In order to function lawfully, the businesses should have their compliance and regulatory in place, said Rajesh Kumar, Director, Brand Liaison, India’s one of the leading compliance services provider. Rajesh Kumar, while analysing the compliances and regulations in the Small and Medium Enterprise (SME) sector at a seminar, said that there is an immediate need for the government to come up with strong compliance and regulatory policies for SME sector. He also said that there is a lack of awareness amongst people and the government should initiate awareness drive.
Rajesh Kumar explained, “Prior to initiating a business in the SME segment, one should know the appropriate regulations of the industry and should not ignore them. Compliances help the business flourish by making them transparent and lucrative to the investors.”
“SME sector primarily comprises low investment business, where the proprietors feel that further investment in regulations and compliances is a waste. Hence, due to thin budgets, they restrict themselves from taking one, which should not be the case. They must understand that compliance and approvals are mandatory and they must go for them,’’ Rajesh Kumar further elaborated.
Proper compliance and regulatory measures help reduce NPAs. As per an estimate, there are approx. 42.50 million SMEs in India, registered and unregistered together, producing more than 6000 products. This comprises a staggering 95% of the total industrial units in India. It is also estimated that these enterprises together have about 106 million employees, a 40% of India’s workforce, next only to the agriculture sector. The SMEs also play an important part in flow of funds in the economy. It is estimated that around 16% of total bank lending goes to SME sector. The SME sector in India has managed an average growth rate of around 10% in last 4 years.