SME Digital World

Author: SDW Editorial Desk

Public Procurement: Government Purchase of MSME Goods Reaches Record High in FY24

Government Purchase of MSME Goods Reaches Record High in FY24

In the financial year 2023-24, central public sector enterprises (CPSEs) set a new record in the procurement of goods and services from micro and small enterprises (MSEs). According to the MSME Ministry’s public procurement monitoring portal, MSME Sambandh, CPSEs procured goods worth Rs 75,253 crore from MSEs in FY24, marking a 16.2 percent increase from Rs 64,721 crore in FY23.
Under the procurement policy, CPSEs are required to source at least 25 percent of their total procurement value from MSEs each year, with specific allocations: 4 percent from MSEs owned by SC/ST entrepreneurs and 3 percent from those owned by women entrepreneurs.
The updated data on the portal, as of April 11, showed FY24 procurement at Rs 58,744 crore, indicating a significant update in the government’s figures. Earlier reports had shown a decline based on the available data at that time.
In FY24, purchases from MSEs accounted for 35.6 percent of the total procurement, benefiting 2.18 lakh enterprises, compared to 37.1 percent in FY23, which involved 2.36 lakh enterprises.
Procurement from SC/ST and women entrepreneurs amounted to Rs 1,406 crore (0.67 percent) and Rs 2,609 crore (1.24 percent) respectively, within the 25 percent minimum procurement share from MSEs. Comparatively, FY23 saw slightly higher procurement from SC/ST entrepreneurs at Rs 1,546 crore but lower from women-led MSEs at Rs 2,318 crore.
Additionally, the Government eMarketplace (GeM), the commerce ministry’s e-commerce portal, reported over Rs 4 lakh crore in gross merchandise value (GMV) for FY24, doubling the Rs 2 lakh crore GMV of FY23. The order volume for FY24 was 62.79 lakh.
The success of GeM has drawn interest from other countries in Asia and Africa, looking to emulate the model. As reported earlier, GeM is the third-largest public procurement platform globally, following South Korea’s KONEPS and Singapore’s GeBIZ.

May 28, 2024
India’s Chemical Market Set to Reach $29.7 Billion by 2024 with Steady Expansion Ahead

India’s Chemical Market Set to Reach $29.7 Billion by 2024 with Steady Expansion Ahead

The chemical sector’s growth is projected to create 1 million jobs in 2024, playing a crucial role in India’s economic landscape.
India’s chemical market, valued at $220 billion in 2023, is poised to grow to $383 billion by 2030, with an estimated compound annual growth rate (CAGR) of 8 percent. Globally, the industry’s growth rate is projected at 1 percent from 2021 to 2030. India ranks as the sixth-largest country in the global chemical industry by sales and has attracted substantial foreign direct investment (FDI), receiving $21.7 billion from April 2000 to September 2023.
The sector is fully open to foreign investors with automatic approval, enhancing investor confidence. Investments are expected to increase by $420 billion through Petroleum, Chemical, and Petrochemical Investment Regions (PCPIRs). Additionally, initiatives by the Central Institutes of Petrochemicals Engineering & Technology (CIPET) and the Institute of Pesticide Formulation Technology (IPFT) will boost skill development.
Specialty chemicals are anticipated to grow at a 12 percent CAGR from 2020 to 2025, driven by innovation and rising demand. The market is expected to expand by $29.7 billion by 2024, with a CAGR of 3.26 percent from 2024 to 2029.
Over the next five years, the market is expected to grow at a CAGR of 2.71 percent, reaching $143.3 billion. The number of businesses is predicted to rise to 15,730 by 2024, with employment in the industry expected to reach 1 million people.
New policies, improved infrastructure, and affordable labor resources are set to boost this sector further. Specialty chemicals, agricultural chemicals, and petrochemicals are identified as the most promising areas for growth.

May 28, 2024
Red Sea Crisis: Government Must Support MSME Exporters

Red Sea Crisis: Government Must Support MSME Exporters

The deteriorating security situation in the Red Sea has led to increased insurance rates and longer travel times for exporters.
Logistics costs significantly impact the country’s manufacturing sector, export competitiveness, and global positioning. The Red Sea route, known for being shorter and faster, was the preferred choice for most shipping companies. Ships transporting goods from major Indian ports like Mumbai and JNPT used the Suez Canal to enter the Mediterranean Sea and reach various European ports based on their destinations.
India heavily relied on this route for trade and energy imports. However, due to disruptions, exporters now have to diversify their trade routes. The worsening security in the Red Sea has resulted in higher insurance rates and longer travel times for exporters. Major shipping companies like Equinor and Maersk have increased their costs, severely impacting Indian companies. Disruptions in freight services and nearly a 50 percent increase in air freight charges have affected the export of perishable goods like vegetables, flowers, fruits, and eggs to the UK, the US, and other parts of the world.
Exporters are anxious about the significant increase in freight costs, which will inevitably impact India’s exports. In the 2023-24 financial year, Indian exports saw substantial growth in both volume and value, totaling nearly $450 billion, with MSMEs playing a crucial role.
The Indian research and information systems estimate that higher container shipping rates and delayed shipments due to route changes could lead to a significant drop in Indian exports in the coming year. Global supply chains have suffered as vessels now take longer routes for exports and imports. The immediate effects are increased freight costs, with small and medium industries in India being the major victims.
The global credit crisis means the world may not be able to absorb this hit. Government agencies need to support the MSME sector to maintain growth and achieve a $5 trillion economy. New markets for perishable goods should be sourced in Asian and Far Eastern regions.
Controlling export container pricing with an incentive mechanism could help mitigate the impact. Since seasonal perishable goods are at the highest risk, an urgent solution from government economic experts is needed.

May 27, 2024
India Logs Robust Business Activity Growth in May

India Logs Robust Business Activity Growth in May

Driven by a sharp acceleration in the services sector, India’s business activity expanded at its third strongest rate in nearly 14 years. The HSBC Flash India Composite Output Index, or Flash PMI, rose to 61.7 in May from 61.5 in April, according to data released by S&P Global on Thursday.
Services firms recorded a significant increase in business activity, the steepest in four months, while factory production rose at its slowest pace since February, stated S&P Global. Despite this, manufacturing continued to grow at a stronger rate than services.
In May, the HSBC Flash India Services PMI Business Activity Index increased to 61.4 from 60.8 in April, whereas the HSBC Flash India Manufacturing PMI Output Index decreased to 62.4 from 63.0.
The latest data highlights robust growth in new export orders across both the manufacturing and services sectors. At the composite level, international sales expanded at the fastest rate since the series began in September 2014, said S&P Global. “Respondents noted gains from many parts of the world, including Africa, Asia, Australia, the Americas, Europe, and West Asia.”
Pranjul Bhandari, chief India economist at HSBC, noted that although manufacturing sector growth slowed slightly in May due to a decrease in new orders and production, “the rise in output in the manufacturing industry continued to surpass that in the services economy.”
Meanwhile, reports of higher labor and material costs led to input prices across the private sector rising at the fastest pace in nine months. Increases were noted in prices for chemicals, food, plastics, electronic components, and electrical items.
Aggregate selling prices also rose more significantly in May. The manufacturing industry saw a faster increase in charges, contrasting with the trend seen for input prices, noted S&P Global.
Looking ahead, Bhandari mentioned that optimism for the year ahead reached its highest level in over 11 years, prompting firms to increase staffing levels. “However, higher input costs in both sectors led to further margin squeezes, particularly for service providers,” she said.
The Flash India composite PMI is a seasonally adjusted index measuring the month-on-month change in combined output from India’s manufacturing and services sectors. Flash data, derived from 80-90% of total survey responses, aim to provide an early indication of the final data, released during the first week of the month.
The index is compiled from surveys sent to panels of around 400 manufacturers and 400 service firms. Survey responses, collected in the second half of each month, indicate the direction of change compared to the previous month. A reading above 50 indicates expansion, while a reading below 50 indicates contraction.

May 24, 2024
GenAI Could Help Indian Workers Save 51 Million Hours Weekly by 2026: Pearson Study

GenAI Could Help Indian Workers Save 51 Million Hours Weekly by 2026: Pearson Study

Generative artificial intelligence (GenAI) has the potential to save Indian workers 51 million hours per week by 2026, according to a study by learning company Pearson.
GenAI can enhance workplace productivity by assisting workers with routine and repetitive tasks, which often dominate their day and contribute to burnout. This insight comes from Pearson’s Skills Outlook series report titled ‘Reclaim the Clock: How Generative AI Can Power People at Work’.
The study highlights the top 10 job tasks that will see the most time savings through GenAI across five countries—Australia, Brazil, India, the UK, and the US—by 2026.
In India, the top five tasks projected to benefit most from GenAI by 2026 are:
1. Promoting products, services, or programs (saving 4,386,799 hours)
2. Collecting data about consumer needs or opinions (saving 3,874,794 hours)
3. Developing marketing or promotional materials (saving 3,513,913 hours)
4. Identifying business or organizational opportunities (saving 3,219,578 hours)
5. Explaining technical details of products or services (saving 3,095,700 hours).
Other significant tasks where time can be saved using GenAI include maintaining current knowledge in areas of expertise, maintaining operational records, communicating operational plans or activities, examining materials or documentation for accuracy or compliance, and evaluating the quality or accuracy of data.
By automating basic tasks with GenAI, companies and their employees can reallocate time to higher-value work that humans excel at, such as strategic thinking, collaboration, decision-making, innovation, problem-solving, empathy, and leadership, the Pearson report stated.
“In nearly every workplace, people spend their day on common, time-consuming tasks that eat away at productivity or their work-life balance,” said Oliver Latham, vice president of strategy and growth for Pearson Workforce Skills. “If those tasks could be augmented with generative AI, employers and their workers could reallocate time to the things that need a more human touch and mean more to their customers,” he added.

May 23, 2024
NSE SME Indian Emulsifiers Makes a Blockbuster Debut

NSE SME Indian Emulsifiers Makes a Blockbuster Debut

Shares of Indian Emulsifiers surged to Rs 450 on the NSE, reflecting a remarkable premium of 240.91% over the issue price of Rs 132. The stock was listed at Rs 430, marking a 225.76% premium compared to its initial public offer (IPO) price. Currently, the stock is trading 4.65% higher than its listing price.
The trading volume was substantial, with the counter reaching a high of Rs 451.50 and a low of Rs 410, and approximately 18.21 lakh shares of the company exchanging hands.
Indian Emulsifiers’ IPO was a massive success, subscribed 306.66 times. The bidding for the issue was open from 13 May 2024 to 16 May 2024, with a price band set at Rs 125-132 per share. The IPO consisted of a fresh issue of 32,11,000 shares. The company plans to use the net proceeds for purchasing plant machinery, civil work, installation costs, funding working capital requirements, and general corporate purposes.
Prior to the IPO, Indian Emulsifiers raised Rs 12.01 crore on 10 May 2024, with the board allotting 9.10 lakh shares at Rs 132 per share to five anchor investors.
Indian Emulsifiers specializes in manufacturing and supplying specialty chemicals such as Esters, Amphoterics, Phosphate Esters, Imidazolines, Wax Emulsions, SMO & PIBSA Emulsifiers. As of 31 December 2023, the company employed 34 full-time staff.
For the period ending 31 December 2023, the company reported revenue from operations of Rs 48.67 crore and a net profit of Rs 6.75 crore.

May 23, 2024
Electronics Manufacturers Urge Indian Government to Introduce PLI Scheme for Components and Wearables

Electronics Manufacturers Urge Indian Government to Introduce PLI Scheme for Components and Wearables

A trade association representing major electronic manufacturers such as Asus, Dell, Google, Canon, and Dixon has appealed to the Indian government to introduce a production-linked incentive (PLI) scheme for electronic components and wearables. In a letter to S. Krishnan, the Secretary of the Ministry of Electronics and Information Technology, the Manufacturers Association for Information Technology (MAIT) emphasized that such incentives would not only boost exports but also enhance large-scale production capacity and attract investment in the electronics sector.
MAIT’s members, which include notable companies like Harman, Konica Minolta, and 3M, argued that a PLI scheme for hearables and wearables would help meet the government’s ambitious export targets. Dixon, one of the association’s members, manufactures laptops in India for Lenovo.
This appeal aligns with the Ministry of Electronics and Information Technology’s plans to introduce similar PLI schemes for the broader electronics ecosystem. Senior officials have indicated that the government will initiate a consultation process for a potential electronics components PLI after the current Lok Sabha elections conclude.
“For the component PLI, we should consider a unified PLI for electronics rather than sector-specific schemes to build a robust electronics industry. Focusing solely on one sector in the past has limited the effectiveness of the component PLI for mobiles,” MAIT’s submission stated, as seen by Moneycontrol.
The industry body also recommended that India’s forthcoming cybersecurity strategy align with international partners’ legislative or regulatory frameworks to create secure global supply chains and enhance collective security.
“The rise of global value chains and India’s PLI and Make in India initiatives have significantly boosted the country’s global trade, particularly in electronics and ICT sectors. At MAIT, we believe that for India to fully integrate into global supply chains, regulatory adjustments encouraging global investment and local company participation are crucial,” said Rajkumar Rishi, President of MAIT.
“As more companies consider investing in Indian manufacturing, we foresee accelerated growth in output, exports, and the overall economy. Developing a robust cybersecurity strategy is a top industry priority,” Rishi added.
Additionally, MAIT presented specific recommendations to various ministries and departments, including the Prime Minister’s Office, Ministry of Commerce and Industry, Ministry of Finance, and the Department of Telecom. The suggestions included:
– Supporting Ease of Doing Business initiatives.
– Considering tariff reforms to promote competitiveness and large-scale manufacturing.
– Opening investment limit enhancement under PLI for telecom.
– Excluding the telecom and electronics sectors from section 65A applicability to optimize the Manufacturing and Other Operations in Warehouse (MOOWR) scheme for these industries.
These recommendations aim to foster a conducive environment for electronics manufacturing in India, thereby strengthening the sector’s global position and economic impact.

May 23, 2024
India Has Sufficient Domestic Tyre Capacity; Imports Should Not Be Liberalised Through FTAs: ATMA

India Has Sufficient Domestic Tyre Capacity; Imports Should Not Be Liberalised Through FTAs: ATMA

India has ample tyre manufacturing capacity, and imports should not be liberalised through free trade agreements (FTAs) with duty concessions, according to the Automotive Tyre Manufacturers’ Association (ATMA). The industry body emphasized that domestic manufacturing capabilities in the automotive tyre sector are strong enough to make imports unnecessary, as communicated to the government.
This feedback was provided in response to the government’s inquiry about sectors where India can achieve self-reliance, to ensure that upcoming FTAs protect domestic industries, ATMA stated.
ATMA highlighted that India’s domestic tyre industry, one of the largest globally, produces over 200 million units annually across various categories, including two-wheelers, passenger vehicles, commercial vehicles, and off-road vehicles.
Despite these capabilities, tyres worth over Rs 2,000 crore were imported in the first three quarters of FY24, marking a 27% increase from the same period the previous year, ATMA noted.
“In recent years, the tyre sector has seen substantial investments, with leading manufacturers investing over Rs 35,000 crore in capacity expansion, technology upgrades, and research and development,” said ATMA Chairman Arnab Banerjee. “As new capacities come online, it is crucial to meet demand with domestic manufacturing rather than imports.”
Banerjee added that the domestic tyre industry is well-equipped to meet the needs of both domestic and international auto original equipment manufacturers (OEMs) in terms of design, development, and regular supply for all vehicle types manufactured in the country.
“The industry is ahead of the demand curve in producing all types of tyres. Auto OEMs are not importing tyres as the domestic industry meets their requirements,” Banerjee stated.
ATMA also pointed out that the domestic tyre industry is a significant employer, providing livelihoods to over 500,000 people directly and indirectly involved in manufacturing, distribution, and related services.
“Prioritising domestic tyre manufacturing is essential as it supports the livelihoods of over one million rubber growers in the country, with the tyre industry consuming over 70% of domestic natural rubber,” ATMA emphasized.
By promoting domestic production and leveraging technological advancements, India can strengthen its position as a global leader in the tyre industry while generating employment, promoting sustainability, and driving economic growth, ATMA asserted.

May 22, 2024
Impact of Bribery on SMEs: Standing Against Corruption May Cost Business Opportunities, Survey Reveals

Impact of Bribery on SMEs: Standing Against Corruption May Cost Business Opportunities, Survey Reveals

A global survey by the UK-based Association of Chartered Certified Accountants (ACCA) highlights the impact of bribery and corruption on SMEs worldwide. It found that 59% of SMEs and their advisers believe that resisting bribery and corruption could lead to lost business opportunities.
While strong anti-bribery policies might result in lost trade, many respondents acknowledged that these policies are ethically correct and could benefit businesses. According to the survey, 77% of respondents thought such policies would boost customer confidence, and 68% believed they would increase the chances of trading with larger businesses or public bodies.
“Many very small businesses lack the bargaining power to refuse small bribes, forcing entrepreneurs to choose between paying the bribe or losing the business,” said Jason Piper, ACCA’s Head of Tax and Business Law. ACCA has over 247,000 members in 181 countries.
Unlike large companies, SMEs often lack structured reporting lines and management frameworks, relying heavily on personal relationships and daily interactions. This can make it difficult to recognize and address corruption issues until they become severe.
The survey also found that 49.8% of respondents believe bribery and corruption negatively impact the business environment, with 66% viewing it as a concern.
Despite high awareness and perceived effectiveness of anti-bribery legislation, compliance costs remain significant for SMEs, with 48% of respondents agreeing that local anti-bribery laws have added to their expenses.
The implications for SMEs involved in bribery can be severe. Unlike large multinationals, small businesses often lack financial buffers, and money spent on bribes is money diverted from profits and local economic support, stunting investment and growth.

May 21, 2024
India Must Create 115 Million Jobs by 2030 to Sustain Economic Growth: Study

“India Must Create 115 Million Jobs by 2030 to Sustain Economic Growth: Study”

India needs to create 115 million jobs by 2030 as more people enter the workforce, according to a study, emphasizing the need to boost services and manufacturing to sustain economic growth.
Asia’s third-largest economy will have to generate 16.5 million jobs annually, up from the previous decade’s 12.4 million per year, according to Trinh Nguyen, a senior economist at Natixis SA. Of these, about 10.4 million jobs will need to come from the formal sector.
“To achieve this Herculean task, India’s growth engine needs to fire on all cylinders, from manufacturing to services over the next five years,” Nguyen wrote in a research note.
Although India’s economy is expected to grow by more than 7% this year — one of the fastest rates globally — this pace is still not sufficient to create jobs for its 1.4 billion people. High youth unemployment remains a significant challenge for Prime Minister Narendra Modi as he seeks a third term in the upcoming national elections.
Despite the creation of 112 million jobs over the last decade, only about 10% of these are formal, Nguyen noted. India’s overall labor force participation rate is 58%, much lower than other Asian nations, according to the World Bank.
Nguyen pointed out that India’s services sector, which constitutes more than half of the GDP, has limited capacity for headcount growth and labor quality. Therefore, India can leverage the manufacturing sector to compete with firms and countries looking to diversify away from a China-centric supply chain.
“The incoming administration needs to jump on the manufacturing train and capitalize on demographic and geopolitical tailwinds,” Nguyen stated. “Even if the road forward is challenging, it is never too late to walk down the right path.”

Originally Posted on: https://www.business-standard.com/economy/analysis/india-must-create-115-mn-jobs-by-2030-as-more-people-enter-workforce-study-124052001062_1.html

May 21, 2024