Externally-oriented Small and Medium Enterprises: Predicament and Possibilities

This paper addresses emerging issues concerning externally-oriented SMEs in India and the nature of important business risks faced by them during the period of global financial crisis. The unimpressive export performance of SMEs during the period of reforms is also a reflection of the limitations of the institutional support as also weak forms of production organization. The state needs to play a proactive role in contributing to enhancing SME competitiveness. Whereas financially well protected Indian SMEs are likely to be more competitive and efficient, a greater recognition of the potential of domestic market and provision of business-facilitating infrastructure holds the key for success of SMEs across board.Financial Crisis, SMEs, Exports, Business Risks

Export-orientation of Foreign Manufacturing Affiliates in India: Factors, Tendencies and Implications

This paper addresses an important development issue in literature of international production, namely what motivates market‐seeking foreign direct investment (FDI) to undertake export activities. It is well recognized in the concerned literature that export‐oriented FDI is more beneficial for the host country than purely domestic market‐seeking FDI. Hence, many developing countries like India have policy concerns on foreign firms playing a very minimal role in their export activities. Various studies including that of UNCTAD (2003) noted that foreign direct investment (FDI) in Indian manufacturing has been and remains largely domestic market‐seeking. In view of this low export contribution by foreign firms, existing studies suggest that developing countries like India should improve their locational advantages to attract export‐oriented FDI as opposed to local market‐oriented FDI like quality of available infrastructure, availability of cheap but skilled manpower, expanding the size of export processing zones, participation in bilateral/multilateral trade and investment regimes, etc. However, these studies have not examined those factors that could motivate the existing market‐seeking FDI into export activities. The contribution of the present study is precisely to address this issue and identify factors encouraging market‐seeking FDI to take up export activities. The empirical analysis has been conducted in two stages. In the first stage, we have estimated the export shares and export‐orientation of foreign firms in Indian manufacturing across 17 Indian industries over 1991–2005. In the second stage, we have analyzed the impact of five set of factors—size and growth of host country market, local competition, policy regime, import competition and industry‐characteristics on the export‐orientation of foreign firms in Indian manufacturing. The empirical findings from the panel data analysis of 17 Indian industries over 1991–2005 has thrown up several policy implications important for increasing export‐orientation of foreign firms in a developing country like India.Export–Orientation, Foreign Manufacturing Affiliates, Local Competition, Host Country Market

Developing Regional Value Chains in South Asian Leather Clusters: Issues, Options and an Indian Case

The possibility of developing regional production networks in specific sectors between nations of South Asia has been explored in this paper. The case of the leather and leather goods cluster in Tamil Nadu in south India has been taken up to reflect upon range of issues that confront such initiatives. It is expected that firms participating in the regional production networks would benefit from shared technology, institutional support and wider market access. While the important dimensions appear to be domestic policy interventions to ensure adequate and timely loan finance, promoting economic infrastructure, and other business development services, exploring the nature and direction of collaboration among clusters between nations and other stakeholders including institutions of the state requires closer attention. However, the significant presence of informality in the production and labour processes requires to be addressed as a core concern of developing regional production networks in South Asia

Export-Orientation of Foreign Manufacturing Affiliates in India: Factors, Tendencies and Implications

This paper addresses an important development issue in the literature of international production, namely, what motivates market-seeking foreign direct investment (FDI) to undertake export activities. It is well recognized in the concerned literature that export-oriented FDI is more beneficial for the host country than purely domestic market-seeking FDI. However, the existing literature has not examined those factors that could motivate existing market-seeking FDI into export activities. The present study addresses this issue and identifies factors encouraging market-seeking FDI to take up export activities. The empirical analysis of exportorientation of foreign firms in Indian manufacturing across 17 Indian industries during 1991–2005 has brought out several policy issues important for increasing export-orientation of foreign firms in a developing country like India

Externally-oriented Small and Medium Enterprises: Predicament and Possibilities

This paper addresses emerging issues concerning externally-oriented SMEs in India and the nature of important business risks faced by them during the period of global financial crisis. The unimpressive export performance of SMEs during the period of reforms is also a reflection of the limitations of the institutional support as also weak forms of production organization. The state needs to play a proactive role in contributing to enhancing SME competitiveness. Whereas financially well protected Indian SMEs are likely to be more competitive and efficient, a greater recognition of the potential of domestic market and provision of business-facilitating infrastructure holds the key for success of SMEs across board

Exports by Indian Manufacturing SMEs: Regional Patterns and Determinants

A unique firm level database was used to shed lights on national and regional patterns of SME export contribution in manufacturing activities. An eclectic conceptual framework for SME export performance was developed based on the reviews of extant theories of international trade, which incorporate firm-, sector-, policy- and region-specific variables. The model was estimated for using the Censored Quantile Regression. SMEs are found to have modest roles in the manufacturing exports from India during 1991–2008 and their exports is mostly dominated by low technology products. Regionally, SME manufacturing exports is heavily concentrated with Southern states alone accounting for half of it during 2000–08, followed by Western India. The export determinant analysis brought to the fore the significance of certain key physical and economic infrastructure for SMEs, particularly access to ports, power, telecommunications and loan finance. Local market conditions, namely the size, growth and per capita income of the host states also favourably affect SME export activities. SMEs are more dependent on foreign technologies for enhancing their exporting rather than in-house R&D. Apart from improving the key business supporting infrastructure, the state policy makers may better enhance export orientation of SMEs by networking them to R&D facilities and providing easier access to information on overseas markets. This is because SMEs are more dependent on foreign technologies for enhancing their exporting rather than in-house R&D. Relatively smaller enterprises need greater support as they are disadvantaged by their size

Regional Origin of Manufacturing Exports: Inter-State Patterns in India

Regardless of exports’ increasing roles in national and state level economic growth performance, there are hardly any studies that analyze inter-state disparities in export activities. Constructing a unique dataset from a variety of published and unpublished sources of information, the study has estimated state level manufacturing exports for 1991–2008. It is the first ever attempt on estimating state level exports focusing on plant information. The estimation derived with reference to plant size information and covering majority of sub-national entities in India, has offered preliminary but useful findings for furthering policy understanding on inter-state disparities in firms’ export activities

Regional Origin of Manufacturing Exports: Inter-State Patterns in India

Regardless of exports’ increasing roles in national and state level economic growth performance, there are hardly any studies that analyze inter-state disparities in export activities. Constructing a unique dataset from a variety of published and unpublished sources of information, the study has estimated state level manufacturing exports for 1991–2008. It is the first ever attempt on estimating state level exports focusing on plant information. The estimation derived with reference to plant size information and covering majority of sub-national entities in India, has offered preliminary but useful findings for furthering policy understanding on inter-state disparities in firms’ export activities

Externally-oriented Small and Medium Enterprises: Predicament and Possibilities

This paper addresses emerging issues concerning externally-oriented SMEs in India and the nature of important business risks faced by them during the period of global financial crisis. The unimpressive export performance of SMEs during the period of reforms is also a reflection of the limitations of the institutional support as also weak forms of production organization. The state needs to play a proactive role in contributing to enhancing SME competitiveness. Whereas financially well protected Indian SMEs are likely to be more competitive and efficient, a greater recognition of the potential of domestic market and provision of business-facilitating infrastructure holds the key for success of SMEs across board