Focus on small businesses to drive manufacturing: Anand Mahindra

Mumbai: Asserting that domestic manufacturing has not lost its mojo, business leader Anand Mahindra has said "a new round of boom is upon us," and sought increased public policy focus on small businesses so that they drive this next wave of growth.

"The focus should not be on big businesses or large industry or groups. The real growth in employment and in manufacturing is going to come from SMEs, the entrepreneurial small sector," Mahindra said at a book launch event last evening.

The country has for long "disincentivised" SMEs from growth and scale through archaic labour laws that offer zero flexibility once they expand, he said.

"We have built in an incentive to stay microscopic and not to grow," the Mahindra group chairman said, adding that fiscal and labour law-related disincentives have to be done away with and SMEs must be helped with aspects like skilling.

"Nurturing the SME ecosystem is what needs to be looked at rather than lamenting that the top-20 business houses have not invested. They are not the ones who are going to deliver employment going forward," he said.

Mahindra also sought to downplay concerns on the manufacturing scenario, saying it is only the leveraged firms that are going slow, but there is increased interest from overseas to set shop here.

It can be noted that despite an over one decade push to increase the share of manufacturing in GDP to 25 per cent from the present 16 to 17 per cent, nothing has moved on the ground level so far.

Mahindra said domestic firms went on an overdrive ahead of the financial crisis in 2008 and have been in a state of fatigue ever since.

"The fatigue is still being dealt with by the banking system with the large players but that doesn't mean our manufacturing has lost its mojo, though currently it is coming through overseas investment only," he said.

There will be another boom in the next few years in the manufacturing sector, he said and opined that it will be led by the consumption sector.

"If consumption picks up on a very good monsoon, you are going to see the animal spirits return and you will see the fatigue in some of our industries go away," he said.

"Do I see a boom? Yes, I see one coming in but I don't know whether it will sustain at 9 or 10 per cent, but it has a better chance," he added.