New Delhi: After broadening the definition of Micro, Small and Medium Enterprises (MSMEs), the government is looking at widening the market for this key industrial sector.
According to top sources, the government has already identified high potential export market for the MSMEs in several countries and will soon come out with a calibrated strategy.
The review of future export markets, opportunities and other legal issues linked to the particular countries was carried out just weeks before the mega announcement by the Finance Minister Nirmala Sitharaman to support MSMEs while also revising the limit of investment to boost productivity.
“Since investment limit has been increased for the MSMEs, we are now planning a strategy to double MSMEs exports in the next couple of years as markets in many countries in Europe, Latin America and Africa has been identified. Coronavirus pandemic will deeply alter the distribution of global market and will offer new opportunities for the MSMEs. Looking at the current trade flow and existing import figure, the government will help MSMEs to tap markets in these countries,” the sources said.
The government documents reviewed by Firstpost shows, the MSMEs will get active support for export of ‘Made in India’ products in the Latin American countries like Brazil, Chile, Argentina, Colombia, Nicaragua, Paraguay, Guyana, Bolivia, Costa Rica, Suriname, Ecuador and Uruguay.
Initially, India had signed preferential trade agreement with business bloc of Argentina, Brazil, Paraguay and Uruguay during NDA-I regime headed by Atal Bihari Vajpayee though it was limited to certain sectors like engineering and energy products, iron and steel, and pharmaceuticals. These have expanded considerably to other areas in 2014.
The government has reviewed existing tariff lines, current exports from India and stakes of other competing countries like China, Indonesia and Malaysia. Documents suggests the government will provide detailed inputs to MSMEs about the duty structure in these countries, pricing and market entry strategy to enable the Indian companies to target potential export markets. There are also concerns of preferential tariffs with certain countries that needs to be analysed and addressed by the government.
The government documents also revealed that the share of MSMEs-related products and services in total exports had reached 48 percent in 2019. However, in the last five years, the total investment made by the enterprises was only Rs 11.62 lakh crore.
The investment is expected to significantly grow in medium enterprises. The medium enterprises had made the minimum investment of Rs 2.27 lakh crore in the last five years while small enterprises made investment of Rs 6 lakh crore.
The government is also looking at MSMEs to tap huge potential in European countries like Belgium, Austria, Italy, France, Ireland, Czech Republic, Cyprus, Croatia, Finland, Portugal, Netherlands, Switzerland, Germany, Hungary, Poland, Slovakia and Latvia. Germany, Italy and Netherlands figure among the top markets of Indian exports in 2018-19. However, there remains a significant restriction on commodities. In the last five years, there is a surge in export to Belgium owing to massive demands in jewellery, iron and steel.
In African region, the government is looking at Kenya, Ghana, Ethiopia, South Africa, Algeria, Namibia and Mozambique to boost MSMEs exports. Sources said, the African region has a huge export potential for high-end engineering products and currently this region has the second-highest share of technology products at 13 percent followed by European countries where India exports around 20 percent of engineering products like machinery, pumps, medical devices, electrical equipment and textile machinery.
MSMEs in the new avatar is expected to develop cutting edge export-oriented technology products. The government, sources said, will assist the concerned MSMEs with research and technology up gradation.
The government is also expecting that new MSMEs cluster in states like Andhra Pradesh, Bihar, Haryana, Uttar Pradesh, Maharashtra, Mizoram, Madhya Pradesh, Jharkhand, Uttarakhand, Karnataka, Telangana, Kerala, Chhattisgarh and Tamil Nadu will come up after the reform process picks up pace.
According to government data, a total 18.63 lakh new MSMEs were registered last year which provided 1 crore new employment opportunities. Out of the total registered MSMEs last year, however, only 8,500 were medium enterprises providing 6 lakh employment, 2.2 lakh were small enterprises which employed 30 lakh people within a year while a large chunk of 16 lakh were registered under micro enterprise category offering employment to more than 63 lakh people.
Updated Date: May 15, 2020 06:19:30 IST