SME
development requires cross-cutting strategy: EXIM Bank
Our
Corporate Bureau
21 November 2005
Mumbai:
Exim Bank's latest study titled Export Performance
of Small and Medium Enterprises in India finds that
SME development requires cross-cutting strategies that
touch upon many areas, such as conducive policies, simplified
legal and regulatory framework, good governance, abundant
and accessible finance, suitable infrastructure, entrepreneurial
skill development, and competitive environment.
The
study was released by minister of small scale industries
Mahavir Prasad, at the third Commonwealth-India small
business competitiveness development programme, in New
Delhi yesterday, who presented the first copy to George
Saibel, director, special advisory servicesd, Commonwealth
secretariat.
T
C Venkat Subramanian, chairman and managing director,
Export-Import Bank of India said that SME competitiveness
could be enhanced through networking and sharing of
experiences from successful firms. The networking could
be done by way of transfer of technology, joint ventures,
marketing arrangements, or even outsourcing. Such networking
approach enables SMEs to overcome many of the limitations
of size, efficiency and quality, he added.
The
study analysed 12 SSI intensive sectors engineering
goods, chemicals and allied products, basic chemicals
and pharmaceutical products, plastic products, leather
products, processed food products, marine products,
woolen garments and knitwear, sports goods, readymade
garments, rayon and synthetic products, and processed
tobacco and bidi.
The
study noted that while these sectors have improved their
cumulative share in India's total exports (from 51.6
per cent in 1991-92 to 55.5 per cent in 2002-03), the
export share of SSI units in these sectors have come
down from 58.4 per cent in 1991-92 to 52.4 per cent
in 2002-03. The study remarked that this could be a
result of liberalisation, which could have facilitated
more and more SSI units to increase their capital investment
in order to emerge as global players.
The
study reviewed the performance of medium enterprises
using two definitions, viz., based on capital investment
(between Rs1 to Rs10 crore), as defined by the Reserve
Bank of India, and based on sales turnover of units
up to Rs75 crore. The analysis revealed that sectors
like food and beverages, chemicals, auto-components,
machinery, electronics, metals, castings and forgings
have witnessed increasing export orientation trend over
the last decade.
The
study suggested that small and medium scale enterprises
could be defined as one entity for policy purposes,
with the objective of facilitating higher investment
and thereby encouraging the technology upgradation.
The study added that SMEs should be encouraged to work
in cluster environment ensuring complementarities, common
activities, collective goods and institutional stability.
This strategy requires sector specific actions, aimed
at increasing the competitiveness of the clusters, promoting
networks and cooperation amongst firms.