India, US to exchange notes on SMEs

To internationally market products manufactured by the Indian small and medium enterprise (SME) sector and increase its market access, the Federation of Indian Chambers of Commerce and Industry (Ficci), along with the Ministry of Commerce and Industry is taking a 60-member SME delegation to Chicago, the United States next month.

The visit is planned alongside the US-India trade policy forum meeting on February 19, where the Commerce Minster is slated to meet US Trade Representative Susan C Schwab.

Both of them will also inaugurate the three-day SME summit which will focus on key issues like SME partnership in engineering and manufacturing, role of SMEs in the global supply chain, among others.

The delegation will look at increasing market access for high potential products like pharmaceuticals, electrical equipment, chemicals and also establishing long-term linkages with US SMEs.

In view of the government's decision to remove the 24 per cent cap on investment in the small scale industries sector, offers for international collaboration, partnership and expansion have been flowing in from all corners of the world. These include countries like Germany, the United Kingdom and now the US.

According to Ficci, the India-US bilateral merchandise trade rose from $18.04 billion in 2003 to $31.92 billion in 2006. Also, Indian exports to the US during the same period rose by 67 per cent to $21.83 billion. During January-November 2007, the bilateral trade stood at about $ 38 billion with Indian exports amounting to $22 billion.

"Today, our manufacturing sector is in the ascendancy. The best partner for India to emerge as a manufacturing superpower in the coming years is the US, particularly states around Chicago, which together form the manufacturing hub of the US. There are massive repositories of small- and mid-size companies that are technology intensive. We need to give a fillip to the export of products by way of creating awareness about Indian SMEs, on a much wider scale," Amit Mitra, secretary general, Ficci said.

According to Mitra, Ficci will help facilitate equity participation of US SMEs by providing them access to consultancy firms like McKinsey or PricewaterhouseCoopers (PwC). "In the manufacturing sector, most of the US SMEs do not have the resources to go through a world level consultancy firm like McKinsey or PwC. This facilitation will be provided by us," Mitra said.

According to a recent Ernst and Young report, there were a total of 46 outbound investment deals from India to the US in 2006, the total value of which amounted to more than $2 billion. These were equity investments made by Indian enterprises in joint ventures and wholly owned subsidiaries.

"While the magnitude of mergers and acquisition in India is itself unprecedented, outbound investment from India to the US is the most significant paradigm shift. Indian SMEs in the future will have much to contribute to this," Mitra added.