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That set the ball rolling for a panel discussion on “Sustaining Innovation in the Indian SME Industry”. The panel included Sanjay Sethi, secretary, Small & Medium Industries & Development Commissioner, Government of Maharashtra; K.N. Srinivasan, CEO, Reliance Consumer Finance and Reliance Home Finance; Girish Vanvari, executive director, KPMG; Yogesh Dixit, head, SME Ratings, Crisil; Sanjay Vakharia, co-founder and director, Spykar Lifestyle; Chandrakant Salunkhe, founder president and director, Small & Medium Business Development Chamber of India (SME Chamber of India); and Akkshay Mehta, managing director, Mission Vivacare. The discussion was moderated by Businessworld’s senior associate editor Gurbir Singh.

KPMG’s Vanvari struck a positive note. He said though the 2008 recession had dimmed global investors’ interest in Indian SMEs, they were resilient. “During my practice, I have seen many SMEs grow big,” he said, “and now the scenario for growth and innovation is much better.”

On whether the government was doing enough for the SMEs, Salunkhe answered in the affirmative. But, he said, information on government support was not reaching the entrepreneurs. He also said that innovation should not be thought of only in terms of technology. SMEs should also adopt innovative advertising, marketing and financial initiatives. And the government should provide more support for export promotion.

It was Srinivasan who fielded the question of finance. He said Reliance Consumer Finance’s core focus was SMEs, which accounted for almost 45 per cent of Indian GDP. But choosing the deserving SMEs was not easy. “There is no checklist for deciding the parameters of credit for them,” he said. “One has to look beyond the global textbook of finance while underwriting SMEs.” His advice: one, SMEs should grow beyond the one person who spearheads the organisation; and two, adopt innovative technology to sustain and grow.

But does size matter after all? Are the big fish eating the small fish in the pond? Crisil’s Yogesh Dixit turned the argument on its head, saying that in many global ecosystems, large enterprises are in fact supported by small enterprises. This model can also work well in a country like India. What needs to be done is to bring out the interplay between these two. But these are commercial outfits and a symbiotic relation can develop only on their own volition.
Vakharia of Spykar Lifestyle, who represented the SME entrepreneurs, was asked how his product competed with brands such as Wrangler and Levis. Vakharia was pragmatic. He said they knew from the beginning that their parentage could not change; they were Indian. As a brand, they understood the challenge. They decided to be honest to one set of audience — the Indian youth — and then innovated by creating fashion in denims, something that few brands do.

A problem that most SMEs face is quality. The standard of their products is always suspected, sometimes unfairly. Akkshay Mehta of Mission Vivacare recounted how when he started exporting, he had to face a battery of questions from various regulatory bodies in the US. Despite his intention of meeting all parameters, he faced many random questions. This, he felt, is a challenge for all SMEs.

Highlighting the problems faced by the SMEs, MSME secretary Sethi gave some startling numbers. The recently concluded MSME census has revealed that 140,000 SMEs had registered with them but only 80,000 were actually operating, that is, almost 40 per cent had shut down soon after starting business. This means the transfer of technology to SMEs was not really taking place. The government had launched many schemes such as Techpedia, the patent regime and clean technology initiatives, but there were few takers, he said.

The audience had a plethora of questions. The lively question-and-answer session saw healthy interaction between SME-aid groups, SME entrepreneurs and panellists. The discussion concluded with the launch of the Businessworld SME Whitebook 2010-2011. There was also a lucky draw by LG.

The presenting sponsor for the event was Reliance Consumer Finance, the principal associate sponsor was IBM, the co-sponsor was LG and the partner was Whyte & Mackay. The event was done in association with SME Chamber of India, while Bloomberg UTV was the television partner.