Despite their Significance, the Indian Service Sector Enterprises Face Challenges
SME World|October 2020
The Indian Service Sector Enterprise is a rarely spoken of segment, although it comprises of some of the most significant sectors of the Indian economy. These include the Travel and Hospitality, Beauty and Wellness, Healthcare, Finance, Business, Real Estate, Transport and Logistics, as well as technology and communication service providers, most of which fall under the SME/MSME and Start-up segment. The easy access to modern technology enablers has further accelerated the growth of service focussed businesses.
Anindita Gupta

As a sector that brings a considerable amount of FDI and employs 31.45% of India's employed population (as of 2018), the services sector is said to contribute 55.39% to India's Gross Value Added (GVA) at current price in FY20. However, the recent pandemic and the resultant lockdown have lent a major blow to the SMEs/ MSMEs and the start-up businesses, and more so for the service-focused enterprises. While the new 'Atmanirbhar Bharat Abhiyaan', FM Nirmala Sitharaman has announced a lucrative package of INR 20 lakh crore, the initiative has also redefined the MSMEs segment parameters and merged the manufacturing and service sectors into terms based on turnover, namely as 'Micro Units' for less than INR 5 Cr. Turnover, 'Small Units' for less than INR 50 Cr. Turnover and 'Medium Units' for less than INR 100 Cr. Turnover.

This merging of enterprises and the re-assignment of businesses based on turnovers, has further made it difficult for service sector enterprises to leverage the benefits of the economic bail-out package, as the specific challenges and needs of the sector continue to go unnoticed, and even maybe lost as they try to compete for attention on an unequal playing field. At a time of crisis when the sector was in dire need of special focus and customized solutions by the government, they have been merged with and lost amidst the pool of Medium, Small and Micro Units re-assessment of business, based on turnover. This needs to change, especially because of the following key differentiators of the service sector enterprises:

Perception Driven industry

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