4,000 crore ($832 million) for the SME sector to make credit readily available, SMEs across the sectors are still finding it difficult to raise funds.

SMEs have put 'financial accommodation by the banks at lower interest rates' as their single most important demand.

With about 90 percent of small and medium firms being dependent on banks to raise funds, the survey said: 'Fifty-nine percent of the respondents said the high cost of financing persists to be a problem, while 62 percent felt that banks do not encourage financing in the SME sector.'

The survey also highlights rising cost of raw materials and falling demand of products.

The reporting companies also indicated that they were witnessing stiff competition from Chinese goods as these products are being dumped in India.

However, about 66 percent of the surveyed firms said the situation may improve in the next six months, and expected market conditions to improve significantly over the next two quarters.