What do you think is the right approach for SMEs to grow?

They have to come to terms with reality. They can only survive if they work as ancillaries. Those supplying to the large sector will grow.

How is Assocham helping the SMEs?

We bring to focus some of the specific problems, especially in the area of finance. To counter environmental degradation and pollution, we are working with SMEs. Do you think the government policies are conducive to the growth of SMEs?

The small and medium sector has come of age. Now, in most economies of the world, SMEs contribute around60-70 per cent of GDP. India is no exception as far as importance of this sector is concerned. However, SMEs are a neglected lot. Policies concerning them are not policies, they are mere quickfixes. Take the case of reservation, it does not genuinely serve SMEs.The foremost problem for a small businessmen is getting finance. What should the government's approach be towards solving this problem?

There is urgent need for a promotional agency, policy and authority. The right approach will be to create a small-scale development corporation to make the finance available on time to this sector.

Another problem is that of technology upgradation?

Yes, SMEs can't afford individual R&D. The government should establish development centres on the lines of Ontario, Canada. There are seven technology centres there catering to the needs of the SMEs. Initially, these centres were government funded; later, they were privatised and now they are profit making. It is easier to achieve upgradation quickly in thesecentres.

Don't you think the large sector can help SMEs in this regard?

Yes, they can help. In fact, there are numerous good examples. But the problem is that the large sector can provide help in some specific areas whereas technology centres can be broad based.

What about the problems faced by SMEs in providing guarantee to obtain credit?

Nowhere in the world is credit guarantee-free. Whether there should be a guarantee beyond the collateral is a matter of discussion. I think the legal process should ensure quick recovery wherever there is wilful non-compliance. Only a sound legal process can instill confidence in the creditors.

Will the new government succeed in reversing the present trend?

We isolated ourselves from rest of the world for a long period. Opening-up of the economy has helped us a lot. The policies of the new government appear to be pro-reform. Now the question is can they come up with the budget which stimulates demand? I personally feel that the new budget will be a positive one.