 "Vikramjit Sahney")
There is great potential for Indian small and medium enterprises (SMEs) in trade with Saarc (South Asian Association for Regional Cooperation) countries, and Indian SMEs can also explore business opportunities in South Africa in agro-processing and infrastructure, according to Vikramjit Sahney, President of the Saarc Chamber of Commerce and Industry, and Honorary Consul of the Republic of South Africa for Northern India. In an interview with Komal Amit Gera, he offers insights on the avenues available for Indian SMEs in these countries. Edited excerpts:
How can Indian SMEs benefit from the Saarc Chamber of Commerce and Industry?
The Saarc Chamber of Commerce & Industry is an officially recognised body of the South Asian Association for Regional Cooperation, approved during the 12th Session of the Council of Ministers of South Asian Countries held in December 1992 at Dhaka, and is permanently located in Pakistan. Since its establishment, the Saarc CCI has been playing an important role in promoting regional economic cooperation in South Asia.
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India's private sector has played an important role in the development of the Saarc CCI and the promotion of SMEs as well. The Saarc CCI has created a regional council on SMEs, which is presently chaired by India. The objective of the council is to create complementarities in the industrial sector, particularly in SMEs, since 90 per cent of South Asia's industry comprises SMEs, in which the share of Indian SMEs is more than 75 per cent. Having both comparative and absolute advantages, SMEs of India can not only penetrate other South Asian countries but also help modernise SMEs in other countries.
Are there any technology exchange programmes being run by the Chamber, and can you give us examples?
Indian SMEs, as compared with those in other Saarc countries, have both comparative and absolute advantages, including economies of scale. They are therefore in a position to help modernise SMEs in these countries. India is quite ahead in terms of their balancing modernisation and restructuring. Since countries like Pakistan, Bangladesh and even Sri Lanka rely on Western technology to attain the same competitiveness level as Indian SMEs, the complementarity for regional cooperation remains constrained. Although technology exchange is a vital area owing to its multiplier effect on economic cooperation, unfortunately no significant work has been done in this direction. One basic reason is that there is no unified definition and policy. It leads to huge disparities which can be transformed into cooperation.
You are the Honorary Consul of the Republic of South Africa for Northern India. What is the trade potential between the two countries, particularly for the SME sector?
Historical ties between India and South Africa need to be converted into a strong economic partnership. SMEs are also most effective for job creation, which is a pressing challenge and priority in South Africa. SMEs of both countries can mutually benefit but need a direction to venture into each other's market.
India's participation in the annual South African International Trade Exhibition (SAITEX) is a strong step towards sharing its experience in developing the SME sector in South Africa to promote economic growth and job creation. Cooperation opportunities in areas such as agro processing and infrastructure are enormous and must be exploited to the fullest. The Indian machine tool and knitwear industry can set up joint ventures in South Africa and benefit from the zero duty on exports to Europe and North America under the Africa Growth and Opportunity Act (AGOA). Thus, a strong relationship between the two countries would build long-term capacities to effectively compete in the global market.
Where does the Indian SME sector stand vis-à-vis its global counterparts?
India is one of the most attractive destinations for FDI inflows and also offers a very large consumer market. This is the reason why India was less impacted in the recent downturn. Its strong domestic demand acted as an insulator.
There are several factors that have contributed to the growth of Indian SMEs. But primarily it has been fuelled by strong funding of SMEs by local and foreign investors and of course the new available technology. Both these factors have added considerable value and reduced the barriers to trade. There is huge potential, and if backed by strong government support, Indian SMEs will continue to post their growth stories.
What according to you is the core strength of the Indian SME sector, which can help small industry to grow and gain from globalisation?
In this era of globalisation, India has been able to earn distinction as a knowledge-based economy, which establishes that education and skill-set development are two important pillars of the Indian economy. The two elements have given value-addition and innovation and remain the core strength of Indian SMEs. There is need for greater focus on the SME sector through an effective supply chain mechanism. The idea of SME development through clusters could be beneficial, as it reinforces the growth of allied sectors and effectively addresses supply side constraints.
