In FY21 the trade, import and export dropped or stagnated. In this circumstance, the government has declared a release of due incentives to the exporters from this sector.
The export dropped 7.6% compared to the preceding financial year, with the exception of the pandemic year where the drop was 1.8%.
According to DGCI&S data released on Friday by Minister of State for Commerce and Industry ministry Anupriya Patel, the MSME export dropped from $158.76bn in FY19 to $155.91bn last year and $143.99bn this year.
The export share stagnated around 49%.
According to the provisional data of FY22, till September $90.80bn worth of MSME related products was exported. In the April-September period, out of total exports worth $198.26bn, MSME had a share of 45.80%.
The government is seeing the growth of MSME share in the export as a matter of utmost importance. They have the target of expanding the share to 60%. Nitin Gadkari, former MSME Minister has stressed this point in many public venues.
According to him, the government has planned to increase the export share by 12% within five years. Another target is to increase its share in the GDP from 30% to 50%, with additional 5 crore jobs in the sector.
In a private meeting held in September, the present MSME Minister Narayan Rane said to enhance export and ensure localisation it is important to improve the manufacturing sector.
It can be done, by improving and developing India’s competitive advantage and increasing the competitive capacity of the sector. In all the focus is to make India a preferred manufacturing destination of the world.
The inspiration for this move could have come just beyond the border, from China. After the Chinese economy opened to foreign investment during the early ’80s, the government focused on making money and modernisation.
While the direct foreign investment, was limited towards special economic zones, the government carried out the privatization in the rest of the regions by encouraging SMEs. The people of SMEs paid taxes took loans which increased productivity.
That helped the expansion of their exports and be an important part of the Chinese GDP. As of now, they contribute 60% of the GDP and 80% of the jobs. Because of the continuing government policy, 16,000-18,000 new enterprises are created per day.
The government has even called the sector growth engine of the economy.
India has the target of becoming a $5 trillion economy and a $400bn target for goods and service export this year and $2trn for 2030. To reach these targets, MSME should reach at least the Chinese level.
As a further step of incentive for the sector, the government declared that they will release ₹56,027 crores for the present year. It will go towards 45,000 exporters whose incentives were pending, most of them are from MSME under various schemes.
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