Winds of change continue to blow for Small and Medium Enterprises (SMEs), as they remain hopeful of improved business conditions and expect a high growth rate in the coming months, reveals the second SME Sentiment Survey conducted by IndiaMART, India’s largest online marketplace for businesses. Placing their confidence in the new government, 54 per cent of the companies surveyed feel that the new government is likely to foster an environment to boost positive growth in the country. This is evident from the fact that their confidence on Indian economy has significantly grown from 5.8 in May 2014 to 6.6 in Oct 2014.
According to the survey, 70 per cent of the SMEs foresee improved business conditions over the next six months and over 45 per cent expect growth of more than 20 per cent during the same period. This is despite the fact that 41 per cent of these businesses experienced less than 5 per cent growth in the previous six months, a contrasting finding. In May 2014, when the last SME Sentiment Survey was conducted, around 66 per cent of the respondents had predicted an improvement in business conditions. A slight increase since then, the current results clearly indicate optimism among SMEs, who are hoping for some significant reforms in the next few quarters.[metaslider id=1448]
Commenting on this, Shri Dinesh Agarwal, Founder & CEO, IndiaMART, said, “SMEs have been highly positive on the future prospects of growth, largely owing to the recent change in the government and are quite hopeful of a positive transformation. The survey is an extension of their expectations and the change that they seek for their progress.”
The study also reflects a sharp decline in the input cost for small and medium businesses, which has travelled down from 82 per cent (May 2014) to 57 per cent (October 2014). This points to a significant control of inflation over the period surveyed.
However, the report also uncovers that financing or credit flow has been a major constraint to the growth of the SMEs, implying an increased unavailability of credit for them. Other critical challenges posing a hindrance to their growth emerged as increasing competition from large businesses, declining sales, rising production cost, followed by others.
The SME Sentiment survey aims to analyse the performance of Indian SMEs and identify their growth expectations over the next six months, besides recognizing the challenges they face to scale up their businesses.