#ExpansionEurope: Focus India

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Europe is spreading its wings; and as the previous article suggests, the growth rate for 2015 will hover at the 20 year average of 5.3% a year. This is already quite an impressive prediction, given the recurring meltdowns that certain economies have been facing over the past few years. Much of that sustained growth can be attributed to SMEs, which not only form an overwhelming 99.8% of the 21 million EU enterprises, but have also withstood the test of time. Out of this “Rock of Gibraltar” section of industry, over sixty percent of enterprises are concentrated on the export-import segment. It can thus be led to conclude that a quintessential reason for the sustainment of European growth rests at the hand of the inter-Europe import-export trade segment. Europe has not turned a blind eye to this fact, and continues to support this sector with professional/legal advice and networking opportunities. This has lead to forty percent of these businesses conceding that their international growth has been catalyzed by the the EU support. This growth in most cases is ten percent of the company turnover. The seven key markets of exchange identified are notably China, Russia, India, Brazil, Japan, Ukraine and South Korea. This article will focus on the Indo-European trade nexus.

The support offered by the EU is targeted, bearing in mind the cultural and language aspects which are specific to each country. This is where each of the each of the aforementioned key markets offer individual exotic challenges of their own. Listed below are some of the key challenges for EU SMEs as far as the Indian subcontinent is concerned:

  • Finding the right person: India is a diverse market with many players at different levels. While there are providers focalized on a single offering and very good at it, the market is flooded with numerous “Jack of all trades, master of none” businesses as well. Choosing wisely will go a long way in determining the depth of your international footprint.
  • Cultural Differences: These exist not only between EU and India, but within India as well. The methodology of doing business is anything but uniform in all the states. This is further influenced by the individual cultures of the individual states.
  • Infrastructure not developed in all of the places.
  • The legal system is slow and complicated: A standard bottom-up hierarchy which is anything but simple to comprehend means that a tryst with the law is a time-consuming affair.
  • Customs Issues
  • Awareness of the Indian market in the EU is low.
  • Concentration of EU organizations in capital cities like Delhi and Mumbai, leading to duplication of functionality.

Below is a summary of the barriers as seen by EU SMEs for India vis a vis the average of the 7 key countries:

barrier

Some suggested reforms in the EU support as far as India is concerned are mentioned as below:

  • EU should set up regional offices in different states of India, each oriented to the local methodology of business.
  • Financial support should be arranged for EU SMEs desiring to set foot in India: Nearly all the nationalized banks in India have a specialized SME department to cater to the needs of this specific segment. The EU should thus tie up with these banks to allow the local financing of EU SMEs.
  • EU should draw up a list of certified professionals which it endorses for their services to SMEs and make this information publicly available on a website so as to benefit SMEs worldwide.

References:

[1] Opportunities for the Internationalisation of EU SMEs [pdf]

[2] Top Barriers and Drivers to SME Internationalisation [pdf]

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