Published : August 23, 2022 , Updated : July 16, 2024

Why should SMEs consider cross-border trade opportunities?

Why should SMEs consider cross-border trade opportunities?

With an investment threshold of Rs. 50 crores and turnover, not more than Rs. 250 crores, SMEs or small and medium enterprises are the backbone of the Indian economy. They make up around 6.11% of the manufacturing GDP, nearly 24.63% of the GDP from service activity, and contribute to 33.4% of India’s manufacturing output.

However, despite their crucial presence in the economy, most of India’s SMEs don’t set their sights past the local markets. This is counterproductive because cross-border trade holds a great deal of opportunity for SMEs.

Here are the top reasons India’s SMEs should look beyond Indian markets:

1. Ease of trade via e-commerce solutions:

Many SMEs may be overwhelmed by the challenges posed by direct exports. But with e-commerce solutions making international trade more viable, it is now much easier to reach out to foreign markets online. SMEs in India can test the waters by setting up international e-commerce stores before making the move to direct exports.

2. Global presence coupled with a wider customer base:

Cross-border trade gives SMEs in India the opportunity to compete with global players and establishes a global presence for Indian enterprises. This gives small and medium businesses the incentive needed to boost quality while simultaneously offering the advantage of an expansive customer base.

3. Improved profitability with foreign currency payments:

SMEs that engage in exports get paid in foreign currencies. Currencies belonging to developed nations like the USA, the UAE, the UK, and some European countries can improve the profitability of small and medium businesses. This is because such currencies tend to appreciate against the rupee and also because of lower inflation in developed countries.

4. Opportunity to leverage government incentives:

The Indian government offers various incentives and subsidies to exporters. SMEs aiming to reach international markets can leverage such incentives and scale up their exports significantly over time. Some key benefits in this regard include zero GST on most exports, the incentive of 3-7% of the net foreign exchange earnings for service exporters, and tax rebates for certain sectors.

5. Quicker economic growth

Widening the cross-border customer base of SMEs through exports not only results in revenue growth for the businesses themselves but also fast tracks the country’s overall economic growth. Their contributions can lead to a higher GDP and cement India’s position on the global map.

6. Expand your Business Beyond Borders

If you run an SME and are interested in exploring cross-border trade opportunities, Credlix can help fund and boost your exports seamlessly. With the Credlix Export Finance Advantage, you get the benefit of upfront export financing, high credit limits, cover for buyer’s credit risk, and more. Visit our website to learn more.

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