India must become an International Hub

...for manufacturing, trading and services. As one of the members of the CII & FICCI Council for SME's, we are pleased to pen down some thoughts, which may assist the Govt. of India, for achieving the above. These are our personal views & suggestions and not those of CII or FICCI.

1. India has all the ingredients to achieve a status of an International Hub, however many of the attributes are latent and need to be freed, deregulated and modified. Let us mention some of the most critical ones. [Enterprises means all types of businesses and not only Industry!]
2. North America, Europe, Japan, S. Korea, Taiwan and China constitute about 80% of the World's GDP of about US$34 trillion. In all these countries, the definition of SME's means organizations with up to 250 to 1500 employees, depending upon the business. Their sales volumes are up to $30 million in the USA, DM 100 million in Germany, Euro 40 million in Europe, and so on. Very different from the present SSI Indian definition.
3. The SME's in the above countries contribute to nearly 80%, directly and indirectly, of their respective GDP's as well as Exports. SME's are nimble, flexible, vibrant, lean and flat organizations. They are like the 'Cheetah' in the forest. They contribute to nearly 80% of employment & 80% of all trainees!
4. The present definition of the Indian so called SSI's, should be consigned to the archives of Indian Museums. It is illogical for India of the 21st century and does more harm than good to the Nation as well as to its owners and the lending Financial Institutions [in the medium & the long term]. SSI's are born as babies and forced to remain so forever!

Suggested ACTION PLAN

1. Government of India should make a comparison chart showing the above, especially details of definition, % of GDP, % of Exports, % of Employment, of SME's, in the above countries.
2. Change the definition & all government regulations of SME's in India to fall in line with International norms [if we do not act, external forces will force us to do so in due course]. Replace SME with SSI. Redefine all enterprises as SME's or large units.
3. Take a 'Big Broom' and sweep away any impediments, which may come in the way of the new and existing SME's in India! Whether it is employee laws, flexibility of location, better infrastructure, lower cost of finance, vocational education & training, 100% primary literacy and enterpruenership skills development, government procedures and paper work.
4. Educate & Train the key officials in the Central Government who are part of the economic ministries [including the MP's and Ministers] in New Delhi, about the advantages of this plan.
5. Educate & Train the key officials in the State Governments who are part of the economic ministries [ including the MLA's] in all the key State Capitals of India, about the advantages of this plan.
6. Educate & Train the key officials in the 500 top Municipalities of India who are located in all the main SEZ's, Industrial Estates and Municipalities of the State [including the municipal councilors], about the advantages of this plan.
7. Educate & Train the key officials in the SSI/SME organizations as well as the financial lending institutions in the states of India, about the advantages of this plan. They will be the biggest gainers in this restructuring.

It pains us to see where India is today and where it should be! Most of our problems are man-made and therefore there is hope of change!

China's manufacturing sector is 50% of GDP or $650 billion per year, against India's 25% of GDP or $110 billion per year. China exports nearly 65% of its manufactured products. With better governance and effective administration, India could make it's manufacturing sector also to 50% of GDP and make it world class in cost and quality.

The term 'labour', refers to the 19th century and should be changed to 'employee', to cover all employees. The general impression is that organised sector employees are protected even at the cost of the entire nation. Inspite of a large pool of of skilled human capital, India cannot become competitive, if it cannot use the best talent.

India's human capital in the organised sector is no always market driven, in terms of quality and cost. This leads to high cost, wastage and uncompetitiveness of Indian goods and services in domestic as well as international markets.

This greatly influences and sets work culture and work ethics standards for the nation, which prevents the full potential of India's PPP, purchasing power parity, position to be fully realised.

Please see our Relevant Manufacturing Policy for India, for details.

The only Constant in Life is CHANGE!

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