A Tool to Open Sesame for MSMEs

Context: The new Foreign Trade Policy (FTP) to be recently released opens Micro, Small and Medium Enterprises (MSMEs) as a new gateway for export-oriented growth.

MSME Exports from India

• Exports from India (merchandise and services) during April-November 2020 totalled $290.66 billion, with a trade surplus of $13.59 billion.
• At present only 35,000 MSMEs are involved in exports.

Steps taken by the government for the development of MSMEs: during the pandemic

• Broadened the definition of MSMEs.
• Provided Rs 30 lakh crore relief package.
• Creation and Harmonious Application of Modern Processes - for Increasing the Output and National Strength (CHAMPIONS) infusion of tech support and e-market linkages.

Way forward: to create vibrant export-oriented growth for MSMEs

• Enable MSMEs for direct export: At present, two-thirds of India’s exports are from third-party merchants.
  • Making MSMEs self-reliant and providing them with direct platforms of eCommerce for export. 
  • This would need ->
    • A proactive regulatory architecture,
    • Special ease of doing business,
    • Knowledge hubs through export promotion councils (EPCs),
    • Galvanising ‘district export hubs’ (GoI’s ‘One District, One Product’ initiative),
    • Creating foreign post offices in every such district and export processing zones (EPZs) across the country, and
• Removing structural blocks: Remove entry barrier for small businesses – like special logistics, inputs and support in tax-free or concessions)
• Capacity building: through dedicated training modules in the Niryat Bandhu scheme, MSME Champion Portal, Indian Institute of Foreign Trade (IIFT).
• Improve decision making: By constituting an empowered inter-departmental coordination mechanism for on-spot decisions (with Reserve Bank of India, customs, Directorate General of Foreign Trade (DGFT) and Department of Revenue)
• Infrastructure improvement:  through an efficient network of logistics, warehouses, facilities at the port, quality testing labs and certification centres.
• Upgrade skills and technologies: for creating a competitive export market.