“SMEs to contribute 22% to national GDP in near future”

A new study by ASSOCHAM showed the contribution of SMEs is around 17 per cent to the national Gross Domestic Product (GDP). The study projects the same to touch 22 per cent in the near future.

The statistics was revealed by Sudebh Sarbadhikary, CEO of India Factoring and Financial Solutions Private Limited, at a press meet on the organisation’s development and future plans.He said that SMEs accounted for 45 per cent of the industrial output in addition to creating one million jobs annually.

He added that working capital management was a concern that most SMEs face. “The recent economic crisis saw many large organisations looking to squeeze their supply chains in an effort to improve their efficiency. It is evident that the access to finance by SMEs is mainly constrained due to the unwillingness of the financial institutions or investors, given the high risks associated,” he said.

He also said that due to lack of collateral and absence of clear financial records, SMEs failed to receive funds. “In such a scenario, factoring services have the potential to emerge as an important means of raising working capital. Factoring is also the most suited for MSMEs since it does not require collateral,” he said.