94 per cent SMEs hit by slowdown: FICCI survey

The survey was conducted by FICCI among 116 SMEs manufacturing a diverse range of products from 20 locations across the country,mostly catering to the export market.

The participating companies indicated that they have lost most of their major markets primarily in Europe and the US and are now struggling to find new markets for their products. Among other factors,rising cost of raw materials and lack of buyers for products were reported to be problematic areas.

The reporting companies also indicated that they were witnessing stiff competition from Chinese goods which were being dumped in India.

The survey also underlines the requirement for better communication of government initiatives for the Small and Medium Enterprises (SMEs) sector. Of the total participating companies,73 per cent of the respondents said they were unaware of any steps announced under the stimulus packages to support their sector.

Moreover,87 per cent of the participants reported that they were,in general,unaware of the different schemes being run by the government for the SME sector. This indicates a serious problem with information dissemination at the ground level,the survey said.

Pointing out factors adversely affecting the business performance,59 per cent of the respondents indicated that high cost of financing persists to be a problem. About 90 per cent of the participants reported that they were dependent on banks for funding their operations. A further 62 per cent of the participants felt that banks do not encourage financing in the SMEs sector and 97 per cent of the respondents pointed out that the cost of finance has gone up over the last one year.

The participating companies from the SME sector pointed out that lowering the cost of financing and getting additional fiscal support from the government is the need of the hour. Faster processing of loan applications,support from government for technical upgrade,availability of quality control facilities,and easier availability of credit at better rates,among others,should be adopted by the government.