Small entrepreneurs should concentrate on the domestic market as the
development of local market would help them buoy up the slowdown in the
exports. Chandrakant Salunkhe, the president of SME Chamber of India,
shared this while talking exclusively to SME News. He also shared that
it is now more important for SMEs not to concentrate only on the
exports, but also on the domestic market.
What is your opinion on the state of exports in the country? How is the current global market scenario for exports by SMEs?
Chandrakant Salunkhe: After registering a healthy growth of 21% in 2011-12; India's exports have declined consequently for last three months - by 15% in July 2012; by 5.5% in June 2012 and by 4.16% in May 2012. For the first 4 months of 2012-13, the total exports dropped by 5.06% compared to the same period during the last year. The decline has been mainly due to the lower global economic growth and ongoing euro zone debt crisis which has led to lower demand of goods and services in one of the largest markets. As far as the export market scenario for SMEs is concerned, the lower global economic growth coupled with worsening euro zone crisis has created market situation very tough for SME exports. The sectors that have been worse affected include engineering goods, petroleum products, gems and jewellery, fruit and vegetables and iron ore.
What support and subsidies are being given to them?
Chandrakant Salunkhe: SME Chamber of India has been assisting SMEs both in manufacturing and services sector to enhance their business, exports and trade, enable them obtain the bank finance, PE & VC; joint ventures and technology transfers, contract manufacturing tie-ups; and also assist them with marketing, branding and promotion of their products and services. Also resolve their problems and issues.
Current Challenges for SMEs: - High interest rates charged by banks
- High inflation rate leading to high cost of raw materials as a result high input costs.
- Inadequate source of funds due to risk averseness of banks
- Lack of availability of timely funds
- Financial Crisis giving rise to delayed receipts of payments from Corporate/Customers.
Subsidies and Support given to the SMEs:
- Scheme of Surveys, Studies and Policy Research
- Entrepreneurship Development Institution Scheme
- Marketing Assistance Scheme (Implemented through NSIC)
- Performance and Credit Rating Scheme (Implemented through NSIC)
- Product Development, Design Intervention and Packaging (PRODIP) (Implemented through KVIC)
- Interest Subsidy Eligibility Certification (ISEC)
- Other schemes introduced by NSIC comprise of bank credit facilitation, Export credit Insurance, SME Credit Rating, Bill discounting schemes, Government stores purchase programme, infomediary services, facilitating marketing support, technology support and other support services.
In India, the SME segment is a fragmented one. In how much time do you think it would become organised?
Chandrakant Salunkhe: Commenting on the time required to make the Indian SME sector organized is tough. However the efforts are being made to develop SME clusters and various incentives are provided for SME Cluster development programs as well as for the SMEs having their operations in those clusters. At the same time various SEZz are being promoted in order to make the SME sector organized and there is an all-round development of the sector.
What are the growth opportunities for the SMEs available in the export sector?
Chandrakant Salunkhe: Currently the export sector is subdued mainly due to the ongoing euro zone debt crisis and is expected to remain the same for another quarter. However the sector presents ample of opportunities for the SMEs mainly in the field of the engineering goods, textiles, gems and jewellery, pharmaceutical products, metals and metal products, iron ore and other raw materials.
Are Indian SMEs fully aware about the advantages of the export-import business? What measures your organisation undertakes to make them aware?
Chandrakant Salunkhe: SMEs in the manufacturing business are aware of the benefits of the export-import business. The extent of the awareness might vary. However in order to increase the awareness amongst the Indian SMEs, the Council is organizing various Seminars, Conferences, Summits as well as various training programs from which the SMEs get the first hand information from the industry experts and also provides them with opportunity to network.
India's trade deficit widened in July as exports recorded their sharpest fall since November 2011. What do you think, in such scenario can the government miss its export target for the ongoing fiscal and will this further hit Indian rupee?
Chandrakant Salunkhe: It is important to understand that as the exports have dropped in July so have the imports in the same month. How and when the export market will pick-up will totally depend on global economic situation and the States of Euro zone. Commenting on whether the government would be able to meet the export target in the ongoing fiscal would be too early. The rupee volatility is dependent on various reasons and not just the availability of foreign currency in the country. The current volatility is mainly due to the uncertainty over Euro and other major currencies resulting in strengthening of the US Dollar.
What measures should government take on export policies in the wake of deficient monsoons this year?
Chandrakant Salunkhe: In view of deficit monsoon, the Government of India has already started taking various initiatives in order to boost the exports.
Some of them include:
- 2% interest subsidy scheme extended till March 2013
- Incentives for exports from north-eastern states in order to boost their participation
- Single revolving bank guarantee for different export deals to reduce time
- Market linked focus product scheme extended till March’13 for apparel export to USA and EU
- Government to come out with new guidelines to promote SEZs
- Steps announced to reduce transaction cost of exports in order to increase efficiency
- Thirteen shows abroad to promote Brand India to boost demand of domestic products across different countries.
Other key initiatives taken
- Shipments from Delhi, Mumbai through post, courier or e-commerce to get export benefits
- Ahmedabad, Kolhapur and Shaharanpur new Towns of Export Excellence
- Focus on market diversification to continue
How do you see Indian SMEs in terms of their performances?
Chandrakant Salunkhe: SMEs have been playing a major role in economic growth of the nation. They have been outforming the Corporate, however their performance is marred by various glitches in the policies and other areas of their concern. Initiatives are being taken in order to develop the clusters so that it would enable the SMEs to achieve an all-round growth.
Please share your roadmap for the current fiscal (2012-13).
Chandrakant Salunkhe: We have been assisting SMEs for a very long time and would continue to do the same in the current fiscal year too. We plan to organize various events and training programs in order to make SMEs aware on various policy measures and other incentives available to them. These programs will also concentrate on various risk management strategies in order to enable to mitigate the risk arising due to currency fluctuations and uncertainty in the West. Also we are putting efforts for empowerment of SMEs so that India can achieve 7% growth in the current fiscal year.
What is the outlook for the sector, especially SMEs, in the next 6 months?
Chandrakant Salunkhe: It is important for SMEs not to concentrate only on the exports, but also concentrate on the domestic market. There is a vast scope in the domestic market and if SMEs develop this market completely it would help them buoy the slowdown in the exports. Also it is necessary for them to get out of the comfort zone and try and identify new markets as well as new and innovative products. The sector though affected by the slowdown will continue to grow and government is taking initiatives to provide adequate support to the sector.
What is your opinion on the state of exports in the country? How is the current global market scenario for exports by SMEs?
Chandrakant Salunkhe: After registering a healthy growth of 21% in 2011-12; India's exports have declined consequently for last three months - by 15% in July 2012; by 5.5% in June 2012 and by 4.16% in May 2012. For the first 4 months of 2012-13, the total exports dropped by 5.06% compared to the same period during the last year. The decline has been mainly due to the lower global economic growth and ongoing euro zone debt crisis which has led to lower demand of goods and services in one of the largest markets. As far as the export market scenario for SMEs is concerned, the lower global economic growth coupled with worsening euro zone crisis has created market situation very tough for SME exports. The sectors that have been worse affected include engineering goods, petroleum products, gems and jewellery, fruit and vegetables and iron ore.
What support and subsidies are being given to them?
Chandrakant Salunkhe: SME Chamber of India has been assisting SMEs both in manufacturing and services sector to enhance their business, exports and trade, enable them obtain the bank finance, PE & VC; joint ventures and technology transfers, contract manufacturing tie-ups; and also assist them with marketing, branding and promotion of their products and services. Also resolve their problems and issues.
Current Challenges for SMEs: - High interest rates charged by banks
- High inflation rate leading to high cost of raw materials as a result high input costs.
- Inadequate source of funds due to risk averseness of banks
- Lack of availability of timely funds
- Financial Crisis giving rise to delayed receipts of payments from Corporate/Customers.
Subsidies and Support given to the SMEs:
- Scheme of Surveys, Studies and Policy Research
- Entrepreneurship Development Institution Scheme
- Marketing Assistance Scheme (Implemented through NSIC)
- Performance and Credit Rating Scheme (Implemented through NSIC)
- Product Development, Design Intervention and Packaging (PRODIP) (Implemented through KVIC)
- Interest Subsidy Eligibility Certification (ISEC)
- Other schemes introduced by NSIC comprise of bank credit facilitation, Export credit Insurance, SME Credit Rating, Bill discounting schemes, Government stores purchase programme, infomediary services, facilitating marketing support, technology support and other support services.
In India, the SME segment is a fragmented one. In how much time do you think it would become organised?
Chandrakant Salunkhe: Commenting on the time required to make the Indian SME sector organized is tough. However the efforts are being made to develop SME clusters and various incentives are provided for SME Cluster development programs as well as for the SMEs having their operations in those clusters. At the same time various SEZz are being promoted in order to make the SME sector organized and there is an all-round development of the sector.
What are the growth opportunities for the SMEs available in the export sector?
Chandrakant Salunkhe: Currently the export sector is subdued mainly due to the ongoing euro zone debt crisis and is expected to remain the same for another quarter. However the sector presents ample of opportunities for the SMEs mainly in the field of the engineering goods, textiles, gems and jewellery, pharmaceutical products, metals and metal products, iron ore and other raw materials.
Are Indian SMEs fully aware about the advantages of the export-import business? What measures your organisation undertakes to make them aware?
Chandrakant Salunkhe: SMEs in the manufacturing business are aware of the benefits of the export-import business. The extent of the awareness might vary. However in order to increase the awareness amongst the Indian SMEs, the Council is organizing various Seminars, Conferences, Summits as well as various training programs from which the SMEs get the first hand information from the industry experts and also provides them with opportunity to network.
India's trade deficit widened in July as exports recorded their sharpest fall since November 2011. What do you think, in such scenario can the government miss its export target for the ongoing fiscal and will this further hit Indian rupee?
Chandrakant Salunkhe: It is important to understand that as the exports have dropped in July so have the imports in the same month. How and when the export market will pick-up will totally depend on global economic situation and the States of Euro zone. Commenting on whether the government would be able to meet the export target in the ongoing fiscal would be too early. The rupee volatility is dependent on various reasons and not just the availability of foreign currency in the country. The current volatility is mainly due to the uncertainty over Euro and other major currencies resulting in strengthening of the US Dollar.
What measures should government take on export policies in the wake of deficient monsoons this year?
Chandrakant Salunkhe: In view of deficit monsoon, the Government of India has already started taking various initiatives in order to boost the exports.
Some of them include:
- 2% interest subsidy scheme extended till March 2013
- Incentives for exports from north-eastern states in order to boost their participation
- Single revolving bank guarantee for different export deals to reduce time
- Market linked focus product scheme extended till March’13 for apparel export to USA and EU
- Government to come out with new guidelines to promote SEZs
- Steps announced to reduce transaction cost of exports in order to increase efficiency
- Thirteen shows abroad to promote Brand India to boost demand of domestic products across different countries.
Other key initiatives taken
- Shipments from Delhi, Mumbai through post, courier or e-commerce to get export benefits
- Ahmedabad, Kolhapur and Shaharanpur new Towns of Export Excellence
- Focus on market diversification to continue
How do you see Indian SMEs in terms of their performances?
Chandrakant Salunkhe: SMEs have been playing a major role in economic growth of the nation. They have been outforming the Corporate, however their performance is marred by various glitches in the policies and other areas of their concern. Initiatives are being taken in order to develop the clusters so that it would enable the SMEs to achieve an all-round growth.
Please share your roadmap for the current fiscal (2012-13).
Chandrakant Salunkhe: We have been assisting SMEs for a very long time and would continue to do the same in the current fiscal year too. We plan to organize various events and training programs in order to make SMEs aware on various policy measures and other incentives available to them. These programs will also concentrate on various risk management strategies in order to enable to mitigate the risk arising due to currency fluctuations and uncertainty in the West. Also we are putting efforts for empowerment of SMEs so that India can achieve 7% growth in the current fiscal year.
What is the outlook for the sector, especially SMEs, in the next 6 months?
Chandrakant Salunkhe: It is important for SMEs not to concentrate only on the exports, but also concentrate on the domestic market. There is a vast scope in the domestic market and if SMEs develop this market completely it would help them buoy the slowdown in the exports. Also it is necessary for them to get out of the comfort zone and try and identify new markets as well as new and innovative products. The sector though affected by the slowdown will continue to grow and government is taking initiatives to provide adequate support to the sector.
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