UPS announced the findings of its fourth annual Asia Business Monitor (UPS ABM 2008) survey, a study of  competitiveness  of  Asia's small and medium enterprises ("SMEs"). With India's growing importance in global trade and its businesses gaining a stronger foothold in the world economy, Indian SMEs are bullish on the country's economic growth and more optimistic about their own business growth than other SME leaders in Asia Pacific. Key highlights from Indian SMEs in the UPS ABM 2008 include:

Outlook towards regional economic growth - 80% of Indian SME leaders are optimistic about their country's economic growth. India and China are seen as having the greatest prospects for growth. There is only a marginal decrease amongst the Indian SME's from last year when 81% of SMEs indicated good economic prospects for India.

Outlook towards business prospects in 2008 - India displays the highest level of optimism across the region as 87% of the SME leaders are confident of their business prospects in 2008. It signifies the high levels of optimism across Indian SME community which is a contrast to most of their regional counterparts.

Workforce retention - While India continues to lead the other countries with 66% of SMEs planning to increase their workforce in 2008, this is a decrease from last year's 79%. Also this year, 29% of SMEs in India plan to retain their present workforce. 

Sector with highest growth opportunity  - 44% of the Indian SME leaders felt that Information Technology will be the sector bringing in the highest growth opportunities. This is followed by automotive (36%) and building and construction (28%). Only 4% feel that the transport and logistics industry will be showing growth prospects. Interestingly, 17% (highest across the region in this category) of the Indian SME's feel that biotechnology will be a promising sector.

Reaction to the growing woes of the U.S. economy - India and China remain least affected by the looming downturn in the US economy. This demonstrates that Indian SMEs are seeking and making most of the opportunities outside the United States.

The China paradox - 40% of the Indian SMEs feel that China will boost their business prospects. This is a marginal decrease from last year (46%)

SME Competitiveness  - 41% of those outside India rated Indian SMEs to be more competitive than them. There has been a slight increase in the percentage compared to 2007, when 39% rated Indian SMEs to be more competitive. But while Indian SMEs are most optimistic when it comes to their own business prospects, SMEs outside India have not given Indian SMEs a high rating. Yet in comparison to the other findings, India still is the only country where this figure has increased this year as compared to last year.

Obstacles to SME competitiveness in India - Indian SMEs see transportation infrastructure, government support and supply chain efficiency as highly lacking. However, SMEs in India are rated as having the highest level of entrepreneurial spirit when compared to their counterparts in the region.

The tension areas - For Indian SMEs, the top three business issues that are keeping them awake at night are retention of quality employees (48%), customer loyalty/retention (46%) and quality of products/services (40%). 54% of Indian SMEs feel bureaucracy and red tape in processing applications is a big issue (54%) followed by lack of collateral (46%) and lack of institutions willing to lend (30%). In contrast last year, 34% Indian SMEs stated the lack of institutions willing to lend to small businesses while 40% stated insufficient collateral.

The Supply chain puzzle - 45% of Indian SMEs feel that lack of forecasting demand is a huge issue followed by fragmented supply chain sector (37%) and lack of knowledge and expertise (35%). Also a matter of concern was use of unreliable logistics and shipping service providers (34%).

Impact of increased FDI into India - More than half (55%) of India's SMEs feel that FDI has opened up new opportunities for their businesses.

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