WTC Mumbai suggests Policy Measures to boost MSME Exports in Focus Sectors

by Shrutee K/DNS

The second edition of World Trade Day received overwhelming response from more than 500 delegates representing micro, small and medium enterprises, women entrepreneurs, industry clusters, start-up enterprises and other business organizations across Maharashtra. World Trade Day was held from June 17^th to 23^rd 2018 across Kolhapur, Ichalkaranji, Nagpur, Aurangabad, Ahmednagar and Nashik.

“World Trade day is a unique initiative of World Trade Centers and Trade Promotion Organisations across the world to create awareness on the significance of international trade for economic development. This initiative in Maharashtra will provide an effective platform for existing and aspiring exporters - MSMEs, women entrepreneurs and industry clusters to explore new foreign markets, understand emerging challenges in international trade and enhance competitiveness”, said Mr. Kamal M. Morarka, Chairman, MVIRDC WTC Mumbai.

There are more than 6.33 crore micro, small and medium enterprises (MSMEs) in India, of which Maharashtra has 47.78 lakh enterprises or 8% of the total. MSMEs play an important role in enhancing India’s exports as they contribute almost 50% to the country’s total outbound shipments.

We have identified the top ten exporting countries, their major markets and their market size in key industries where Maharashtra has export potential.  These industries include electrical equipments, key fabricated metal products, machineries and equipments and textiles, wearing apparel, leather and related products. Countries such as China, Germany, United States, Japan, Italy, France        and the UK together account for around 40-46% of imports of these products. India’s export share in these industries is miniscule around 1-2%, except for textiles and leather products where India has a marginally higher share of about 4%. Policymakers and industry bodies must assist Indian MSMEs in these identified sectors to enhance their exports in these markets.

Based on our extensive interaction and primary survey with MSMEs during the programme, we would like to propose policy makers a slew of recommendations to enhance MSMEs’ competitiveness in the global market.

In order to promote flow of credit to MSMEs, the state government must form strategic partnership with fintech start-up enterprises and create awareness about their services among MSMEs in various districts of the state. Start-up companies use machine learning and artificial intelligence to assess the credit risk of borrowers. By using these technologies, these companies are able to facilitate collateral-free loans to entrepreneurs without much hassle of paper work and verification of documents.

Government of India has set up a credit guarantee fund (under CGTMSE scheme) so that MSMEs can access collateral free loans from banks. However, this initiative seems inadequate as many entrepreneurs still complain about non-availability of loans through this scheme. In order to supplement this initiative, the state government may explore the possibility of setting up a credit guarantee fund for MSME borrowers in the state.

Further, in 2015, Government of Maharashtra set up a SEBI-registered alternative investment fund (AIF), known as Maharashtra State Social Venture Fund, to support start-up enterprises. The state government may consider setting up a similar fund to support aspiring and existing exporters. The government may tie-up with management institutions and incubation centres to identify innovative business ideas (related to exports) and financially support these ideas through this fund.

We suggest that in order to create awareness on the schemes of various government bodies and institutions, the state government must collaborate with local industry bodies to organize awareness programmes. Organizations such as Foundation for MSME Clusters (FMC) specialize in promoting MSMEs through cluster and value chain-led development. The state government should undertake targeted Cluster Development Programmes with the help of such organizations.