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Saturday, December 23, 2017


Address by Dr. A Sakthivel, Regional Chairman FIEO Southern Region


        The WTO estimate for growth of world trade in 2017 was revised upward to 3.6% from previous estimate of 2.4% and this shows that the recovery of World Trade is eminent and coming years will be better years for exporters. This is substantial increase form 1.3% growth registered in the year 2016. Stronger recovery particularly better demand for imports from US and China expected to increase our export growth in the last quarter of this financial year.

-         India’s economic growth is set to accelerate in the coming months, as the economy started recovering from demonetization- and GST related issues. Economic momentum could be further boosted by the new fiscal package, including higher incentives announced in the Foreign Trade Policy, along with economic prudence expected form this Govt. 

-         The Asian Development Bank predicted that the Indian economy will  pick up in the coming quarters and grow at 7% + in this financial year.

-         Manufacturing has emerged as one of the high growth sectors in India. The government had launched the ‘Make in India’ program to place India on the world map as a manufacturing hub and give global recognition to the Indian economy. India is expected to become the fifth largest manufacturing country in the world by the end of year 2020.  

A recent report by Goldman Sachs titled BRIC - A Road in 2050  –forecast that India will surpass Japan as the third largest economy in the world by 2032. 

-         In many of the sectors India is leader presently irrespective of various constraints and hurdles we are facing. India ranks 3rd in farm and Agricultural output amongst the world.  We are the largest producer of Milk in the world with 19% of world’s output. 

We are top Shrimp exporter and largest producer of instant coffee; Largest producer of food grains’; Second largest fruit producer; largest producer of spices; and many more. One of the estimate of World Bank also states that India can rank amongst the top three growth economies and manufacturing destination of the world by the year 2025.

-         I am sure that the implementation of the Goods and Services Tax (GST)  made India a common market with a GDP of US$ 2 trillion along with a population of 1.2 billion people, which will attract more investment and industrial development in the coming years.

-         Tamil Nadu is poised on a big opportunity of demonstrating leadership and taking on a bold agenda to look beyond the shores of the country and onto the global arena. Consequently, cities such as Chennai, Coimbatore, Tirupur and Madurai have the opportunity to grow into a global city.

-         Tamil Nadu's growth can be powered by sectors such as automotives, textiles, manufacturing, biotech, health, energy, pharma, animation, visual effects, and, of course, IT, where it is already establishing leadership. But leadership isn't good enough; it must become global hubs in these sectors. It must attract investment to drive growth and revenues multi-fold, which will, in turn, help plough investment into the State for development.

-         Tamilnadu especially, Chennai is the hub for auto mobile industry supporting with more than 40 per cent of India's car production and 35 per cent of India's auto-components production, a sizeable part for exports, comes from the region.Tamil Nadu has become a very cost-effective manufacturing hub for automobiles. The export in automotive sector from Tamil Nadu has grown on an average CAGR of 30% per year for the last five years and has reached a turnover of 3.5  billion USD. During 2016-17.Chennai has become the largest export hub for automobiles and components in India.

-         Traditionally, Tamil Nadu is known for automobile Manufacturing. Started in 1840, Simpsons pioneered India's automobile industry rail coaches, motor cars, diesel engines and steam passenger buses. In 1948, Ashok Leyland was started for assembly of Austin cars. The Integral Coach Factory (ICF) was established in October 1955. In 1960s, TVS Group established a number of auto components manufacturing plants. 

Tamil Nadu has emerged as India's largest automobile and auto components exporter in India. Hyundai has made Chennai the manufacturing and export hub for its small cars. There are several brands operating now form India which includes Ford, Caterpillar , Komatsu & Koebelco,  Doosan etc. Nicknamed the "Detroit of India" for its auto industry, Chennai in the coming years will see more opportunities in this sector.

-         Another area of leadership is that of textiles. The State has the distinction of contributing one-third of the total textile production in the country and is a major source of foreign exchange. The handloom sector which Madurai also was strong is a traditional resource. But tradition must keep up with modern taste to stay alive. Better market connects and a better understanding of changing tastes of the customer will result in product diversification.

One advice I wanted to give to new entrepreneurs is that you should look for product diversification and product innovation instead of coping what others are doing in order to become successful in the international market. There are lot of avenues and new opportunities. 

For example for textile sector, there is huge demand for technical textiles. Be it home furnishing with fire proof or dirt proof materials, textiles used for other purposes like agriculture, industry, other than clothing, etc are some of the examples which give you better realization and lesser competition. 

In each sector you are handling will have better opportunities if you look around and find out what others are not able to offer.

-         We are a nation of entrepreneurs. Tamil Nadu accounts for the largest number of MSMEs in India (15 per cent), producing more than 8,000 product varieties for a total investment of Rs 32,000 crore. There are lot of schemes available for promoting micro and small enterprises by developing clusters under the Cluster Development Programme, which will catalyse growth.
The Food Processing Industry is a sun raise industry as world over the habit is changing to Ready to Eat; Ready to Cook segment including in India. By seeing its immense future potential I request EPC to take lead in organizing 20 to 25 entrepreneurs and propose a food processing park in Madurai and from FIEO I promise that we will help in setting up the infrastructure and getting necessary support especially financial support form the Govt. for this venture.

-         Tamil Nadu accounted for 11.50 % of India’s exports with export of 31.51 Billion USD during the year 2016-17.. Tamilnadu it the third largest exporting state after Gujrat (23%) and Maharashtra (21%).  During the year 2014-15 export from Tamil Nadu was to the tune of USD 35.78 which drop down to USD 30.26 during 2015-16 as India’s total exports also contained during this year.

-  Biggest advantage of Tamil Nadu is that it is having presence of export driven industries like Textiles & Garments, Leather,  Automobile and components, Food processing, besides software.  Major products exported form Tamilnadu are Engineering, Automobile and spare parts, Textiles and Garments, Leather products, Chemicals, Agro & Processed Food, Marine products, Jewellery, etc.

-        Major markets to which Tamil Nadu  products are being exported are  USA (45%), UK (16%), EU (15%), UAE (14%) Africa (4%), Japan (3%), etc.

-         Tamil Nadu is blessed with a unique location on the coastline of India and has the resources as well as determination to transform itself into an Export Hub for the nation. There are several projects in the pipe line to connect all industrial hubs in Tamil Nadu with gate way Ports and I am sure that with entrepreneurs like you with supported by EPC and Chamber will help in make Tamil Nadu the top exporting state in India.

-         Tamilnadu is one of those few states in the country that can become an export hub due to the available infrastructure, geographical location and availability of resources. The state currently has a very well developed road network that connects both the rural and the urban areas. The state also falls under the Golden Quadrilateral NH project that connects many of the major industrial, agricultural and cultural centers of India making it easily accessible by road.

-         However there are some concerns especially related to MSME in Exports which includes : High Cost of credit ,Lack of Technology, Less marketing Exposure, Liquidity crunch under GST , High Transaction Cost, etc.

Dr. A Sakthivel, 
Regional Chairman 
FIEO Southern Region

-         FIEO taken lot of efforts to attend above issues and I am happy to inform you that in the Mid-term review of Foreign Trade Policy some of the issue has been attended and many are under consideration of the Government.

The credit rate in India is at-least 6% above international benchmark. For example, In a sector where the procurement of inputs  to exports takes 9 months and value addition is 20% , exports competitiveness is lost by 5%. 

Interest Equalisation Scheme provides 3% interest supports to MSME manufacturers. FIEO suggested the Govt to cover this scheme to Merchant exporters as well.

Credit Link Capital Subsidy Scheme  providing interest subsidy of 15% for loan upto Rs 1 Cr is available.  EPCG Scheme providing duty free imports for exports against an exports obligation which helps the MSME to upgrade technology.

As per Government own estimates, Transaction Cost of Exports varies between 8 to 13 %. MSMEs are paying a further higher cost due to lack of knowledge and less adaptation of technology, system issues, etc. 

India has rectified the Trade Facilitation Agreement aiming to reduce such cost . Government efforts for Ease Of Doing business also to supplement in reducing cost .

FIEO provides an Integrated platform to the businessmen dealing in Multi Products. We are having Bilateral agreements for exchange of information with over 64 overseas organisations  there by able to provide  Importers address & Contact details to the exporters. 

We are also providing Market Development Assistance and subsidize stall charges in international trade fairs. In an year we are participating more than 50 international trade fairs and taking small and medium exporters to explore the potential markets. 

Apart form Taking up Issues/Problems of Members we are also having Live Chat with Members on forex trends, , Policy clarification, international marketing,  etc.

FIEO also actively participating in Enterprise Europe Network focusing MSMEs for Technology and Marketing Support.  The Network organizes face-to-face meetings between European SMEs and busineses in India my match making exercise. 

This network also generates partnership proposals apart form providing  information about industrial rules & regulations, standards, certification requirements and customs matters.

You may also aware that FIEO launched an information portal for exporters and importers - INDIAN TRADE PORTAL which provides all information required by an entrepreneur  who wishes to start his business in international trade. Hope many of you are using this Portal.

I am extremely happy to learn that EPC is making inroads in Tamil Nadu especially in smaller towns where there is lack of information flow. I am also happy to meet many entrepreneurs who have started their business due to initiatives of EPC and grown which shows the effectiveness and commitment of the team and I congratulate Mr. Rajan and his team for excellent works done for promoting exports from this part of the state. 

I promise all necessary help from FIEO to EPC and I am sure that we can work together for encouraging more and more entrepreneurs to join in export fold.

Strategic planning, due diligence, consistent follow-up, and perhaps most importantly, patience and commitment are all prerequisites to successful business in international trade. This necessitates multiple marketing efforts that address differing regional opportunities, standards, languages, cultural differences, and levels of economic development. 

Gaining access to international markets requires careful analysis of consumer preferences, existing sales channels, and changes in distribution and marketing practices, all of which are continually evolving. 

Issues of sales channels, distribution and marketing practices, pricing and labeling, and protection of intellectual property, etc are also very important in international business. To overcome various hurdles, FIEO organize series of programmes and I am happy to learn that FIEO could also join with EPC in organizing some progrmames in Madurai for the benefit of exporters here.

Tamil Nadu as I mentioned earlier having huge potential to become NO.1 state in exports as we have immense potential to grow in various verticals of products. Each districts we have niche products which is competitive and each district if focus on these products, I am sure we can achieve this in very short span of time. FIEO is ready to work with EPC and Chambers to reach grass root level and help entrepreneurs to overcome various hurdles and face challenges in the international markets.

In Tamil Nadu, after Chennai and Coimbatore, Madurai is having huge untapped potential for exports and I am happy to note that Mr. Rajan and his team is doing excellent work towards this direction.

With this word, I thank EPC for providing me this opportunity and wish them all success.

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