Rituparna Kakati | 05 Oct, 2017
Sound technical services and time to time skill update can help Indian Small and Medium Enterprises (SMEs) bolster their growth and enhance their export competitiveness as well, said M. Bhaskar, Director, TUV Rheinland India, in an exclusive interview with SME Times.
TUV Rheinland India is part of the TUV Rheinland Group, a global leader in the field of industrial technical services, headquartered in Cologne, the largest city in the German federal State of North Rhine-Westphalia and the fourth-largest city in Germany.
TUV Rheinland India has recently signed an MoU with the Export Promotion Council for Handicrafts (EPCH) to promote and project Indian Handicrafts in National and International markets.
Excerpts of the interview...
Please share with our readers about TUV Rheinland India.
M. Bhaskar: We are a leading provider of technical services worldwide. Founded in 1872 and headquartered in Cologne, with our expert workforce of more than 19,600 people in 500 locations in 69 countries, we generate annual revenue of € 1.9 billion.We have been present in India since 1996.With our nationwide presence in over 100 locations, we provide services to the industry in the field of Industrial Services, Mobility, Products, Softlines, Academy & Life Care and Systems.
What are the services you offer to the industry?
M. Bhaskar: Our 2500 + services cater to most of the industries that exist under the sun. Here is a glance of testing, training, inspection, consultancy & certification services (TIC).
Plants and Machinery - We can offer intelligent solutions - for maximum safety, functionality, and trouble-free operations of your plants and systems. From elevators to solar power stations - we have the expertise and accreditations you're looking for. We offer a set of statutory & non statutory services to the industry. Our non-statutory services like the third party inspection, among others, is recognized world over.
We are also active in the Materials Testing and Inspection field where our portfolio includes a full range of destructive and nondestructive methods, quality control and quality assurance functions, and physical testing. We test, approve and certify materials and products in accordance with both domestic and international requirements and codes.
Product Testing - Document the quality of Electronic & electrical products, IT components, Textile & Leather goods, PV componentsetc. with an independent, recognized certification mark.
Education & Personal - We offer tailored programs and services for vocational training, on-the-job training, qualification of job seekers, and personnel management.
Our experts evaluate management systems, IT processes, and complete businesses in accordance with internationally recognized standards, or on the basis of individual performance criteria. Around the world, companies trust in the excellent reputation of our TÜV Rheinland mark – a synonym for tested safety and quality.
Are these services relevant to SME sector? How?
M. Bhaskar: Reports say that SME's contribute to 42% of total India's Exports. Most of these SME's who are into exporting need to comply with the quality and safety regulations of the exporting country. We make it easier for the companies to understand these regulations and comply with them as per International standards. Our services cater to various sectors across various industries which includes SME's too. Services like Quality management certification are applicable to all SME's who are exporting outside India or supplying components to giant manufacturers within India. As an SME, you need to constantly upgrade the skill of your employees. We offer tailor made training programs for all sectors as per the industry needs. Most of our services are relevant to all the SME's as a whole.
Do you think this Indian industry is still lagging behind in this area?
M. Bhaskar: Small and Medium Enterprises (SMEs) have been considered as the primary growth driver of the Indian economy for decades. SMEs play a big role in promoting exports and creating jobs. But Indian SMEs suffer from not having a level playing field in the business environment. It is further evident from the fact that today we have around 3 million SMEs in India contributing almost 50% of the industrial output and 42% of India's total export. These are at the heart of linking the global value chains (GVCs), as they have been for Southeast Asian countries and China. SMEs could attract all efficiency seeking FDI from MNCs, making India a hub for GVCs. But Indian SMEs lack the capacity as well as support services to adjust strategically to changing global landscape. From limited access to information and technology, to an enlarged current skills mismatch, Indian SMEs lag behind their worldwide compares. Work force of Indian SMEs lacks the necessary skills to operate in a high-tech GVC environment. Additionally, they have difficulty in penetrating global markets or be part of the GVC due to their inability to meet international product quality standards, demanded by an increasingly sophisticated international buyer. SMEs are also poorly represented in apex chambers of commerce and industry in India, which are dominated by large enterprises, who receive preferential access to trade services. India also urgently needs to create a trade policy institution that is able to operate efficiently in the new global environment.
What do you think about the possible impact of GST on the Indian industry?
M. Bhaskar: The Goods and Services Tax (GST) has been heralded as the biggest indirect tax reform in India after Independence. SMEs and startups are affected the most with the rollout of the GST and the impacts are favorable in ways more than one. Some of the ways GST benefited SMEs and startups are ease of starting business, reduction of tax burden on new business, improved logistics and faster delivery of services and elimination of distinction between goods and services. A sizeable portion of SMEs are of the opinion that GST is not all good for the sector and their fears may not be totally vacuous. The tax neutrality that the SMEs enjoy may be one of the prominent benefits. However, reduction in duty threshold is one of the key concerns that has led them to be wary of the GST bill. Previously, no duty is paid by a manufacturer having a turnover of less than rupees 1.50 crores. But after GST implementation, the exemption limit got significantly lower to 20 lakhs. But for special category States enumerated in article 279A of Constitution, threshold exemption limit has been fixed at Rs. 10 lakhs. As a result, a large number of SMEs and startups are mandated to come under the tax net and have to pay a large chunk of their earnings towards tax. GST regime don‘t differentiate between luxury goods and normal goods; which is hard for the SMEs to compete against large enterprises. The sectors that are benefited the most from the GST reform are FMCG, Automobile, Textile and E-commerce whereas Consumer durables and Entertainment are the sectors which are not benefited.
Recently, you have signed a MoU with EPCH. Please share details about it.
M. Bhaskar: Yes we signed an MoU with EPCH and as per the terms of the agreement, we have agreed to promote and project Indian Handicrafts in National and International markets as a brand by utilizing their expertise and knowledge and also by involving other reputed agencies. Together with EPCH, we create awareness and disseminate knowledge to handicraft exporters w.r.t supply chain standardization; processing, product certification and testing through multiple industry connect interventions (workshop, seminars and awareness programs) to enable the Indian handicraft sector to meet international benchmarks. It is a great initiative and it will definitely help the Handicraft industry.
Also, we would love to hear from you on the Indian handicrafts sector.
M. Bhaskar: Though Indian Handicraft industry is considered a cottage industry, but it has evolved as one of the major revenue generator over the years. The handicrafts sector is important for the Indian economy as it is one of the largest employment generators and accounts for a significant share in the country's exports. As per reports Handicraft exports from India increased by 11.07 per cent year-on-year during April 2016-March 2017 to US$ 3.66 billion. During this period, the exports of various segments registered positive growth like Shawls as Art wares, Hand printed Textiles & Scarves, Art metal wares, Agarbatis, and Embroidered & Crochetted goods. Indian handicrafts are exported across geographies, with the top 10 destinations being the US, the UK, the UAE, Germany, France, Latin American countries (LAC), Italy, the Netherlands, Canada and Australia.
In spite of having diversified products, some part of Indian market is still untapped and market is price sensitive. Products are high priced in big and metro cities, which are beyond the reach of people belonging middle and lower middle class. Craft producers have to compete on price, quality and delivery for different segments. There is poor promotion for craft products in national market and there is lack of awareness about new traditions and among craftsmen. There is a lack of ability to produce handicrafts in large scale and create economies of scale and also inadequate material testing and performance measurement. Low capital investment, Inexpensive and skilled labor, Diversified product portfolio, Flexible Production are few important features of Indian Handicraft Industry.
Finally, please share your future plans in India.
M. Bhaskar: We have invested more than 100 crores in the past 5 year and plan to go bullish on the Indian market. We have signed a MoU with AMTZ (Andhra Pradesh Med Tech Zone) to invest 85 crores over a period of 4-5 years to set up and operate Electro-Magnetic Interference (EMI/EMC) including Anechoic Chambers, Biomaterial, Reliability& Electrical Safety Testing Facilities on Public Private Partnership Mode. We support AMTZ's objective to reduce medical device imports and production cost, partner with industry to deliver the quality medical devices to local market and eventually increase the export of world class medical devices to the international market. We also plan to tie up with the government in the area of skill development where government has changed its strategy towards a demand driven approach rather than a supply driven approach.
We are expanding ourselves at a decent pace and definitely hope that we will be able to achieve sustained development of safety and quality in order to meet the challenges arising from the interaction between man, technology and the environment.