From Local to Global: Unlocking Opportunities for MSMEs

Micro, Small, and Medium Enterprises (MSMEs) are the backbone of any economy, driving growth and innovation. With an impressive presence of nearly 63 million enterprises, the MSME sector in India holds substantial significance, contributing 30% to the country's GDP, 45% to its manufacturing output, and 40% to its total exports. However, for these businesses to thrive and expand their reach, they need to go beyond local markets and tap into the global arena.

In a dynamic podcast series presented by DBS Bank and Money Control, the journey from "Small Business to Smart Business" takes center stage, unravelling the untapped potential of MSMEs and uncovering the strategies to empower these businesses to scale up and tap into the global market. In the first episode, titled "From Local to Going Global," industry experts explore the challenges and opportunities for MSMEs in expanding their reach beyond domestic borders.

Get ready to delve into the transformative power of MSMEs from local to global success as we speak to, Mr. Divyesh Dalal, Managing Director and Head – Global Transaction Services, DBS Bank India and Mr. Jayant Dasgupta, IAS, Former WTO Ambassador. Gain valuable insights from these distinguished experts as they share their perspectives on the topic.
 

The Challenges Faced by MSMEs

MSMEs encounter a multitude of challenges as they endeavour to expand their presence in the global market. One key hurdle is access to adequate and timely credit with high costs and complex collateral requirements imposed by banks. Cumbersome loan sanction procedures and delays in fund disbursement further compound the issue. Additionally, MSMEs often struggle in establishing favourable payment and credit terms with offshore buyers, tracking payments and managing charges.

Informational barriers also prevent MSMEs from internationalising their operations. Limited awareness and knowledge regarding increasing competitiveness also hinder MSMEs, including inadequate information about in-demand products and services, limited marketing linkages, and a lack of understanding of foreign markets. Besides, limited access to markets, logistics-related obstacles, trade and non-trade barriers, and inadequate information on potential markets based on market intelligence, restricts MSMEs' growth opportunities.

Moreover, limited access to or knowledge of appropriate technology hampers innovation, value addition, and packaging, preventing MSMEs from meeting importers' quality standards and establishing a suitable design and image in the export market.

Additionally, documentation requirements to expand in the overseas market present lengthy and complicated processes that demand compliance with varying regulations. This is often a major challenge for MSMEs since every country has its own specific regulations and it is crucial to keep up with the constantly changing regulations and laws to survive in the global market.

The insufficiency of basic infrastructure, such as power, water, and roads, particularly for non-cluster-based MSMEs, further adds to the challenges.
 

Opportunities for MSMEs to Overcome Barriers to Global Expansion

Despite the challenges, several opportunities exist for MSMEs to expand their global footprint.

· Nurturing innovation

Nurturing innovation and embracing modern technologies are crucial for MSMEs. It opens up vast opportunities for SMEs by providing easy access to market-relevant information. By leveraging digital technology, they can generate valuable market insights, enabling them to analyze markets and facilitate buyer-seller interactions effectively.

· Building Strong Infrastructure Facilities

To seize global opportunities effectively and integrate into global value chains, there is a need for improved infrastructure facilities within the manufacturing sector. Implementing efficient manufacturing practices is essential for MSMEs to enhance their competitiveness in the global arena. Mr. Jayant Dasgupta, Former WTO Ambassador adds, “Compliance with quality standards, including improving designs and packaging requirements is vital for SMEs.”

· Capacity Building

Capacity building is crucial for the growth of MSMEs, especially for small and micro-companies that need to adapt and innovate to meet the demands and trends of the international market. By focusing on capacity development initiatives such as investing in employee training and skill development programs, fostering a culture of continuous learning and innovation, and seeking partnerships and collaborations with industry experts, MSMEs can enhance their productivity and competitiveness in the global markets.

· Risk Management and Partnerships

Building effective partnerships with banks and financial institutions is crucial for MSMEs to facilitate their expansion plans. “Collaborating with banks can help MSMEs become more customer-centric, providing risk coverage, enabling quick shipping, and reducing paperwork. Establishing such partnerships can enhance the overall experience for customers and streamline the export process,” says Mr. Divyesh Dalal from DBS Bank.

DBS Bank's Support for MSMEs to Expand Overseas

DBS Bank offers a range of services and solutions to support MSMEs. Through digital platforms, they facilitate easy access to credit, paperless transactions and cross-border payments. They offer contactless modes and digital solutions that bring transparency and traceability to transactions. DBS Bank also facilitates interactions between MSMEs and its partnerships, such as ODeX to provide hassle-free credit solutions. Beyond financing, the bank assists MSMEs at every step, from purchase order management to manufacturing, logistics, foreign exchange, trade reporting, and more.
 

Key Takeaways

In conclusion, MSMEs seeking global expansion should focus on key factors for success. This includes prioritizing customer trust through a customer-centric approach, harnessing the power of digitalization, constantly improving technology and manufacturing practices, efficiently managing working capital, and forging partnerships with the right transaction partners. Additionally, capacity building, market awareness, adherence to quality standards, and continuous innovation are crucial elements for MSMEs to thrive in the global marketplace. By embracing these strategies, MSMEs can unlock their full potential and achieve remarkable success on the global stage.                                                         

Courtesy - MoneyControl