From Local to Global: How Indian MSMEs Can Thrive in International Markets

Micro, Small, and Medium Enterprises (MSMEs) represent the backbone of economic growth everywhere. Indeed, nearly 95 percent of all businesses, accounting for about 60 percent of employment, are very important. MSMEs have often struggled, particularly in terms of integration into international trade.

MSMEs assume a substantial position in the export landscape of India. In 2023-24, during the year, actively Udyam-registered MSME exporters contributed US$ 127.5 billion to the export of India, that is, 29.2% of the total merchandise exports. However, only 1% of the 3 crore Udyam-registered MSMEs are exported from India, which holds enormous potential. An all-inclusive strategy on the impediments to the global expansion of MSMEs will become critical to unlock that potential.

Crossing the Information Divide

A major barrier for MSME exporters is the scarcity of information on international markets and products in demand. As a recent Exim Bank survey reports, a whopping 51.4% of MSMEs identified a lack of information on export opportunities as one of the major constraints. So, one of the ways of mitigating this is by creating a single digital platform that would provide current, real-time knowledge regarding global trade, market trends, and regulations. Recently, the Government of India launched the Trade Connect e-platform, a move in the correct direction that may go a long way in reducing the knowledge gap prevalent in the existing system.

Standard Compliance

Matching international product standards is the biggest challenge for MSMEs in terms of packaging, eco-labelling, and other mandatory certifications. The GOI recently launched the CBFTE scheme, which reimburses MSEs for the costs of certifications and other expenses associated with exports. However, the scheme was not known to and implemented by many MSEs. It still needs improvement.

Marketing and Branding Activities

Marketing and branding are the keys for MSMEs in countering larger corporations. As has been indicated by the survey conducted by Exim Bank, 27.5% of the respondents felt that they lacked an edge over the larger firms when involving a more developed marketing presence. Even digital marketing, though available on the affordable side, can't present an obstacle in the minds of many; as, here, 11.9% of the respondents cited inadequate knowledge of digital tools.

Currently, the GOI is supporting its exporters in marketing through various schemes such as the Market Development Assistance and the Market Access Initiative, which target improving access to markets for its exporters: both new and existing markets. Funds consolidation from the schemes ongoing under marketing support could enhance the international competitiveness of MSMEs and improve MSME growth. The funding will be easy to access.

It can go a long way in promoting GI products, and some of the leading e-commerce portals can be very effective in the promotion of Indian products with GI tags, which can boost MSME exports. India boasts a rich variety of goods having GI tags, many of which are produced by MSMEs and have a huge export potential because of their unique identity and cultural heritage.

A notable example is the Italy approach, which collaborated with the e-commerce platform Amazon to promote Italian products with protected designations of origin or protected geographical indications. Similar partnerships will increase India's GI-tagged products and enhance consumer trust while enabling these to grow in exports.

How to Update MSME Certificate

Updating your MSME certificate is beneficial to continue your business with government schemes and incentives. MSME registration certificate is the most important thing. You can do this by following these steps:

• You need to go to the official portal of Udyam Registration.

• Log in through your Udyam Registration Number and the number mentioned during your registration on your mobile number.

• Select Update Details.

• Make all the changes you want and upload the documents that you are required to upload.

• Submit the details and wait for the confirmation of the same.

Institutional Support Strengthened

Involving MSMEs in global trade requires a strong institutional underpinning of the supporting mechanisms. Already, the GOI has constituted State and District-level Export Promotion Councils under DEH. To significantly increase the participation of MSMEs in global trade, the Government could constitute MSME internationalization centres across key export clusters with end-to-end support for exports. They may be supporting hands-on from logistics to trade compliance, order and lead management, finance, and insurance consultancy.

New Mechanisms of Financing

Ease access to working capital for MSMEs would be gained through providing incentives for the promotion of innovative financing mechanisms such as international factoring. International factoring, increasingly a highly sought-after financing tool in global trade, is nascent in India. It is beneficial for MSME exporters because it mainly depends on the quality of accounts receivable rather than on collateral, enabling exporters to provide competitive credit terms to their buyers.

This will significantly improve the worldwide competency of MSMEs and indirectly help India achieve its plan to reach US$ 2 trillion in exports by 2030. In turn, the country's overall economic development and growth would be ensured through the proper tooling, information, and support given to the MSMEs.

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