SMEs have scope for improvement in export-import biz: TEDO

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Saurabh Gupta | 04 Aug, 2008
Small and Medium Enterprises (SMEs) in India need to make certain changes in their functioning to remain competitive in the export-import business considering the current market trends.

This was stated by the Technology Export Development Organisation (TEDO) an initiative of Confederation of Indian Industry (CII) and Department of Scientific and Industrial Research (DSIR) during a launch of its project for Capability Building to Enhance Exports Competitiveness & Facilitating Market Access for Indian Technologies/ Technology intensive products/ services in New Delhi recently.

Interestingly SMEs constitute more than 80 percent of the total number of industrial enterprises and form the backbone of industrial development in India.

"There are very few success stories of our SMEs, which we even count in fingers," said Vinod Sharma, MD, Deki Electronics, Co-Chairman National Committee on ICTE.

"India's high technology exports is very minimum. At the same time you should look at the other side - today there are several government schemes and funds which are either not availed or lying in the coffers. Whether it is technology development, commercialization, upgradation, whatever you ask for, it is there, but in the same time the figures portray a different story altogether. The figures make me think that there is something wrong with our SMEs," said Anjan Das, Senior Director, CII.

"Indian SMEs contribute about 34 percent in exports," Ashwani Gupta said.
All present in the conference were unanimous in their opinion that this figure can increase manifold if the SMEs make certain adjustments in their functioning, they said.

The prevailing global economic conditions which has seen a slowdown, hit by rising inflation calls for changing existing strategies.

"India's export has grown up by a healthy rate in last couple of years. It has been increased by almost USD 160 billion last year. And Indian exports will be USD 500 billion by 2013," said Ashwani Gupta, Advisor, Department of Scientific and Industrial Research, Ministry of Science and Technology, Government of India during a conference.

"India's export of manufactured goods is also increasing with a pace. India already exports over USD 20 billion and this is increasing at the rate of 20 percent annually. According to a study organized by CII and McKenzie that India's manufacturing export has potential to touch USD 300 billion by 2015," he said.

According to TEDO the SMEs play a vital role in the industrial development of any country. The importance of the SME sector is well recognized worldwide due to its significant contribution to gratifying various socioeconomic objectives, such as higher growth of employment, output, promotion of exports and fostering entrepreneurship.

India has nearly three million SMEs, which accounts for almost 50 percent of industrial output. They are an essential employment generating sector with 50 percent of the private sector employment and 30-40 percent value addition in manufacturing.

SMEs produce a diverse range of products (over 8000), including consumer items, capital and intermediate goods.

In the last decade SMEs have grown faster than the overall economy. SMEs contribute 95% of all industry establishments, 34 percent of domestic exports and industry output, 35% of manufacturing sector, Industry related contribution has been declining, Year 1990 - approx. 56%, Dominance of service and trade in line with higher growth registered by service sectors.