Need for MSMEs to better integrate into global supply chains: Study
New Delhi, Oct 19 (KNN) Since Micro Small and Medium Enterprises (MSMEs) in India continue to remain one of our highest employment-generating sectors, their performance in international markets has much scope for improvement, says a study.
It says that in all other sectors, the relative competitiveness of MSME units in India in the global supply chain continues to remain in a nascent stage.
According to a study by Invest India and Confederation of Indian Industry (CII) called 'Making Indian MSMEs Globally Competitive', ''There is a need to better integrate into global supply chains, either directly or through larger companies. And yet, there is great diversity, robustness and technology-centricity found in some MSME units. The greatest example of their resilience will be found in the fact that at least 10 components in India’s Mangalyaan (Mars Mission) were sourced from MSME Tool Rooms9.''
The report further talks about the factors that enhance competitiveness of a firm can be evaluated by its capacity to compete, capacity to connect, and capacity to change. Each of these forms the pillars of the Competitiveness. While the Capacity to Compete centers on present operations of firms and their efficiency in terms of cost, time, quality and quantity, the Capacity to Change refers to firms’ capacity to execute change in response to, or in anticipation of, dynamic market forces.
The Capacity to Connect, on the other hand, refers to the capacity to gather and exploit business relevant information and knowledge. Each pillar of competitiveness is determined at three levels -- firm capacities, business ecosystem, and national environment -- to determine whether competitiveness weaknesses or strengths are at the firm level, within the immediate business environment or at the macro level.
While MSMEs have shown remarkable resilience by virtue of adapting to the changing face of global economy and maintaining a stable growth rate, it has continued to suffer on the competitiveness index due to significant challenges, which have remained more or less unchanging.
These challenges are Lack of access to adequate and timely credit, Limited awareness / know-how w.r.t increasing competitiveness, Lack of access to markets, Limited access or knowledge of appropriate technology, Lack of availability of suitable skilled human resources, Poor procurement, Insufficient infrastructure and Documentation.
Notwithstanding a significant share in overall exports and a fairly decent growth story, MSMEs are repeatedly faced with challenges that impede their access into global markets. It is imperative to create an eco-system that enables them to enhance growth prospects, integrate with the global value chain either through directly engaging with the global players or being a part of the supply chain by producing for the bigger firms which are linked to the global vendors, generate more and better-quality jobs, experience improved productivity and innovation while seizing new opportunities in the digital age.