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Tuesday, Nov 02, 2004

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`Indian SME products have promising future in EU'

G.K. Nair

Kochi , Nov. 1

THE prevailing market situation in the European Union (EU) countries indicates that the Indian SME products have a promising future there, according to Dr P.M. Mathew, Director, Institute of Small Enterprises Development (ISED).

Though the EU Governments have identified SMEs as a major vehicle with focus on innovations, a close observation of the European markets would reveal that very few SMEs are moving on the innovative line, Dr Mathew told Business Line.

"High-profile departmental stores are flooded with local agro products that are under-priced due to massive subsidies. Manufactured items from Europe are mostly from large companies. The rest is a heap of unbranded items such as readymade garments, leather bags, etc., from Asia and Africa. The only branded items are probably sports goods from Punjab, and of course from Pakistan and China as well."

According to him, it is in this market situation that Indian SMEs should examine their competitiveness.

"The thrust of Europe is only on technology. But Indian SMEs can bring in several aspects of Indian culture into the production line. Can India's ethnic goods be presented with a specific identity? This is the key to competitiveness of Indian SMEs."

According to him, in the whole of the European market there is only one product that is special to India - basmati rice.

The Lisbon Conference of the European Union held in March 2000 set itself a new strategic goal for the next decade "to become the most competitive, and dynamic knowledge-driven economy in the world, capable of sustainable economic growth with more policy and better jobs and greater social cohesion."

For this, SMEs have been identified as a major vehicle. Now, in the whole of Europe, the buzzword is "innovation and SMEs".

Public policy in most countries of Europe has made clear statements on this. Besides, specific Governmental agencies have been set up to promote innovative SMEs.

"The European Governments focus on innovation (which means high technology), which they think will enhance competitiveness."

For this, all types of indirect subsidies are given to the local SMEs. According to latest data, while two million new enterprises were started in Europe, over 1.5 million shut down.

Employment in the new units was 2.5 million, but the number of jobs lost through the exit of enterprises was also 2.5 million.

"The history is still against Europe and its SME products. Labour is costly. Labour of the multinational Phillips and that of the local SMEs think alike."

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