Business strategy for exporters in MSMEs to succeed and grow!

After the implementation of LPG act in 1991, globalisation gives new opportunities to the MSME. But coming with a new and innovative idea is not sufficient to establish a business successfully. Yes, it is true that market always demand for something new and different, but we cannot proceed without a proper calculative business strategy and risk management ability. 

One cannot survive in the current dynamic environment until and unless he/she is well aware of challenges and opportunity. Primarily, taking care of MSMEs comes under the role of state government but central government also takes necessary decision and comes with new policies and projects as and when it required. For enhancing the export figure central government has introduced $ 3 billion for the exporters.

For better understanding one must know the definition of MSME. MSME’s stands for Micro, Small, medium size enterprise.

MSME consist of (SME) Small and Medium Industries, (ARI) Agro & Rural Industries, (IF) Integrated Finance, (DATC) Data Analytics and Technical Coordination.

New Looks of MSME’S
S.No	Type	Manufacturing		Services
1	Micro	Up to ₹ 25lakhs		Up to ₹ 10lakhs
2	Small	Between ₹25lakhs to 5crore		Over ₹ 10lakhs to ₹ 2crore
3	Medium	Over ₹ 5crore to ₹ 10crore		Over ₹ 2crore to ₹ 5crore
Manufacturing: Plants and machine investment			Service: Investment in equipments.

                           Table 1.0

Most of the time MSME’s has to face different challenges such as generation of initial capital, regular flow of funds, optimal scale of operation, supply chain breakdown, dynamic market scenario so on and so forth. That is the reason they have to rely on labour intensive technique. But on the other hand MSME’s contributing 45% in total manufacturing output and 40% in the export figure.
Table 2

Contribution of MSME’s to the country’s economy
Year	Share of MSME in GVA (%)	Share of MSME in GDP (in %)
2011-2012	32.35	30
2012-2013	32.85	30.40
2013-2014	32.71	30.20
2014-2015	32.21	29.70
2015-2016	32.03	29.20
2016-2017	31.83	28.90

                   

In the above data, we can see the contribution of MSME’s in the economy growth. Approximately it contributes 30% in the GDP every year.

Table 3

Year	Growth rate of overall industries in %	Growth rate of MSMES in %
2011-2012	7.4	4.4
2012-2013	7.8	5.6
2013-2014	6.58	9.1
2014-2015	6.76	8.56
2015-2016	6.6	7.62

                             
It would not be wrong to say MSME’s are backbone of every developing nation. If we see the growth rate of last 5 years, it is nearly 7.05% every year. That is why central government always comes with the different policies that not only minimize the problems faced by the small and medium enterprises but also to encourage them to invest more. But balanced sub-optimal scale of operation is always required.

Nirtay Rin Vikash Yojana(NIRVIK) provide coverage to the small exporters. The commerce and industry ministry is also working on Export Credit Insurance Scheme (ECIS) under which the insurance guaranteed could cover up to 90% of the principal and interest and guaranteed up to 60% loss.

Table 4

India's trade in services sector in $ Billion (2014-2018)
Year	Export	Import	Trade balance
2014	157.2	128.36	28.38
2015	156.28	123.57	32.71
2016	161.82	133.53	28.29
2017	185.29	154.6	30.7
2018	205.11	176.58	28.52
Source: ITC Trade Map

                                

As per the report published by The Trade Promotion Council of India, Indian services sector exporting more and able to maintain the trade balance of $30 billion every year.

Table 5

India's trade figure with different countries on $ billions
Year	2014	2015	2016	2017	2018
world	317.54	264.38	260.33	295.85	323.06
U.S.A	42.68	40.31	41.99	46.06	51.06
U.A.E	32.92	29.99	30.04	30.01	29
China	13.34	9.58	8.92	12.49	16.04
Singapore	9.64	7.81	7.35	11.57	10.43
U.K	9.67	8.89	8.57	8.96	9.78
source: ITC Trade Map

                                 

In previous circumstances India was exporting pharmaceutical products, natural and cultured pearls, precious and semi precious stones, footwear and many more. But now Indian exporters have to develop their new business model. After the implementation of  lock down worldwide,  demand of  luxurious products fells down. People are purchasing only those products which are essential for living. It is the clear indication that in the upcoming 2-3 years, demand of luxurious goods would be at their minimum level.  On the other hand it is a golden opportunity for those exporters who are exporting essential goods or (FMCG) fast moving consumable good to different countries. Similarly, Indian exporter has to think about their new customers from all over the world. Mostly Indian exporters are targeting the market like USA and Singapore, but for selling essential goods Indian exporters have to target developing nations like Bangladesh and South African countries. Cabinet minister Nitin Gadkari also emphasise Indian exporters to determine the demand of different countries and design their products accordingly.

It is the time to build relationship with new countries for not earning profit but also from ethical point of views. It is not necessary to establish a new e-business channel for exporting, exporters can also use the existing channels of different companies from all over the world for supply.

One must have complete information, than only he/she could get benefited by various schemes and new business models. For spreading awareness,     government gives privilege to the digital mode of communication. Ministry of micro, small and medium enterprise has launched mobile applications like NIRYAT app for the exporters.

Reference:
Annual report of 2018-2019, Ministry of Micro, Small and Medium Enterprises, New Delhi
 Imperial tobacco company of India(ITC)
The Economic times
Annual Report of Ministry of consumer affairs 2018.