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

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InternationalFueling Growth EngineAmid growing demand for inking a Free Trade Agreement, India and EuropeanUnion have opened a direct channel to link up their SMEs. Read on to find whatit has to offer.MSME Business March 201320As India joins the 54-memberEnterprise Europe Network(EEN) to facilitate the flowof trade, investment andtechnology between small andmedium enterprises (SMEs) in the tworegions, optimism and ambition levelshave been raised over opportunities thiscrucial channel is to open for the sector.Given the dynamics of trade relationsbetween India and its largest trading partnerEuropean Union (EU) -- the bilateral tradebeing $91.3 billion in 2010-11 -- from theperspective of Indian SMEs, the partnershipmeans it's time to home in on suchcollaborations that can help increase theirglobal reach and build competitiveness.Once the Bilateral Trade andInvestment Agreement (BTIA), thenegotiations on which are on since June2007, gets signed between India and theEU, the trade between the two regions islikely to more than double to exceed $207billion by 2015, says an industry study.The talks were to conclude in 2011 butdifferences over the level of opening ofthe market have delayed the pact. Indiahas been seeking a single visa for itsprofessionals on short-term contractualvisits to the European Union. On the otherhand, the EU has been asking for significantreduction in customs duty on cars, winesand spirits in their exports to India.Nevertheless, the EEN platform,conceptual underpinnings of which aregrounded in the need to share, learn andcollaborate to grow together, providesIndian SMEs, accounting for about 45percent of the country's manufacturingoutput, huge gains.The advantages are in terms of accessto Europe's largest database of cuttingedgetechnologies, with firms fromcountries in the 27-member bloc offeringand requesting research and commercialapplications in as many as 17 sectorsincluding agro-food, automotive, transportand logistics, biotech, healthcare.The sector groups often form thelink between EEN and other Europeanactors and projects including Europeantechnology platforms, Europe INNOVAprojects and Business Innovation Centres(BICs), as well as research-driven clustersand National Contact Points of theEuropean Commission's 7th ResearchFramework Programme (FP7).While India's nearly 26 million SMEsproduce over 6,000 products for theglobal market, complexities involved infinance, infrastructure, skill development,marketing, networking and regulatoryframework act as barriers for their growth.According to Gurpal Singh,Principal Advisor and Head of MSME atConfederation of Indian Industries (CII),the EU has been a very difficult market forthe Indian SMEs, given its complexities,stringent rules and regulations and overalla very protected market.However, things will certainly look upfor MSMEs with India becoming an officialmember of the EEN. The EEN platform wouldhelp to combine core strengths of Indianand EU companies which will be mutuallybeneficial to both sides, says Singh.The CII along with European Businessand Technology Centre and Federation ofIndian Export Organisations are partnersin this initiative and are network contactpoints for Indian SMEs.
InternationalThe network serves as one-stopshop for enterprises looking to go globalwith their innovative ideas. Joining thenetwork means they don't have to worryabout resource constraints. While theEEN can be the answer to such questionsas: who can offer venture capital orloans, what's the best way to sell abusiness plan to investors, how to get aidfrom regional, national or EU authorities,or how to access public funds andgrants for research and development,the handholding SMEs get from expertsprepare them to face acid tests from themost demanding investors.With one of the world's largestbusiness cooperation database of morethan 23,000 profiles and businesssupport organisations from more than 50countries, the EEN is where an SME canstart search for international businesspartners, source new technologies andadvisory services on issues as diverse asintellectual property, going international,or EU law and standards.The idea is to ensure that SMEs benefitfrom the EU Single Market as much as thebig players do. In Europe, 99 percent ofall GDP is with SMEs, but the importancealways goes to MNCs as they do the bigdeals. The brunt of the economy is withthe SMEs. In CII too, 60 percent of itsmembers are SMEs, says Poul V. Jensen,director of European Business andTechnology Centre (EBTC).The EEN helps sort out IntellectualProperty Rights (IPR) issues duringcollaborations between Indian andEuropean firms, does the handholding toguide them through red tape and helps innetworking, says Jensen.It will open the doors of EuropeanUnion to India and vice versa, he adds.The EU technology platform canadvise and assist SMEs from the initialcontacts to making the deal. When SMEsjoin the Network their cooperation offeror request is entered into the databaseand alerts are sent regularly to updatethem if their cooperation needs matchwith that of others. Matchmaking eventslike business-to-business meetings areorganized across Europe. Such meetingsare often organized at internationalfairs, keeping in mind the travel andaccommodation costs.Moreover, the network ensures thatSMEs looking to expand their businessto another country find competent andtrustworthy partners. The network helpsSMEs find out that how EU laws andregulations affect businesses. Its expertshelp find the way through the legal mazeand make it easier to sell product orservices in another EEN country.For instance, an SME selling Ayurvedicproducts stands to gain by linking tothe EEN platform. Since such productshave to contend with a lot of regulationand stringent testing in EU that areprohibitively high, the network canhelp find a good European partner withwhom sharing of the cost of testing andmarketing can be worked out.Similarly, the revised defenceprocurement procedure (DPP) focuseson the technology transfer to boostindigenisation. SMEs engaged in thesegment can realign their businessprocesses for strategic alliances andjoint ventures using this technologyplatform to gradually assume therole of system integrator andmanufacturer of complete defenceequipment and systems.Besides EU countries, Russia, Turkeyand Israel have also joined the platform.In Asia, the partners are China, Japan,South Korea and the latest is India.Alerts on new EU legislations,tender opportunities and specialistmarket information for companies thatare exporting or preparing to importkeep SMEs updated. The network alsoorganizes from time to time trainingprogrammes to help members withEuropean policies and programmesrelevant to their business and how theycan be made to work for them.India has declared 2010-2020 as theDecade of Innovation for SMEs. The unionbudget 2012-13 too had several pluses forthe sector as was reflected in doubling there-finance funding of the Small IndustriesDevelopment Bank of India (SIDBI) andthey can also avail the non-tax benefitsfor three years even after growing out ofthe category.Efforts are on to protect theirinnovations, inventions and designsthrough patents and copyrights andraise funds through external commercialborrowing (ECB). The government recentlyrelaxed ECB norms to allow easier accessto cheap dollar funds to housing financecompanies such as HDFC and SIDBI, andpermitted non-resident entities to providerating enhancement facility to Indians.Thus keeping in view thesedevelopments, forging collaborativepartnerships between SMEs of India andEU through EEN is another importantstep towards ensuring their growth, andthereof their contribution in creatingjobs and innovative products & servicesto increase India's share in the globalmarket place.MSME Business March 201321
Page 3: Small WorldMadhav Lal new MSME Secr
Page 8 and 9: Growth DriverRevving Up For Vertica
Page 10 and 11: SUCCESSMSME Business March 201310Th
Page 12 and 13: Sector FocusClimbing Growth LadderT
Page 14 and 15: TransformationThe Game ChangerFDI i
Page 16 and 17: FinanceMSME Business March 201316Sm
Page 18 and 19: Finance GapMSME Business March 2013
Page 22: RegionsRoundup of Major MSME Linked

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

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