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Access to credit, technology adoption, connect with global peers, key for Indian MSMEs growth: WASME


The lack of critical connect between Indian MSMEs and their global counterparts has often been cited as the main reason behind the setor lagging behind competitors. For example, the Chinese MSMEs enjoy increased linkages with global firms, giving them seamless access to Global Value Chains (GVCs). ET spoke to Sanjiv Layek, Executive Secretary of Noida-based World Association for Small and Medium Enterprises (WASME), an organisation, that is working to address this anomaly. Edited Excerpts:

EconomicTimes (ET): We recently celebrated MSME Day. What relevance do you see of this day for Indian labour workforce?
Sanjiv Layek (SL):
The MSME segment contributes 60-90% of the market requirements, 40-45% of GDP, thereby creating 70-90% jobs across the globe. The UN’s decision to celebrate MSME day is highly appreciable. WASME has been consistently working closely with world MSMEs, Central and State Governments in providing opportunities to MSMEs. We have organised and conducted more than 50 conferences and workshops to empower them. Out of them, aligned with the UN‘s Sustainable Development Goals (SDGs), 22 international conferences have been organised across the globe. The Indian labour force is widely diversified and less skilled. Thus, MSMEs have enormous potential to deliver. Our responsibility is to make them skilled in terms of credit, technology, marketing, professionalism and negotiating skills.

ET: According to you, what are the three main structural problems that are affecting the growth of Indian MSMEs in the country?
SL:
Three main structural problems that are affecting the growth of Indian to MSMEs are: difficulty in availing credit facility, use of inferior technology and difficulty in accessing markets.

The first issue is with credit facility, where MSMEs don’t actually have access to credit and Government schemes because of some reasons. The government’s Mudra scheme is good but has not been very supportive as the amount offered is very less. This also comes with a high interest rate. As far as 59 minutes’ loan scheme is concerned, while the loan is approved through the portal in 59 minutes, when MSMEs approach banks for loan disbursement they are denied because of documentation and collateral. It is certainly a challenging job for MSMEs to get credit for their business. There should be sound coordination between the Government, Banks and MSMEs.

Further, most of the MSMEs are not aware of the changing technology. Due to that, they are not able to develop capabilities and compete at global marketplaces. Indian MSMEs are lagging in knowledge and market research. They don’t have much marketing and research budget. They are not finding proper marketplaces to showcase their products. A lack of marketing strategy also makes it tough for them to compete against large players in volatile markets.

ET: What are your thoughts on the potential of Indian MSMEs? How do these fare vis-a- vis global counterparts? Do you think they are future-ready to capitalise on the globalisation bandwagon effectively?
SL:
Indian MSMEs have great potential. But, due to lack of hand-holding from government as well as other associations/bodies, they have been struggling on many fronts. Other than the credit facility, technology and market access, they lack in professional skills, human resources etc. Recently, government has been continuously supporting the segment through various types of schemes to empower them. Now, some of the MSMEs are doing well and producing quality goods. Next generation MSMEs are focusing on innovation, world class product/services to cater to global needs. They are ready to compete with global players. The government has to enhance its outreach programme to handhold MSMEs in India, improving their skills and encouraging them to compete in the global environment.

ET: Donald Trump has unleashed trade wars on many nations and India is also not immune to the resulting trade dynamics. The US administration has recently scrapped GSP benefits for India too. What repercussions do you see of such a move?
SL:
Scrapping GSP will certainly impact the MSME segment. They may lose some of the global partners as well as markets. Indian MSMEs may face difficulty in maintaining cost advantage, producing good quality goods and services and logistical support necessary to be part of the global value chain.

According to government sources, the US government’s move to withdraw duty concessions on certain products under the GSP programme will not have a significant impact on exports to America as the benefits were only about $190 million annually. India exported goods worth $5.6 billion under GSP last year, but total GSP benefits were to the tune of only $190 million. Indian MSMEs are capable of getting out of this situation by innovating product/service. I am sure, the newly formed Modi 2.0 government will also help in combating challenges.

ET: As envisioned by the UN, India hails South-South Cooperation (SSC) as a win-win for all Partners. How can the idea benefit Indian MSMEs?
SL:
South-South Cooperation (SSC) is all about developing countries like India, working together to find solutions to common development challenges of business, especially of MSMEs through sharing knowledge and exchanging technologies. We are glad to note that the $150-million fund that has 33 active projects implemented by seven UN agencies has made significant strides in advancing the implementation of Sustainable Development Goals in many developing and least developed countries.

ET: The UN MSME day advocates MSME-MSME collaborations. Indian MSMEs’ existing linkages with the Global Value Chains (GVCs) is an area where domestic players lag behind competitors. What’s your view on enhancing Indian MSMEs’ competitive positioning in this regard?
SL:
Yes, the UN is advocating MSME-MSME collaborations, but Indian MSMEs are lagging behind foreign counterparts in quality in GVC. The UN should step up to support Indian MSMEs to identify products and services to add value in GVC. The present Government is focusing on enhancing exports through various ways like International Cooperation (IC) scheme. The IC scheme of Ministry of MSME is offering MSMEs to showcase products and services to the global platform. Under this, Government is providing incentives like airfare, exhibition opportunity, stalls, clients etc, in foreign destinations and create an opportunity for networking.





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