India’s smaller businesses losing out

By Lucy Whitehouse

- Last updated on GMT

MSME, India, exports
MSME, India, exports

Related tags: International trade

India’s micro, small and medium enterprises may need to step it up with exports, as recent figures show that the country’s MSME exports are declining.

Smaller businesses’ stake in India's export figures have declined by 3.2% in recent years, shrinking to a share of 43% in 2012-13 according to the country’s ministry of MSME.

This is despite the boom in the Indian cosmetics industry, ​where the hair and beauty sector is expected to reach $6.2 by 2015, according to International Beauty Mart.

While the dip in exports is chiefly attributed to the continuing contraction of global markets, lacking innovation is also to blame, the Business Standard has reported.

Lucrative exports

Market development, R&D and innovation, and physical infrastructure inadequacies have coupled with global market contraction to slow down MSME export levels in the country.

This decline is especially worrying as India’s MSME export output is already much lower than many other markets: while 13% of European SMEs export worldwide, the figure is less than 0.5% for Indian MSMEs.

Other countries in the region, including Singapore, Taiwan and South Korea, are seeing an export boom driven by SMEs on which India is missing out.

Raman Saluja, chairman of the Confederation of Indian Industry's northern region committee on MSMEs, told the Business Standard that exports are key, as they reduce India’s MSME dependence on the domestic market.

Stepping in

Lack of capital is a key reason MSMEs fail to take off, a shortfall which Indian bodies are already making moves to address.

P S Rawat, executive director of Canara bank, has stated the bank’s focus would be lending to MSME sector in the coming year. The bank intends over 24% growth in loans to micro, small and medium enterprises.

The government has thrown in its weight too: in December 2013, the ministry and the National Innovation Council (NInC) launched a collaboration which will invest in innovative ventures with the India Inclusive Innovation Fund​ (IIIF).

The National Manufacturing Competitiveness Programme (NMCP) has been recently launched, which aims to equip MSMEs with the ‘technologies and skills’ required to assert themselves in the global markets.

The Ministry of MSME encourages and honors innovation and enterprise. We work in close coordination with the State Governments, Industry Associations, Banks and other stakeholders through our numerous field offices and technical institutions to help the ‘engines of growth’ throughout the country​,” the union commented. 

Related topics: Business & Financial, South Asia

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