India highest in SMB units:Zinnov Study

India is the largest SMB nation globally with a total base of 48.8 mn SMBs, according to a latest study by Zinnov.

The report highlighted that the Indian SMB space today is largely dominated by micro scale businesses, contributing 95% of the SMB landscape, followed by small scale businesses contributing 4.8% and the rest 0.2% by medium scale businesses. Out of the 48.8 mn SMBs, around 55% are located in urban areas while the rest 45% constitutes to the rural regions.

Moving out from its traditional 'pen and paper' business culture, SMBs today are moving towards adopting technology for the advancement of their business. SMBs are investing heavily on tools like PCs, internet and website to market themselves and compete in global /domestic markets.

Over the last few years, SMBs in India have gained strategic importance from corporations and government. The recently announced tax incentive for growing SMBs in the Union Budget is one such example.

Initiatives like these have helped SMBs enhance their competitiveness in the global markets. Globalization in trade is further forcing SMBs to improve their efficiency of conducting business, said the study.

The report also highlighted that around 82% of all SMBs are situated in 10 states in India. Additionally, manufacturing is the single largest vertical with at an all-India level followed by repairs and maintenance and services vertical, it read. Greater employee mobility, increased competition, and expansion in terms of office locations have further pushed more SMBs in India to generate more employment.

The report also added that the Indian SMB sector gives employment to approx 81.16 mn people in India that has increased at a CAGR of 5.29%, while the fixed investment has been consistently increasing over the years at 11.48%. Factors like increase in mobile and internet will fuel the growth of this sector.

Since the sector is enjoying its steady growth still there are some set of challenges that need to be addressed to maintain its rate of growth. Challenges like lack of IT awareness as most of the SMB owners are not aware of the existing IT solutions that may solve their problem, unclear about their ROI, invest heavily on long-term technology solution.