SMEs Leverage Capital Markets for Funding, Raise Rs 11,000 Crore in India

Small and Medium Enterprises (SMEs) are increasingly seeking funding through capital markets. As of June 2023, 780 SMEs are listed on the NSE and BSE, raising about Rs 11,000 crore, according to a senior official. The combined market capitalisation of these SMEs now exceeds Rs 1.6 lakh-crore, Shekhar Chaudhary, director of the financial markets division at the department of economic affairs, said.

Representative image

Speaking at the 10th edition of the CII East Capital Markets Conclave, Chaudhary highlighted the crucial role capital markets play in India's economic growth. A report on SME Initial Public Offerings (IPOs) was unveiled during the event. Experts discussed how capital markets could drive India's economic future by enabling SMEs to significantly contribute to the country's GDP, a statement said.

Capital Markets and Economic Growth

Chaudhary also mentioned that in the social enterprise sector, nine NGOs have raised Rs 12 crore through a social exchange platform. Around 100 NGOs are currently registered with the NSE and BSE, preparing for future fundraising, he added. West Bengal accounts for 5 per cent of the total Assets Under Management (AUM), ranking among the top 10 states in terms of per capita penetration.

Kolkata is among the top five cities for AUM contribution, he added. Kamala K., chief regulatory officer of BSE India, expressed confidence that capital markets will be a key driver in India’s journey toward becoming a developed nation by 2047.

SMEs' Growing Presence in Capital Markets

The increasing number of SMEs turning to capital markets for funding reflects their growing importance in India's economy. With a combined market capitalisation exceeding Rs 1.6 lakh-crore, these enterprises are making significant strides. The funds raised through IPOs and other means are expected to fuel further growth and development within this sector.

Experts at the conclave emphasised that empowering SMEs through capital markets can lead to substantial contributions to India's GDP. The release of the SME IPO report during the event underscored this potential. The discussions highlighted how capital markets could be instrumental in shaping India's economic future by providing SMEs with necessary financial resources.

Social Enterprises and Fundraising

The social enterprise sector is also leveraging capital markets for fundraising. Nine NGOs have successfully raised Rs 12 crore through a social exchange platform. This trend is expected to continue as around 100 NGOs are currently registered with the NSE and BSE, preparing for future fundraising efforts.

West Bengal's significant contribution to AUM highlights its importance in India's financial landscape. With Kolkata ranking among the top five cities for AUM contribution, the state plays a vital role in driving economic growth through capital market participation.

The confidence expressed by Kamala K., chief regulatory officer of BSE India, underscores the belief that capital markets will be pivotal in India's journey towards becoming a developed nation by 2047. This optimism is shared by many experts who see capital markets as essential for empowering SMEs and driving economic growth.

The increasing reliance on capital markets by SMEs and social enterprises signifies a positive trend for India's economy. By providing these entities with access to necessary funds, capital markets are enabling them to contribute more effectively to economic development.