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Recently, Nitin Gadkari, the Union Minister of Micro, Small and Medium Enterprises (MSME), said at the inauguration of the ‘39th Indian International Trade Fair,’ that MSMEs in the country must understand the needs of the foreign market and design their products accordingly in order to increase the sector’s share in India’s exports to around 60%. At the above said event, the Indian MSME minister also focused on quality production, identifying production capacities in rural and tribal areas, transfer credit lines to the poor and economically backward entrepreneurs.

Share of exports of products related to India’s MSME sector for 2018-19 stood at 48.10%. For the current fiscal, Indian MSMEs reportedly contribute around 49% to the country’s exports.

Necessary steps to reach 60%

Dr. Sourabh Khemani, Chairman, MSME Standing Committee, Bharat Chamber of Commerce, said in this context, “To match with the international market and increase the export volume of the MSME sector from 49% to 60%, it requires certain steps. The first one is about understanding the international market well. Secondly, the MSME sector needs to reduce the cost of production in terms of capital investment, power and logistics. Thirdly, incorporating new technology and initiating new training centres are needed. This sector also needs to build production capacities in rural and tribal areas while creating employment. Offering credit to the MSME sector to invest and increase production is another important requirement. This sector also urgently needs to be associated with top institutions like World Bank and Asian Development Bank. Infrastructure development is another major necessary step.”

He added, “India needs to focus on local to go global. Entrepreneurs should identify top quality resources in each state of the country and utilise their potential in building high-quality products to match with the international standards.”

Export credit scenario

A senior executive from Allahabad Bank told BE, “In the current scenario, it is very tough to reach the 60% target. We have seen a decrease in the growth of export credit. The big players, who were using it, had stopped. The slowdown across the globe is one of the major reasons for this crunch. In Allahabad Bank, we are trying to streamline our mechanism. There are designated branches that deal with foreign currencies. Now we have designated forex hubs which will cater to all the designated branches. We are trying to push the export credit to those pockets where we are absent. We are trying to identify the reason of the export credit crunch by reaching out to the exporters through conducting export meets.” He also added, as far as Allahabad bank was concerned, primarily, textile and leather sectors got the maximum importance for export credit.

 The MSME segment has the potential to emerge as a backbone for this economy and act as an engine for growth, given the right set of support and enabling framework. It is essential for our economy to reach the said target of MSME export share to seize the possibility of growth. Seizing the emerging opportunities to develop a robust MSME sector as a strong backbone for a growing economy will require efforts by the government to bring the various stakeholders i.e. equity funds, banks and financial institutions, industry sector majors and MNCs, regulators across various ministries at the centre and state level and trade associations together and create a forward looking framework and a composite eco system.

High target for big push

According to Rajesh Singhal, Associate Vice President, Brand Capital, The Times Group, the government must have a roadmap to reach the target. B. B. Chatterjee, President, The Bengal Chamber of Commerce and Industry, said that the target of 60% MSME export share is good for the growth.