A government working group in India has said a $5 trillion economy could be a reality for the country by 2025, with small businesses (SMBs) a key component of the roadmap it proposed to achieve that goal.
Reports in the The Economic Times on Wednesday (Jan. 16) said a working group of the Ministry of Commerce and Industry released a report outlining how India could achieve this goal, including plans for the agriculture, manufacturing and services sectors to heighten their economic contributions. The goal “is within the realm of possibility,” the report said.
SMBs are a prominent part of the roadmap, according to reports, with the working group emphasizing the importance of access to working capital for this group. The report also recommended the development of a credit risk database for small businesses, as well as the introduction of credit rating and community-based funds for small companies.
Government figures said the SMB space has been expanding by at least 10 percent annually since 2015, and contributes nearly 38 percent of national gross domestic product (GDP).
Small businesses became a focal point of the nation’s previous demonetization efforts, which introduced significant disruption to entrepreneurs who had been relying on cash to conduct business. Reports in CNN in 2016 highlighted small businesses’ struggles since demonetization, but more recent analysis from American Express and Oxford Economics found that SMBs in the country have rebounded.
“Our research shows that India’s smaller enterprises are primed for success in 2018, by balancing revenue growth with efficiency improvements and leveraging unique attributes of agility, innovation and strong customer relationships,” said Saru Kaushal, American Express country business head of global corporate payments, in a statement last year. “Indian [SMBs] are now placing equal priority [on] embracing responsible business practices to attract more customers.”
Recent years have also revealed a growing alternative SMB finance market in India, though fallout from the PNB banking scandal has led to tighter underwriting standards among India’s financial institutions — a trend that analysts said has hit small firms particularly hard.