Benefiting small businesses in global trade from Chinese slowdown; how clusters can play important role

By: |
Published: September 26, 2019 1:39:28 PM

Ease of Doing Business for MSMEs: Cluster development has been among the key focuses by the government as MSMEs are expected to generate around 1 crore jobs in the coming four-five years, as per a report by Nomura Research Institute.

MSMEs are expected to generate around 1 crore jobs in the coming four-five years.

For India to benefit from China’s slowdown with respect to the opportunities in global trade and boosting entrepreneurship, micro-enterprises have a key role to play, according to Arun Maira, Former Member, Planning Commission and Chairman, Foundation for MSME Clusters. Maira said that to build power in the small enterprises in order to capture the opportunity, the quality of clusters and their effectiveness are critical. Cluster development has been among the key focuses by the government as MSMEs are expected to generate around 1 crore jobs in the coming four-five years, as per a report by Nomura Research Institute.

“Clusters can empower small businesses but we have seen them not paying attention to it. They leapfrog building the fundamentals. There are small enterprises in Vietnam, in India, Africa etc., and with China vacating, who will succeed depends on the quality of the clusters that will be fostered in these regions. Instead of leapfrogging this, we got to focus on this so that we can land into the big value chains,” Maira, a celebrated management consultant said at a CII event recently.

Also said: If you want to invest in startups with a huge market, come to India, Modi tells US investors

There is power and information asymmetry, according to Maira, between micro and large businesses that can be bridged if there is a big domestic assembler able to access best foreign technology and grow the whole ecosystem of small enterprises. For instance, in the automobile sector where large manufacturer enables SMEs with business.

Maira also stressed on the need for businesses to also focus on building skills for their employees by creating an environment for them to learn faster in order to build competency for their businesses, small or large. “This means a focus on building skills for them and treating them as assets. Unfortunately, we are too focused on the cost of human beings in the businesses. So please move human beings from the profit and loss account on to your balance sheet.”

Last month, industry body FICCI as well in its latest economic outlook survey among economists highlighted the need to adopt a cluster development approach by the government. “Smaller enterprises working in a cluster will develop economies of scale and become cost-efficient, thereby improving their productivity and competitiveness,” the survey said since “a majority of employment opportunities are created by SME.”

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Next Stories
1Microsoft kick-starts a unique initiative for supporting start-ups
2If you want to invest in startups with a huge market, come to India, Modi tells US investors
3Why gaps in anti-profiteering law is a question mark on mechanism, unfair for SMEs