Strengthening SMEs to make export competitive

The importance of SMEs in any economy cannot be overlooked as they form a major chunk in the economic activity of nations. India has nearly three million SMEs, which account for almost 50 per cent of industrial output. However, SMEs which form the backbone of industrial development in India are not export competitive and contribute only about 34 percent of exports. It is this feature of the SMEs that make it an ideal target to realize its potential export competitive. Drawing from the experiences of countries that have successfully promoted the export competitiveness of SMEs, this paper has identified ways in which SMEs in India can have an access to external markets through exports, which include simplification of procedures, incentives for higher production, preferential treatments to SMEs in the market development fund, linking up SMEs with Transnational Companies or large domestic exporting firms; and formation of clusters and networks in order to reinforce their external competitiveness