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High credit, material costs hit small firms

High costs of credit and procurement of raw materials are the major factors inhibiting the growth of small and medium enterprises, a survey by the Confederation of Indian Industry (CII) has said.

business Updated: Jun 20, 2010 22:32 IST

High costs of credit and procurement of raw materials are the major factors inhibiting the growth of small and medium enterprises, a survey by the Confederation of Indian Industry (CII) has said.

Around 79 per cent of the micro, small and medium enterprises (MSMEs) surveyed said high cost of credit was a problem. For 64 per cent, it was the high cost of raw materials. Lack of credit and delayed payment were the factors affecting their growth, said 55 per cent.

The MSME sector contributes 8 per cent of the country’s gross domestic product, 45 per cent of the manufactured output and 40 percent of exports.

It provides employment to 60 million people through around 26 million enterprises.

Though the government has offered assistance under schemes like the National Manufacturing Competitiveness Programmes, 60-70 per cent of the respondents said they were not availing the benefits.

Developing infrastructure like industrial estates, simplifying labour laws and providing electricity and connectivity through roads should be the most important priorities for the development of the sector.