India emerging as an attractive investment destination for US SMEs

Indian small and medium enterprises (SMEs) are set to go global with opportunities flowing in from all corners. After SMEs from Germany and the UK, the US has expressed willingness to invest and explore possibilities of technology transfer to Indian SMEs.

In view of the government's decision to remove the 24 per cent cap on investment in the Small Scale Industries (SSI) sector, the American Chamber of Commerce in India (AMCHAM), the chamber of all US companies working in India, is working to bring to India a select group of US SMEs in February.

"With the economy booming and the US SMEs looking for fresh opportunities to invest abroad, AMCHAM felt the need to bring in a delegation to survey the opportunities available. An important point one should not miss is that a typical US SME is larger than its Indian counterpart given the larger scale of US operations. Also, many of them have the benefit of patented technology which will allow Indian SMEs to thrive," said Ramesh C Bajpai, executive director, AMCHAM.

According to Bajpai, US SMEs are present in the Far East and South East Asia and their only apprehension in expanding their businesses to India is the difference in cost structure of both the countries.

"However, with the new dispensation which will allow these SMEs the existing benefits like excise exemption, the US SMEs will find India an attractive base. With fresh investments, Indian SMEs will enter an era of fast growth, generate more employment and spread development to the interiors of the country," Bajpai added.

Earlier during her visit to India, Angela Merkel, Chancellor, Federal Republic of Germany and President of the European Council had said that the German SMEs will set up common standards with Indian SMEs and increase their presence in India.

"Renewable and clean energy technology is a key area of concern for the European Union (EU) and Germany is willing to assist India with technology and investment to jointly foster clean energy solutions," Merkel said.

The Chancellor further proposed that vocational training for Indian manpower can be taken up by the German companies who are planning to set up their business in India.

The Genesis Initiative, UK, which represents SME organisations within the UK, is also in the process of setting up The Genesis Initiative India, the objective of which would be to promote linkages with existing members across the globe and articulate the concerns of the sector.

With all these opportunities round the corner, SME associations like the Federation of Indian Micro and Small and Medium Enterprises (FISME) believe that competitive pressures and the push for a technological upgrade will fuel the growth of Indian SMEs.

"Indian SMEs fully realise the need to upgrade technologically so that they can play a vital role in the global supply chain. International joint ventures will go a long way in leveraging the competence of Indian SMEs in this regard. A lot of collaboration is already happening but it largely confined to the medium-sized enterprises which have a more structured management for a joint venture. But the trend is slowly catching up," Anil Bhardwaj, secretary general, FISME said.