'Industry should invest more in R&D to compete globally'

India needs to reduce its imports and increase the exports, says Minister of State for MSME K H Muniyappa

The government today said industry should invest more in R&D, innovation and clusters development to become efficient and compete with countries like China.

"You have to come forward and give valuable suggestions to make our products more competitive and to take India's trade forward in the international market vis-a-vis China," Minister of State (Independent Charge) for Micro, Small and Medium Enterprises K H Muniyappa said.

Therefore, India needs to reduce its imports and increase the exports, he said at a CII National Cluster Summit here.

To compete in the world market, the Minister said, Indian products should have high standards to be marketable in the international market.

He said there was a need for improvement in the areas of research.

Stressing the need to replicate success models of Germany and Japan in these areas, he said, "There is a scope for more public-private-partnership in the areas of innovation and R&D to improve the production quality and increase our exports. We will also ask banks to assist the industry."

Sharing similar views, National Small Industries Corporation (NSIC) CMD H P Kumar said Indian MSME's are facing several challenges including large imports from countries, like China.

While the market share of MSMEs has been declining domestically and in the global market, on the other hand countries such as China have been increasing their share consistently, he said.

He said factors like reduction in cost, improved quality and greater efficiency would help build the competitive advantages.

Although India-China trade has grown over the years,  the trade balance is heavily in favour of China.

According to the data released by Chinese Customs, the India-China bilateral trade touched $26.5 billion till May 2013. The trade deficit for India has widened year-on-year to $12 billion, up by 34%. The trade volume was lowered by over $two billion compared to last year.

The MSME sector has been witnessing a slow growth phase with its share of exports falling from 40% to 36% of late.

It contributes over 8% to the country's Gross Domestic Product (GDP) and accounts for 45% of the manufacturing sector. There are around 3.6 crore such enterprises, employing over 8 crore people.