Journal of Small Business and Enterprise - March, 2013 - CII

DifferentiatorBoosting MSME Brand PowerCII calls for a Branding & Export that helps position brand Indian MSME globallyAfund to subsidise Indian MSMEsbranding and marketingoperations is the need of thehour, according to Mr DeepKapuria, Chairman, CII NationalMSME Council. The primary objectiveof such a fund is to promote and createinternational awareness of the IndianMSME label in markets overseas and tofacilitate the dissemination of knowledgeof Indian MSME products and services.In the backdrop of opening up of FDIin multi-brand retail, the fund will enablepositioning the Indian MSME brand globallyand create new market opportunitiesfor a swathe of Indian MSMEs, as foreignretailers that invest in India would berequired to source at least 30 percent oftheir goods from Indian MSMEs.Going forward, the proposed fundwould help MSMEs supplying to globalretail majors in India to focus upon thequality standards set by the majors, gainfirm understanding of their complexvendor management systems, and scaleup as per demands placed by those firms.Economist Paul Deng has analysedthat firms with advanced technology inthe domestic market compete neck-toneckwith the foreign competitors andthe inefficient firms are driven out of themarket. He has termed this driving out ofthe technologically obsolete firms as thediscouragement effect. This dynamismpromotes innovation and competitiveness.In this context, the Foreign InvestmentPromotion Board (FIPB) nod to Swedishfurniture retail giant Ikea to invest in theIndian retail sector is expected to createbusiness opportunities for a variety ofIndian MSMEs that can supply to thisretail major. Ikea plans to open 25 outletsin India, investing $2 billion over thenext 10-15 years. While initially, Ikea hadexpressed reservations about sourcingfrom Indian SMEs, citing its own complexglobal vendor management processes,the group has now agreed to adhere tothe sourcing norm.It is well recognised that MSMEscontribution to employment generationcannot be understated, and therefore thesector deserves unwarranted attentionby the Union Commerce Ministry, whileupdating the Export Import Policy 2009-2014, for the growth and development ofthe Indian economy, says Mr Kapuria.While thanking the Finance Minister,Mr P Chidambaram, for taking cognizanceof the CII Pre-Budget Memorandumfor MSMEs, Mr Kapuria shared thatout of the 12 recommendations madeby CII, five recommendations, founda mention in the Union Budget 2013-14 these include, (i) Continuation ofthe benefits or preferences enjoyed byMSME for up to three years; (ii) Provisionof a corpus of Rs 500 crore to SIDBIto set up a Credit Guarantee Fund forFactoring; (iii) Provision of a sum ofRs 2,200 crore during the 12th Plan periodto set up 15 additional tool rooms andTechnology Development Centres; (iv)Funds provided to technology incubatorslocated within academic Institutionswill qualify as CSR expenditure; (v) SMEswill be permitted to list on the SMEExchange without being required tomake an initial public offer (IPO).The Budget's announcements werepredicated to social and financialinclusion to catalyse economic growth,according Mr Kapuria.Last year, the Parliamentary StandingCommittee on Commerce, Chaired byMr Shanta Kumar, had suggested thesetting up of an export marketing fundwith a corpus of at least Rs 1,000 crorefor MSMEs. The committee in its reporttabled in Parliament had mentioned thatto double India's share in world trade by2020, it is necessary to create a robustMSME segment that is oriented to exportpromotion. The panel said a fund shouldbe set up to subsidise the marketingefforts of MSMEs.However, CII is of the view that amarketing fund by itself cannot help theMSMEs tackle all the problems they arefacing now. MSMEs on their own shouldbe willing to adopt modern marketingtechniques to tap the huge marketopportunity that is available to them.Branding, especially, is a big challengefor MSMEs as it calls for a lot of investment,which these firms cannot afford on theirown. To cap it all, there is no fundingavailable for brand building activity - fromGovernment of the banks. CII observesthat without proper brand building, thesefirms are finding it difficult to createbrand awareness and to compete withhigh visibility products from bigger rivals,let alone increase their market share.MSME Business March 201319