SMEs need to break contractor mindset
May 16 2012, 14:04 | By CNBC-TV18
YM Deosthalee feels there are few institutions to provide support because most SMEs are followers rather than creators.
Image: SME Mentor
Welcome to the concluding episode of CNBC-TV18's Emerging India Awards featuring YM Deosthalee of L&T Infotech. In this episode, Deosthalee offers his view on the various aspects of the SME sector and its potential to contribute significantly to the Indian economy.
Q: You were present at the Emerging India Awards ceremony which recognised winners of emerging India. There is a lot of talk about SMEs being the backbone of the country and the need to do more for SMEs.
But do they really get the credit they deserve? Do SMEs really get the support they deserve in this country?
A: There is no doubt that the SMEs are the backbone of the economy because they create lot of employment opportunities. They also nurture entrepreneurship and are primary innovators.
So, there is no doubt in my mind that they need to be nurtured and supported. But there are very few forums, institutions or even venture capitalists today to provide that support because there are quite a few SMEs who are followers rather than creators. It is important that SMEs also be creators. They need to come out with new ideas that can be supported.
Q: So they have to get out of the subcontracting mindset that seem to have gotten stuck into?
A: That is a key point. What is important is that they need to come out with new ideas. For this we need to ensure that the education system trains the youth in learning to generate new and original ideas.
Q: For the kind of businesses that SMEs run, do you believe that specialisation has to be the key strategy?
A: Specialisation is one part as it offers a competitive advantage even if they are subcontractors or small-parts manufacturers But more than specialisation what I believe SMEs need to do is spend time in fully understanding the industry and its future needs.
Q: How important will it be for an SME to actually look at the opportunities that alliances or joint ventures offer?
A: I don't think a SME should focus on alliances. Alliances are important only if the SME is used by technology providers as a base in India. But once the overseas partner understand the markets then the alliance becomes less meaningful.
Q: A lot of conditions on what you can do and can't do?
A: Of course and it happens in the services industry.
Q: On regulations as well?
A: I think a lot depends on that. But if the alliance is for upgrading technologies that would aid the SME reach out to the world market, then the alliance makes a lot of sense.
Q: When is it a good time for a SME to enter an alliance and what should be kept in mind in negotiating a deal?
A: I think private equity definitely has its own agenda. It's important for the SME to make the right choice in terms of a private equity provider and also understand the mindset of the private equity partner.
Q: Are you seeing a big difference in the way investors are looking at India?
A: I do not think investors or for that matter anybody is questioning the long term outlook on India. There are problems, there are issues and I think what is important today is that the economic agenda needs to get priority. It's very easy to say, but very tough to implement.
Q: What is your No.1 problem about India?
A: The No.1 concern clearly is the holistic development of infrastructure. If there is visible action in one or two or three areas, I think the sentiment will change tremendously.
Post Your Comment
Recent Comments (1)
May 17 2013, 16:16
May 17 2013, 15:29