Compliance plays a big part in helping
Indian MSMEs grow exports
Micro, small and medium enterprises (MSMEs) play a
critical role in shaping India's economy by contributing over 29% to the GDP
and 50% of exports. However, say industry experts, India's MSMEs have far
higher potential and should work towards understanding global market demand and
compliances to become competitive in exports.
The compliance levels of Indian MSMEs in terms of
export vary depending on various factors, says Farida Dholkawala, Partner,
Desai & Diwanji. While challenges persist, the compliance levels of Indian
MSMEs in terms of export have been gradually improving, with efforts from both
the government and the private sector to enhance awareness, provide training
and simplify procedures, adds Dholkawala.
Kalyan Basu, MD & CEO, Vayana TradeXchange, says
the compliance in exports has a direct correlation with sustained scalability,
and so its importance is paramount. Merchandise exports from India have
multiple layers of compliance and monitoring authorities to pass through like
customs, DGFT, RBI, banks both in terms of actual shipment and money movement,
and hence are well covered in terms of compliance, adds Basu.
Key compliances for MSMEs
Dholkawala talks about the three important
compliances that Indian MSMEs should bear in mind while exporting.
First and foremost is documentation and procedural
compliance, which is all about MSMEs having all the necessary export-related
documents in order, such as the bill of lading, commercial invoice, packing
list, certificate of origin, and any other specific documents required by the
importing country. Other licences, permits and clearances would also have to be
obtained including PAN, GSTIN, registration with the Udyam portal,
Importer-Exporter Code, Registration cum Membership Certificate (RCMC) from an
authorised Export Promotion Council (EPC), registration with the ICEGATE portal
of the Customs Department, says Dholkawala.
Then comes product and technical compliance, which
deals with MSMEs ensuring that their products comply with the technical
standards, quality norms and regulatory requirements of the importing country.
This includes compliance with product labeling, packaging and certification
norms. Specific industries like food, pharmaceuticals and engineering goods
have additional product-specific regulations to follow, notes Dholkawala.
The third is financial and export control
compliance, which is about MSMEs ensuring proper invoicing and adherence to
payment timelines and other provisions mentioned under the foreign exchange
regulations. Further, the Reserve Bank of India has issued several instructions
or guidelines to banks relating to lending to the micro, small and medium
enterprises sector. The MSMEs would also have to ensure compliance with such
regulations if it has availed credit, says Dholkawala.
Service exports need attention
Industry experts say that the area which now needs
more attention is service exports, which are growing at a very fast pace and
stand at 40% of our overall exports.
Basu says that very little data is available in the
public domain related to service exports. The monitoring mechanisms are not so
clearly demarcated, pricing of services is an area of great concern, contracts
are vague and sometimes misleading, with major fallout often hitting headlines
in national newspapers involving large concerns and also affecting geopolitical
relations between countries, says Basu.
Service exports is the area we need to focus on in
terms of compliance and monitoring much more than what we are doing today,
adds Basu.
www.economictimes.indiatimes.com
dt. 17-05-2024