Global Summit for SMEs : Business Partnership Meet - 2002
December 20-21, 2002, New Delhi

Speech by Smt. Vasundhara Raje, Minister of State (Independent Charge) for Small Scale Industries

Salutations,

At the outset, I would like to convey to you a very warm welcome. Festivity is in the air as the spirit of yuletide pervades. It is a time to meet old friends and renew relationships. So, while all of us will be talking business, at the same time, there is an important sub-text. We are here in an atmosphere of bonhomie and camaraderie. I wish you all the very best for the next year.

In this Global Summit on SMEs, we seek to highlight the challenges posed by globalization and draw up appropriate responses and strategies. While the challenges are manifold, it is also equally true that, for once, we have a wide range of possible responses available. Some of these include working with clusters, strengthening SME capabilities, enhancing their competitiveness, making SME support intermediaries effective and building partnerships and networks.

We represent many nations. Yet, our Governments share a joint commitment to ensure that SMEs are able to achieve their full potential, prosper and grow. There is enough evidence to indicate that SMEs are the prime driving force of job creation in nation after nation. The International SME Network has recently concluded a study of 37 countries of all geographic macro regions and determined that SMEs make up almost two-third of total industrial employment. This being so, we need to ensure that in each of our countries we put in place a policy environment which ensures that it becomes easy and cheap to set up a small business. Necessarily, this involves analysis of national policies, identification of bottlenecks to growth and exchange of best practices. We, in India, are keen to facilitate this process. We have our own SME development agency. We have taken many SME related initiatives since 1954 and have built up a wealth of expertise and experience, which we are open to share. Each year 130,000 new businesses come up, creating 660,000 additional jobs. Our Training Institutes have emerged as International Training Centre on SMEs. They offer customized training solutions for entrepreneurs and Government officials across the world. Our Tool Rooms are state of the art and have been extending consultancy, training and production services not only to SMEs but also to large industry at competitive rates. By building up linkages and partnerships, the facilitation of trans border outsourcing is a priority for us.

In doing all this, we realize that SMEs today face a very different competitive context. Globalization and the WTO have led to the removal of quantitative restrictions and provided greater opportunities for trade. While this has opened new markets for SMEs to access, the flip side has been that in protected markets SMEs have now been exposed to greater competition from overseas. Parallel developments in information and communication technologies have made the flow of information easier. Thus, customers who are dispersed and discrete can be reached far more easily through the Internet. Delivery of goods gets effected through transport and logistics services, which have also become global. In a nutshell, international trade transactions are tending to become more efficient. While this is a desirable outcome, the fact is that the rules of the game have changed for SMEs. The challenge, therefore, before us is to educate SMEs and more importantly organizations which support SMEs about the threats and opportunities associated with this change. It is necessary for us to understand that as competition increases because of globalization, at the same time, efficiency in transactions is encouraging a restructuring of production relations whereby outsourcing of production takes place through fragmentation across different SMEs located in different parts of the world. This is something which SMEs can capitalize on because working in niche areas has always been one of their strengths. Alongside, there shall also be concomitant changes. Change of mind set would be required. Change in hierarchy structure, for instance may be necessary. Or a drastic reduction in response time or even different works practices. At the end of the day, what we are likely to see is that the whole notion of competitiveness itself could be based on a set of constantly shifting parameters.

Admittedly, seeing through many of these changes may constitute a tall order. For SMEs it may even be cataclysmic. We need to work together to see that this process of transition is made a little less painful. In this, we in India, draw inspiration from our experience over the last 10 years or so. In 1991, we began liberalizing our economy, removing controls and encouraging domestic competition. There was a similar fear, which was expressed then. But the resilience of our SMEs has manifested their inherent capabilities to adapt to potentially hostile situations. The sector has been growing at a fast clip, 9% every year and adding employment at almost 4% every year. It continues to outperform our large industry, both in terms of growth and employment. We hope to share some of these experiences with you through today and tomorrow.

Recognition for this effort has not been slow in coming. In 1999, our Hon'ble Prime Minister, who is both a visionary and a mentor for us, set up a new Ministry for Small Scale Industries in India. We were among the first few countries in the world to do so and this gave us the inspiration to dream. He has given us a challenge again. He wants us to create 4.5 million net new jobs in SMEs during the next 5 years. Sir, your wish is our command. We have taken this as a mission and we shall ensure that we will make it happen. You have reposed faith in us and we shall come out with flying colours.

I am looking forward to the deliberations of the Summit. While, we in India, have much to offer, we have much more to learn: at the end of the Summit we need to have an agenda and a plan of action in place, so that, when we go back we know exactly where to begin. This needs to be done by building on individual strengths of each nation and each SME support organization.

I compliment the Federation of Indian Chambers of Commerce and Industry for organizing this Global Summit with us. I am also grateful to SIDBI and NSIC for having sponsored this Summit.

Finally, I would like you, our guests, to take back home with you, warm greetings from all of us. Have a Happy X' Mas and a wonderful New Year.

Thank you.