Lack of adequate infrastructure is an oft cited problem by Indian industry, but nowhere is it more acutely felt than in small and medium enterprises and they’re hoping that Finance Minister Arun Jaitley will come up with a whole new roadmap in his first union budget to make facilities like electricity and waste management available.
The Firstbiz-Greyhound Knowledge Group “Analysing Indian SME perceptions around Union Budget” survey of small and medium enterprises in India found that while there is an unavailability of infrastructure facilities, every one of the 540 respondents in the survey said they expect the new government to give incentives and encourage cluster infrastructure schemes.
The survey found that availability of basic infrastructure like power, water and waste management was a challenge for firms across all cities where the survey was conducted and was the fourth biggest challenge faced by small and medium enterprises.
Almost all the respondents said that they were grappling with a lack of large-scale electricity resources, inadequate cluster infrastructure schemes, insufficient facilities for waste management, inadequate water. And this apart from the rising price of gas and coal.
Compared to the average of 74 percent of the respondents saying that they had insufficient infrastructure, Mumbai was the highest with 80 percent of the respondents complaining of a lack of infrastructure, followed by Indore and Nasik at 78 percent.
And while the government may claim that they have adequate support mechanisms in place for smaller industry, most of the respondents said they were unaware of them, which means that they weren’t taking advantage of them. So while the Department of Industrial Policy and Promotion may have a scheme for smaller industries to upgrade their infrastructure, the survey found that most of the respondents were unaware about them.
In case of the Industrial Infrastructure Upgradation Scheme (IIUS) scheme of Department of Industrial Policy and Promotion, 90% of total respondents were unaware of the scheme. Similarly when asked about Integrated Infrastructure Development (IID) scheme of the Ministry of MSME, 92% of total respondents were unaware of the existence of this scheme.
So how can Arun Jaitley rectify the problems of the industries that are expected to re-fuel the Indian growth engine?
Apart from cluster development schemes, SMEs are hoping for more special economic zones (SEZs), greater availability of large-scale electricity through captive power plants and greater discipline for industrial waste management.
The demand for cluster infrastructure is more acute in Tier 3 cities than their counterparts in bigger cities. For example, 94 percent organisations in Nasik and Kanpur felt that there was a pressing need to encourage and set up cluster-based infrastructure as it was directly impacting their competitiveness in markets. In comparison, about 83% organizations in cities such as Delhi and Chennai felt the need of cluster infrastructure.
The ball now lies in the Finance Minister’s court but with Prime Minister Narendra Modi having promised a focus on small and medium enterprises on the campaign trail, Arun Jaitley will need to ensure that he finds a means to not only develop infrastructure but also deliver it efficiently to India’s SMEs.
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