Franchise India, the franchise retail and licensing solution company, have released a report on small and medium enterprises (SMEs), titled 'Top 100 Cities for Doing Small Business in India'.
Small and medium enterprises currently contribute about 8-9 per cent of India's GDP. They provide employment to more than 40 million people, in the course of producing about 8,000 products. SMEs produce about 45 per cent of the country's industrial output and contribute about 40 per cent of India's exports.
The report identifies 100 Indians cities, which, due to their unique positioning, can potentially galvanize the growth of small business; and hence, are ideal locations for starting new business ventures.
The report reveals that some states, such as Gujarat, Maharashtra and Andhra Pradesh, have been relatively more proactive in providing the right atmosphere for the prolific growth of small business.
The ranking draws its data from two sources - hard data from the Government and an opinion survey. The hard data provides information about clusters where SME growth is strong; while the opinion survey deals with the perception about various cities, regarding their suitability for starting a small business venture.
The survey captured new data points, essential to derive an overall ranking, which would reflect the ease of starting a business in the respective cities. The report has a record sample of over 1,000 surveys from 150 cities, between January and May 2010.
The ranking parameters are divided into 14 sections, relating to 45 sub-indicators. The data thus provides unique insights and a qualitative portrait of each city's economic and business environment.
The study revealed that metros, due to their conspicuous factor conditions, as well as potential exposure to a relatively innovative cosmopolitan interface, are an evident ecosystem for entrepreneurship.
Ahmadabad, however, gets Rank 1, due to the depth and breadth of its SME cluster. Bengaluru (Rank 2), Mumbai (Rank 3), Hyderabad (Rank 4) and Delhi (Rank 5) are other metropolitan destinations for starting small businesses. The national capital, which otherwise is a thriving commercial nucleus, lags behind its peers, because lately, the proactive approach in policy making for small-scale industries has been slightly off-centre.
Other contemporary small trade hubs include Surat (Rank 7) and Faridabad (Rank 8).
Incidentally, many cities at the bottom of the list are in those states, where regulatory or administrative action in the past few years has been haphazard; thus indicating a serious lack of correlation between the policymakers' strategic vision and the long-term sustainability of innovation at the grassroots, which has impeded the growth of the small-scale sector.
Policymakers of cities such as Jhansi (Rank 91), Dharbang (Rank 92) and Dhanbad (Rank 94) have a lot of catching up to do, when it comes to planning the future commercial landscape.
Curiously, cities such as Patiala (Rank 93), Haldia (Rank 95) and Bikaner (Rank 97) lag behind despite a progressive state approach -- this is due to the lack of regional impetus.
The report discovers that some of the debutant cities, such as Bhatinda (Rank 79), Anantpur (Rank 88), Bhiwandi (Rank 80), Nellore (Rank 89) and Muzaffarpur (Rank 70) are endowed with all the potential factors, which if taken note of by planners and policymakers, would help evolve these cities into SME hubs.
Franchise India has also, for the first time, announced a 'Small Business Congress 2010' and a 'Small Business Awards 2010', which will take place on August 28-29. It has associated with process advisors, E&Y for the awards, which will felicitate achievers, innovators and suppliers, who have contributed significantly towards the development of SMEs in India.
Bharat Kapoor, senior manager, Ernst & Young - Risk Advisory Services, says, "Ernst & Young has assisted Franchise India in institutionalizing the process for Small Business Awards 2010. Our role included reviewing the Awards concept, assisting Franchise India in validating the nominations and winner determination process, facilitating jury proceedings and acting as official tabulator for the Awards."