Although the government has been taking steps to promote and create awareness about the MSMEs, there are still a lot of hurdles which the sector needs to clear.
The way things are going on for the MSME sector, it is a sure shot sign that the sector will be growing tremendously in the coming years. The MSME sector is a crucial sector of the Indian economy. It is really important for the government to support and promote its functioning by giving timely capital, providing necessary assistance and technology infrastructure. This will boost the functioning of the MSME sector manifolds.
There are various challenges that the sector faces, such as inadequate capital infusion and delayed payments, especially from large cooperates and restricted access to properly organised finance. Banks in India have been the largest source of funds for SMEs in India. But their policy of granting a loan against collateral has in most cases worked the other way round.
There are plenty of options available when it comes to financing of the SMEs, but the problem is that they cater only to a handful of them. There is a huge demand and supply gap, which needs to be taken care of. Issues such as unavailability of desired/ acceptable collaterals, high rate of raising funds and unavailability of credit raising are just some of the issues that plague the lender-borrower relationship. There is also a massive lack of technical sharing when it comes to information sharing and proposal development, which further leads to a general lack of interest by the potential small entrepreneurs. Also, the lack of confidence on borrowers by the lenders is a major hurdle.
The recent economic trends in the country have thrown open an array of opportunities for the development and diversification of the MSME sector. The ‘Make in India’ campaign by the government has the potential to change the fortunes of MSME sector.
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