Small and Medium Enterprise

12633 Words Aug 9th, 2011 51 Pages
INTODUCTION

Small and medium enterprise(SME’s) in India have a very important place in the Indian economy. Their contribution in terms of production, export, export, employment generation and all round growth of the country is well known. The role of SME sector in the nation building is well recognized not only in India, but also across the globe. The industrial engines of Japan, china, US, Germany and Taiwan are also driven by the SME sector.

Finance/credit is the most critical component in any business process. Any industrial sector cannot work to its full capacity without adequate flow of funds. The SME sector is working with low capacity utilization, which, however, has now improved from 33.34% to around 52% percent. Still these
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Nevertheless, the spread of SMEs is a fact, which enhances their attraction from a national or regional policy.

SIGNIFICANCE OF SMEs

SMEs are considered the engine of economic growth in both developed and developing countries, as they:
• Provide low cost employment since the unit cost of persons employed is lower for SMEs than for large-size units. • Assist in regional and local development since SMEs accelerate rural industrialization by linking it with the more organized urban sector.
• Help achieve fair and equitable distribution of wealth by regional dispersion of economic activities.
• Contribute significantly to export revenues because of the low-cost labour intensive nature of its products.
• Have a positive effect on the trade balance since SMEs generally use indigenous raw materials.
• Assist in fostering a self-help and entrepreneurial culture by bringing together skills and capital through various lending and skill enhancement schemes.
• Impart the resilience to withstand economic upheavals and maintain a reasonable growth rate since being indigenous is the key to sustainability and self-sufficiency.

IMPORTANCE OF SMEs IN VARIOUS ECONOMIES OF WORLD
Small and medium enterprise has always the engine of growth for every country, in developing as well as in transition economies. Their role in
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