SMEs to Transform the Future of Manufacturing in India

SMEs in India hold great prominence in the upsurge of its economy. This importance is because of few reasons, one of them is the fact that this segment plays a major in manufacturing. Now, the connect between SMEs and economic growth is established at the policymaking level, connect between SMEs and manufacturing is also well known, now the real challenge is to ensure the Indian SMEs should practice an optimized and advanced level manufacturing. This requires a lot of ground work, a lot of hand holding and a lot of mindset capturing and influence.

MAIT as an organization has taken a plunge of reaching out to SMEs and motivate them towards manufacturing. However, on the other hand, MAIT is also proactively influencing the policy makers to continuously evaluate policy framework. In an exclusive interaction with Faiz Askari of SMEStreet, Anwar Shirpurwala, Executive Director of MAIT highlighted the relevance of Indian SMEs for MAIT and also outlined the activities that his organization is planning towards this sector.

Edited excerpts:

What importance does SMEs carry for MAIT?

SMEs are very important entity for MAIT. We are promoting manufacturing and this segment represents manufacturing vertical in a major way.

Government of India understands and acknowledges the potential of SMEs for country’s overall economic growth. As part of this reorganization government is making sincere efforts of improvising the level of manufacturing.

As a result of such vision, the ‘Make in India’ initiative launched by the Prime Minister envisions an increase in the manufacturing sector growth to 12-14% per annum over the medium term and increase the share of manufacturing in the country’s Gross Domestic Product from 16% to 25% by 2022. Within the manufacturing sector, the growth of the IT electronics sector is critical for realising the visionary initiatives of ‘Make in India’ and ‘Digital India’ launched by the Government.

At MAIT, we work with SMEs to motivate them towards manufacturing and also guide them towards becoming a manufacturer in the field of IT and related areas.

What are the key opportunities you witness for a typical startup or a SME manufacturer?

There are several market opportunities which a entrepreneur can explore. Just to take few examples, the smart home segment, healthcare and security & surveillance are some of the emerging areas where IT adoption is happening at a advance level. Infact, these industry segment are becoming technology driven hence they become a lucrative opportunity for IT products manufacturer which either could be a seasoned player or a new entrant.

At the policy making level, where do you witness MSMEs? What contributions can MAIT offer for Indian MSMEs?

As mentioned, government is highly focused around SMEs and MSMEs. The growth of economy is expected from SMEs and positive work is in progress in this direction. We are making serious efforts in engaging with government on various SME issues.

MAIT works with several state governments and on timely basis we highlight MSME perspective in order to make policy framework more MSME oriented.

Please discuss India’s domestic electronics manufacturing potential and opportunity?

However, domestic electronics production accounts for only around 45 percent of the total market demand, which leaves a wide demand-supply gap to be filled and provides a significant opportunity to improve domestic manufacturing capabilities. The estimated production will reach USD 104 billion by the year 2020, creating a gap of USD 296 billion in demand and production. This is a serious cause of concern, because growing at this rate, the electronics import bill is expected to far exceed the oil import costs by 2020 and result in a major balance of payments crisis.

The electronics market of India is expected to increase with a Compounded Annual Growth Rate (AGR) of 66.1 per cent to USD400 billion by the year 2020 from USD31.6 billion in 2015. However, domestic electronics production accounts for only around 45 percent of the total market demand, which leaves a wide demand-supply gap to be filled and provides a significant opportunity to improve domestic manufacturing capabilities. The estimated production will reach USD 104 billion by the year 2020, creating a gap of USD 296 billion in demand and production. This is a serious cause of concern because, growing at this rate, the electronics import bill is expected to far exceed the oil import costs by 2020 and could result in a balance of payments crisis.