SMEs eyeing tie-ups with foreign firms

Till a few years back, the SME segment in India lacked the right strategy and the focus to enter into tie-ups and collaborations with global entities. However, things have changed radically in the past few years. With increasing realisation of the benefits of tie-ups, SMEs are now looking to collaborate with strategic global partners, in order to move up the value chain and gain a strong foothold in both domestic and global markets.

Benefits

Entering into tie-ups with foreign players can help small companies gain greater access to new markets. Several small companies across diverse industry verticals have already entered into tie-ups with international brands to gain a competitive edge in the domestic market and acquire greater technical expertise.

"Considering that multinational companies are interested to enter into tie-ups with innovative small entrepreneurial firms more than ever before, SMEs must take full advantage of this opportunity to go global. Collaborations with international firms facilitate exchange of knowledge and help local companies to acquire new technologies and management expertise," said N Pathak, proprietor of Neelhard Corporation, a small-sized IT firm in Kolkata.

Tie-ups with prominent foreign companies can lead to diffusion of technology and help SMEs create an efficient business model. Alliances with multinational firms also enable small firms to raise their global competitiveness. However, there is a need on part of the government to create a stable framework for providing adequate support required to help SMEs enter into tie-ups with foreign firms.

"Comprehensive reforms should be implemented to enable small companies attract investors and foreign collaborators," said A Kumar, senior analyst at Tax Consultants, a Mumbai-based investment advisory firm.

The government must create a system that enables small companies to develop high-quality products and services that meet global market requirements, which in turn will help attract multinationals to collaborate with these small players. Besides facilitating an easy access to new markets, tie-ups and strategic partnerships with big international companies can also help small firms position themselves strongly in the export market.

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