India’s MSMEs fail to make an impression in world market: FICCI Survey

90% of respondents ready to expand business.

R Chandrasekaran

CHENNAI: India’s Micro, Small and Medium Enterprises (MSMEs), which is considered as the big boon of industrial economy, have failed to make a dent in the global market as their exports are either minimal or have operational issues with other countries hampered by regulatory issues and lack of financing. This revelation came to the fore during a FICCI-Grant Thornton survey on ‘Integrating MSMEs with the Global Value Chain’.

The trade body conducted a survey of over 100 MSMEs thus suggesting that only 39% of the respondents were either engaged in exports to other countries or had presence in other countries apart from India. However, nearly 90% of the respondents are ready to expand their business in the future, while 97% of them are looking to expand within the next three years. The survey also indicated some of the MSMEs outsourcing some of their work to other countries, though most of them failed to have any international presence.

Pointing out that that the industries have suffered due to a variety of factors, especially the difficulties in establishing contacts with the international players, the FICCI believes that the Indian government and industry organisations could play an important role in removing the obstacles. The survey also established the need for India to play a big role in removing regulatory blocks and make available the finance.

The performance of MSMEs is vital for not only the global economy but also for the Indian economy since 94% of the industrial enterprises of the economy are run by them. This sector also contributed 36% of the exports value of India with employment of more than 80 million. The MSME contributes 40 % of India’s output and over 8% to the GDP. The sector witnessed accelerated growth pace in the recent years than the overall industrial sector, FICCI said.

The survey indicated the excellent opportunities for the Indian industries to integrate themselves into the international value chain even as they grabbed opportunities in the field of distribution networks, new technologies and product development through research and development. The expansion ideas coupled with the available skill and capital should allow them greater participation in the global value chain.

Another crucial aspect for the Indian industry to feel happy is that the products and services offered by them to their global partners were rated highly by them. However, the Indian organizations feel the pinch of the stringent global compliance procedures, which are not economically viable for them. The survey brought to light the Indian organisations increasing ethical trading practices parameter in the global trading platform.

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