Small businesses are small. right? Reality is actually the opposite. Small businesses are really big and large businesses are small. Let me explain.
In any country, small and medium enterprises form the bulk in terms of numbers, while large businesses form a very small percent. In India too, the case is no different. If we were to take the number of employees as the indicator of the size of a business, then, in the case of manufacturing, large businesses - those who employ 250 or more people, are just 5.6 % of the total!
The graphs below are for the year 2004.
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Data source - OECD
How to read the chart - Less than 10, 23.6 means 23% of all manufacturing enterprises in India by number had less than 10 employees.
How does this compare with other countries? According to the OECD (Organisation for Economic Cooperation and Development), "The contribution and importance of small enterprises across economies varies considerably. Generally, the larger the economy the lower the proportion of small enterprises.". Further, "In most economies, the percentage of businesses with less than 10 persons employed is over 70%. The reverse is true where the number of employees is concerned, where businesses with more than 20 employees contribute around 70% or more." To that extent, the Indian manufacturing sector is more skewed towards larger organisation sizes. This could be because of lower levels of automation and because the general business environment is more conducive to larger organisations.
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Data source - OECD
Opportunity
Obviously, there is a huge space for even more small, medium and micro enterprises in the country
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