Foreign Trade Policy - aiming at continuity, stability

From CEO'S Desk

The recently announced foreign trade policy (FTP) in the current difficult times was indeed a tough task, but our Commerce Minister, Mr Anand Sharma, has done a fairly good job. Two facts in the blueprint of the 2009-14 Foreign Trade Policy that came as good news was the realistic target of $ 200 billion in the next two years and the focus on 26 new markets.

I feel the new trade policy has aimed at continuity and stability, technology upgradation, reduction in transaction costs, diversification and market expansion, and also focuses on giving a boost to the labour-intensive export-oriented sectors. Without doubt the slew of measures and incentives announced in the FTP will greatly benefit the exporters who have been hit due to the slowdown in the country's traditional export markets.

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The FTP rightfully provides an extended tax holiday, duty refund for exporters and allows duty free import of capital goods. These initiatives will help to double the country's share of global trade in the next five years, and will also help in increasing employment opportunities.

Meanwhile, the employment-oriented sectors, especially textiles, leather and handicrafts will get a major thrust from the increased incentives available under the Focus Markets Scheme to promote exports in new markets in the Latin American and Asia-Oceaniaic region. The scheme as of now covers 83 countries in Africa, Central America, CIS and Eastern Europe.

In addition, the hike in allocation for existing schemes under the Markets Development Assistance and Market Access Initiative will also benefit exporters who can now seek financial assistance under these schemes to hold trade fairs, buyer-seller meets and brand promotion to develop new markets.

Another positive factor is that the policy seeks to rationalize and simplify procedures and duties across the board by implementing e-governance in trade for the benefit of exporters. The Minister has indicated that the process will start with nine products and services with five states and hopes that by 2015 all states will be covered by this initiative. However what needs to be seen is how states ruled by political parties other than those in the UPA react and act to this.

With the notifications on the Foreign Trade Policy to be released in the next couple of days, the Finance Ministry's reactions to the various incentives announced in the policy is not yet known considering the in-fight between the two ministries on earlier occasions. Hope good sense will prevail.

Bikky Khosla

CEO, Trade India

Beat Competition, stay ahead

 From CEO's Desk

I have observed that most Small and Medium Enterprises (SMEs) waste their time thinking about what they did last week, month or year when they should instead be thinking about what they need to do tomorrow. My advice for these SMEs would be: instead of spending valuable hours analyzing results, put your energy into developing future market strategies, and in identifying how you can position your business as a market leader.

I believe that before you decide that you want to be the best in your domain, it is of utmost importance to look into your strategies and ask yourself whether the tactics you are applying are focused on dealing with competitors' actions or not. Unless you do so, your profits and your standing in the market will remain stagnant.

Cliched though it might seem, and as all management gurus will reiterate, I strongly believe that any business has to satisfy its customers, earn their satisfaction and loyalty, and subsequently achieve the maximum share of its target market on its way to the top.

However, it is easier said than done. Market capturing process is however not easy since your competitors too will not sit idle as you work on your strategies, just to see you capturing the market. And even if you are able to climb to the No 1 position, the game will continue, which is why your planning needs to continue to maintain the top position.

To keep one's business ahead of competition, one needs to develop marketing strategies smartly. Certain activities in businesses including competitive pricing, promotional strategies, advertising, quality consciousness, innovation, after-sales service, distribution network and sales force, etc. need to be focused on to beat one's competitors.

Ideally, I have seen several SMEs cutting costs and trimming corners to maximise their gains without even thinking that doing so weakens one's ability to execute and thus eliminates resources to do new things. Smarter companies on the other hand, recognize the opportunity to pounce on customers and take away business during weak market dynamics.

If you always do what you have always been doing, then you will end up doing nothing new. So pull up your socks and don’t just do what you want to do. Take stern actions intended to hurt your competitors. Because that's not just one of the many options you have...it's the only option to take you to the top.

Bikky Khosala 

CEO, Trade India

Exporters should look east to maximise gains

From CEO's Desk

There seems no end to the woes of exporters to Europe. Months of slowdown, then when the situation started to look up, the rupee appreciated eating into the profits of the exporters. While the exporters were still in the midst of re-evaluating their strategies, exports to key European markets have now been affected by flight disruptions over the past few days as planes remain grounded following a volcanic eruption in Iceland.

In the last couple of days I have met a few number of exporters who have been affected for these reasons. However, I felt that the exporters who solely depended on European markets were the most affected, while exporters who had diverse countries in their trade basket were not affected much in their profit bookings.

I think the situation calls for looking at all geographical directions, rather than just looking at the West, from which we are at present not profiting much. As such, turning our attention towards the Eastern nations can be a good idea. It's a fact agreed by experts that the region today provides immense opportunity for Indian manufacturers and service providers to expand their global footprint.

For instance, Indian seafood exports to Europe and US have declined in volume and value over last year and interestingly, for the first time, seafood exports from India to the East have surpassed those to the West. A fair indication of the potential the region holds for Indian exporters.

Even Union textiles minister Dayanidhi Maran had acknowledged that India's 'Look East Policy' was paying good dividends, especially in the textile sector.

The slow revival in the US and Europe is in stark contrast to the rapid recovery witnessed in the eastern economies which unfolds new vistas for India's manufacturers and exporters as attractive propositions for exports.

I believe the Indian government's 'Look East' policy has certainly helped as far as economic gains are concerned. The Asian region is now our largest trade partner and our economic exchanges with Southeast Asia as well as the more mature economies of Northeast Asia like China, Japan, Korea, Hong Kong have been facilitated by this policy. I have no doubt that had these nations not figured prominently on our trade profile, we would have been much more severely affected by the global economic downturn.

I think it's time for us to look at our eastern partners with more vigour and take advantage of the opportunities that lie before us.

Bikky Khosla

CEO, TRADE INDIA

Branding - success mantra for every business

From The CEO's Desk

Branding today is the success mantra for every business, and particularly for SMEs. There is no doubt whatsoever that an effective brand name, combined with a well known corporate image, usually allows a company to charge more for its products and thus increase its profit margins. No one can deny the fact that a brand value reflects how a product's name, or company name, is perceived by the marketplace.

Companies often err in their thinking when they presume that branding is not very important for old businesses and only rookies need to worry about it. In reality, branding is equally important for both newbies and established businesses as corporate branding strategies will significantly help a company in creating a highly effective and well-established corporate identity.

Contrary to what SMEs usually think, branding is not about getting one's target market to choose oneself over competition. Branding for SMEs should actually be about getting one's prospective clients to view the SME as the only solution provider to its problems.

I believe that for a SME to succeed in branding it must understand the needs of its customers and prospects and this can easily be done by integrating one's branding strategies through those of the company at every point of public contact.

In actuality, the experiences and perceptions of buyers and future prospects of the brand you are offering is what makes it a success. SMEs should understand that a good brand will deliver the message you want to convey clearly and thus confirm your credibility. A good branding strategy will also connect your target prospects emotionally and will motivate the buyer and thus cement user loyalty for future deals.

Lost in the crowd? Get yourself an effective branding strategy. This is what the doctor will prescribe for a growing SME. As the battle for customers intensifies day by day, a strong brand can work wonders. It is thus very important for SMEs to spend time in researching, defining, and building one's brand. SMEs need to take brand building seriously owing to the fact that ultimately it is the brand that is the source of a promise to one's customers. Branding is the foremost level of marketing for a company and one you cannot do without –right?

Bikky Khosla

CEO,Tradeindia.com

Asia's emerging markets - are you there?

The recent World Bank report on India's economy indicated that while India may grow at a rate of 9 percent, the export sector may not be doing well though. With major global powers, the bastions of India's exports, still in uncertain waters, the country's export sector indeed needs to fight hard to bring in orders.

The report noted that the Indian economy is expected to make huge strides in 2011 growing at a pace of 9 percent with South Asia poised to grow a little slower. However, it cautioned that the shoots of recovery for the export sector of the whole region may not be strong enough.

India's drop in growth during the global economic crisis was minuscule compared to other nations and our economy had shown great resilience. However, I fear that if the current Eurozone crisis spreads to major nations in the continent, India too would see a slowdown in exports to the region. Even the industry body, FICCI seems to agree with my apprehensions when their recent study said that 'the sovereign debt crisis of Greece may spread over to other European nations which could have a catastrophic impact on Indian exports.'

While there is good chance of the crisis spreading to other economically vulnerable nations like Portugal, Spain and Ireland owing to their already weak public finances, I would say that the impact of the crisis on Indian exports will be marginal if it remains restricted to these nations because our exports to this part of the globe are limited. But if the crisis spreads across the bigger nations in the EU region, we will see a negative growth in exports to EU, which accounts for about a fifth of our total global exports.

As such Indian companies should work to expand the domestic demand which can help them grow better as opposed to export markets. It will perhaps be needless to say that the domestic market in today's context appears even more important, than it was a couple of years back before the recession. Moreover we can highly benefit from new engines of growth and adapting to requirements of the emerging markets in Asia.

It's a fact that emerging markets have gone up spectacularly this year and 2010-11 too will be no different. While it will be a year of consolidation for the developed world, emerging markets will see more growth, which in turn means more demand. Emerging markets enthusiasts will now reiterate that Asia's emerging markets are where the future lies, and this time it looks like these markets could be the lifeline for India's export community.