Indian SMEs Engineering Growth in Malaysia

Indo-Malay trade relations have continued to grow manifold even at a time when the global market is reeling under recessionary pressures. Significantly, Indian SMEs in the engineering segment have played a key role in boosting Indo-Malay trade ties.

Malaysia, the third most industrialised economy in the world, is heavily dependent on its manufacturing segment. It is one of the most economically prosperous countries in the world and an important trading partner of India.

Post 1991, India has pursued an active liberalisation policy to promote its trade relations with Malaysia. As a result of these efforts, bilateral trade between the two countries has increased by nearly 17% since 1992. Notably, in 2008, the total trade volume between India and Malaysia stood at $10.5 billion.

The Indian engineering industry, constituted primarily by SMEs, is one of the key growth drivers of our economy. At present, India accounts for only 1.4% of the global engineering goods trade.[ii] Hence, despite growing at an unprecedented rate, the industry is yet to cash in on the increasing demand for reasonably priced engineering goods.

A preferred destination

Malaysia is the largest importer of Indian engineering products. It accounts for nearly 19% of the Association of South East Asian Nations’ (ASEAN) total imports.

According to Engineering Export Promotion Council (EEPC) — the apex body of the Indian engineering segment — Malaysia will emerge as the leading trade partner of Indian engineering SMEs in the near term.

Malaysia’s burgeoning engineering supporting industries, that include metal stamping, machining and casting industries, have witnessed tremendous growth in the recent past. To accelerate the production and supply of its engineering goods, the Malaysian engineering industry is looking at India as a key partner for sourcing engineering products.

Indian SMEs can, therefore, grab a significant share of the Malaysian engineering sector by supplying their B2B Products at competitive prices.

Tax breaks tempt Indian SMEs

Furthermore, Indian SMEs can capitalise on the tax concessions offered by the Malaysian government to promote joint ventures and collaborations. The Malaysian government has recently announced tax sops for Indian engineering companies planning to invest in the country. This is expected to draw a large number of SMEs to Malaysia in the coming months.

With the objective to enhance mutual cooperation between India and Malaysia in the engineering segment, the EEPC is organising several trade fairs in Malaysia. These trade shows are giving Indian SMEs an opportunity to showcase their products before Malaysian buyers. These efforts are expected to boost the business of Indian engineering SMEs in Malaysia.

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