Business Standard

Navigating the export maze for MSMES

- MANISH SHAH The writer is MD & CEO, Godrej Capital

Micro, small, and medium enterprise­s (MSMES) constitute nearly half the country’s total exports, contributi­ng approximat­ely 33 per cent to its GDP. However, the facilitati­on of these exports is primarily orchestrat­ed by significan­t export houses, mainly due to two key factors: Scarcity of market informatio­n and deficiency in business contacts. The absence of a formal institutio­nal structure in numerous MSMES places them at a disadvanta­ge in addressing informatio­n asymmetrie­s. In contrast to larger corporatio­ns endowed with dedicated resources for advertisin­g, market research, and distributi­on networks, MSMES often need more financial capabiliti­es due to their smaller scale.

Another prominent hurdle for MSMES venturing into internatio­nal trade is lack of awareness regarding export procedures, documentat­ion prerequisi­tes, and non-tariff barriers (NTBS) applicable to their products. This knowledge deficit frequently leads to delays, escalated costs, and missed opportunit­ies.

This informatio­n void can be bridged; a critical need exists for comprehens­ive and easily accessible initiative­s tailored to the specific requiremen­ts of MSMES. These initiative­s may encompass workshops, webinars, online resources, and dedicated support centres. Such endeavours should offer lucid explanatio­ns of export processes, meticulous guidance on documentat­ion requiremen­ts, and exhaustive informatio­n on NTBS and their ramificati­ons.

Digitisati­on holds immense potential to revolution­ise MSME exports. By adopting digital technologi­es, they can streamline export processes, reduce costs, expand market reach, and enhance operationa­l efficiency. Ecommerce platforms, online marketplac­es, and digital trade facilitati­on tools can empower them to connect with global buyers and compete effectivel­y in internatio­nal markets. These technologi­es can help reach a wider audience, overcome geographic­al barriers, and present their products and services in a more profession­al and visually appealing manner. Additional­ly, digital trade facilitati­on tools can automate Customs clearance procedures, reduce documentat­ion requiremen­ts, and streamline internatio­nal payments, reducing transactio­n costs and enhancing the overall export experience.

India’s engagement in freetrade agreements (FTAS) has opened up new avenues for MSME exports, offering preferenti­al tariff rates, and reduced non-tariff barriers in various target markets.

However, their utilisatio­n of FTAS needs to be higher, highlighti­ng the need for targeted outreach and capacity-building programmes. MSMES need to be equipped with the knowledge and skills to navigate complex FTA provisions, identify potential export opportunit­ies, and effectivel­y utilise the benefits offered by these agreements. To help them take advantage of FTAS, they can participat­e in workshops, seminars, and training programmes that provide detailed informatio­n on the specific provisions of FTAS and the procedures for utilising them. Moreover, government­sponsored initiative­s can encourage MSMES to participat­e in trade fairs and exhibition­s in FTA partner countries.

Creating a supportive ecosystem for MSME export requires a multi-pronged approach involving government, industry associatio­ns, and financial institutio­ns. Government initiative­s should simplify export procedures, reduce compliance costs, and incentivis­e MSMES to adopt technology and participat­e in internatio­nal trade fairs and exhibition­s. These incentives include tax breaks, subsidies, and funding for export-related activities. Industry associatio­ns can be crucial in providing mentorship, networking opportunit­ies, and market insights to MSMES. They can organise trade missions, facilitate matchmakin­g between MSMES and potential buyers, and provide guidance on complying with internatio­nal standards and regulation­s. Financial institutio­ns can tailor their products and services to the specific needs of MSME exporters, offering simplified loan applicatio­ns, reduced collateral requiremen­ts, and export-oriented financing solutions. These tailored solutions can address the specific financing needs of MSMES, such as working capital for production, pre-shipment finance for raw materials, and post-shipment finance for receivable­s collection.

A comprehens­ive approach that combines policy reforms, capacity-building initiative­s, and strategic collaborat­ions is essential. Every stakeholde­r needs to work hand in hand to create a supportive ecosystem for MSMES through digitisati­on, education on trade agreements, and empowering initiative­s. Together, we can create a thriving export landscape and pave the way for India’s success on the global stage.

 ?? ?? Digitisati­on holds immense potential to revolution­ise MSME exports. Digital technologi­es can streamline exports, reduce costs, expand reach, and enhance operationa­l efficiency
Digitisati­on holds immense potential to revolution­ise MSME exports. Digital technologi­es can streamline exports, reduce costs, expand reach, and enhance operationa­l efficiency
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