The impact of WTO and its agreements are on every economic activity, be it agriculture, manufacturing, trading or services. Following is the summary of the impacts:
a. World markets are opening up due to lowering of tariffs and dismantling of other restrictions in developed and developing countries. Enlightened and awakened entrepreneurs have greater opportunities to benefit from their comparative advantages.
b. Domestic markets will face an increasing threat because of lowering tariffs leading in freer entry of foreign goods and because of larger number of foreign companies establishing their manufacturing bases with state-of-art facilities.
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c. Export markets will become tougher because of competition among developing nations having similar comparative advantages.
d. The WTO regime will benefit those countries more, which show enormous negotiating skills in the on-going dialogue. India is currently on a strong wicket on this score. The Government that is in constant touch with the industry would stand to a significant advantage.
i. Opportunities for SMEs:
a. Access to global markets
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b. Access to better technology
c. Access to greater funding through FDI/Joint ventures
ii. Challenges before the SMEs under WTO regime:
a. Removal of Quantitative Restrictions – this would lead to liberal import for goods and thus result in additional competition.
b. Quality of goods – under a regime where better quality of goods imported from other countries would be available to the consumer. Indian SMEs would have to ensure that their products meet with international standards in order to remain competitive.
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c. Outdated technologies – Most of the SMEs use outdated technologies either because of lack of knowledge or lack of capital. These deficiencies would have to be made good.
d. Infrastructure – several SMEs are facing problems with basic infrastructure facilities like bad roads, unreliable power supply, high pollution etc.