MSME in exports
Although GDP contribution of MSMEs is just 8%, MSMEs occupy a significant portion India’s exports, and its contribution is increasing. MSMEs source most of their input locally making them exporters of truly Indian products. Also, MSMEs have played a prominent role in generating employment opportunities. The success of Make in India initiative rightly exploring the potential of this MSME units.
In view of this, export promotion from the small-scale sector has been given high priority in India’s export promotion strategy which includes simplification of procedures, incentives for the higher production of exports, preferential treatments to MSMEs in the market development fund, simplification of duty drawback rules, etc. Products of MSME exporters are displayed in international exhibitions free of cost under SIDO Umbrella abroad
MSMEs have huge potential but needs to address certain challenges like access to finance, market, technology, infrastructure and knowledge of regulatory facilities.
The way forward includes integrating domestic companies with global production networks (GPNs) While GPNs are primarily controlled by big MNEs, local firms and MSMEs play a significant role as subcontractors and suppliers of intermediate inputs to MNEs. An example of such relationship in the Indian context is that of firms in auto ancillary industries supplying components to larger automakers. MSME companies can enter as a low tier supplier of labour-intensive components. Thus MSMEs can benefit from these GPNs but they need to work on establishing and maintaining a relationship to improve their competitiveness.