Even though the government is making all efforts to boost credit flow to small- and medium-sized enterprises (SMEs), banks need to prepare special financial products and need-based financing schemes for them, says a recent study of the Small Industries Development Bank of India (Sidbi).
Finance should be made available at internationally comparable interest rates and oriented to key SSI sectors which are technology and export-oriented. Financial needs of different sectors would be different as priorities would vary.
Reduction in import duties under General Agreement on Trade and Tariff (GATT) and removal of quantitative restrictions (QRs) has increased the inflow of low-cost imports from China affecting domestic SMEs, says the study. On the positive side, this has improved access of domestic industry to raw materials and accessories for improving finished products.
