Advantages of Small and Micro Enterprises in Indian Manufacturing Industry

 

Advantages of Small and Micro Enterprises in Indian Manufacturing Industry. Many Indian manufacturing companies are looking to the small and micro enterprises to take up new technology, new processes, and new strategies for business growth. There has been a steady rise in the number of small and micro enterprises (SMEs) in India from the past decade. According to the recently released FDI statistics, the number of foreign direct investment (FDI) in the manufacturing sector of India has increased by nearly twenty percent over the last two years alone. India is emerging as one of the fastest-growing sources of growth for FDI in emerging economies. However, challenges and disadvantages exist that Indian SMEs need to overcome if they want to remain competitive in the global market.

 

Challenges and Disadvantages Small and Micro Enterprises in India faces many challenges that were not present even ten years ago. The high rate of unemployment is a major challenge for small and micro enterprises in India, considering that the rate of unemployment in the overall economy has been rising. Another significant challenge that the small and micro enterprises in India face is the lack of skilled labor in the country. Many of the small and micro enterprises in India do not have the adequate infrastructure to employ skilled laborers. Larger corporations also often refuse to employ their local labor because of the low cost of doing so in the domestic market.

 

Cost competition is another major obstacle that small and micro enterprises in India face in the Indian manufacturing industry. For example, the overhead expenses in a manufacturing unit can skyrocket if there are several other foreign companies located in the same area as the manufacturing unit. The local labor is also limited, considering that the quality of that type of labor is much lower than that in the United States. In addition, foreign corporations often buy large quantities of products at wholesale rates when they come to India.

 

Another challenge that the small and micro enterprises in India faces is poor distribution infrastructure. Many times, the distribution infrastructure in India is lacking, which hinders the smooth flow of goods from the manufacturer to the wholesaler or retailer. The manufacturer may have adequate storage facilities to hold raw materials but lacks distribution facilities, such as air conditioning units, generators, and large warehouses. Thus, the goods may be delivered to the customers when they arrive, but then the delivery route needs to be repaired or blocked by the distribution units. As a result, the goods may not get to their destinations, which leads to a loss in profits for the manufacturing company.

 

Inadequate enterprise information and technology protection software and systems are another challenges faced by the small and micro enterprises in India. These enterprises often fail to update their information on the latest technologies, which decreases their ability to compete with global competitors. Indian Small and Micro Enterprises face an even greater challenge when it comes to enterprise information and technology protection software. This lack of enterprise information and technology protection reduces the processing speeds of many programs, which results in reduced productivity.

 

Finally, Indian Small and Micro Enterprises face the threat of counterfeit and substandard products. The quality of Indian goods is rising, but there are still plenty of imitations and fakes in the market. Many small and micro enterprises rely on the importation of goods for their production process, but at the same time, they have to take care of the quality aspect of the imported products, as well. In order to stay ahead of their competition, they have to invest in advanced manufacturing technology, such as industrial machinery and software.

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