Digital skilling is critical to help MSMEs boost bilateral trade between India and the US: IACC National President
Not only did the COVID-19 pandemic cripple domestic trade and imports but it also took a toll on exports. The trade impact of the pandemic for India is estimated to be about $348 million, according to UN data.
The US, India’s top trading partner, is estimated to take a $5.8 billion hit. In 2019-20, the bilateral trade between the US and India stood at $88.75 billion, but this number could drop significantly.
MSMEs, which contributed 48.1 percent of total exports from India in 2018-19, have been bearing the brunt of the trade slowdown between the two countries.
S Purnachandra Rao, National President, Indo-American Chamber of Commerce (IACC), believes MSMEs can play an important role in recovery, and drive growth in the trade and investments between the US and India.
“The COVID-19 pandemic has resulted in a need for upskilling, education and industry-readiness for MSMEs’ workforce. If education and skilling evolve to make the workforce agile and skills more interchangeable, MSMEs can become more dynamic and gain further ground in the road to recovery,” he says.
The Indo-American Chamber of Commerce
The IACC, founded in 1968, is the apex bilateral Chamber of Commerce fostering US-India economic engagement. IACC’s honorary members include Gautam Adani, Mukesh Ambani, Rahul Bajaj, Ashwin Dani, Adi Godrej, Harsh Goenka, Anand Mahindra, N R Narayana Murthy, and other Indian industry leaders.
Rao explains the organisation is working to sense opportunities and advocate changes for its MSME members so they can reignite bilateral trade between the two countries.
IACC’s membership includes 1,800 organisations from India and the US, involving industries such as manufacturing, engineering, construction, consumer goods, electronics, IT, pharmaceuticals, consulting, travel and tourism, etc.
For India, manufacturing sectors such as chemicals, textiles and apparel, automotive, electrical machinery, etc have the maximum trade impact.
The need for digital skilling
IACC is now poised to play a role in augmenting bilateral trade between the two countries. But Rao admits fostering trade becomes a challenge if MSMEs are unable to attract and retain digital-savvy talent.
“If Indian MSMEs do not have an agile and digitally-skilled workforce, the rate at which they can adopt digital solutions is heavily impeded. Consequently, it will be difficult for MSMEs to stay ahead of global competition in the trade market,” he says.
However, he believes Indian business leaders largely understand the need to make the workforce digitally-savvy.
“They understand working with intelligent systems with algorithmic and artificial intelligence capabilities requires extremely technical skills – such as complex reasoning, problem-solving, and interpreting data – that go beyond simple technical capabilities,” he explains.
The need for adaptability
As consumer behaviour shifted online during the lockdown, customers increasingly relied on digital platforms for groceries, education, and other essentials. But not all MSMEs were quick to adapt and pivot from producing non-essential commodities to essential goods.
“Few MSMEs were able to innovate and start producing hand sanitisers and toiletries, PPE kits, reusable masks, etc to survive in the tough times. MSMEs in remote areas had to deal with severe supply chain disruptions,” Rao says.
The shift in consumer behaviour taught stakeholders in the MSME ecosystem the importance of adopting digital solutions for online selling, digital payments, inventory tracking, and resource planning/management.
Rao believes if the MSME workforce is vigilant and sufficiently skilled to adopt these digital solutions, supply chains can be optimised, and business processes can be formalised and streamlined. This “digital connect” is crucial for MSMEs to stay competitive in the midst of changing geo-political landscapes, according to him.
IACC National President Purnachandra Rao
The road ahead
“For the next three to four years, MSMEs need to invest in areas that are proven to have market acceptability and help them stay connected with trade partners. We at IACC ensure our entrepreneurs from India and the US are well-connected. This helps our Indian members network better and enables them to tap into export opportunities from several American states,” he says.
India is now looking for a trade agreement with the US which, according to Minister of Commerce and Industry Piyush Goyal, will help protect India’s agriculture, dairy, MSMEs, and local industries.
In the agreement, India is seeking exemption from high duties imposed by the US on steel and aluminium products. It is also aiming for better market access for agriculture, automobile and engineering products.
However, the trade deal could be signed only after the US Presidential Elections in early November.