Government should promote vendorisation amongst small & large industries

Indian micro, small & medium enterprises (MSMEs) to be globally competitive must learn from clusters across the world, as the Indian firms cannot learn due a limit to internal learning.

Jayarama Emani | The Dollar Business Clusters-The-Dollar-Business World over, micro, small and medium enterprises (MSMEs) are exporting, but as an exporting nation we rank very low as our exports are legible, said Dr. Tamal Sarkar, Director, Foundation for MSME Clusters. Speaking exclusively to The Dollar Business, during a recently held event on ‘Make in India’ by The Federation of Telangana & Andhra Pradesh Chambers of Commerce and Industry (FTAPCCI), Sarkar said, “If not international exports, I will rather look at MSMEs export internally to larger industries. We must promote vendorisation in India, so that MSMEs absorb technologies the way large enterprises do it by collaborating with multi-national companies.” In his presentation, ‘MSMEs and Global Competitiveness - A cluster based approach,’ Sarkar said, 70% of MSMEs are present in clusters - Industrial (1156); Handicrafts (3092); Handloom (564); Service (200+). Sarkar said that Indian MSMEs to be globally competitive must learn from clusters across the world as the Indian firms cannot learn internally as there is a limit to internal learning. While in India has specialized clusters like Pharma in Hyderabad and Jalandhar for Sports, the need of the hour is for them to tie-up with lead global clusters and learn the way the Japanese and Koreans learnt through technology transformation. Later, the learnings can be passed on to follower clusters. Stating that Food Products, Textile Products and Metal Products are the three leading sectors that have cluster presence of 241, 153 and 138 respectively, Sarkar said that technology, wages and market penetration are the biggest challenges of MSME. Speaking on the financial hurdles for MSMEs, the director said that though the industry has the big financial debt, the financial spread is very poor. And one of the major reasons is that banks are very restricted in financing micro enterprises for various reasons including being interested only in high level financing. So if banks can be promoted to finance MSMEs, like the Reserve Bank of India (RBI) did the other day, MSMEs can go a long way in servicing the country, he opined.