Samir Sathe, Executive Vice President, Wadhwani Advantage at Wadhwani Foundation, talks about the relevance of SMEs and MSMEs in helping the Indian economy recover, and provides a comparative insight on the contribution of business giants like the Tatas and Reliance to the economy.
It is not new that SMEs and MSMEs in automotive, food, and IT have been leading contributors to the GDP of India. In any economy, giant or large conglomerates such as the Tatas and Reliance in India have created massive ecosystems, consisting of many SMEs and MSMEs. Both Tata and Reliance include SMEs in their customers, suppliers and partners, which have their own MSME and SME networks. The automotive industry’s structure of OEs, Tier 1, 2, 3 segmentation of suppliers has been around for decades.
One needs to see the value chains and ecosystems rather than the isolated view of the revenue or market cap of the enterprises. The recent GDP growth is skewed and may show a distorted picture since COVID-19 severely hit SMEs between April 2020 and May 2021. Before that, SMEs had already suffered more than giants between Apr 2017 and Mar 2019. So the baseline where SMEs began in April-May 2021 was already on a low base, and therefore, the current value-add growth looks disproportionately high. We are merely going back to 2018 levels. So in real terms, we are yet to witness growth. For giants like Tata and Reliance, the trajectory has not been as volatile as SMEs.
Source: The Pioneer