Tuesday, 29 January 2019

SME and sustainable economy

SMEs (Small and medium-sized enterprises)


SME meaning is Small and medium-sized enterprises.


The presence of SMEs as part of the whole national business entity is a manifestation of the real life of the diverse economy in India. Therefore, the placement of the role of SMES is one of the main pillars in developing the economy, but until now the development is still far behind compared with other economic principals. In a related development, SMES should be one of the main national development strategy which is realized in earnest with a strong shared commitment and supported by efforts to systematically and consistently conceptual and continually by involving all the parties concerned (Government, private, or community at the national level, regional, or local).

Small and medium enterprises (SME) have two small business definition that is known in India, namely:


The definition of a small business according to law No. 9 of the year 1995 concerning small business is the people's economic activities that have a maximum annual sales results $ 1000K and has a net worth, excluding land and buildings of the place businesses, most $ 200,000.00.

Definition according to the category of the Central Bureau of statistics (BPS), small businesses is identical with small industrial and household industries. BPS classify industries based on the number of workers, namely:

  • Household industry workers with 1-4 people.
  • A small industry with workers of 5-19 people.
  • Secondary industry workers with 20-99 people.
  • A great industry with 100 or more workers.

In line with developments in the era of globalization and the demands in the framework of the implementation of regional autonomy, the crucial problem that also complained a lot lately by the business including SMES emergence of a range of barriers related to the new regulations, especially in the regions.

 Cooperatives and SMEs


The rules of this area often lacking or not even provide opportunities for SMES to flourish. In its implementation, the bureaucratic administration that is convoluted and less assertive law enforcement a challenge to which we must continue to resolve the forward. Starting from a wide range of issues, challenges, and barriers to, then in the development of cooperatives and SMEs, the Government has set the direction of his policy, namely:

Develop SMEs.

  • Institutional Strengthening.
  • Expand the base and the opportunity of trying.
  • Mengembankan SMEs as the manufacturer, and
  • Building Cooperative
India's economy in the development of SMES is always portrayed as the sector has an important role. This is because the majority of the population of low-educated and live in small business activity in both the traditional and modern sectors. SMES also have a strategic role in the development of the national economy, therefore, in addition to his role in the economic growth and the absorption of labor also plays a role in industrial development outcomes.

Small and medium enterprises (SMEs) in the play an important role, both in terms of number of businesses (establishment) as well as in terms of job creation. Based on a survey conducted by BPS and the Office of the State Minister for cooperatives and small and medium enterprises (Scooping up & SME), small businesses including household enterprises or micro (i.e. business with total sales (turn over) a year that is less than $1 billion) in the year 2000 include 99.9 percent of the total enterprises in India.

 Medium enterprises


While medium enterprises (i.e. enterprises with a total annual sales ranging between $ 1000K to $5000K) that includes only 0.14 percent of the total effort. Thus, the potential of SMEs as a whole covers 99.9 per cent of the total number of businesses in India.

In order to capture the spirit of reform, democratization, decentralization, and participation; then the planning, execution, control, monitoring, evaluation, and continuous refinement of the overall development program should refer to the paradigm of development that is based on the Community (community-based development) or human-centered development (people-centered development).

Implementation of the concept of development that is based on the community among other things based on principle-the principle:


The full commitment of the Government with the involvement of a minimum (fully committed with less involvement), the Government of Participation only if there is a distortion of the market by means of selective and judicious (smart intervention)
  1. Participation active (participatory process) of all components
  2. Civil society (civil society)
  3. Sustainability (sustainability)
Funding is based on principles: efficiency, effectiveness, transparency, and accountability and can be directly accepted by the people who really need (intended beneficiaries).

As a consequence all interested parties (stakeholders) or all the elements of civil society (Government, employers, community colleges and the public and/or NGOs) must be involved in the process of planning, implementation, control, monitoring, and evaluation of development, both at the central level as well as regional/local. Efforts to uphold national independence in order to reduce/eliminate the burden of debt and lending against foreign dependence as well as the efforts of strengthening the resilience of the national economy should be built through excavation and mobilization of Community funds as well as an increase in the participation of all elements of civil society (India Incorporated) in the development process is based on the paradigm of development that is based on the Community (community-based development).

Investment development

Thus investment development will take place on an ongoing basis and stem from the ability of national resources with the extensive participation of the community and the world of business, especially SMES and cooperatives as the largest component of the national effort, so formed the reliability of national investment competitiveness. Development investment for retaining the national efforts need to be more encouraged to expand equitable opportunity of trying for the whole economy in order to strengthen the national economy that is resilient and self-sufficient as well as to realize system people's economy.

In realizing the system, it takes a supportive environment. The closest environment is the operating environment of the SMES themselves that directly faced by SMES. This directly affects the environmental performance of SMES. Competitors, creditors, customers, workers, and suppliers are factors that affect the performance of SMES. Mastery of the market share of one of the decisive factors to what extent competition power of SMES. While the credit system, labor, and customers are also very real affect SMES.

Business Prospects

SME business prospects in an era of free trade and the autonomy of the region depend largely on the efforts taken by the Government in developing the SME business. One of the key efforts that need to be done is how to develop a conducive business climate for SMEs. To achieve this a conducive business climate, required the creation of a conducive policy environment for SMEs. A conducive policy in question can be interpreted as a policy environment that is transparent and does not overload the SMES financially excessive talking. This means a wide range of government intervention, either at central level or area must be eliminated, particularly the removal of various regulations and administrative requirements are complicated and hinder the activities of SMES.

An important factor in some areas which greatly reduce the competitiveness of SMES was wild (Extortion) charges or compulsory contributions imposed official government apparatus. Extortion wild of course will increase the operating costs of SMES so as to reduce their competitiveness. Thus, wild charges as well as the fiscal burden of damning the development of SMES in the region should be eliminated.

SMES Growth


The focus of this program namely, efficient SMES growth is determined by productivity growth sustainable SMES, and in turn will drive the growth of SMES. More Species The Asia Foundation in the year 2000 a new SME development focus of the divide that the market-oriented in the four principal elements, namely:
  1. The development of a conducive business environment for SMEs
  2. The development of financial institutions that could provide an easier access to credit to U KM on the basis of transparency
  3. Services-business development services to the non-financial SME is more effective
  4. The formation of strategic alliances between SMEs and other SMES or with great effort in India or abroad.
 In addition to the creation of a conducive business environment, the SME development programs directed at supply driven strategy should begin to be abandoned, as the successor of the direction this program namely the SME program development market-oriented based on the consideration of efficiency and needs of SMES rial (market oriented, demand driven programs).

SME business examples 

SME business examples


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