities which in turn will benefit India's growth.

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