SME Listing Background

SME Overview

Small and Medium Enterprises (SMEs) are the backbone of a nation’s economy. Like any other major economy, India too enjoys its fair share of SMEs which constitute bulk of the industrial base, also contributing significantly to the exports and GDP.

SME segment has been a key engine of growth, employment, wealth distribution and effective mobilization of resources (both capital and skills) in India. Statistically, SME segment contributes to 45% of the manufactured output, 40% of exports, and is among the largest generator of employment in the Indian economy. Today, Indian SMEs operate in sectors ranging from traditional to the most modern industries competing with the bests-of-the-world. SMEs in new economy sectors like IT, ITES, retailing, education, entertainment, media and the like represent the new and modern face of India. SMEs take a prominent role in social sectors as well and are known for bringing innovative business models.

With the advent of planned economy in 1951, special role was earmarked for SMEs, which was given a fillip by the subsequent progressive industrial policies. The Micro, Small, and Medium Enterprises Development (MSMED) Act, 2006 provided for facilitating the promotion and development and enhancing the competitiveness of MSMEs (commonly referred to as SMEs) and for the related matters. A big leap for SMEs was witnessed in 2010, with “The Prime Minister’s Task Force” recommending setting up of dedicated stock exchange/ platform for SMEs. SEBI, through its circular dated May 18, 2010, laid down framework for setting up a stock exchange/ trading platform dedicated to SMEs.

SME Exchange

An SME Exchange is a stock exchange dedicated for trading the shares / securities of SMEs who otherwise find it difficult to get listed on the Main Board. The concept originated from the difficulties faced by SMEs in gaining visibility and attracting sufficient trading volumes when listed along with other stocks on the Main Board of stock exchanges.

India’s leading Stock Exchanges BSE and NSE have launched their platforms for SMEs namely BSE SME and NSE Emerge respectively.

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