India SMEs face double challenge after Mumbai terror attack

Source: Xinhua | 12-11-2008 16:28

by Xinhua Writer Wen Jian

MUMBAI, Dec. 11 (Xinhua) -- India's small and medium enterprises (SMEs) were faced with double challenges simultaneously from both economic meltdown and terror attacks, the SME Chamber of India told Xinhua in Mumbai on Thursday.

Chandrakant Salunkhe, President of the Small and Medium Business Development Chamber of India (SME Chamber of India) said that SMEs of India were feeling the heat of Mumbai attacks and economic meltdown.

"Although the impact of Mumbai attacks was first felt by the corporate, slowly it is affecting the SMEs who are the main suppliers of raw materials, components and services," Chandrakant Salunkhe told this Xinhua correspondent Thursday in Mumbai.

During the three-day attack and the following days, most of the shops and hotels in southern Mumbai were closed. Big companies were probably able to afford such a situation, but it was beyond the capacity of small and medium businessmen and traders to face the same situation.

In India, there are 13 million SMEs employing around 30 million people, creating one million jobs per annum, contributing 34 percent of exports and 40 percent to industrial output and producing more than 8,000 products.

"The industry which is going to be affected in the coming months is the tourism and hotel industry," said Chandrakant Salunkhe.

However, more worries of India SMEs came from economic slowdown, besides the frequent terror attack.

"Following the actual recession in the USA, UK, Germany, Japan and Netherlands, the Indian economic growth is also expected to drop from 9.0 to 7.0 percent," Chandrakant Salunkhe said.

Official data showed that during the period between August and October 2008, Indian economy started to feel the impact of the global economic crisis. In August, the Index of Industrial Production (IIP) expanded at the slowest pace of 1.4 percent in 10years, and exports dipped 12.1 percent for the first time in about seven years.

A survey conducted by the Indian Ministry of Commerce and Industry revealed that 121 export-oriented firms have lost export orders worth 3.6 billion U.S. dollars and cut off 65,000 jobs in the three-month period that ended in October this year.

However, faced with challenges simultaneously from economic slowdown and terror attacks, Chandrakant Salunkhe is still confident about the future of SMEs.

"The recovery is likely to take place between six months to one year," he said.

"The most important point to be noted is that Indian SMEs consist mainly of proprietorship and partnership firms. Over the years they have mastered how to manage the crisis and they will also come out of the present problem successfully," Chandrakant Salunkhe told the Xinhua reporter.

Editor:Zhang Pengfei