The small and medium enterprises (SMEs) today are considered as a
vital segment of the Indian economy as they provide a significant
contribution to the country's GDP. Today, the SME sector accounts for
around 35 per cent of the gross value of output in the manufacturing
sector and over 40 per cent of the total exports from the country.
SME players enjoy dominancy in some of India's major export sectors namely textiles and garments, sports goods, leather products, gems and jewelry, handicrafts to name a few. But still they are hesitant to step into global trade. In today's globalization and liberalization era, their penetration is confined with several factors and it is a herculean task for them to compete in a global environment. Some major restrictions faced by the SMEs include resource crunch, shortage of trained manpower, risks and complexities involved in exporting. They choose to compete across local areas, at the domestic level.
In order to assume centre-stage in India's trade policy and also to expand penetration in the global arena, SME owners should come together and form a confederation while complying with their own limits and boundaries. The formation of export consortia by SMEs is an effective way to live up their dream of becoming active players in the export game as it will help them to get over the barriers of costs and lack of skills.
Defining export consortium
A voluntary group formed by small and medium sized businesses which pool in their own expertise, experience, resources and business network is called an export consortium. While in the consortium, they still enjoy their legal, financial and managerial rights. Their objective is to boost the export of goods and services of its members through joint actions.
This group promotes different levels of strategic cooperation among enterprises with their collective activities and initiatives to reach out to overseas markets.
Generally, such consortiums are non-profit alliances, and the members do not have to transfer control of their business to others.
The benefits it offers
SMEs can efficiently make a way into and enhance their market share in foreign markets at reduced expenditure and risk with the formation of export consortia. Besides, it allows the affiliates to improve productivity, increase knowledge and gain a way into larger markets and contracts with joint efforts. By and large, the voluntary group of enterprises is from a same business stream and the collaboration is aimed to make these enterprises globally competitive.
Despite these benefits, export consortia are also faced with some impediments such as delays emerging from the process of looking for like-minded and appropriate business partners and ensuring a productive partnering which itself is a huge effort asking for cohered efforts, dedication and resources. These challenges of a collaborative venture, however, fall short in front of the benefits of an export consortium. Member SMEs must work cordially and efficiently for the consortium to bring them access to exports.
An export consortium allows the members to also opt for collective bidding. This enables them to cater to large orders from foreign buyers which may not have been possible for a single enterprise of a small size.
The way forward
SME players enjoy dominancy in some of India's major export sectors namely textiles and garments, sports goods, leather products, gems and jewelry, handicrafts to name a few. But still they are hesitant to step into global trade. In today's globalization and liberalization era, their penetration is confined with several factors and it is a herculean task for them to compete in a global environment. Some major restrictions faced by the SMEs include resource crunch, shortage of trained manpower, risks and complexities involved in exporting. They choose to compete across local areas, at the domestic level.
In order to assume centre-stage in India's trade policy and also to expand penetration in the global arena, SME owners should come together and form a confederation while complying with their own limits and boundaries. The formation of export consortia by SMEs is an effective way to live up their dream of becoming active players in the export game as it will help them to get over the barriers of costs and lack of skills.
Defining export consortium
A voluntary group formed by small and medium sized businesses which pool in their own expertise, experience, resources and business network is called an export consortium. While in the consortium, they still enjoy their legal, financial and managerial rights. Their objective is to boost the export of goods and services of its members through joint actions.
This group promotes different levels of strategic cooperation among enterprises with their collective activities and initiatives to reach out to overseas markets.
Generally, such consortiums are non-profit alliances, and the members do not have to transfer control of their business to others.
The benefits it offers
SMEs can efficiently make a way into and enhance their market share in foreign markets at reduced expenditure and risk with the formation of export consortia. Besides, it allows the affiliates to improve productivity, increase knowledge and gain a way into larger markets and contracts with joint efforts. By and large, the voluntary group of enterprises is from a same business stream and the collaboration is aimed to make these enterprises globally competitive.
Despite these benefits, export consortia are also faced with some impediments such as delays emerging from the process of looking for like-minded and appropriate business partners and ensuring a productive partnering which itself is a huge effort asking for cohered efforts, dedication and resources. These challenges of a collaborative venture, however, fall short in front of the benefits of an export consortium. Member SMEs must work cordially and efficiently for the consortium to bring them access to exports.
An export consortium allows the members to also opt for collective bidding. This enables them to cater to large orders from foreign buyers which may not have been possible for a single enterprise of a small size.
The way forward
SMEs are progressively focussing on improved production methods,
penetrative marketing strategies and management capabilities with the
help of their vigour, flexibility and innovative drive in order to
uphold and strengthen their operations in the global market. However,
when tried, unity and collaboration brings good results as it follows
the old saying 'unity is strength and division is weakness'.
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