New Research Highlights MSMEs’ Key Role in Strengthening India-UK Trade Relations

A major conference titled ‘UK-India Trade: Small Firms and Global Ambitions’ was recently held at the India International Centre in New Delhi, showcasing groundbreaking research on the role of Micro, Small, and Medium Enterprises (MSMEs) in enhancing trade between India and the UK. Organized by IIM Bangalore (IIMB) and King’s College London (KCL), in collaboration with FICCI, the event presented findings from a three-year research project funded by the UK Economic and Social Research Council (ESRC) and the Indian Council of Social Science Research (ICSSR). The study focuses on the challenges and opportunities for MSMEs in bilateral trade.

The research, led by Professors Kamini Gupta, Sunil Mitra Kumar from KCL, and Prateek Raj from IIMB, particularly examined the handicraft sector in India and the global potential of its MSMEs. The conference featured in-depth discussions on the enablers and obstacles faced by MSMEs, particularly in sectors such as handwoven carpets, textiles, and handicrafts.

Prof. Prateek Raj highlighted the significant global ambitions of India’s handwoven carpet industry, emphasizing its potential for expansion with better export assistance and innovation support. He noted that regions like Kashmir could increase their luxury carpet exports, while Uttar Pradesh and Rajasthan could focus on improving product quality and exploring new markets.

Prof. Kamini Gupta added that unlocking the potential of India’s handwoven carpet industry requires addressing challenges such as access to credit and social networks. The research revealed that many small firms rely on inter-firm credit rather than formal financing, suggesting that targeted support in areas like quality upgrades and export assistance could enhance global competitiveness.

The study also underscored the job creation potential of the sector, particularly for women in regions like Bhadohi, Srinagar, and Jaipur, through better market linkages.

Prof. Sunil Mitra Kumar discussed the broader implications of India-UK trade, particularly in the handicrafts and textiles sectors. With ongoing discussions around a free trade agreement between the two countries, he noted that this partnership could drive innovation, boost exports, and further strengthen economic ties between India and the UK.

The research explored the supply chains and credit access for MSMEs in the carpet-weaving clusters of Kashmir, Rajasthan, and Uttar Pradesh, noting that these clusters are highly export-oriented. For instance, 97% of firms in Rajasthan and 81% in Uttar Pradesh are already engaged in exports, while Kashmir’s luxury carpet exports are primarily directed to destinations like Germany and the UAE.

The next segment of the conference will be held at IIM Jammu, focusing on the evolving nature of the handicraft industry. The session will be led by Prof. Suresh Bhagvatula and Prof. Nilam Kaushik, with additional insights contributed by PhD scholar Mir Autif Mohammad from IIM Bangalore.

Key takeaways from the research include:

• Kashmir’s handwoven carpet industry could expand luxury exports with better assistance.
• MSMEs in Uttar Pradesh and Rajasthan need to upgrade product quality and explore new markets.
• 43% of firms in the handwoven carpet industry manage all major production functions, indicating strong vertical integration.
• MSMEs face few barriers in accessing credit but prefer inter-firm credit relationships.
• Rajasthan and Uttar Pradesh firms are highly export-oriented, with 97% and 81% involved in exports, respectively.

As dialogue continues between academia, policymakers, and industry leaders, the findings from this research will serve as a critical roadmap for enhancing India-UK trade relations and MSME growth.

Disclaimer: The information provided in this article is based on reports and updates from various sources. Every effort has been made to ensure accuracy and reliability. Readers are encouraged to verify the details independently.