Let’s Go Local – Here’s Why Buying from MSMEs is Crucial in India
This article, where our Global Marketing Head, Jayati Singh talks about how buying from local markets would help MSMEs become more empowered was published in The Hindu and Hindustan Times (Hindi) on the occasion of International MSME Day on June 27, 2019.
How many of you ask your friends or relatives to get you products when they go abroad? It’s quite a normal phenomenon, right, as a few commodities are cheaper in certain countries as compared to India. But, while shopping at a nearby mall, how many of us have opted for a foreign tag instead of a local brand, arguing within yourself about the quality? With an increase in the demand of imported goods, they seem to be taking over the domestic market resulting in our local merchants getting fewer opportunities to establish their brands in the market. This is the mindset which we all MUST change. We fail to understand that while these foreign brands which might claim to be of the highest quality are imported to our country at a huge cost which affects our local retailers and merchants adversely.
According to a report published by logistics firm DHL, ‘The 21st century spice trade: A guide to the cross-border e-commerce opportunity’, 42% of surveyed Indian respondents said they shop from websites abroad due to better quality of products, while 37% liked the available offers. Electronic items (55%) and fashion apparels (45%) are among top purchases by Indian consumers, followed by beauty products and cosmetics (26%) and toys (20%). Even though the US markets tend to produce high-quality products, Indian markets and consumers must focus on boosting domestic production and go local.
It is only with our efforts of investing and buying from MSMEs, that these small-scale businesses will become globally-acclaimed enterprises. We must promote export contribution by supporting and developing MSME segment to be globally competitive and adopt research and development, innovation and global technologies. Provide MSME with global market access by entering into bilateral trade agreements and set off arrangements. While the contribution of MSME sector to India’s GDP currently stands at 8% for 2011-12, small businesses have an immense potential to increase the share of contribution to GDP to approximately 15% by 2020.
A PWC study stated that in India MSMEs contribute nearly 45% to manufacturing and about 40% to the Indian export sector. Their contribution to the Indian GDP is 8% and the sector has registered a growth rate of 10.8%. While the Indian MSMEs have scaled up the value chain from manufacturing of simple goods to complex and sophisticated products, small businesses are still facing numerous challenges like suboptimal scale of operation, technological obsolescence, supply chain inefficiencies, increasing domestic and global competition, fund shortages, change in manufacturing strategies and turbulent and uncertain market scenario.
While trying to eliminate these problems, MSMEs are constantly struggling to establish themselves in local markets as well. The Standing Committee on Commerce (Chair: Naresh Gujral) submitted its report on ‘Impact of Chinese Goods on Indian Industry’ on July 26, 2018. Bilateral trade between India and China increased from $38 billion in 2007-2008 to $89.6 billion in 2017-2018. Trade with China constitutes more than 40% of India’s total trade deficit. Isn’t that startling?
It was also noted by the committee that due to the reduced price and bulk availability of Chinese goods “Made in China” is dominating the unorganized retail sector which is primarily our MSMEs. While the product pricing might differ in a huge way, but these small sector industries deliver the highest standards of quality. To cash in on the booming MSME sector, we must endorse buying products from our local markets and yield further growth of the Indian economy. In fact, it is suggested that import of finished goods be taxed at the highest rate, and raw materials at the lowest, to boost domestic production. It is startling to note that the price of Chinese goods is 10%-70% lower than Indian goods, and because Indians often target buying cheap products irrespective of the quality, Chinese products emerge as winners.
Movements like ‘Make in India’ were targeted for local businesses which aim at balancing the economic condition. Since India is emerging as one of the brightest economic spots in the new millennium, we must diligently focus on fulfilling MSME owners’ aspirations and dreams. Being in the small-scale industry, their aspirations may not be sky-rocketing, but by collaborating with them and their business, we could change the face of Indian MSME landscape. The Indian government has also launched several schemes to motivate young talent to step into the world of business. Even women entrepreneurs are slowly coming in the forefront, donning the hat of a businessperson and making a huge difference in the society and economy at large. Such schemes have grown to a wider range covering Tier 2 and Tier 3 cities and small towns, instilling confidence in the youth and budding entrepreneurs, and now their idea is more than just an idea and that there are ready opportunities to help nurture it further.
While the government is doing its bit to provide enormous scope and benefits to young entrepreneurs and MSMEs, we as consumers must also contribute in working towards making Indian products “GLOBAL” by “GOING LOCAL”.
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Author: Pratibha DevasenapathyA newbie in the world of finance writing with a passion to learn something new each day. Pratibha has shown exponential enthusiasm to understand the world of MSME and financing and has been writing blogs to spread knowledge and understanding of digital marketing and social media. With a vast experience of 6 years in digital content writing, she draws attention towards the importance of digital medium through her words.
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