#4 Ways in Which 2017 Has Favoured the Growth of SMEs So FarThe SME sector has raised INR 660 crore in the first six months of the year

There have been quite a few developments for Indian Small and Medium Enterprises this year. From the jolt of demonetisation last year to the introduction of GST, they have seen ups and downs. But with the support of the Indian government and a renewed attention towards the sector, the SMEs have been witness to many good changes in 2017.

Entrepreneur Indiatakes a look at top 4 changes in the SME sector that has benefitted them in 2017 so far.

SMEs Strike Gold

One of the biggest news developments so far in the SME sector is how they have raised INR 660 crore in the first six months of the year through IPOs. Between January-June 2017, about 50 SMEs have raised funds through the IPO way. Reports have suggested that the number is three times higher than what they raised last year. Another report claims that over 185 companies are now listed in the BSE.

Finding Funding

For SMEs, one of their biggest lenders was the unorganised sector – middlemen who lend out cash for higher interest rates but do so faster without the hassle of documentation. However, post demonetisation the entire sector came crashing down forcing SMEs to look for other alternatives. But they didn't have look for too long. From alternative lending platforms to NBFCs, there has been a sudden surge of lenders and the focus has turned completely onto SMEs, allowing them to borrow easily with lower interest rates, thus giving them a working capital.

Banks are the New Best Friends

For long, the SME sector has been ignored by banks because of their unstable nature and as it is largely unorganised. But now, the banks are becoming SME friendly. They have started partnering with start-ups that favour SMEs. For example, LendingKart which facilitates working capital loans for SMEs has raised a $10 million debt from Kotak Mahindra Bank, Aditya Birla Financial Services and other financial institutions. Similarly, YES Bank has raised $150 million as a part of its partnership with Overseas Private Investment Corporation (OPIC) and Wells Fargo. The bank will be using these funds to further facilitate SME funding and support women entrepreneurs.

GST – A Sign of Change

While GST was rolled out in the middle of the night, many SME business owners lost their sleep. Many found themselves scrambling to put their finances and documents in order. But while many imagined it to be bad luck, GST is actually looked at turning things around for them. SMEs have not seen many technological advancements but with the introduction of GST and a forced move to turn digital, they will finally be looking at being an organised sector. This will facilitate better bank loans as well. The reduction in tax payments will also make their finances better. Sectors like FMCG, Automobile, Textile, E-commerce are expected to benefit the most from GST.