December 19, 2014—Small businesses in India would receive significant boost from restructuring and better access to energy sources other than fossil fuels and the power grid.
The two recommendations are among several contained in a report that Nathan Economic Consulting India Private Ltd., a unit of Nathan Associates, prepared for the Federation of Indian Chambers of Commerce and Industry and an affiliated group, the Confederation of MSMEs (micro, small, and medium enterprises).
Government should provide incentives for MSMEs to convert from proprietorships, where a single owner runs affairs, to limited liability partnerships of two or more individuals, according to the report. Partnerships are more likely to attract much-needed capital, employ more people, and be more productive than proprietorships, in addition to providing better risk management, the report found. The availability of finance “continues to be a big challenge in the MSME sector.”
As for energy, almost 25 percent of MSMEs registered with the government “operate without any energy sources.” Those businesses provide limited employment and lag far behind other businesses in productivity. Using nonconventional energy sources (NCES), such as wind power or biogas, provides “almost free energy” after initial setup expenses. “Besides, use of NCES would help to reduce risks of loss of production due to power shortages and high electricity costs,” the report found.