Thai-India Small and Medium Enterprises: Opportunities and Ways Forward

Introduction

Thailand, an upper middle income country is the second largest economy in the Association of Southeast Asian Nations (ASEAN). The Thai economy in 2019 is projected to grow in the range of 3.5% to 4.5% with investment, tourism and exports remaining the key drivers of Thailand’s economy.

The bilateral relations between India and Thailand has been shaped by the ‘Act East’ policy of India and the ‘Look West’ policy of Thailand including the economic linkages. There has been an increasing flow of Thai goods into the Indian market with the establishment of the ASEAN-India FTA in Goods on 1 January 2010. Also, the bilateral trade between the two countries has seen phenomenal growth through the Early Harvest Scheme (EHS) under the proposed India-Thailand FTA which now covers 83 products. Given the varied government initiatives undertaken by both countries, two-way trade between India and Thailand increased from USD10 billion in 2017 to USD12 billion in 2018.

Small and Medium Enterprises (SMEs)

Contributing to the growth and expansion of developing economies are the Small and Medium Enterprises (SMEs). The Organisation for Economic Co-operation and Development (OECD) defines SMEs as non-subsidiary, independent firms which employ fewer than a given number of employees. Each country determines their own numbers.

SMEs have successfully tapped into the global value chain leading to a pathway for economic development. SMEs comprise about 98.5% of the total Thai businesses, with e-commerce SMEs contributing to about 30% of Thailand’s total exports. As of February 2019, Thailand has roughly 3 million SMEs and startups, including community enterprises. Of these, 700,000 registered SMEs are under the corporate tax system, while 2.3 million SMEs are micro-size companies. The government hopes to increase the contribution of SMEs to about 55% of GDP by 2021.(OSMEP to dispense B1.25bn to SMEs , Bangkok Post, 15 February 2019).

(Image 1: H.E.Chutintorn Gongsakdi, Ambassador of Thailand to India along with the officials of Office of the Small and Medium Enterprises Promotion of Thailand and 27 Thai SMEs
who participated in the Namaste Thailand Festival 2019)

In India, the SMEs sector is the second largest employment generating sector after the agriculture sector. It contributes around 31% of GDP and 45% and 34% share of the overall exports and manufacturing output, respectively. (FICCI, Key to SME Growth, http://ficci.in/spdocument/23035/Key-to-SME-Growth.pdf)

S 3678338 (Image 2: Ambassador Chutintorn Gongsakdi delivering his special address during the B2B meeting with Thai and Indian SMEs at Federation of Indian Chambers of Commerce and Industry on 15 March 2019)

SMEs and e-Commerce:

The fast growing Indian and Thai markets offer vast opportunities, with conducive government policies and incentives, from reduced tariff rates, to technological advancements, to new initiatives for businesses. To catch up with the rapidly growing competition of SMEs in the global economy, India and Thailand have embarked on a new journey of digitisation.

Thailand’s economic model of Thailand 4.0 is a policy move to shift Thailand to a value-based economy driven by innovation and technology. It aspires to create an inclusive society by raising Thailand’s human values and well-being. Thailand 4.0 focuses on modernization of SMEs by encouraging the uptake of innovative models for business and encouraging technology usage with the support of research and development (R&D).(ASEAN,"Preparing MSME 4.0 for Thailand's 4.0 economy", https://asean.org/preparing-msme-4-0-thailands-4-0-economy/). The government's "Intelligent SME" programme, a part of Thailand's Industry 4.0 policy, alongside major investment by government agencies such as the Department of Industrial Promotion, has helped to digitalise SMEs and help them to be internationally more competitive.

(Image 3: Ambassador Chutintorn Gongsakdi delivering his special address during the inaugural session of
"B2B Business Matching Event with the Thai SMEs" on 16 March 2019 at Select CityWalk in the context of Namaste Thailand Festival)

Indian government schemes like the ‘Make in India’ campaign, ‘Skill India’ and ‘Start-Up’ India have all helped in transforming India as a manufacturing powerhouse by promoting exports, encouraging Foreign Direct Investment (FDI), improving industrial productivity, and improving the entrepreneurial culture of SMEs in doing business.

Royal Thai Embassy Initiative: B2C B2B and e-Commerce

The support of the government is imperative for the growth of SMEs. The initiative taken by the Royal Thai Embassy in New Delhi for the promotion of SMEs deserves a mention. Thailand was a partner nation country for 33rd Surajkund International Crafts Mela 2019 held in Haryana in February 2019. More than 30 SMEs from Thailand participated in the mela promoting their products. (Partner Nation, http://www.haryanatourism.gov.in/partner-nation)

(Image 4: The dignitaries interacting with the Thai businesses on the second day of Namaste Thailand Festival 2019).

The Office of the SMEs Promotion (OSMEP) of Thailand with the support from the Royal Thai Embassy in New Delhi has successfully managed to bring about 27 potential Thai SMEs, all registered under the OSMEP, to collaborate with Indian buyers in the context of the ‘Namaste Thailand Festival 2019’ in India.

FC34DF0C 0816 4997 A9C9 A48B8D927B6F (Image 5: Interactive session between the Thai and Indian SMEs during the B2B session at FICCI on 15 March 2019)

Two B2B Business Matching events with Thai SMEs were held in the business creation aspect of the Namaste Thailand Festival 2019.

On 15 March 2019, Federation of Indian Chambers of Commerce and Industry (FICCI) provided a platform for the buyers-sellers meet between potential Thai and India businesses.
The support and partnership from the Millennial India International Chamber of Commerce, Industry and Agriculture (MIICCIA) has been highly instrumental in reaching out to a huge number of enthusiastic Indian companies to participate during the second B2B business matching event with Thai SMEs on 16 March 2019 at the Plaza, Select CityWalk, Saket. About 177 companies and 336 participants confirmed to participate.

9373AFC0 F92C 4DD4 9354 D5A1685F1AA8 (Image 6: Thai sellers interacting with the Indian buyers during the B2B business matching at FICCI on 15 March 2019)

Thailand also plans to promote Thai SMEs products online through e-commerce in India. Mr. Suwanchai Lohawatanakul, Director General of OSMEP has also visited the offices of Home Shop 18, a famous Indian online and on-air shopping channel on 18 March 2019 to explore business opportunities through Indian online market.

(Image 7: L-R Ambassador Anil Trigunayat, Chairman of MIICCIA, H.E. Chutintorn Gongsakdi, Ambassador of Thailand to India and Honorable Suwanchai Lohawatanakul, Director-General of OSMEP during the inaugural session of the "B2B Business Matching Event with Thai SMEs" on 16 March at Namaste Thailand Festival 2019)

Policy consistency, affordable access to finance, advancement to digital knowledge and emerging markets is vital for SMEs to thrive. The Royal Thai Embassy in New Delhi stands ready to be a focal point of contact to help collaborate Indian businesses with any potential Thai SMEs.

Written by Dr. Arenla Jamir, Economic Assistant, Royal Thai Embassy, New Delhi
29 March 2019