Trade, import and export for MSMEs: The share of micro, small and medium enterprise (MSME) sector in the country’s annual merchandise exports has declined even as the latter hit a record high level in the financial year 2021-22. MSME exports’ share dipped to 45.04 per cent in FY22 in comparison to 49.75 per cent during FY20 and 49.35 per cent during FY21 while India’s exports jumped 34.63 per cent from $313.3 billion in FY20 and 44.5 per cent from $291.8 billion in FY21 to record $421.8 billion in FY22. The data on the value of MSME exports and its share in overall exports was shared on Monday by the Minister of State for MSMEs Bhanu Pratap Singh Verma in a written reply to a question in Rajya Sabha.
For the uninitiated, the share of MSME exports in India’s total export value hovered around 49 per cent till FY21. For FY19, the share stood at 48.10 per cent amounting to $158.76 billion, as per the data shared by Minister of State for Commerce and Industry ministry Anupriya Patel in Rajya Sabha in December last year.
“Commodity prices and commodity exports including petroleum, steel and other metals, and food grains have jumped record high recently. In these segments MSMEs are not the key players while non-MSME exporters account for exports of petroleum products, steel, food grains etc., who have probably done exceptionally well and hence the overall share of MSME exports has come down due to this,” Ajay Sahai, Director General & CEO, Federation of Indian Export Organisations told Financial Express Online.
“Now with commodity prices correcting along with the change in MSME definition and technology infusion into the sector, I’m sure MSMEs’ share in exports will bounce back and scale to more than 60 per cent in around five years,” he added.
Meanwhile, MSME exports surged 21.8 per cent from $155.9 billion during FY20 and 31.9 per cent from $143.9 billion during FY21 to $190 billion during FY22.
“Among the reasons for growth in MSME exports is the ‘China Plus One’ strategy by multinational companies that has certainly drawn a lot of buyers out of China to India. Most of these buyers have been attracted by small and medium enterprises in India which are getting a lot of orders. That’s why we see engineering goods exports doing well,” said Sahai.
Exports of India’s engineering goods had jumped 13.5 per cent to $9.79 billion in May this year from $8.62 billion in May 2021, according to the data from the Engineering Export Promotion Council of India’s monthly analysis of export trends.
Among the top 10 export destinations for Indian MSMEs in FY22 have been the US ($54.7 billion), UAE ($13.4 billion), Hong Kong ($9.93 billion), the UK ($7.54 billion), Germany ($7.19 billion), China ($5.16 billion), Belgium ($4.73 billion) France ($4.20 billion), the Netherlands ($4.24 billion), and Italy ($3.84 billion).
MSMEs’ share in exports assumes significance as the government has been targetting $1 trillion in exports by FY27. In accordance with the target, the government had added another scheme ‘Capacity Building of First-Time MSME Exporters’ (CBFTE) scheme to enhance the quality of MSME products globally and increase exports.
“Whether it is about monetary support, certification-related support, etc., this initiative has been taken to ease the export process for first-time exporters. Irrespective of the size of your product, I would want maximum MSMEs to look at the global market. The work done by our missions in various countries abroad would be evaluated based on three Ts — trade, technology, and tourism,” Prime Minister Narendra Modi had said while launching the scheme in June this year.