Context: Ministry of Micro, Small and Medium Enterprises (MoMSME) has released its Strategy Action Plan on Unlocking the potential of MSME exports.

Background:

• Despite a reasonable growth story and substantial share in overall exports, MSMEs are often faced with challenges that restrict their entry into the foreign market. Not only do these challenges need to be studied in detail but, an eco-system needs to be created in such a way that these enterprises shall be able to participate in the global value chain on its own and generate enough economies of scale.

Highlights of the strategic action plan proposed:

• Aim: The strategy action plan prepared by the Ministry aims to create a sustainable ecosystem for entire MSME development.
• The action plan aims to achieve the objectives of – Finance; Access to affordable trade finance; Target of USD 100 billion of exports from India by 2020; Evaluate readiness of MSMEs to export their products and services; Recognize areas where improvements are required in order to be able to export effectively and efficiently; Integration of MSMEs into Global Value Chain.
• Governing Council: To ensure efficient and effective delivery of all MSME export related interventions, the Strategy Action Plan proposed to formulate a governing council that shall be chaired by Secretary, M/o MSME and Co-chaired by DC, M/o MSME.
• Composition: The council shall comprise of senior officials and members from M/o MSME, Commerce, MSME Export Promotion Councils, Export Development Authorities, Commodity Boards, and other bodies.

Problems and challenges faced by the sector:

• Limited information about products & services.
• Working of the foreign markets, and in particular difficulties in accessing export distribution channels and in connecting with overseas customers.
• Lack of awareness on export promotion and assistance programmes offered by the government and unfamiliarity with legal and regulatory frameworks of the exporting and importing countries are another issues identified in the Strategy Action Plan.
• No or zero awareness on IPR issues and various International Trade Agreements (ITAs).
• Access to affordable trade finance; Costly product standards and certification procedures; Logistics cost –airport and shipping costs etc;
• Technology; Lack of innovation, low value addition and poor packaging due to low level of technology adoption are some other problems identified.

Need of the hour:

The need of the hour is to study challenges in detail and create an eco-system in such a way that these enterprises shall be able to participate in the global value chain on their own and generate enough economies of scale.