Indian SMEs contribute 45% to country’s GDP: Report

In $4’s ‘Micro Merchant Market Sizing and Profiling Report’ released in collaboration with Confederation of All India Traders, the company has claimed small businesses make up for 45% of India’s $4, around three times of what Corporate India contributes. The sector is also said to be employing close to 46 crore people, and growing at 11.5% annually.

India is pre-dominantly a cash-based economy, with less than 5% of the country’s personal consumption expenditure of $1.1 trillion transacted via $4.

“Cash can cost businesses up to 2% of their operating costs, including labor over-heads. Cash is not free”, Ravinder S. Aurora, Groud Head, Global Policy Affairs and Community Relations at MasterCard said.

The country currently with a population of over 1.2 billion has a mere 12 lakh POS terminals. Aurora claims a mere 1.5% of the 10 crore of India’s small traders currently have cards.

“As a consumer, the transactional cost is a major deterrent. The government should offer tax breaks and incidental benefits as incentives to digital payments. Currently only 5% of the cards issued are used for online payments. With incentives it can be bumped up to 30%. That’s way more than the 2% transactional fee banks make”, Praveen Khandelwal, National Secretary General, CAIT said.

$4 has promised to get over 500 million new consumers onto the $4 bandwagon by 2020, and Aurora claims India is a major strategic market for the company.

Image Credit: Indiatimes