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Experts discuss future of Global Supply Chains

Jun 12, 2020

“It is a misunderstanding that MSMEs can 'just open up' during unlock phase, as indeed MSMEs need to rebuild their markets, workforce, operations and supply chains whilst also firming up their financial basis. Focusing on core business strengths in products, technology and business processes, MSMEs can align with requirements to integrate in Global Value Chains", said Dr Rene VAN BERKEL, UNIDO Representative - India, at the International Webinar on ‘Leveraging on MSME strength to become Global Manufacturing Hub, Part 1: Supply Chain Management and Capacity Building’ organised by MVIRDC World Trade Center Mumbai and World Trade Center Binh Duong New City, Vietnam.

Dr Berkel highlighted challenges faced by MSMEs amidst COVID-19 crisis such as uncertainty over future, collapse of demand, labour scarcity and disrupted supply chain. He expects the COVID-19 crisis to reset globalisation and create Industrialisation suitable for 21st century. He expects transformational change in global consumption and production post COVID with renewed focus on Circularity, Digitisation and Resilient Global Value Chain.

Dr Berkel further expects localisation of value chains in integrated manufacturing hubs in the post COVID world. He emphasised on formalisation of MSME sector to access institutional credit. Dr Berkel suggested that government should provide wage subsidy to industry to retain labourers, as it is done in Japan, Europe and other regions.

He said protectionist policy may not be in the best interest of India. If India has to succeed in its plan of “Make in India for the world”, it has to be integrated into the global supply chain.

Mr Frank Weiand, Technical Director, USAID LinkSME, Vietnam said 85% SMEs in Vietnam are negatively affected by the COVID-19 crisis. Especially, firms in apparel, footwear, electronics and auto sectors have been severely impacted. He suggested, “Vietnam MSMEs can gain from opportunities post COVID if they address gaps in quality standards, labour, finance and other issues such as having a customer-driven mindset, bringing in transparency and investment in technology.”

Highlighting events that impacted global trade in the last few years, Mr Weiand spoke of issues such as trade wars, rising costs in China, buyers looking at diversifying risk and now COVID-19. He emphasised that Government of Vietnam is improving existing laws and is developing policies to support MSMEs to benefit from the dynamics of the new world.

Mr Nikhil Puri, Global Head – Sourcing & Procurement, Sterlite Technologies said, “India's Micro, Small, and Medium Enterprises (MSMEs) base is the largest in the world after China. In today's scenario, companies are moving towards the Digital Supply Chain. Companies mean different things by the term ‘digital supply chain transformation’. MSMEs have to adapt to this digital transformation project wherein they can utilize the best practices of the market which will bring operational efficiencies at a much higher level of maturity.”

Bringing out the significance of MSMEs, Mr Puri said we have about 63 million MSMEs in India, second only to China, and Indian MSMEs are growing at the pace of 10% p.a. 20% of MSMEs in India are located in rural areas, and Indian MSMEs have shown resilience to global shocks.

Mr Puri said 5G technology can transform end to end supply chain management and called for an agile, flexible supply chain in today’s world. He stressed on adhering to timeliness in supply chain management and pointed out the potential of blockchain technology in transforming supply chains.

Mr Puri further suggested that MSMEs should avail receivable discounting facility to manage cash flow and adapt to cutting edge technology to sustain their business. He suggested that large corporate buyers should train MSME vendors by considering them as partners in their business, and discussed about how MSME vendors can minimise supply chain costs.

Dr Nguyen Viet Long, Deputy CEO, Becamex IDC said 45% of Vietnam GDP comes from MSMEs and they contribute to about 63% of jobs. Dr Long remarked Vietnam has to educate employers and reskill labourers to move up the value chain in the post-COVID world.

Dr Long further listed out projects being implemented by his organisation to support MSMEs in Vietnam and highlighted the ongoing projects of Binh Duong New City in Vietnam to become a global hub for trade and investment. He said Vietnam industry wants to strengthen connections with counterparts in India. He further discussed India-Vietnam collaboration in information and communication technology.

Earlier in his Welcome Address, Mr Vijay Kalantri, Vice Chairman, MVIRDC World Trade Center Mumbai outlined the importance of MSMEs globally and emphasised that supply chain management and capacity building among MSMEs should be enhanced for benefits of economic development to percolate at the operational level.

Mr Kalantri called for implementation of the economic stimulus package for MSMEs in letter and spirit. He said the current situation should be considered as an opportunity in crisis and urged upon the need to revive and restart industry. He expressed hope that India can become a competitive manufacturing hub and called for an online process in regulatory certifications and licensing for industries.

Speaking about Vietnam’s economic development, Mr Kalantri said “Vietnam has one of the best special economic zones in the world. However, although FDI in Vietnam has reached historic levels, SMEs in Vietnam have not much benefitted from it. There is, therefore, a need to strengthen supply chains.”

Ms Rupa Naik, Senior Director, MVIRDC World Trade Center Mumbai raised issues faced by women entrepreneurs amidst the COVID-19 crisis.

Capt Somesh Batra, Vice Chairman, MVIRDC World Trade Center Mumbai flagged logistics disruption issue amidst COVID crisis. He pointed out that the government’s move to waive detention charges at port areas has led to congestion of cargo and affected smooth movement of EXIM cargoes. He further emphasised on reskilling of labourers to stay competitive.

Ms Linh Huynh, Project Director, World Trade Center Binh Duong New City, Vietnam proposed vote of thanks and ascertained that World Trade Center Binh Duong New City, Vietnam will partner with World Trade Center Mumbai towards developing industry, innovation and infrastructure, the 9th Goal of UN’s Sustainable Development Agenda 2030.

Over 600 MSMEs from India, Vietnam, Cambodia and other South and South East Asian countries attended the webinar.