Small & Medium Enterprises (SMEs)

6th April 2017

So I came across this article and was fascinated to learn that there is an interest in learning the efficiency from the German system and trying to reason potential glocaliztion of the German framework. 

The article can be read at

This article has left me…:

I am fascinated by Germany, and for the very reason because Germany as a country really respects and values education particularly research. I have many German friends and it is so easy for them to find a job in the government sector because employability is based on merit and fresh perspectives is overly valued (or at least that is what I have observed in my small sample size.. I am open to hearing stories otherwise and would actually like to hear them to widen my horizon). It is the same in the US. In the US, you can actually stand in front of the Congress and give a testimony. A situation to my surprise completely opposite to what I am experiencing in India. I won’t even be allowed to enter the government premises let alone giving testimonies. Even logical suggestions gets shot down. If I have to tell the government that the e-visa system would be better if you’d do a, b and c, 1. there is no outlet, 2. even if there is an outlet, there won’t be a hearing, 3. even if there is a hearing, it gets shot down. It actually is very frustrating when someone has the energy to help to make a positive difference. hile I do not say that it is all rosy outside India and the way the world leaders are getting impeached, we know that the world is as corrupt as any other alternative world can be, but at least they give you a lending ear and hope of being wanted to make improvements.

I think in India, it is not only about education being able to serve the industry. It is also whether industry is willing to absorb the education. For example, I have met with people who have all the skills to be employed in both the private and public sector but yet, they are not being employed by either of the sectors. So to some extent, it is the argument of the skill mismatch, but when there is no issues of skill mismatch, why isn’t the private and public sector utilizing the available skills? At the end of the day, not utilizing the skills is a loss to productive GDP isn’t? In India, one of the reasons that I observe is a result of not wanting to change and being open to new ideas. Comfort zone is so comforting that the incentive to leave is not high enough to overdo the comfort, and anyone challenging the comfort is weeded out. The world over is worried about not enough jobs being created, and one of the main reasons being the productive loss to GDP which every unemployed generates, somehow I do not even see that a worry in India.

With regards to the SMEs, monopolistic competition  exist at all firm levels: large, medium or small. And yes, small firms do tend to be in the glocal supply chain mainly (which in the US is captured as indirect exports). Actually, US also pays a lot of attention to their SME sector, and how they directly or indirectly contribute to exports.

The question which always remains is: how do we transition SMEs from being in a glocal supply chain to a global supply chain? From what I see in India, India has a long long way to go and this particularly because of the large informal sector which gets constrained from enjoying any benefits just because it is an informal sector. For example, India’s transportation industry is not even recognized as a sector (as against the film industry). When I speak to transporters, they tell me that they are bogged down with high interest rates on borrowings they have made in the informal market, and this is because the banking sector doesn’t even recognize them as a sector to give them the necessary capital for expansion. The newcomers (mostly the small guys) find it impossible to enter the market and when they do, they aren’t able to sustain. Hence you see high exit rates in the industry. The older firms continue to the same size as they have been since 1980s even though their goodwill helps them secure some amount of capital from the bank as compared to the small newcomers but not enough to be able to compete with large new entrants like Volvo. And given the changing climate and the demands for more cold storage/efficient/high mileage trucks, the older transport firms are just unable to compete what capital can buy which the large entrants can buy, better trucks. Their frustration is valid given the film industry doesn’t find it difficult to get a loan from the bank.

Nonetheless, unless and until we start valuing education and research, none of it is possible. Only innovation can give us a sustainable growth.  Look at our startups. I am yet to find a startup that is so innovative that it helps to resolve a societal problem, a situation in the US. In the US, with the help of open government data, researchers have invented apps that can tell you the timetable of a bus in a city. In India, we do not even abide by Open Government. Our datasets are all over the place with inadequate information for a comprehensive analysis. for instance, the Ministry published the top 15 source countries of foreign tourist arrivals, and top 10 of foreign tourist arrivals on e-visas. But since the Ministry is publishing the top 15 and 10, why not publish all the countries? What is the harm in giving all the information? And even the data on the top 10/15 countries is given in the most unusable format, again not adhering to the Open Government Data. It took me months to be able to put an excel with this information.

I think there is a lot more for India to do, and the efforts have to move across Ministries and move in tandem and not silos.


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