Karnataka - Bangalore   

‘SMEs must lower costs, improve quality’

Bangalore: Walter D’Souza, convener, Federation of Indian Export Organisations (FIEO) Committee on Agro Exports and Agri Export Zones, on Friday said that small and medium enterprises (SMEs) needed a comprehensive programme for improving technology and better access to credit.

Inaugurating an SME workshop on ‘Growth opportunities for exporters’ organised by the FIEO and ICICI, Mr. D’Souza said that to sustain growth it was essential to lower the cost of manufacturing and improve the quality of products. Rising transaction costs and lack of infrastructure were affecting the prospects for higher exports.

Small businesses lack access to capital and money markets. Investors are unwilling to invest in proprietorships, partnerships or unlisted companies as the risk perception about small businesses is high. In India, many small manufacturing enterprises do not have access to adequate bank finance and only about 16 per cent of the total bank credit finds its way to the sector.

Despite being a priority sector for lending, small manufacturing enterprises get just about 8 per cent of their annual turnover as working capital requirement, as against the normative requirement of 20 per cent.

M. Balagangadharan, Regional Joint Director of Foreign Trade, spoke on the role of foreign trade policy in promoting exports by SMEs.

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