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MSMEs in the UK, India & EU: A Quick Look


MSME Day, also known as International Micro, Small and Medium-sized Enterprises Day, is observed annually on June 27th. It's a day to recognize the significant contributions of MSMEs to global economic development. It was established by The United Nations General Assembly to raise awareness about the crucial role MSMEs play in achieving the UN's Sustainable Development Goals (SDGs). These goals include poverty eradication, decent work for all, and fostering sustainable economic growth.[1] Additionally, it also highlights the challenges faced by MSMEs and advocates for policies that support their growth and sustainability.


The European India Centre for Business and Industry (EICBI), a European Commission registered Geopolitical forum, assists Micro, Small, and Medium Enterprises (MSMEs) in tapping opportunities in the UK India corridor and EU India corridor. For over a decade, the Europe India Centre for Business and Industry (EICBI) has championed Track 1.5 diplomacy, acting as a bridge between India and Europe (including the UK) to promote trade and strengthen relationships. EICBI and their affiliated organizations have successfully organized 31 major sessions at the Parliaments in Europe, including 26 at the British Parliament in London/ other locations in the UK and 5 at the European Parliament in Brussels/ other locations in Belgium. EICBI offers advisory services on regulatory compliance, market entry strategies, and business expansion.

MSMEs, which account for 90% of businesses, more than 70% of employment, and 50% of GDP worldwide, remain the core of the economy for most societies. Small and medium-sized enterprises (SMEs) represent 99% of all businesses in the EU. The definition of an SME is important for access to finance and EU support programmes targeted specifically at these enterprises.[2]


Similarities:

  • Economic Backbone: MSMEs (Micro, Small & Medium Enterprises) are crucial players in all three regions, contributing significantly to GDP, employment, and innovation.

  • Size Definition: While specific size brackets may differ slightly, they all categorize businesses based on employee count and turnover.


Differences:

  • Number: 

  • UK: Around 5.5 million MSMEs, with the vast majority being small businesses (under 50 employees) [Leyton].

  • India: Exact figures vary, but estimates suggest tens of millions of MSMEs [Invest India].

  • EU: No single figure, but estimated to be in the tens of millions [European Commission website].

  • Government Support: All three regions offer programs and initiatives to aid MSMEs, but the scope and focus can vary.

 

Here's a more specific look at each:

  • UK: Focuses on promoting growth, innovation, and access to finance for SMEs. Resources include funding schemes, tax breaks, and mentorship programs [GOV.UK]. MSME's in UK typically face financial difficulties, economic pressures, cybersecurity threats and operational challenges.

  • India: Places a strong emphasis on fostering entrepreneurship and formalizing the vast informal MSME sector. Initiatives include credit schemes, skill development programs, and online registration platforms [msme.gov.in]. MSME’s in India generally face challenges in the form of limited market access, high disruption costs, lack of digital infrastructure and inadequate logistical support. [The Economic Times] EICBI offers programs specifically designed for Indian MSMEs. These programs aim to educate them on best practices followed by successful companies in the UK and EU. This can help Indian MSMEs improve their own operations and potentially make them more competitive in international markets.

  • EU: Emphasizes harmonization of regulations across member states to create a level playing field and support cross-border trade. The EU also offers funding programs and promotes best practices [European Commission website]. Market Competition, Skills and talent gap and financial obstacles are some of the challenges faced by the MSME's in EU.

 

MSME Collaboration in EU-India & UK-India Corridors :-

The 2030 Roadmap for India-UK future relations outlines a comprehensive plan to strengthen ties between the two nations across various domains. This roadmap aims to create a dynamic and multifaceted relationship that benefits both nations and contributes to regional and global stability and prosperity. The EU-India and UK-India corridors offer exciting opportunities for MSMEs in all three regions. They can foster mutual growth and opportunities in the EU-India and UK-India corridors. Here's how they can facilitate these collaborations:


Joint Ventures and Strategic Alliances:

  • EU & UK Expertise + Indian Manufacturing: MSMEs in the EU and UK can partner with Indian counterparts to leverage their manufacturing capabilities and cost advantages. Partner on R&D projects to innovate and develop new products suitable for both markets.

  • Indian Products + European/UK Distribution: Indian MSMEs can collaborate on distribution networks with European or UK MSMEs for better access to these markets.


Knowledge Sharing:

  • Technology & Innovation: EU and UK MSMEs with advanced technology can share knowledge and expertise with Indian MSMEs to enhance product quality and efficiency. Facilitate exchange programs and internships to foster mutual understanding and transfer of knowledge.

  • Marketing & Branding: European and UK MSMEs can share their marketing and branding experience to help Indian MSMEs penetrate new markets. Implement cross-border training programs to enhance skills relevant to both markets.


Supply Chain Integration:

  • Component Sourcing: EU and UK MSMEs can source components from Indian MSMEs known for specific skills or cost-effectiveness.

  • Value-Added Services: Indian MSMEs can provide value-added services like final assembly or customization for products destined for the EU and UK markets.


Facilitating Collaboration:

  • Government Collaboration: Both side's governments can establish platforms and programs to connect MSMEs, offer trade missions, and simplify regulatory hurdles. Leverage existing trade agreements and policies that promote MSME collaboration. Governments can also negotiate new agreements focusing on MSME support.

  • Business Associations: Industry associations in all three regions can play a key role by organizing networking events, mentorship programs, and information sharing initiatives. Organize trade missions to help MSMEs explore opportunities, understand markets, and build networks.


Digital Platforms and Marketplaces

B2B Platforms: Use online B2B marketplaces to find partners, suppliers, and customers across regions. Virtual Trade Fairs and Webinars: Participate in virtual events that connect MSMEs from different regions. Engage in CSR activities that can build goodwill and foster community engagement in target markets.

 

Challenges to Consider:

  • Regulatory Differences: Navigating different regulations and standards in each region can be complex. Legal and compliance expertise will be crucial.

  • Communication & Cultural Gaps: Communication barriers and cultural differences can create challenges. Building trust and understanding is essential.

 

Practical Steps for Implementation :-

  • Identify Partners: Use digital platforms and business networks to identify potential partners.

  • Initial Engagement: Arrange virtual meetings to discuss potential collaborations and understand mutual goals.

  • Pilot Projects: Start with small pilot projects to test the feasibility of collaboration.

  • Scale Up: Based on the success of pilot projects, scale up the collaboration to more significant initiatives.

 

Overall, collaboration between MSMEs in the EU, UK, and India holds immense potential for sustainable growth, mutual benefit and enhanced market presence. By leveraging complementary strengths and addressing challenges, they can unlock exciting opportunities in the EU-India and UK-India corridors.

EICBI advocates for policies that favour MSMEs and provides a platform for businesses to voice their concerns and needs to policymakers in these regions. The chamber organizes events, trade fairs, and business delegations, enabling MSMEs to connect with potential partners, clients, and investors in the UK, EU and India. By providing these services EICBI aims to strengthen the economic ties between Europe and India and support the growth and internationalization of MSMEs in both regions.

 

Additional References :-


[1] MSME Day 2024: Leveraging Power and Resilience of Micro-, Small and Medium-sized Enterprises to Accelerate Sustainable Development and Eradicate Poverty in Times of Multiple Crises | Department of Economic and Social Affairs. (n.d.). Sdgs.un.org. Retrieved June 25, 2024, from https://sdgs.un.org/events/msme-day-2024-leveraging-power-and-resilience-micro-small-and-medium-sized-enterprises

[2] European Commission. (2003). SME definition. European Commission. https://single-market-economy.ec.europa.eu/smes/sme-definition_en 


(The Author of this article Divya Narvekar is an fellow with EICBI)

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