Micro units' share in exports rises, drops for SMEs

New Delhi: Micro enterprises saw an increase in their share in exports from India in January to 6.63% from 5.79% in 2020-21, whereas the share of small and medium enterprises fell to 10% from 11.64% and to 11.22% from 12.96% respectively, said a report by the Directorate General of Commercial Intelligence and Statistics.

Manufacturing and services units with investment of up to ₹1 crore and annual turnover of up to ₹5 crore are classified as micro enterprises, while small enterprises are those with investment of up to ₹10 crore and turnover of ₹ 50 crore, and medium enterprises are those with investment of up to ₹50 crore in plant and machinery and equipment and turnover of ₹250 crore. As per the data, the top five micro, small and medium (MSME) export sectors were engineering goods (19.64%), gems and jewellery (12.3%), readymade garments (8.52%), rice (6.22%) and organic and inorganic chemicals (5.7%).


Capture

However, exports from the top two sectors in the overall industry fell in the April 2023-February 2024 period in terms of value, with textile and apparel exports falling 8.44% year-on-year and gems and jewellery exports down 12% while engineering goods saw a 4.65% increase.

The US, UK and Germany are among the top five export destinations for Indian MSME exporters, according to the report, It said but all three export sectors saw a decline in exports to the US and EU in this financial year. Engineering goods exports to the US and EU fell 9.1% and 2.6% year-on-year respectively in the first 10 months of this fiscal. “The rising freight costs have increased the cost of goods in the exporting country, thereby, leading to a fall in demand,” said Arun Kumar Garodia, chairman, EEPC.

Textile exports to the US fell 16.7% year-on-year and to the EU and UK 14% in April-January 2023-24. Gems and jewellery exports to the US declined 61% and to the EU and UK 51% during this period, showed the data. “The Western world has been grappling with wars leading to a rise in gas prices and a shrinking economy over the last two years, affecting the demand for goods in these countries,” said Anil Bhardwaj, secretary general, Federation of Indian Micro and Small & Medium Enterprises.

Except for the pharmaceutical sector, which has a considerable market share in low-income countries, the demand for goods constituting exports of the top-five MSME sectors, predominantly comes from the Western world. Apart from falling demand, the sharp increase in freight cost due to the war in West Asia has hurt exporters.

“The Red Sea crisis has increased shipping time and cost. Costs have started coming down but are still on the higher side. Shipping costs to Europe have increased 1.5-2x and to America 1.2x,” said Pankaj Poddar, CEO, Cosmo First, a medium enterprise .


Roy Walsh

Related post