Indian MSMEs and Germany’s Mittelsand

Over the next decade, India is likely to become one of the leading economies of the world. The Micro, Small & Medium Enterprises (MSME) segment is expected to play a significant role and can be a driver for high growth businesses with both domestic and foreign companies investing in Make in India. This could help businesses from India become globally competitive and score on delivering quality of product and service at competitive prices in domestic and international markets.

The MSME sector could develop and drive growth, led by innovation with new generation entrepreneurship.

The sector is likely to contribute to the GDP by 15% by the year 2020, generate employment up to 50% of the current levels across agricultural, manufacturing and services.

German and Indian economies have similarities as both have a strong base of SMEs. Germany has what they call ‘Mittelstand’ model. Mittelstand or medium and small companies are called hidden champions because most of the German companies fall in this category. They are typically middle sized family with a long term strategy. They run with lean hierarchies, innovativeness and a strong customer focus. They contribute almost 52% of Germany’s economic output. They employ roughly 15.5 million people.

The government of India has seen the benefit of the Mittelsand model and the Embassy of India in Berlin has already implemented a strategic first of its kind market entry support programme “Make-in-India Mittlestand” aimed to assist German Mittelstand companies to enter Indian market.