Acute need for developing SMEs in India: SEBI Chairman U K Sinha

Private financing in a regulated environment is the way forward as the country is moving towards a culture of appreciating the contribution of start-ups and small and  medium enterprises, Securities and Exchange Board of India (SEBI) chairman U K Sinha.

“There is an acute need for developing small and medium enterprises (SMEs) that have huge potential but suffer from absence of capital,” he said while delivering a lecture on the topic ‘How SMEs and start-ups can raise money from the market’ organised by the State Planning Board and hosted by the Asian School of Business (ASB) in Pallippuram.

The SEBI chairman said that 70 per cent of SMEs were debt stressed as against 30 for large and mid-corporates. The working capital cycle for SMEs was stretched to 130 days in comparison to 90 days for mid corporates, he noted, quoting HSBC Global Research.

Sinha also outlined various opportunities made available for SMEs and startups for raising capital, including a dedicated SME platform in national stock exchanges, institutional trading platforms, venture capital and dissemination board that will enable trading by companies listed in regional stock exchanges.

“Safeguarding the interests of genuine investors will remain paramount even while promoting alternate fund-raising mechanisms for the industry,” he said.

State Planning Board vice-chairman K M Chandrasekhar, in his presidential address, said that promoting home-grown industry was the best solution for the state.

“The industrial climate in Kerala can best be captured by local entrepreneurs. Proliferating startups are offering new leads for future industrial growth,” he said.

Startup Village Chairman Sanjay Vijayakumar said that India was fast becoming a knowledge economy where people, ideas and creative infrastructure mattered a great deal. Crowd-funding options available, as in the US, that support creative and high-risk enterprises which might not be able to raise funds from traditional sources, are something innovative, he said.

Terumo Penpol Senior Advisor C Balagopal urged high net worth individuals to invest in startups that have a passion and enthusiasm to excel and make a difference.

ASB director S Rajeev requested SEBI to favourably look into crowd funding options. “Crowd funding is a market research in disguise as it gives a preview into how well the product or application may be received upon completion.”

Panelists representing the industry recorded appreciation for the emerging opportunities for raising funds unlike in the past.