Indian MSMEs have manufacturing cost advantage in global value chain

There is tremendous potential for Indian engineering MSMEs to be integrated into the global value chain due to their manufacturing cost advantage, and to achieve high growth, the two most significant interventions required are related to credit assistance and technology upgradation, MSME Secretary B.B. Swain said on Thursday.

The MSME Ministry has been working closely with other Ministries and Departments to facilitate the ease of doing business for MSMEs, he said in his address at the inaugural session of MSME Conclave organised by EEPC India.

MSMEs contribute around 30 per cent to India's GDP and have a 50 per cent share in the country's exports. 

MSMEs engaged in manufacturing engineering products are about 29 per cent of the 67 lakh MSMEs which have registered since July 1, 2020 on the Udyam registration portal. 

In the National Manufacturing Policy, manufacturing output has been targeted to increase MSMEs' contribution to the GDP.

A Knowledge Paper titled 'Integrating Indian MSMEs to Global Value Chain', released in the inaugural session, suggested that India's trade regime should promote value addition in the country. 

Hence, the general tariff structure should be low on raw and primary goods, slightly higher on intermediaries, and the highest on final products.

It further recommended that both direct and indirect tax structure should be neutral and not discriminate between the nature of firms. 

Banks and financial institutions should be more willing to discern genuine exporters and demand less collateral. 

Stability in policy measures with less intervention and emphasis on neutrality on behalf of the government will be necessary, it added.