Low Productivity Levels Scare Investors

CUMBERSOME BUREAUCRATIC procedures, complex regulations, and compliance burdens hamper productivity and discourage entrepreneurship. Streamlining regulatory frameworks, simplifying licensing processes and fostering a business-friendly environment will encourage industrial growth and productivity. This has to start with trust between the industry and bureaucracy.

- Srinath Sridharan

Limited access to finance, especially for small and medium-sized enterprises (SMEs), hinders their ability to invest in modern technology, expand operations, and enhance productivity. Initiatives like improving the ease of doing business, expanding credit availability and promoting innovative financing mechanisms can alleviate this challenge. Current schemes have made some progress, but a lot more needs to be done.

While India may face challenges in productivity, it also possesses unique strengths, such as its large domestic market and a growing middle class, which can serve as potential drivers for future productivity improvements

Surveys in understanding practical issues due to which some of these schemes are still not reaching the intended sectors might throw some light. Micro, Small, and Medium Enterprises (MSMEs) form the backbone of India’s manufacturing sector. However, many MSMEs struggle with low productivity owing to limited access to capital, technology, and skilled labour. Supporting MSMEs through targeted policies, easy access to credit, technology upgradation schemes and capacity-building initiatives can unleash their potential and contribute significantly to overall manufacturing productivity. We need to examine the possibilities of setting up multiple SROs (self-regulatory organisations) across various sectoral focuses to help SMEs and MSMEs come to global standards.