Indian SMEs expected to double in size

Industry Survey

A SMERA and Dun & Bradstreet study of auto component SMEs attempts to put them on a global platform.

The $10 billion auto components industry will double in size to become a $22 billion industry by 2010, similarly, exports of auto components will grow from $1.8 billion in 2005 to $4.5 billion by 2010, says a recent study by Dun & Bradstreet (D&B) in association with the SME Rating Agency of India Ltd (SMERA).

D&B along with SMERA announced the launch of its first series of publication, 'Emerging SMEs of India' series of six publications covering auto components, textiles, food processing, pharmaceuticals, chemicals and engineering to address these needs.

The first publication in the series titled "Emerging Auto Components SMEs of India", the domestic auto components industry will double in size by 2010 from $10 billion in financial year (FY) 2006 to $22 billion by 2010. Even the exports are set to grow from $1.8 billion in FY 2005 to $4.5 billion by 2010.

There are multiple factors that are seeing the auto component industry record such exponential growth. "A robust domestic market is combined with a global Original Equipment Manufacturers (OEMs) setting up base in India, OEMs here also are expanding and increasing indigenisation levels for exports, and the rising exports of automobiles manufactured in India such as Mahindra & Mahindra's Scorpio, Bajaj Auto's bikes, Tata Motors' City Rover and Hyundai's Santro Xing and Suzuki's Alto, have all given a boost to the industry besides deregulation and the government's policy initiatives," said Kaushal Sampat, director, business development, D&B.

The publication also studies the banking preferences of the SMEs and notes that nearly 66 per cent of the profiled companies preferred banking with public sector banks, followed by private banks and cooperative banks. Only one per cent of the profiled Auto Component SMEs banked with MNC banks.

Despite their massive growth potential and size, SMEs account for almost 90 per cent of industrial units in India and 40 per cent of value addition in the manufacturing sector, besides contributing to 35 per cent of the country's merchandise base.

The publication is an attempt to provide a platform to enhance the visibility of Indian SMEs in the competitive global arena. It will be provided on a complimentary basis to leading global companies in these sectors, banks and financial institutions, leading corporates, ministries, Indian embassies, industry experts and industry associations.