Globalization: Sustainable Economic Growth and Challenges to Indian MSMEs

Abstract

This study briefly gives a literature based review of how the micro small and medium enterprises (MSMEs) are affected by Globalization in India. Globalization is as absorbing term these days as modernization, development and change have been for the last century.The Indian MSMEs are lagging behind the rival firms due to Globalization. The huge competition and demand has drained firms in almost all kinds of businesses affecting drastically the major economies. Export competitiveness has decreased significantly for the Indian MSMEs. This problem needs an immediate attention to improve the status of MSMEs. Data Source and Methodology: The study is based on secondary data analysis. A Case on Footwear Industry in Agra cluster (Uttar Pradesh) has been analyzed. This Industry in India has crossed boundaries and got a good foothold in international production network yet it is still dominated by firms that supplies majorly to India. The study was done in regard to the size, composition, Production organization, labor market, skills, remuneration, marketing channels. Findings and Analysis: The lag in the technological know-how and reach, less margin in profit, inferior quality as compared to competitors has reduced business potential of Indian MSMEs. Though the Indian government has been making policies, launching schemes for the growth of MSMEs yet some important factors like tax policy, transaction cost, red tapism etc come out clearly for how the size of domestic firms are smaller than the exporting firms and what are the reasons which demotivate the MSMEs from going abroad.