SME Lessons for India: What Thailand’s Rise in Global Supply Chains Can Teach Us
In the ongoing series SME Lessons for India, where we examine countries becoming more attractive than India as global manufacturing relocates from China, we began with Vietnam. Today, we focus on Thailand, a nation that, while smaller in scale, is quickly becoming a preferred destination for multinational manufacturers.
The goal isn’t to lament India’s position. Rather, it is to extract practical, timely lessons from those outperforming us and ask what Indian SMEs must do differently to seize the opportunity ahead. The answers lie not in sweeping reforms alone, but in learning how smart strategy, coordination and targeted support can empower a country’s SME backbone to become globally competitive.
Thailand’s Rise: Coordination Over Chaos
Thailand’s success as a supply chain magnet in 2025 stems from more than just low costs or geographic luck. Its government has built an enabling environment where policies, infrastructure and SMEs work in alignment. The Eastern Economic Corridor (EEC) is the centrepiece of this strategy a $44 billion industrial zone covering Rayong, Chonburi and Chachoengsao provinces. This corridor offers seamless port connectivity, digitized customs and sector-specific industrial parks catering to electronics, automotive, medical technology and green energy.
Crucially, Thailand doesn’t just build infrastructure and hope investors arrive. Through its Board of Investment (BOI), it offers streamlined approvals, investor aftercare, and targeted incentives. Companies in priority sectors can benefit from 5-8 years of corporate income tax exemption, fast-tracked permits and subsidies for workforce training.
Compare this with India’s industrial policies. While the Production Linked Incentive (PLI) schemes and Gati Shakti logistics master plan aim high, their execution is patchy. Land acquisition delays, overlapping regulatory jurisdictions and slow disbursal of incentives continue to limit India’s potential, especially at the state level.
Why India Is Falling Behind
The problem is not a lack of ambition. India has the vision and the talent. But the system still lacks operational agility. Most Indian industrial zones are not “plug and play.” Investors must navigate multiple bureaucracies for land, power, water and environmental clearance. SMEs, in particular, are often left out of formal incentive frameworks due to poor documentation or lack of awareness.
Thailand, by contrast, has built a predictable business environment, especially for SMEs. In 2024, its BOI introduced digital adoption subsidies for small manufacturers, covering up to 70% of ERP software costs and industrial automation tools. Thai SMEs also benefit from faster trademark and patent processing, allowing them to scale IP-driven businesses more efficiently.
Moreover, Thailand’s integrated approach to trade policy has given its SMEs a global edge. It has signed FTAs with the EU, China, Japan, South Korea and ASEAN nations, enabling tariff-free or low-duty access to some of the world’s largest markets. Indian SMEs, on the other hand, often struggle to navigate compliance requirements or take advantage of existing trade deals due to information asymmetry or capacity gaps.
What India Can Do Differently
India must reimagine its SME strategy around five priorities:
- Subsidize Digitization, Not Just Capacity
While PLI focuses on scale, India needs a matching push for digitization. SMEs should be incentivized to adopt inventory management tools, CRM systems, GST-linked invoicing and compliance platforms. These are critical for engaging with global buyers. - Link FDI to Local SME Ecosystems
Thailand’s BOI mandates foreign companies to partner with vetted local suppliers, often training them in global quality standards. India must embed such provisions in its FDI policies and create matchmaking portals for SME-MNC collaborations. - Enable Trade-Ready Compliance
APEDA, AEPC and other sectoral bodies must ramp up training and awareness on global certifications like ISO, HACCP, WRAP, and CE. Subsidies are not enough; SMEs need handholding and simplified processes to complete audits and secure approvals. - Invest in Cluster-Based Specialization
Thailand’s SME success is rooted in export clusters. India has them too- Tirupur for textiles, Rajkot for engineering, Ludhiana for apparel but lacks formal recognition, funding and value chain support. Cluster-focused upskilling, branding and marketing support is vital.
Five Case Studies: Thai SMEs That Are Going Global
1. Bangkok Precision Tools – Automotive Components
This SME leveraged BOI subsidies to invest in high-end CNC machines. Today, it supplies Japanese Tier-1 manufacturers, operating from a zone with pre-built utilities and export facilitation support.
What India Can Learn: SMEs must invest in certification and precision tooling to become viable suppliers in global automotive chains.
2. Chiang Mai Organics – Agrifood Exports
Using government support, this small agribusiness adopted traceability tools and now exports to EU and Japan. Their labels include batch data and QR codes traceable to farm origins.
Takeaway for India: Agrifood SMEs must upgrade traceability and hygiene standards to meet global benchmarks. India’s APEDA schemes can support this, but awareness is low.
3. SmartCity Tech Co. – IoT and Industrial Sensors
This tech SME exports IoT solutions to Korea and Japan. Based in Thailand’s EEC Smart Park, it benefited from BOI incentives for electronics and digital IP protection.
What India Can Learn: Niche tech hardware and sensor manufacturers can scale globally but only if protected by faster IP and supported by sector-specific parks.
4. ElectroEV Components – Electric Vehicle Supply Chain
Started by two engineers in Rayong, this SME collaborated with coating and die-casting firms to supply EV parts locally. Their partnership model gave them scale without owning the full value chain.
Takeaway for India: SME collaborations can unlock EV supply potential. States should support regional alliances and create pooled infrastructure.
5. MIND Data Services – Digital Bookkeeping for SMEs
This SaaS firm offers affordable ERP tools for SMEs in Thailand and exports to neighbouring ASEAN markets. It benefited from digital innovation grants by the Digital Economy Promotion Agency (DEPA).
Lesson for India: Indian SaaS companies can build vertical-specific tools for domestic clusters and scale outward, supported by MeitY or SIDBI grants.
Coordination Wins, Not Just Cost
Thailand isn’t winning because it’s cheaper. It’s winning because it’s coordinated. Its policies prioritize agility, predictability and inclusion especially for SMEs. These enterprises are not left to fend for themselves; they are plugged into national strategies, export pipelines and digital ecosystems.
India has the scale to outpace every other Asian competitor. But unless its SMEs are formally included in trade, digitization, and FDI frameworks the opportunity may pass us by.
India’s Window of Opportunity
The good news is the foundation already exists. With GST-linked systems, UDYAM registration, e-way bills, ONDC and account aggregators, India has built the digital rails. What it now needs is execution focus, state-level dynamism and outcome-based policies that bring the last mile into global view.
For Indian SMEs, this isn’t a race against Thailand or Vietnam. It’s a race toward readiness. Those who digitize, certify and collaborate stand a real chance to ride the next wave of global manufacturing and maybe lead it.
