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India’s SME sector is the foundation on which a robust economic model for India is being built. In that spirit, each SME in India should be strengthened. SMEs face a multitude of challenges and risks in their journey of business building and scaling up. While some of these challenges (like geography, sector, and regulatory framework) are macro in nature and impact the entire SME community, others (like inventory management, financial management, products and services management, people management, etc.) are specific to individual SMEs.
While risks in themselves are not bad, SMEs should be more aware on how to tackle them and benefit from them, concluded experts at the recently held Business Standard Smart Business panel discussion on 'Risk Management for SMEs' held in association with Rajkot Chamber of Commerce and Industries (RCCI) and protection partner Birla Sun Life Insurance. The panellists included Arvind Modi, Associate Vice President, Gujarat Venture Finance Limited (GVFL), Kulin Vyas, Member - MSME Committee, Gujarat Chamber of Commerce and Industries (GCCI), S B Bhatiya from the District Industries Commissionerate (DIC), Rajkot, Gaurav Saxena, Vice President and Zonal Head, Birla Sun Life Insurance, and Samir Shah, President, RCCI.
Arvind Modi highlighted ignorance as one of the primary banes for SMEs in handling financing risks. "Many don't know other sources of funding. They only know of banks,” he said. “SMEs need to understand that the more loans they take, the greater their credit value decreases.” He felt that there was a need for increased awareness among SMEs for funding options like venture capital and private equity, among others.
On the other hand, Kulin Vyas called for the government and banks to assist SMEs in fund raising to boost risk management in finance. Offering a government perspective, S B Bhatiya said that the state was also working towards hand-holding SMEs in infrastructure risks and finance risks, among others.
Emphasising on the use of technology to grow their business, Gaurav Saxena urged SMEs to adopt innovation and technology integration. "The young generation is quick to adopt technology. SMEs should leverage that since today lot of work happens through technology orientation," he added.
Meanwhile, Samir Shah commended the role of industry associations in guiding SMEs towards risk management by helping them engage in fruitful interface with various stakeholders.
