Diversity of the Indian MSME Sector


Ajit Kumar AJIT KUMARWISDOM IAS, New Delhi.


The MSME sector in India boasts of diversity in terms of its size, level of technology employed, range of products and services provided and target markets. MSME Tool Rooms have been credited to provide at least ten components that were used in India’s Mangalyaan (Mars Orbiter Mission probe), the Indian Space Research Organization’s (ISRO) most ambitious mission till date, which is the country’s first inter-planetary space mission. The sector has also contributed vital inputs for other space satellites such as the Chandrayan. India’s second moon mission, Chandrayaan II, set to be launched in 2016-17, will have a soft land over a wheeled robotic vehicle to explore the landing area. India seeks to launch other ambitious projects like a global sea traffic monitoring system and an earth observation satellite, in cooperation with the EU. The projects envision significant contributions and convergence opportunities from the Indian MSME sector.
India is one of the world’s top ten countries in terms of military expenditure. According to the database prepared by the Stockholm International Peace Research Institute, which has listed the countries of the world in terms of their military expenditure at current US$ millions in 2013, Indian ranks ninth.
With spending in Defence and Aerospace on the rise in India, it is estimated to become the third largest market by 2020, after the US and China. Increasing passenger traffic and military expenditures are expected to boost demand for new aircrafts. Investment opportunities of US$110 billion are anticipated with US$80 billion in new aircraft and US$30 billion in the development of airport infrastructure by 2020, according to the Investment Commission of India. Many global companies are increasingly looking to Indian MSMEs for strategic partnerships of mutual benefit due to the innovative capabilities in niche manufacturing, comparative advantages of advanced engineering, low-cost manufacturing and overheads, ability to speedily absorb new technologies and local skills and capabilities that set these enterprises apart from other national and international players in the sector.
With its vast resource pool of engineering talent and high skill labour at competitive costs, India has the potential to become a significant player in the global auto industry, especially in engineering and component manufacturing. India’s close proximity to key automotive markets like the ASEAN, Japan, Korea and Europe provide an added fillip to the sector. Exports of auto components increased at a CAGR of 17% during 2008-13, reaching USD 9.7 Billion in 2012-13. MSMEs assume a dominant position in the automotive and auto components sector.
Many more lucrative opportunities can be tapped by Indian MSMEs in the foundry industry, electronics industry, chemicals, leather, textiles, agro and food processing, pharmaceuticals, transport and tourism industries, etc. The globalization of businesses has increasingly drawn SMEs into global value chains through different types of cross-border activities. Many entrepreneurs are recognizing the opportunities that this advent ushers and gaining access to global markets has become a strategic instrument for their further development. These opportunities have arisen as a result of the government’s increased focus on the MSME sector, larger investments in research and development, technological upgradation, thrust towards international collaborations and measures to boost competitiveness and propel growth.
Supportive Role of Government of India
Recognizing the potential of this sector for the nation’s development, the Government of India, through its various agencies, has taken many key steps to strengthen the MSME sector and promote innovation and capacity building in this sector. Regular dialogue is facilitated between various stakeholders through the constitution of specific task forces and inter-ministerial committees. The Micro and Small Enterprises­­­-Cluster Development Programme is being implemented by the government for the holistic and integrated development of these enterprises in clusters through soft interventions, hard interventions and infrastructure upgradation for enhancing their productivity and competitiveness. During the year 2014-15, 43 new clusters have been taken up for various interventions. So far, around 966 clusters and 171 infrastructure development programmes have been initiated by the government. Provisions are also being made to strengthen the framework of virtual clusters with an aim to assist MSME accessibility of the Ministry from the remote location of their operation. The Credit Linked Capital Subsidy Scheme also assists in the technological upgradation on MSMEs. The National Manufacturing Competitiveness Programme is another flagship programme of the Ministry of MSME which endeavors to equip these enterprises with technology-based tools in the areas of quality upgradation, productivity, design development, energy efficiency and marketing. To ensure better flow of credit to SMEs, the Ministry has introduced a Policy Package for Stepping up Credit to Small and Medium Enterprises (SMEs) under which it operates schemes like the Credit Guarantee Fund Scheme and the Performance and Credit Rating Scheme.




Wednesday, 06th Apr 2016, 10:37:20 AM

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