SMEBusiness

Inside This Issue

FROM THE CHAIRMAN’S DESK

Ramesh DatlaChairman,

CII National MSME Council

Journal of Small Business and Enterprise Vol 7, No. 5, October 2010

IndusTry specIal pg5energy pg8InTervIew pg10growTh FacTor pg12case sTudy pg14MarkeTIng pg15huMan capITal pg17way Forward pg18 plussMall world pg 3InTernaTIonal pg20IndeX pg22evenTs pg23

The big push that had eluded the MSME sector for many years has come about with the Government demonstrat-ing palpable urgency in fast-tracking policies and pro-

grammes that are vital to the sector's development. With about 50% of the recommendations put forth by the Prime Minister's Task Force on MSME already acted upon by the Office of the Development Commissioner (MSME), this would have a major bearing on the growth and development of the MSMEs.

The Government has already acted on some key recommen-dations of CII MSME Council like announcing the guidelines for setting up an SME exchange and removing the cap of 24% on FDI in MSEs. Currently, FDI in SMEs is subject to sectoral caps and other relevant sectoral regulations except for units manu-facturing items reserved for SSI/MSE.

The MSME sector has said in unison that its development is inextricably linked with the purchase preference pursued by gov-ernment departments. We are glad that the Government is firm-ing up a purchase preference policy that will open up fresh oppor-tunities for the sector. While the government departments and agencies may not be mandated to procure specific equipment from the MSME sector, they will be bound to obtain a certain per-centage of their procurement needs from this sector.

Quality will no doubt be paramount in the emerging cir-cumstances. To develop quality products, and to get them validated, MSMEs would have to progressively opt for the cluster approach and create common facilities for design, testing and professional services. Government has taken strident steps to promote MSME clusters. Alongside, the Na-tional Manufacturing Competitiveness Programme (NMCP) has been operationalised, a key part of which is to assist the MSMEs in accessing professional services. As it might not be cost-effective for the enterprises to access these services individually, a collective approach would be the preferred route. The CII MSME National Council will play an active role in this matchmaking process.

Communication is an important pillar of modern business. The MSME Ministry has launched a 24-hour call centre called Udyami Helpline where entrepreneurs and professionals can call in for guidance on matters like how to set up an enterprise,

preparation of project profiles, access to government schemes, etc. The helpline would be particularly useful to first generation entrepreneurs who face hurdles in credit availability, technology access and marketing support. The CII MSME National Council on its part has accorded high priority on effective information dissemination through multiple channels including this journal.

In this edition, we present an exclusive interview with Mr Madhav Lal, Additional Secretary & Development Commission-er, Ministry of MSME, Government of India. Mr Lal was instru-mental in shaping several key MSME policies and programmes. His observations on the sector are vital to our understanding of the sectoral trends and opportunities. I am sure you will read this article with great interest.

Leather and leather goods manufacturing has been histori-cally a key pillar of the MSME sector. Over the years, changing business trends have altered the course this industry. In this edi-tion, we present an overview of this industry from the MSME perspective.

Keeping the green agenda alive, we have also focused at-tention on alternative energy development in the MSME sector, with particular focus on solar energy. The attempt is to look at how MSMEs can both produce green energy as well as increase the share of alternative energy in their overall energy mix.

Innovation is central to the sector moving up the global value chain. Not to underscore this element, we present a case study of a company that has taken the green innovation path to pro-mote solar energy for household and industrial use.

International cooperation has always been a key facet of our content mix. In this edition, we have turned the spotlight on MSME cooperation with Romania, a country that bespeaks of innovation and cutting-edge technologies.

The content mix that this edition offers is designed to meet the differentiated needs of our readership. I invite you to pro-actively participate in the shaping of this journal and in the Council's activities.

Please write to me at Chairman.MSMECouncil@cii.in

petitiveness in domestic and global markets. Nearly, 5000 entrepreneurs are likely to be benefitted," said Dinesh Rai, Secretary, Minis-try of MSME.

The ministry has initially identified 40 potential product-specific clusters for ICT interventions. Each cluster right from phar-maceutical units at Indore to machine tools manufacturing at Bangalore, from auto parts cluster at Faridabad to jewellery one at Howrah shall manufacture specialised products catering to domestic and global demands and quality.

The Centre has given approval to a scheme for promotion of Information

and Communication Technology (ICT) in micro, small & medium enterprises (MSME) sector, through identification of 100 existing clusters across the country. The ICT intervention in iden-tified clusters is aimed at removing barriers faced by entrepreneurs, enhancing competitive-ness, improving product quality, better market accessibility and boost exports of MSMEs. "The main objective is to motivate entrepreneurs to adopt IT tools and applications to improve their production, business processes and com-

Micro, Small and Medium Enterprises (MSMEs) Secretary Dinesh Rai expressed hope that the Union Cabinet will finalise the new procurement policy for SMEs soon. The

MSME procurement policy, finalised by Prime Minister's Taskforce on MSMEs, proposes to make it compulsory for government departments and public sector units to source 20% of their pro-curement needs from small and micro units, though defence units may be exempted due to quality requirements.

Mr Rai said there are 26 million MSMEs in the country, of which 18.6 million are in the services space. The sector contributes 8% of the GDP, as much as 45% of the manufacturing output and 40% of exports, besides offering employment to nearly 45% of the working population. Though we have a large number of small and medium units, their contribution to GDP in general and manufacturing in particular could go up a lot, as in Germany and China where their share to the manufacturing sector is a high 75-80%, he said.

The Maharashtra government has decided to reserve 30%

plots in the industrial estates in the state for MSMEs. Besides, the new in-dustrial policy to be released next year will devote a special section for MSMEs, Maharashtra Industries Minister Rajen-dra Darda informed the media recently. Darda said there were over 1.50 lakh MSME units that provide 12 lakh jobs in the state. These units have a collective investment of Rs 39,000 crore.

The minister said the government will encourage developing MSME clusters. So far the government has approved 25 such clusters and 12 more are be-ing identified. The cluster development approach envisages the measures for capacity building, skill development, technology upgradation, marketing support, setting up of common facility centre and research and development.

Government has earmarked Rs 906 crore for implementing the Prime Min-

ister's Employment Generation Programme (PMEGP) scheme during 2010-11. "An amount of Rs 906 crore (Budget Estimates) has been earmarked for the implementation of PMEGP Scheme during 2010-11, of which Rs 836 crore has been proposed to be provided as margin money subsidy," Micro, Small and Medium Enterprises (MSMEs) Minister Dinsha Patel in-formed the media.

Under the PMEGP, urban and rural entrepre-neurs in the general category can avail a sub-sidy of 15-25% on the project cost. In the case of weaker sections of society, a 25-35% subsidy is provided to urban and rural businessmen. The scheme is aimed at generating employment through setting up of micro enterprises, includ-ing rural industrial units.

Maharashtra to keep 30% industrial plots for MSMEs

Rs 906 cr earmarked for PMEGP scheme in FY2010-11

Govt to promote 100 MSME clusters with ICT push

MSME procurement policy soon

The Department of Pharmaceuticals in collaboration with the Ministry of MSME has introduced a Scheme for Schedule `M' Compliance by SSI Units

in the Pharma Sector under the overall umbrella of Credit Linked Capital Subsidy Scheme (CLCSS). Under the Scheme, the Pharma SSI units are eligible to get 15% (up to Rs 15 lakh) upfront capital subsidy on an institutional finance for an amount up to Rs 1 crore to be availed by them for inclusion of well established and improved technology to make themselves Schedule `M' Compliant. To widely disseminate information on the Scheme, this department had held State level Awareness Building Workshops (ABSs) in 9 pharma clusters in Goa, Mumbai, Baddi, Chennai, Hyderabad, Ahmedabad, Indore, Dehradun and Bangalore. This subsidy of 15% (up to Rs 15 lakh) is also admissible to new pharma manufacturing units.

Funds for pharma SMEs

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© Confederation of Indian Industry, September, 2010

small units. According to a recent report, the share of Indians in the patent applica-tions filed sums up to approximately 16% of the total applications filed with the pat-ent office and the contribution of the Indian MSMEs in this share is minimal.

The Ministry of MSMEs may achieve the target of setting up 40 centres

for providing information related to IPRs be-fore the end of the Eleventh Five-Year Plan in 2012. These centres would provide advisory services related to copyrights and patents to

MSME Ministry plans 40 IP centres by 2012

technological upgradation efforts include implementation of Design Clinic Scheme; Scheme for Promotion of Information and Communication Tools; Scheme for Market-ing Assistance & Technology Upgradation and Scheme for Mini Tool Rooms under PPP mode, launched under the National Manufacturing Competitive Programme (NMCP) of the Government initiated in 2007-08. Further, the Credit Linked Capi-tal Subsidy Scheme (CLCSS), launched in 2005, aims at facilitating technology up-gradation by providing 15% upfront capital subsidy to manufacturing MSEs on institu-tional finance (subject to a maximum limit of Rs 15 lakh) for induction of well-estab-lished and improved technologies in the specified sub-sectors/products approved under the scheme.

The share of MSMEs in the manu-facturing sector of the country

is 45.24% for the year 2007-08 (latest available). As per the 'Quick Results : Fourth All India Census of Micro, Small & Medium Enterprises 2006-2007', the av-erage value of fixed investment in MSMEs for registered sector is Rs 32.26 lakh per unit. With regards to the technological ca-pabilities the MSMEs are heterogeneous in respect of size and state of technology with relatively advanced technology be-ing adopted by many Medium enterpris-es. There is substantial scope for technol-ogy upgradation of MSMEs.

The Ministry of MSME has put in place several measures to help MSMEs for tech-nological upgradation and to increase their share in manufacturing output. The

MSMEs account for 45% of manufacturing sector Ministry

launches MSME

helpline

Joint mechanism for outreach programmes

Prime Minister Dr Man-mohan Singh inaugurated

Udyami Helpline, the Call Centre of Ministry of Micro, Small and Medi-um Enterprises (MSME), on August 21. The Udyami Helpline 1800-180-6763, a toll-free number -- will pro-vide information on a wide range of subjects including guidance on how to set up an enterprise, access loans from banks, project profiles and the various schemes being im-plemented by the Government for the promotion of MSMEs. The Hel-pline will also facilitate lodging of complaints with various agencies of Central and State Governments dealing with MSMEs, including banks. This facility will be available both in Hindi and English between 6:00 A.M. to 10:00 P.M. on all days including Sundays and holidays.

Speaking on the occasion, The Prime Minister said MSMEs have a vital role in the dispersal of in-dustries and generation of employ-ment opportunities. He mentioned that first generation entrepre-neurs face hurdles in credit avail-ability, technology and marketing. Government support in these areas can ameliorate their viability prob-lems to a large extent. The Udyami Helpline will improve public access to the Government, particularly from the rural and remote areas of the country, and make the Govern-ment more responsive to the pub-lic needs. The feedback received from the Udyami Helpline will also facilitate in creation of an effective data base and better understand-ing of the needs of the sector. This will enable a wider outreach and more effective implementation of Government schemes.

sionals rendering specialised and technical services. Since many of these enterprises may not be in a position to avail of such ser-vices individually, Mr Lal urged the industry associations to play the matchmaker and also help the enterprises to collectively ac-cess the professional services.

He said that schemes for manufacturing MSMEs, such as, for lean manufacturing and designing have been taken forward with National Productivity Council and Na-tional Institute of Design as nodal agencies, respectively. Likewise, a scheme for ICTE adoption by MSMEs is being promoted with the IT majors acting as the nodal agencies. This will take a cluster approach wherein the common IT hardware and software needs will be mapped and met.

Government and industry asso-ciations should jointly create an

institutional mechanism to enable a larger number of the 26 MSMEs to benefit from the outreach programmes, said Mr Madhav Lal, Additional Secretary & Development Commissioner, Ministry of Micro, Small & Medium Enterprises, Government of India, an interaction session organised by CII. Mr Lal said that more than 50% of the recom-mendations put forth by the Prime Min-ister's Task Force on MSME have already been acted upon.

He said that operationalising the Na-tional Manufacturing Competitiveness Pro-gramme (NMCP) will have a major positive impact on the MSME sector. Initiatives are being taken to connect MSMEs with profes-

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Leather & Leather Products: New Avenues of Growth

The leather and leather prod-ucts industry is one of the oldest manufacturing indus-tries in India. The trade of leather tanning in India goes

back to 3000 BC. Today, it is a source for nearly 10% of the global leather requirement. However, India's share in the global $116-billion leather market is just about Rs 3.5 billion which is merely 3-4% of the global leather market.

But looking at the potential of the industry, it will not be an understate-ment that in five years, India can cor-ner a major share in the international leather market, provided all stakehold-ers work together to achieve collective economies of scale.

Today the industry ranks 8th in the ex-port trade in terms of foreign exchange earnings of the country. The industry con-tributes roughly Rs 10,000 crore per an-num to the country's export earnings. The Government of India in its Foreign Trade Policy for 2004-2009 had identified the leather industry as a focus sector in view of its immense potential for export growth and employment generation prospects. As per Council of Leather Exports, with an annual turnover of over US$ 7 billion, the export of leather and leather products has increased manifold over the past decades and touched US$ 3.40 billion in 2009-10, recording a cumulative annual growth rate of about 5.43% (5 years).

Global players consider India as the market to be in. An estimated 15% of total purchase of leading global brands in footwear, garments, leather goods & accessories like Coach, Tommy Hilfiger, Hugo Boss, Versace, Guess, and DKNY

comes from India. As per a Council for Leather Export

study, the major markets for Indian leather products are Germany with

a share of 14.45%, UK 13.41%, Italy 11.72%, USA 8.71%, Hong Kong 7.35%, France 7.53%, Spain 6.43%, Netherlands 4.03%, Belgium 1.92%, UAE 2.03% and Australia 1.58%. These 11 countries to-gether account for nearly 79.16% of In-dia's total leather products export.

Right IngredientsIndia has all the important resources required to be there. The country is not only endowed with the world's largest livestock (21% of the world's cattle and buffalo and 11% of the world's goat and sheep population), but also has the competitive advantage of availability of a large number of cheap and skilled workforce. Nearly 2.5 million people are employed by the industry for vari-ous services ranging from processing hides to producing finished products and exporting them abroad.

Thanks to various initiatives taken by the government in the last 3 decades the composition of Indian leather ex-ports has undergone a sea change. From being a mere exporter of raw hides and skins in 1960s, today India is an exporter of value-added leather products. Since 1991, India has been exporting only finished leather be-cause of export restriction on semi-finished leather. At present, the value added products constitute about 80% of the total exports from the industry.

MSME EdgeWhile many studies have projected what the future holds for the industry, it is also pertinent to know that who holds the future of the leather industry

A key forex earner and employment source, the leather and leather products industry in India is undergoing major changes, creating new roles for MSMES

EU (67.89%) (USA 8.71%) Hong Kong (7.35%)

UAE (2.03%) Australia (1.58%) Africa (0.72%)

Others (11.72%)

Country-wise exports from India 2009-10

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in India. The industry is spread over the

formal as well as informal sector and comprises firms in all capaci-ties starting from small artisans to prominent global players. A large part (nearly 60-65%) of the produc-tion is in the small/cottage sector. Small scale sector accounts for large processing capacity ranging from 70-87% for different leather products. Thus, medium and small enterprises clearly hold the key to the growth of the leather industry.

Obstacles to growthThe MSME sector is unable to realise its potential and the slack growth of the sector is due to high price of raw material, lack of negotiating power, lack of technological upgradation, fi-nancial constraints, power constraints and environmental considerations and limited access to markets.Problems faced by manufacturersl Harsh work environmentl Underutilisation of capacity due to influx of finished goods from Chinal Lack of financial assistance

l Lack of adequate access to design and art centresl Lack of access to technical research and development institutions across the countryl Limited access to training centresl Limited awareness of various incen-tives/promotional schemes.Hindrances encountered by tradersl Wide disparity in market prices of end-productsl Lack of adequate financial assis-tancel Cheap, second hand imported Chi-nese goods eating up the market sharel Inability to export directly leading to untapped export potentiall Lack of access to robust industry in-formation.

Overcoming ObstaclesEfficient clustering and networking would allow SMEs to compete glob-ally. Cluster means a geographical concentration of SMEs engaged in the production of related goods, which have common opportunities and face similar challenges.

Networks are groups of firms that cooperate on a joint development proj-ect complementing each other and specializing in order to overcome com-mon problems, achieve collective effi-ciency and penetrate markets beyond their individual reach. Through blustering and networking the MSMEs in the leather sector can:l Obtain economies of scalel Access skilled and educated labourl Facilitate quicker dissemination of information leading to better respon-siveness to market challengesl Increase competitiveness by sharing best practices in the areas of organi-sational capabilities, technological in-novations, flexible structure and faster decision making processl Have better negotiating power.

Models of growth The efficacy of cluster based and net-work based growth models has been proved beyond doubt in case of Kan-pur leather cluster that encompasses nearly 1,600 SMEs and generates em-ployment for around one lakh people contributing about Rs 2, 900 crore of production for a year.

Similarly, the Chennai cluster, which is concentrated in the Chromepet-Pallavaram belt and some adjoining areas, consists of large numbers of tanneries and some shoemaking units. The Chromepet-Pallavaram cluster consists of large numbers of input suppliers, repairing workshops, ware-houses for storing raw hides and skins and several tiny unregulated units for converting waste material into vari-ous articles that are transported to local markets.

In addition, the Madras cluster also has an office of the Labour Commis-sioner located near the Pallavaram cluster, as well as several branches of nationalised banks catering quite ex-clusively to the sector's credit needs. Source: www.diadipp.nic.in/publicat/footwear.htm

sector / product

estimated an-nual production

household, tiny & cottage (in %)

small sector (in %)

Medium & large sector

(in %)

Tanneries - leather 2.5 bn sq.ft 10 35 55

leather footwear

1,009 million pairs 60 25 15

non-leather footwear

1,056 million pairs 15 70 15

garments & outerwear 20 million pieces - 95 5

leather goods 100 million pieces 10 85 5

saddlery & harness

value: rs 2,680 mn 40 60 -

Major production unit types and capacities

"Moving up the value chain is imperative for the sector to stay competitive in the global market. The leather sector is expected to add one million jobs to the current levels of four million in the years ahead. India had no dearth of raw materials and is home to the world's largest livestock population."

Mr Dayanidhi Maran, Union Minister for Textiles

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The Chennai cluster, therefore, is bet-ter regulated and one of the most suc-cessful clusters in the country, so far as export is concerned.

Govt Initiative for MSMEs The main aspects of small-scale sector policy that have had a bearing on the leather industry are reservation, sub-sidised long-term finance and various incentives. The policy of reservation was guided by the following concerns: that this is a traditional rural industry providing employment to a large num-ber of people in rural India; that mod-ernisation and mechanisation which might be caused by large scale pro-duction might lead to displacement of artisans and people belonging to vulnerable sections of society; that production of various articles for do-mestic consumption should take place in artisanal units.

The provision of subsidised long-term finance and various incentives have been in existence essentially given the recognition that in a small-scale dominated industry, they have to be available to individual producers to overcome constraints on growth and performance.

Small-scale reservation has been in existence for the leather and leather products industry since 1967. The list

of reserved items was gradually ex-panded over the years until the late 1990s. However, with the opening of the Indian economy, a gradual pro-cess of dereservation has been taking place from the late 1990s, following a series of arguments being presented by industry associations and commit-tees appointed to look into problems faced by the industry. The argument for dereservation constitutes a major aspect of the changed conceptuali-sation of the small-scale sector, and within that of the leather sector as a major export earner.

The leather sector was opened up to foreign capital in 2001. After 11 items were dereserved in June 2001, in-cluding semi finished hides and skins, leather shoes, washers and lace. No industrial license is now required to manufacture most of the items in the leather industry. Only some items (like chappals, sandals and garments, gloves and fittings for leather goods) are reserved for exclusive manufacture by small-scale units, which can be pro-duced by non small-scale units after obtaining an industrial license subject to an export obligation.

To enhance the performance of the leather industry in the SME clusters in five to six major locations, SIDBI has launched a programme through Busi-

ness Development Services (BDS). The project was initiated in 2006, and is being co-funded by the Department for International Development (DFID) in UK, and GTZ in Germany.

Complementing Socio-Economic SituationThe leather industry is an employment intensive sector, providing job to about 2.5 million people, mostly from the weaker sections of the society. Women employment is predominant in leather products sector with about 30% share.

Besides, the industry has now taken up design development initiatives, continuous modernisation and tech-nology upgradation and economically resizing of manufacturing units in a big way. The industry is also waking up to the need of constant human re-source development programme to enhance productivity, increasing use of quality components, shorter pro-totype development time and delivery compliance. Above all, the domestic market for footwear and leather ar-ticles is growing in India.

In view of all these developments, it can be concluded that the industry is moving on the right track, but needs a greater push from the government and the industry stakeholders to establish India as the global hub for leather.

Source: CLRI

Source: Council of Leather Exports

sector Total employment

women employment % share

Flaying, curing & carcass recovery 8.00 0.35 4

Tanning & finishing 1.25 0.25 20

Full shoe 1.75 0.55 31

shoe uppers 0.75 0.63 84

chappals & sandals 4.5 1.5 33

leather goods & garments 1.5 1.23 82

Estimated employment in different segments of leather industry (Figures in lakh)

"The Indian leather industry is reeling under the impact of the global recession, with exports stagnating and international buyers failing to turn up at major industry events. Poor off-take of leather goods at fashionable stores across the US and Europe during the Christmas-New Year week in 2009 has depressed sentiments in the Indian leather trade."

Mr Habib Hussain, Chairman, Council for Leather Exports (CLE)

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MSMEs are poised to contribute significantly to the overall development and use of alternative energy sources in the country. At the same time, government and industry are actively engaged in promoting energy efficiency in this sector

Green Energy: Role Cut Out For MSMEs

The MSME sector has emerged as a significant partner in fulfilling India's commitment to meet the challenges of energy secu-

rity. For example, the total installed capacity of small hydro power proj-ects (up to 25 MW) in March 2009 was 2,429.77 MW from 674 small projects. Whereas, an estimated potential of about 15,000 MW of small hydro pow-er projects exists in India.

In the wind energy space, wind elec-tric generators of unit sizes between 225 kW and 2.1 MW were deployed across the country. Besides, an indi-genisation level of up to 70% has been achieved in machines of unit sizes up to 500 kW. With this, India now ranks 5th in the world after USA, Germany, China and Spain in grid-connected wind power installations.

Sugar industry has been tradition-ally practicing cogeneration by using bagasse as a fuel. With the advance-ment in the technology for generation and utilisation of steam at high tem-perature and pressure, sugar industry is now producing significant surplus electricity for sale to the grid using same quantity of bagasse. Cogenera-tion projects in sugar mills include 82 projects with installed capacity aggre-gating to 690 MW. Another 107 proj-ects are under implementation aggre-gating to 1280 MW.

The MSME sector forms the back-bone for manufacture of various components and systems for solar systems. Under the Jawaharlal Nehru National Solar Mission, India is target-

ing a 4-5 GW equivalent of installed capacity by 2020. For this, solar farms are being set up and policy framework like power purchase agreement (PPA) has already been finalised.

With international conventions on climate change setting new guidelines and boundaries and the realisation for the need for long-term sustainable development mechanisms, there are a lot of opportunities for the MSME sec-tor as a consumer of renewable ener-gy in developing countries like India.

After China (49.36%), India (19.10%) remains the second largest receiver of CERs (Certified Emission Reduc-tion Credits). This is the case when only 15% of the approximately 1800+ renewable energy projects are regis-tered under the CDM (the Clean De-velopment Mechanism of the UNFCC under the Kyoto protocol).

A structured sector wise approach, with the assessment of cost percent-age of energy in MSME sector is al-ready bearing fruits. For example, the sugar industry has been receptive to the CDM and is developing itself along those lines.

The CDM aims to provide both, a sustainable development incentive to developing nations and an additional capacity for reduction of GHG emis-sions to the industrialized world. CRI-SIL, in a recent report, has estimat-ed tripling of the UN backed carbon offsets issued to projects in India, by end 2012, amounting to approximately $890 million.

It is beyond doubt that India des-perately needs to generate more

power through renewable resources. The 11th Five Year Plan targets 14,000 MW of grid interactive and distributed renewable power generation installed capacity by 2012. This envisions a 10% contribution of renewables in power generation capacity by 2012.

At least 10% power generation in-stalled capacity in the country, with 4-5% share in the electricity mix, should come from renewables by the end of the 11th Plan.

MSME RoleNow what do the MSMEs have to gain from this? Well, the fact remains that in India the number of MSMEs par-ticipating in the Clean Development Mechanism is still small. It accounts for only 5% of the total registered CDM projects in India, which are them-selves only 15% of the total number of such projects. Given the common knowledge that the MSME contribu-tion is nearly 50% of the total indus-trial production in India, there is huge potential for initiating CDM and alter-native energy projects in this sector.

The Ministry of New And Renewable Energy and CII have been in the fore-front to help the MSMEs in realising this goal. The CII's Renewable Energy Committee aims to catalyse imple-mentation of the Integrated Energy Policy recommendations and interact with government on policy issues to ensure accelerated deployment of re-newable energy projects. The commit-tee also strives to facilitate develop-ment of competitive energy markets with a regulatory framework that can

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ensure maximum exploitation of In-dia's renewable energy potential.

The CII National Committee on Bio-fuels is a conglomeration of CEOs and senior representatives of vari-ous stake-holding groups including senior representative from different ministries of the Government of India. This is an initiative under the Agri-cultural Council of CII and has got a sustainable vision backed by several prioritised missions. The Committee had presented Nine Point strategies to make Indian biofuels sector viable and sustainable.

Besides, institutions like the CII-ITC Centre of Excellence for Sustainable Development provide expert resourc-es to Indian industry on sustainability best practices, researches sustainable development relevant to industry, fo-cuses on SMEs and large corporations and provides advisory services on management, policies and practices of corporate sustainability.

The Government has given signifi-cant thrust to the research, develop-ment and induction of renewable en-ergy technologies in different sectors, which can be leveraged by MSMEs. The Government of India has launched the National Solar Mission under the Na-tional Action Plan on Climate Change which envisages a 20,000MW solar ca-pacity addition by 2022.

State governments have also chipped in to take the initiative for-ward. For example, installation of roof-top photovoltaic systems will get central financial assistance in Hary-ana. Himachal Pradesh plans to tap 12,000 MW hydel power by 2012 and has decided to allot 256 new small hydel projects to smaller players in the state. Similarly, the Ladakh Re-newable Energy Development Agency is working on a project to implement the world's largest number of solar lighting systems in the region.

The United Nations Industrial De-velopment Organisation (Unido) has also been actively promoting energy efficiency among the MSMEs. The in-ternational organization is partner-ing Global Environment Facility (GEF) in this endeavour and an $8-million project has been firmed up, to be

implemented by 2013. The project will focus on developing an environment conducive to energy efficiency and use of renewable energy technologies to ensure lower carbon emission by MSMEs mainly in the ceramics, tiles, hand tools, glass, bakeries and iron forging segments.

The introduction of energy efficiency in the MSME clusters will not only im-prove the local environment but will also be beneficial in terms of productiv-ity, Unido said in a statement to media. The international organization will also promote the establishment of national policies concerning MSME development based on energy efficiency and renew-able energy. For this, Unido will inte-grate with the national MSMEs cluster development programme and the regu-latory and policy mechanisms under the Bureau of Energy Efficiency (BEE).

The MSME ministry, ministry of new and renewable sources of energy, BEE and the department of industrial policy and promotion (DIPP), which is the nodal agency for Unido activities in India, are the co-financing partners of the project.

Solkar Solar Industry Ltd, started in 1985 by Mr K E Ragunaathan, an engi-neer with specialisation in the field of solar energy, as a first generation en-trepreneur, is one of many SMEs that have expanded footprints in the alter-native energy space. The company has its manufacturing facility at Ambattur Industrial Estate in Chennai and was started for manufacturing of solar wa-ter heating systems for domestic and industrial use. The company installed nearly 45,000 sq. feet of solar collec-tors in the field in the last 20 years covering various domestic and indus-trial applications.

Likewise, Green Fields Power Servic-es, based in Hyderabad, was founded with the intention of getting in new generation ecofriendly products and solutions for the daily use. With the vast experience gained from going round the world, The company has di-versified into the fields of Renewable Energy Power Generation comprising solar photovoltaics, wind electric pow-er generation (specialising in micro wind electric generators) with focus on

both captive and grid connected solu-tions, geo-thermal heating and cool-ing solutions, bio-mass based power solutions, EPC services related to the above, power conditioning solutions, high efficiency lighting solutions.

The company specialises in design-ing and executing solutions and prod-ucts for end to end requirements, along with proper R&D in designing and producing products based on the user requirements.

In 2001, Bihar-based DESI Power identified Baharbari as a potential site for a 50 KW power station, based on gasification of rice husk briquettes. The raw material was in abundance in neighbouring villages. There was no likelihood of power being available through the grid and a perceived need for electricity was anticipated. DESI Power was to learn its first lesson; farmers did not need electricity. Elec-tricity was not a tangible service and apparently did not fulfill any immedi-ate requirement as farmers and villag-ers had not invested in pumps, motors and lighting equipment. Therefore, the question of paying for electricity did not arise as no one actually had any use for the electricity supplied.

Baharbari Odyugic Vikas Swavalam-vi Shakari Samiti (BOVSSS) Ltd thus emerged as a panchayat level coopera-tive, committed to the development of micro scale industries in the Baharbari panchayat. BOVSSS, in collaboration with DESI Power, has set up a small scale industries complex that is linked to the power station. BOVSSS DESI Power have promoted the concept of energy ser-vices to farmers and families in these villages. The cooperative has invested in these machines and is responsible for their operation and management. Investments have since been made in the installation of electric pumpsets, a battery-charging station, rice mill, flour mill and a briquetting press. Based on user needs, BOVSSS has developed a set of Energy Services

All three cases cited above figure in the portfolio of green companies of New Ventures India. These cases are in-dicative of the huge potential of MSME participation in the generation and use of green energy in the country.

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‘MSMEs will evolve into a vibrant sector’

The Prime Minister's High Level Task Force Report on MSMEs is a milestone in the his-tory of Indian industry how is the Office of the Development Commissioner (MSME) envisioning the future of the MSMEs in the backdrop of the recommendations made in this report?The Report of Task Force on MSMEs provides a road-map for the development and promotion of MSMEs in the country. It has recommended putting in place appropriate institutional, legal and regulatory struc-tures to create a conducive environment for entre-preneurship and growth of MSMEs in the country besides suggesting specific programme support in identified areas. With the implementation of these recommendations, many of the problems faced by this sector shall get addressed and thereby clear the obstacles in the growth of MSMEs. This would en-able the MSMEs evolve into a more vibrant sector with increased competitiveness and efficiency and in the process help Indian MSMEs garner greater share in world exports.

It is often cited that MSEs do not enjoy ad-equate access to collateral-free credit. The RBI mandates that loans up to Rs 5 lakh should be granted collateral-free to MSEs. Do you think this threshold limit should be raised to meet the greater credit needs of growing MSEs?The RBI has increased the limit of collateral-free loans for MSEs from Rs 5 lakh to Rs 10 lakh. Fur-ther, under the Credit Guarantee Scheme, guar-antee cover for collateral free loans up to Rs 1 crore are provided to MSEs.

Cluster development is key to the growth and expansion of the MSME sector. To what extent has the MSE-CDP delivered on this count? Would you advocate greater indus-try involvement in the cluster development programme implementation?Not just in the Cluster Development Scheme, but in most of the schemes of the Ministry, the stake-holders, i.e., industry associations, have a sig-nificant role, without whose support the schemes cannot be a success.

The Ministry has adopted the cluster develop-ment approach as the key strategy for enhancing the productivity and competitiveness of MSMEs. The MSE-CDP, inter alia, aims at supporting the sustainability and growth of MSEs by addressing common issues, building capacity of MSEs for common supportive action, creating/upgrading infrastructural facilities in the new/existing indus-trial areas/clusters of MSEs and setting up Com-mon Facility Centres. In selected clusters where intervention under the scheme has been under-taken, activities like common procurement of raw material, common marketing and exposure visits have resulted in increased competitiveness of the constituent units. The capacity building of as-sociations, setting up of special purpose vehicles (SPVs), consortia, etc., which are integral parts of the scheme would enable the MSEs to leverage their resources and have better access to public resources, linkages to credit and enhance their marketing competitiveness.

MSMEs need greater support in terms of market development and brand promotion. How would you assess the initiatives taken by the MMSE ministry in this regard? Would you suggest any additional steps to promote MSME brands?The Government has been taking several initiatives to facilitate the MSMEs in their marketing endea-vour, including organising exhibitions/fairs and buyer-seller meets, providing financial assistance to individuals for participation in overseas fairs/exhibitions, overseas study tours, etc. Further, the Ministry has launched two schemes under the Na-tional Manufacturing Competitiveness Programme (NMCP) to improve the strengths of MSMEs in mar-keting by using latest techniques and technologies. While all this has helped the MSMEs in marketing their products to a large extent, there is a need to

introduce the Public Procurement Policy for MSEs to enhance the share of MSMEs in the domestic as well as global markets.

Recognising the importance of marketing in the promotion of MSMEs, the Task Force has also made several important recommendations. NSIC has been made the nodal agency for marketing. The recommendations are as under: l Introduction of a Public Procurement Policy for MSEs, as envisaged in the Micro, Small and Medium Enterprises Development Act, 2006. The policy envisages setting up of a goal for gov-ernment departments and PSUs to reach, over a stipulated period, a target of at least 20% of their annual volume of purchases from MSEs, and mandate them to report their achievements in this regard in the annual reports.l Strengthening of NSIC's equity base to give a demand side impetus to MSMEs. This shall help remove bottlenecks in the procurement of raw materials and also step up the marketing sup-port and provide better backward and forward linkages to the sector.l NSIC may increase its operations under Con-sortia Formation and Brand Building 4-5 times the existing level of activity once over the next three years.l NSIC to set up a specialised Cell to collect and disseminate both domestic and international marketing intelligence in coordination with other relevant departments/agencies like Ministry of Commerce, India Trade Promotion Organization (ITPO), Federation of Indian Export Organization (FIEO), export promotion councils, etc. l NSIC may organise at least 6 sector-specific International level trade fairs in metropolitan cities each year wherein MSMEs may be pro-vided built-up space at concessional rates to transact B2B business. Further, ITPO may or-ganise product-specific special international exhibitions for MSMEs with the involvement of NGOs and MSME associations.

Indian MSMEs are in general slow to adopt new technologies which affect their capa-bility to move up the global manufacturing value chain. What would be your recom-mendation?To encourage MSMEs in adopting the best ele-ments of manufacturing competitiveness, the Government is implementing ten schemes under the National Manufacturing Competitiveness Pro-

Additional Secretary & Development Commissioner, Ministry of MSME, Government of India

Mr Madhav Lal,

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gramme (NMCP). To motivate MSMEs to adopt new technologies, soft interventions are in- built in most of the schemes. While most of these com-ponents involve contributions from the beneficia-ries, the benefits accruing to the beneficiaries in the long run would be much more than the initial costs. It is, therefore, essential that all the MSMEs take advantage of these schemes. Industry asso-ciations like CII can help in spreading awareness about these schemes.

Most MSMEs in the country face skill gaps. What kind of external support can be pro-vided to these enterprises in building their human capital?The Ministry of MSME conducts Entrepreneur-ship Development Programmes (EDPs)/ Entre-preneurship Skill Development Programmes (ES-DPs), Management Development Programmes (MDPs) and Industrial Motivation Campaign(IMC) through the Micro, Small and Medium Enterprise Development Institutes for the promotion of MSMEs. EDPs and ESDPs are conducted to culti-vate the skills among the unemployed youth for setting up of their Micro, Small and Medium En-terprises. Under the Management Development Programme (MDPs), existing MSE entrepreneurs and their managers/supervisors are provided training on various areas of management to de-velop their skills. To encourage more entrepre-neurs from SC/ST, Women and Physically Handi-capped groups, stipendiary programmes are also conducted exclusively for the above categories in which stipend of Rs125 per week per candidate is provided to the participants. Industrial Motiva-tion Campaigns (IMC) are conducted to motivate youth in self employment.

Recognising the importance of skill develop-ment and the significance of private sector in-vlovement, the Task Force on MSMEs inter-alia made the following recommendations:l To integrate entrepreneurship/skill develop-ment with the secondary, intermediate and uni-versity level education, appropriate course cur-ricula be designed and developed by a central entrepreneurship/skill development organisation and included in the curricula of the education sys-tem all over the country.l Linkages between industry and entrepreneur-ship/skill development centres be strengthened by incentivising Industry Chambers/Associations to set up skill development centres.l Existing Entrepreneurship/Skill Development Centres (both public and private) should give special thrust on training of trainers to ensure a cascading effect. For this purpose, the Ministry of MSME may develop course modules for Training of Trainers Programme through its National En-trepreneurship Development Institutes.

l The Ministry of MSME should expand the cover-age under its existing entrepreneurship and skill development programmes by adopting innovative models like tie-ups with NGOs, educational and technical institutions, Entrepreneurship Develop-ment Institutes and e-learning. Infrastructure of specialised entrepreneurship/skill development institutions in the government sector may also be suitably scaled up for this purpose.l Setting up of entrepreneurship/skill develop-ment in the private sector be encouraged through various programmes/schemes of the Ministry of MSME. For this purpose, the Ministry of MSME may evolve a system to part compensate the cost of training through financial assistance to trainees. This could either be a new scheme or a component under any of the existing schemes for skill and entrepreneurship development.l To establish a strong relationship between the students of ITIs, polytechnics, engineering and other institutes, the Apprenticeship Act should be reviewed and, if possible, enlarged so that MSEs are encouraged to provide on-the-job training. Draft amendments should be prepared in consul-tation with Member, Planning Commission and others within 3 months.

The Prime Minister's Task Force on MSME has recommended a special fund for micro enterprises. What would be the success fac-tors in your view?The Task Force has recommended setting up of a Special Fund with SIDBI out of the shortfalls in lending by the banks against the stipulated tar-gets for micro enterprises. The Fund is meant to be used for exclusive lending to the micro enter-prises. As the RBI has advised the commercial banks for achieving the share of micro enterprise in MSE lending to 60% in stages, viz., 50% in 2010-11, 55% in 2011-12 and 60% in the year 2012-13, the efforts made by the Banks in achieving the stipulated targets in the intervening period will decide the size of the Fund.

The success of such an initiative lies in the units ability to come up with viable projects in changing the risk perception of bankers towards this sector, in modifying the appraisal norms for lending to this sector and in having schemes like Credit Guarantee Scheme which lowers the risk perception of MSMEs.

MSMEs rely heavily on bank finance for a va-riety of purposes such as purchase of land, building, plant and machinery, as also for working capital. What are the alternative financing options to be developed for the sector to grow?The ability of MSMEs (especially those involv-ing innovations and new technologies) to ac-

cess capital like angel funds/risk capital needs to be enhanced by removing of fiscal/regula-tory impediments hampering such inflows. Further options should be developed for the securitisation of trade credit receivables and factoring services (without recourse) to enable the MSMEs to liquidate the receivables before maturity. A dedicated SME platform could go a long way to facilitate raising of equity capital by the MSMEs at low cost from the market.

Entrepreneurship is largely a male bastion in India. In this context, how effective is the Trade Related Entrepreneurship Assistance and Development (TREAD) Scheme for Wom-en in creating more women entrepreneurs?

The scheme envisages economic empower-ment of women through the development of their entrepreneurial skills in non-farm activities and is being implemented successfully. However, there is a need to network and strengthen linkages be-tween large enterprises and MSMEs represented by clusters of women-oriented enterprises and NGOs working for promoting entrepreneurship among women. In this regard, industry associa-tions like CII, who have a heterogeneous mix of large and small enterprises among their mem-bers, can help immensely in building such a net-work and strengthening the link between large enterprises and such MSMEs.

How important is it to set up a credit in-formation mechanism for the MSME sec-tor, such as an MSME credit bureau?Lack of requisite information about the MSMEs applying for loans with the banks has been one of the major factors leading to delay in approval of loans, and many times denial of loans. A credit information mechanism for MSMEs would help the Banks to access the information required by them, thereby helping in processing of their loan applications in a timely manner.

At a macro-level, what would it take to build a robust eco-system for sustained growth and development of the MSME sector?The problems faced by MSMEs (access to bank credit, access to capital, technology, skill, market, etc.) are quite unique to the nature of the sector. These concern several institutions and depart-ments of the Government. There is, therefore, a need for an MSME perspective in the functioning of such institutions and departments. Further, there is a need for a coordinated and compre-hensive institutional framework for maximising results of the various initiatives taken by the government. This framework also needs to be extended to the point of delivery with appropri-ate structures at the district level.

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President Says MSMEs Are Engines of Growth & Employment

the capacity to generate economic activity in rural areas, by using local raw materials, local skills and providing people employ-ment close to where they live. I have always believed that our rural economy must not be isolated, but rather integrated with other sectors of the economy, for bringing rural prosperity in our country. MSMEs can play a very important role in this regard. I call on MSMEs to become that vital link between our rural economy and our industrial sector, so that through forward and backward link-ages, the benefits of growth flow widely and deeply in our country.

She added: Any talk of the MSME sec-tor cannot be complete without a mention of the Khadi and Village Industries. Gan-dhiji had dreamt of an India comprising of self contained villages, and "Khadi" as a component of Swadeshi was important to him. It is, therefore, gratifying to note that the Khadi and Village Industries are now finding and experiencing a revival in a world that is becoming increasingly sensitive to organically produced materi-als and goods. MSMEs working in the tra-ditional sectors are also preservers of our indigenous knowledge and of our cultural heritage. They must be encouraged.

The President urged MSMEs to con-stantly look at ways and means to be more productive, as also adopt better quality controls. In this context, I believe that it is important to address the concerns and constraints of the sector through a con-structive approach, so as to realise their robust growth and development, a vision that traces its legacy to the Father of the Nation and our first Prime Minister.

Lauding the call centre of the Minis-try of MSME Udyami Helpline, the Presi-

President of India, Smt. Pratibha Devisingh Patil, said it is important to address the concerns and constraints of the sector through a constructive approach, so as to realise their robust growth and development.

President of India, Smt. Pratibha Patil, addressing the audience at the MSME National Awards ceremony

President of India, Smt. Prat-ibha Devisingh Patil, present-ed the National Awards to successful Micro, Small and Medium Enterprises (MSMEs)

and to Banks for excellence in lending to Micro & Small Enterprises (MSEs).

This year's national awardees include 99 MSME sector units, 47 khadi and vil-lage industries and 19 coir industries in different categories, besides six banks. The national awards were instituted in 1983 with a view to recognize the efforts and contribution of MSMEs. The national awards are given annually to the success-ful entrepreneurs, enterprises and banks.

The awards are given to MSME for outstanding performance in entrepre-neurship, research and development and quality, to honour one outstanding wom-

an entrepreneur, one outstanding entre-preneur from SC/ST community and one entrepreneur from the north east.

Congratulating all the winners of the National Awards, the President said that she was confident that this will encourage them, as well as other MSMEs to scale new frontiers. The contribution of MSMEs to the economic growth of countries is recogn-ised worldwide. In India, these enterprises account for almost 45% of manufacturing output, 95% of the number of industrial units and 40% of exports. Clearly they are engines of growth providing employment to almost 60 million people, making it the largest source of employment after the agriculture sector.

The President observed that another as-pect of MSMEs is that 54% of them are locat-ed in rural areas. This sector, therefore, has

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dent said, This is a single point facility to provide information to enterprises on various schemes of the Government for promoting MSMEs, including guidance on how to set up an enterprise and ac-cess loans. Such outreach facilities are important for a sector that has a wide dispersal across the country.

The President called upon the MSMEs, especially of the traditional sector, to employ costeffective technologies, es-pecially in sectors like the coir industry which employs about 5.5 lakh persons, many of whom are women in the coconut growing states of the country. She added, It is undeniable that technology and in-novations are game changers, being the key determinants of increasing productiv-ity through improvement in skills, better capital equipment and better systems.

Urging the banks to give special at-tention in providing credit to MSMEs, the President said, Availability of adequate credit is paramount to the success of the MSEs. It must be kept in mind that it is the vulnerable unorganised enterprises which are still perceived as risky by financial institutions, and suffer the greatest con-straint in access to credit, because of the very nature of operations, especially of the traditional cottage industries. Timely financial support is absolutely essential for their survival, failing which they face the threat of extinction. I urge banks to give special attention to this aspect.

Speaking on the occasion, Mr Dinsha Pa-tel, Minister of State (Independent Charge) for Micro, Small & Medium Enterprises, Gov-

ernment of India, said, The MSME sector, in-cluding Khadi & Village Industries, has shown continued dynamism in terms of growth in number of enterprises, production, employ-ment generation and overall contribution to the country's manufacturing output and ex-ports. It constitutes the breeding ground of entrepreneurship, often driven by individual creativity and innovation.

Giving an overview of the several schemes to support the needs of the enterprises in matters relating to credit, technology, mar-keting and other forms of development, Mr Patel said, We have launched a number of schemes under the National Manufactur-ing Competitiveness Programme (NMCP). We have also revised the guidelines for the Cluster Development Scheme to make it more attractive to the MSE sector gener-

ally. Special provisions have been kept for micro enterprises, women entrepreneurs, SC/ST entrepreneurs and enterprises lo-cated in backward areas and urged the en-trepreneurs to avail of the benefits of these schemes in a fruitful manner.

He emphasised on the role of state gov-ernments as proactive partners in materi-alising all the programmes of the Ministry and of the associations which perform the most important function of acting as an effective bridge between Government and enterprises in the formulation and imple-mentation of various schemes.

The minister also praised the Khadi, Vil-lage and Coir enterprises and the National Small Industries Corporation (NSIC) for playing a pivotal role for supporting Micro and Small Enterprises in the country.

Dr H P Kumar, CMD, National Small Industries Corpora-tion (NSIC) presented a dividend of Rs 5 crore to the

Government on the occasion of the National Awards Func-tion. The business turnover of NSIC has crossed Rs 4,000 crore in 2009-10 record-ing a growth of 24% in 2009-10 over the previous year, thus recording consecutive growth for the third year in a row for the MSME sector.

Congratulating NSIC for its role in supporting MSEs in the country, Minister of State (Independent Charge) for MSME, Mr Dinsha Patel said that NSIC is playing assistance for the development of the MSE sector through their programmes like Bank Credit Facilitation, Export Credit Insurance, Per-

formance and Credit Rating, Raw material assistance, Exhi-bitions etc. The minister further added that the ministry's effort is to considerably expand the reach of NSIC.

Mr Dinesh Rai, Secretary (MSME) also congratulated NSIC in his speech and said that NSIC opened ten new offices in the country during the year to expand its reach to serve larger number of MSME. For pro-viding marketing facilities to MSMEs, NSIC

has established a Marketing Intelligence Cell and launched a B2B Web portal for improving business to business rela-tionship. NSIC has also set up the MSME Info Call Centre to provide information about the schemes and activities being implemented for the benefits of MSMEs.

MSME Minister Lauds Role of NSIC

President of India, Smt. Pratibha Patil with Minister for Micro, Small and Medium Enterprises, Mr Dinsha J. Patel (left) and MSME Secretary Mr Dinesh Rai (second from right) presenting the National award for excellence in lending to micro enterprises for 2009-10 to Chairman of State Bank of India, Mr O P Bhatt in New Delhi

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NEST: Leading The Solar Charge

The only Indian company to feature in an international best-seller book The Clean Tech Revolution, Hyderabad-based Noble Energy Solar

Technologies Ltd. (NEST) has made strident progress as a green energy development company. Promoted by D T Barki, chairman & managing direc-tor of the company, NEST, established in 2001 to address basic lighting needs of rural people in Andhra Pradesh, had developed core competence in de-sign, development and manufacture of highly reliable and cost-effective solar lanterns, home-made lighting systems and street-lighting-systems.

When most solar companies concen-trated on the much lucrative solar cells and modules manufacturing activities, NEST engaged itself in designing, de-veloping and manufacturing solar mini lanterns to replace the unsafe kerosene lamps in the off-grid rural households. Aishwarya solar lamp soon became a household brand name in India.

The company marked its presence on the global solar energy map by in-troducing its Aishwarya-Wow LED so-lar lantern. NEST is ready to launch the improved version of the unique, US patented LED solar lantern in a big way. This product has been tested in Fraunhofer Institute for Solar Energy Systems and we have got the feedback that it has the highest recorded LED cluster efficacy of 280 lumens/watt. They were quite amazed to see the 360 degrees uniform soothing light, which they have not come across in any of the other products that have been tested in their laboratory, said Barki.

Solar lanterns are GHG emission-free. One solar lantern gives quantum

of light equivalent to about 8-10 kero-sene wick lamps. Each year, 96 billion litres of kerosene is burnt across the world. This amounts to 260 million tons of CO2 emitted into the atmosphere, he pointed out.

NEST is guided by its mission to elim-inate light poverty across the globe. Nearly 2 billion people are estimated to be living in darkness and use haz-ardous and dirty kerosene lamps inside homes. We address this segment by providing clean and safe solar lamps and related solar lighting systems through a sustainable business model of working with dealers, distributors and other essential marketing chan-nels that have a presence in the rural areas, he said.

He explained that to ensure that all products are manufactured to the high-est standards, and stage by stage in-spection and assessment is carried out during manufacturing. This assessment culminates in final and full functional-

ity testing, and each year a substan-tial proportion of revenue is invested in product research and development programs, with a highly qualified and experienced team of engineers working to enhance and improve existing prod-ucts, as well as pursue innovative new ideas. NEST solar lighting products are kept for regular evaluation under ac-tual using conditions. The solar lamps are tested and evaluated by national laboratories like ETDC (Electronic Test Development Centre).

NEST, which has been listed by New Ventures India in its portfolio of com-panies, is the winner of Ashden Light Award 2005. As the enterprise grew, it spread its reach beyond the national boundaries to reach the Asian, African and Latin American markets.

The company is also involved in the business and research at High Purity Quartz intended to bring down the cost of solar silicon.

NEST is working closely with several government consultancies on Solar Power Plant projects of the magnitude 3 MW and above. This comes closely after the announcement of the central government's Jawaharlal Nehru Na-tional Solar Mission (JNNSM).

In building its reach within the country, NEST has used an alterna-tive distribution network of NGOs, CSR programmes and development founda-tions. Corporate giants like Mitsubishi have engaged the firm in its CSR pro-gramme. The product has a 1-year war-ranty and a lifecycle of 2-3 years.

The company is hopeful that the re-newed government focus on solar en-ergy will create new opportunities for NEST to reach out to a wider consumer base with innovative products.

Hyderabad-based Noble Energy Solar Technologies Ltd. (NEST) has made strident progress as a green energy development company, setting a fine example for many MSMEs to follow suit.

Mr D T Barki, CMD, NEST in a rural setting

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SMEs: Building Brand Power

SMEs in India are synonymous with being growth engines, GDP drivers and economic power stations. They are rightly considered the pro-

pelling force of the economy as they surge the entire ecosystem of economic development and growth. Catalysts for elevated growth rates and stronger economic and social foundations for the country to acquire leadership position in the world trade and industry forum, SMEs play a fundamental role as they are a major source of entrepreneurial skills, innovation and employment.

SME Marketing: Challenging But High Potential Marketing is not just about box pushing, generating transactions or providing services. It involves a sustained effort 'to make and manage customers'. It forms the core of the SME ecosystem as it bridges the gap between the producer (SME) and the buyer (customer/client). The success of the SME is determined by efforts put in by them to understand the market, competitors, available tech-nology and tools, business environment and choose appropriate marketing tools to influence the customer.

Some of the evolved marketing strat-egies like niche marketing, database marketing, cluster specific marketing, guerilla marketing and relationship marketing are vital for flourishing the business without any significant hit to the bottomline. These marketing strate-gies, if implemented, can give the SMEs a platform to go beyond the generic marketing applications, create greater

acceptance, strengthen the brand, de-vise a focused approach and compete globally. Nirma, Moov, Hi-Design & Fevicol started off as SMEs not so long ago. They have successfully reaped the benefits of strategic marketing to enter, compete and gain market share from the likes of Unilever, GSK and P&G. It is imperative to highlight the fact that ev-ery big fish today was a start-up in the recent past. In 1959, a small time glue manufacturer thought of marketing his products to the masses and taking his business to the next level. With success-ful product strategies, marketing efforts and operational efficiencies, the brand has today created a strong foothold in the market. The company's most suc-cessful brand Fevicol and its sub-brands such as Feviwik, Fevibond, Fevigum, Fevistick and Fevicryl have consistently commanded over 70% of the total mar-ket share. The company has also been able to stay ahead of its competitors in both the organised and un-organised sectors.

SMEs can also use proven traditional STP marketing strategies viz. segmenta-tion, positioning and targeting for B2C and B2B ecosystems. Technology tools like SMS, digital newsletter and elec-tronic direct mail can be used efficiently to target segmented population. Broad-ly classified as push marketing, these via media are cost efficient and easily accessible. To add to this, websites, yel-low pages, directory listings help pull the prospective buyer with rational ef-forts. In both the scenarios, the brand statement acts as major differentiator to outdo competition.

Trade fairs together form another im-portant and novel platform for the SMEs to venture into new territories and de-velop businesses. Participation in rel-evant trade fairs, conferences, events and associations is an essential element in an enterprise's marketing mix. Trade fairs are recognised world over as the one the most effective areas of market-ing for SMEs. Even in India, we see visible appreciation for this initiative but accep-tance of the same on a holistic level is still in question. International trade fairs are an important source of market in-telligence, technological advancements and innovations. Moreover, SMEs get an opportunity to analyse the technological gaps and shortcomings in one's prod-uct line in comparison to international standards. Every year, industry specific trade fairs are held in USA, Canada, UK, Singapore and Dubai to create a meet-ing ground for sellers and buyers. They offer a comprehensive landscape that bring together all marketing activities business promotion, product advertis-ing, face to face contacts, selling actions, public relations, market research, and above all, actually show the product line live to the prospects.

It is important for the SMEs to un-derstand the importance of market research as it ensures the cultural, po-litical, economical and environmental dynamics are in sync with the business offerings and there would be no fur-ther issues once investment in terms of time, manpower and money is initiated for business development. Such efforts give a deep insight into the product fea-sibility and viability along with competi-

Call them Small & Medium Enterprises or Special Machinery for Economic Solidarity; SMEs have given Indian economy the desired recognition, respect and say in the International Economic Community. From Foreign to Domestic Investors, they top the list of attractive investment opportunities and are actively wooed by the investors.

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tion mapping. Research brings out the need gaps in the market and facilitates the SMEs to re-engineer their products and services accordingly.

Digital Marketing: Not New Age, But HygieneModern techniques of marketing have made the life of a marketing manager go digital. In the SME space, digital market-ing plays an even greater role by per-forming the lead function of acquisition, business development and communica-tion. Internet plays an important role in reaching out to the prospective custom-ers irrespective of the remoteness and boundaries, and showcasing the prod-ucts and services in the virtual world.

Internationally, web marketing tools are being extensively used by SMEs to reach out and generate leads. These include social networks, website syn-dication tools, gadgets, and RSS feeds that are again reasonable marketing options. B2B sites have also emerged as viable platform for promoting and doing business in a much evolved and effective way. They facilitate in estab-lishing new business relationships and retaining the existing ones, in what we today know as an e-marketplace. They serve as a medium for the wholesalers, distributors, suppliers, manufacturers and retailers to conduct business in the e-arenas. Low investment online mar-keting tools include sponsored links as they establish an instant connect with laser-targeted prospects, though in-depth research is required to identify industry trends and suitable ad words

to keep the campaign effective. Social networking sites are very

popular in the present context. One can create a community page pertaining to the company, products and services and regularly update it with fresh content to engage the clients & visitors con-tinuously. Mobile marketing is another useful mode for SMEs to connect with their intended audience in an effective manner.

Indian SMEs need to adapt interna-tional marketing practices, use advanced digital marketing tools and establish a strong and committed brand. It's im-portant for Indian SMEs to innovate and stay on par if not ahead of its foreign rivals as such innovations add valuable confidence to the prospective buyer and hence creates greater brand value.

Brand SME: The Next FrontierManaging a brand is pivotal in creating an intangible cover around the enter-prise and business, which creates an aura of trust and hope from the prod-ucts and services offered. In case of SMEs, there is an even greater need for the same. Trust and value are two most important pillars of any business trans-action and it is pivotal for SMEs in their operations, offerings and services. They ensure confidence, loyalty and associa-tion. An SME's brand position is defined by its values, attributes and distinctive-ness. Brand values form the foundation of the entire brand management pro-cess and more importantly serve as the base for the business to drive its focus and business practices. The values that

define an SME must come across to the client through its processes, business conduct and market position; the same being reinforced to its entire internal and external ecosystem.

The brand attributes and values are also defined in sync with the core brand essence. The attributes and character-istics of the brand are functional and emotional associations that the client and prospects assign to the brand. They are the intangible linkages that develop the relationship between the business and client's mind, and form core of the business strategy and more importantly marketing management process.

Today SMEs have competition in all areas with other local players, regional, national and even international compa-nies. SMEs generally perceive that brand development is for larger organisations and that they can afford to focus only on product and price. However, brand-ing is not about how much you spend on advertising and media. It's about what you do that is distinct and differentiat-ed. This in turn helps them increase the market size, sustain the market share and compete on attributes other than price.

Fabindia, an eminent niche player in the ethnic wear segment, is a testimony to the above brand philosophy. This brand has mastered the art of creating a niche market space, owning a distinct position in customers mind and leverag-ing upon the same to develop the busi-ness domestically and internationally.

Started as an export house in 1960, Fabindia has emerged as a successful retail business in India, with 111 retail outlets within the country and 6 abroad. Fabindia sells a variety of products rang-ing from textiles, garments, stationery, furniture, home accessories, organic foods, jewellery and bodycare prod-ucts. Analysts attribute its success to its unique marketing practices, robust sup-ply chain and premium quality products at reasonable prices. All of these played an important role in establishing the brand and defining its essence.

--acknowledgements / data sources: colleagues & cross-industry peers; publica-

tions & periodicals; derivatives from second-ary data points; and professional forums

--credit: Subhrangshu Neogi, Director- Brand and Corporate Communication, Religare Enterprises Ltd

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Bridging Skills Deficit

The majority of Indian MSMEs are hamstrung by lack of adequate skilled workforce that can be employed at affordable

cost. The skill gap meant that many of these enterprises have not been able to scale up. The National Skill Development Corporation (NSDC), set up in 2009, is expected to bridge this skill gap to a great extent.

NSDC has targeted skilling at four levels. The largest group are at the lowest end of the skill pyramid. This is the uneducated unskilled workforce that aspires to better lives by seeking alternative occupations from agriculture and other traditional forms of work. These comprise about 50% of the demand.

The next level is school graduates with no specific skills. These comprise about 25% and need upskilling. Then about 20% of the demand is for graduates, whose skills need to be improved and made specific to the industry needs. The last group of 5% are the highly skilled workers like doctors, engineers, lawyers and scientists.

The corporation is guided by its vision to create a pool of 500 million skilled people by 2022 as against the current 40 million. The majority of the sectors that show a large need for skilled workers fall in the MSME category.

To bridge the technical skill gap in the country, Government has sought to upgrade the Industrial Training Institutes (ITIs) in the country with private participation. As many as 1,396 ITIs have been proposed to be upgraded into Centers of Excellence in specific trades and skills under PPP. Under the proposed scheme, the State Government, as the owner of the ITI,

will continue to regulate admission and fees while the new management will be given academic and financial autonomy and the Central Government will provide financial assistance by way of seed money.

With CII's mission of "Making India the Skills Capital of the world", ITI upgradation has become a movement of 237 ITIs with 138 members. CII members have taken up the responsibility of ensuring that this scheme is a success and all stakeholders participate actively and responsibly.

Further, the Ministry of Labour & Employment, Government of India, has introduced Modular Employable Skills (MES) under Skills Development Initiative Scheme (SDIS), which targets school leavers, existing workers and ITI graduates is a revolutionary step in promoting this. The programme aims to improve the employability of people who possess or have acquired skills but lag behind due to changing requirements of a trade. A check and balance system is put in place by keeping the training provider and the assessment body independent of each other.

The main objective of the scheme is to provide employable skills to school leavers, existing workers, ITI graduates, etc. Existing skills of the persons can also be tested and certified under this scheme.

To scale up the skills level, CII has organized competitions such as the 22nd National Work Skills Competition (NWSC) in FTI Bengaluru during March 24-27, 2010, in association with the DGET, Ministry of Labour and Employment. CII initiated national Work skills competition on the lines of the Skills Olympics organised by the industry in Europe. It was held for

the first time in 1989 at the Advanced Training Institute, Dasnagar, Howrah.

To promote entrepreneurship among the young managerial talent, a delegation of 21 SME managers visited Germany as a part of Indo German Managers Training Programme (IGMTP) organised for a month in October-November 2009. The participants were from varied sectors like publishing, health care, automobile components, industrial automation, tourism, healthcare, human resource management and handloom & textiles. These managers were designate proprietor, head-marketing, managing director, head- research & development, etc.

The managers attended the Indian leg of training in Delhi for 15 days and then went for a month long programme in Germany which incorporated training, attending seminars, exhibitions, visiting companies and having a close look at the factories.

The participants profited from a number of different experts and the opportunity to use these contacts to initiate their own businesses contact, a process that took place a number of times. They came back with new business opportunities. The contacts that they established in Germany materialized into long term technology sharing, knowledge exchange, improved work culture and most importantly joint ventures, signing of Memorandum of Understanding (MoU), Export/ Import contracts, etc.

Initiatives and programmes like these indicate the huge and unmet demand for skills workforce in the MSME domain. Both Government and industry are today working assiduously to support key skills development initiatives in the PPP mode.

Indian MSMEs are largely hamstrung by lack of adequate skilled workforce that can be employed at affordable cost.

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The Eurozone crisis has had a negative impact on Indian MSME export prospects. The debt crisis and subsequent erosion in the value of the euro is a cause of worry for Indian exporters. But, MSME exporters are showing better preparedness to tackle the crisis

Battle Hardened: Tackling Eurozone Impact

The Eurozone debt crisis that threatened to send the global economy into another tailspin showed signs of abating, but recent reports indicate that the

problem is far from over. Investors are ap-parently still concerned about the future solvency of Europe's weakest economies -- Greece, Spain and Portugal. They believe that recovery in the zone is extremely dis-parate, with Germany racing along while others, including Spain, labour with high unemployment and meager medium-term growth prospects. Nor have the fundamen-tal weaknesses of the Eurozone been alle-viated. S&P downgraded Ireland because of concerns over its ailing banking system, which has been crushed by property-mar-ket losses.

The Eurozone crisis has had a negative impact on Indian MSME export prospects. The debt crisis and subsequent erosion in the value of the euro is a cause of worry for In-dian exporters. Over the last 12 months, the Indian rupee has appreciated from around 67 to a euro last June to around 57.

The exporters are hit on the profitabil-ity of their business due to the eurozone debt crisis. The profitability of the export-ers are much affected by the European crisis. Cotton prices are going up and the stimulus packages are being withdrawn in the Europe and US. These are hurting Indian SME exporters.

The demand flow is there in the Euro-pean market and Indian exporters are not witnessing loss in their order books, but MSMEs are worried about the impact on

their bottomline.Many exporters have observed that the

key export market, Europe, have shut down their shops due to the crisis. "Retailers have stopped their operations as they are facing crisis. They have reduced their inventories. In fact, no new stores are being opened. This is the basic problem," said one exporter.

Some 25% of the US and European mar-kets dealing into handicrafts items have closed their shops due to the recent global financial crisis, said a media report.

In order to sustain in business, many Indian exporters are also looking for op-portunities for growth in alternative des-tination such as the Gulf countries, ASEAN regions, Russia, Latin America, Australia and African countries.

Earlier, Commerce Secretary, Dr Rahul Khullar warned Indian exporters on the per-spective of export growth and said, "Over the next three to six months, if things continue like this, people who export to these markets (US and Europe) will figure out how to deal with lower margins. Some of them will look at other markets."

The Ministry of Commerce and Industry has also said that the crisis is indeed a con-cern for exporters this year. And, if the crisis persist then achieving exports growth of 25-30 percent will be impossible.

"MSMEs usually manufacture products of handicrafts, handloom, garments, etc. So, when the slowdown takes place consumers curtail purchasing such types of product and just because consumers reduce their expen-diture on these kinds of product, MSMEs get more affected," said an expert.

"It is not that there is no order flowing into the market. I would not completely agree to that. When the recovery comes the buyers

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usually wants to purchase from the best sup-pliers and the exporters who supply goods to the buyers may not have recovered in com-plete capacity. So, they are a bit in crisis. But, we cannot say that the recovery is not hap-pening," Agarwal added.

Also, many MSME exporters are trying to concentrate on the domestic market for growth besides depending on exports. If Chi-na's decision to make Yuan flexible is put in place, it perhaps can be the reason for Indian exporters to relax.

Reports says the Eurozone crisis has hit the exporters in Uttar Pradesh, as the industry was slowly recovering from the slowdown in the US market and the credit squeeze in the domestic financial system.

While, the full impact of the crisis is yet to be ascertained by the industry chambers, exporters and entrepreneurs, it has already been estimated to have ad-versely impacted revenues up to 15-20% across segments.

The depreciation in Euro to around Rs 57 from Rs 68-70 earlier has also led to narrower margins for exporters. Europe accounts for almost 35 per cent of the ex-port destinations for India. Uttar Pradesh is home to a large number of Micro, Small and Medium Enterprises (MSME) estimat-ed at 1.2 million.

To tide over the crisis and to insulate from similar upheavals in the global markets, the state exporters are explor-ing other export destinations, especially Africa and Latin American nations.

The major export hubs in UP include, Noida Export Processing Zone (gems & jew-ellery, apparel, IT), Ghaziabad (chemicals, engineering, textiles, medicines), Meerut (sports goods), Saharanpur (wood carving, toys), Khurja (pottery, bone China), Aligarh (locks), Agra (silk carpets, handicrafts, jewel-lery, marble inlay, leather), Ferozabad (glass-ware), Moradabad (brassware), Mathura (stone craft), Kannauj (perfume), Lucknow (chikan), Mainpuri (tobacco), Kanpur (leather, textiles, pharma, spices), Varanasi (silk, zari, handicraft), etc.

Ghaziabad-based industrial goods export-

er Neeraj Singhal put the exporters loss due to the depreciation in Euro and European cri-sis at almost 20%.

Since, Euro has depreciated by 15%, the exporters who value their consignments in Euro and receive payments under Letter of Credit (LoC) mode are booking losses to that extent, he told Business Standard.

MSME chamber Indian Industries Asso-ciation (IIA) Noida chapter chairperson N K Kharbanda said the local manufacturing units were working below capacity due to the crisis. Due to Eurozone crisis, the profit margins have been affected and the or-ders have slowed in all sectors, including IT, food processing, industrial goods and leather, he informed.

Meanwhile, the industry is taking steps to look to other markets beyond USA and Europe signed MoUs with industry cham-bers of Argentina and Brazil for trade promotion. We are in touch with the busi-nessmen in Latin American countries, in-cluding Mexico, Chile, Paraguay, Uruguay, Argentina and Brazil for trade possibilities in food processing and medicine sectors, Kharbanda said.

IIA is planning to hold a business event in Noida in December to promote trade ties with Latin America. We are encouraging our members to participate in Focus Africa event scheduled for October in Tanzania, IIA execu-tive director D S Verma informed.

Indian MSMEs are coming out stronger from the series of international economic troughs. "There are several SMEs in India that have weathered the slowdown of the last two years very efficiently. And not only that, some have even come out of it stronger than before," said Roopa Kudva, MD & CEO, Crisil, the leading ratings agency in India that, other than rating almost all the large corporates, currently also rates over 10,000 SMEs.

According to one media report, in-dustry analysts, bankers, SME managers and other corporate observers say that a combination of factors has helped a large number of SMEs get out of the re-cent slowdown quicker compared to how they did during the slump years earlier in

the current decade. These factors include using lessons from the last slowdown, in-novating strategies that have strong cus-tomer acceptance, making smart finan-cial management moves like timely cut in cost, working capital and production, and also postponing capex plans which were on the table during the exceptional growth years of 2005 to 2007. Some of the SMEs even exited markets which were not so profitable and moved to explore newer horizons.

In earlier crisis situations, the affairs on the SME front were much worse and ill-managed. During that bleak period, as the companies continued to produce, all channels got stuck with inventories. They had also run up huge loans to keep pro-duction on track, leading to a rise in inter-est costs while revenue streams dried up. Often they would borrow just to meet the interest outgo. Eventually, weighed down by huge borrowings without a recourse to pay back, many an SME had to exit its business. On top of all these, globalisation was a new thing for Indian SMEs then and quite naturally, they were inexperienced when it came to looking for markets and revenue streams outside India.

Around the same time, the rupee also appreciated, prompting foreign buyers to ask for price cuts from Indian SMEs. "This time, price handling (by SMEs) was much better. They could cut costs, leading to cut in prices," said an industry expert.

Effectively, during this slowdown, com-panies survived much better than the last time. "This time, the level of aware-ness was much higher and so people did not commit the mistakes of the last time. Flow of information was very good," Kudva said.

The current trends indicate that while many MSMEs have borne the brunt of the Euro zone crisis leading to a contraction of the external market, they are much better prepared to tackle the situation. Geographical diversification is becoming an increasingly important agenda item for the exporters.

"Over the next three to six months, if things continue like this, people who export to these markets (US and Europe) will figure out how to deal with lower margins. Some of them will look at other markets."

Dr Rahul Khullar, Commerce Secretary, Government of India

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India-Romania: Opportunity for SME Cooperation

Traditional partners India and Ro-mania have decided to give major thrust to strengthening of bilateral trade and investment relations. Not only is there great scope for

increasing trade in traditional items such as drugs & pharmaceuticals, iron & steel, heavy engineering, chemicals and textiles, but also there is tremendous scope to diversify the trade basket to include non-traditional and niche products keeping in mind the skills ac-quired by two countries.

At the same time, the recent global eco-nomic slowdown opened the possibility of Indian companies looking beyond their tradi-tional markets in search of business opportu-nities. Romani has assumed key significance in this context.

Romania, which became a member state of the European Union on 1 January 2007, along with its locational advantage of pro-viding easy access to the former CIS and the

Balkans as well as it being the second largest market in Central and Eastern Europe, has made it an ideal gateway for Indian com-panies including SMEs who wish to develop business in that region.

The economic resurgence of the Roma-nian economy has strengthened the case for Indian companies to establish their footprints in this country. According to the National Statistics Office, in the first quarter of 2010 compared to the same period of the last year, the gross industrial production (GIP) index in Romania was by 4.1% higher. This increase was supported by the electricity, gas, steam and air conditioning sector (+13.5%) and by the manufacturing sector (+4.0%).

In the Romanian manufacturing sector, the highest production increases were registered in Q1 2010 by the manufacturing of motor vehicles, trailers and semi-trailers (+62.0%), electrical equipment (+42.4%), and basic metals (+27.7%).

Romanian imports increased (Jan 2010 vs. Jan 2009) by 11.2% in machinery and me-chanical appliances, electrical equipment, sound and image recorders and reproducers, 52.6% in mineral products, 5.4% in chemical products, 0.6% in base metals and articles of base metals, and 8.2% in machinery and transport equipment.

The opportunity for SME exports from India into Romania needs to be aligned with the broad export patterns.

Sectorally speaking, the pharma market in Romani is very dynamic. The pharma spend-ing per capita between 2002 and 2006 wit-nessed a 36% increase in Romania compared to Ukraine's 28% or the Czech Republic's 11%. This opens up opportunities for Indian SME pharma players to do business in this region.

Romania also has a strong automotive in-dustry with a modern and diversified suppli-er network. In the first three months of 2010, the production of auto vehicles in Romania increased by 62.6% compared to the similar period of the previous year. A new opportu-nity to develop further has arisen after Ford's takeover of the Daewoo Craiova plant.

The number of suppliers for the automo-tive industry exceeds 500, with a total turn-over of around 6.5 billion. Besides the Roma-nian suppliers, brands like Johnson Controls, Valeo, Trelleborg, Delphi, ACI, Siemens, Continental, Pirelli, Hella, TRW, Faurecia and many others, are producing in Romania for western OEMs. Indian players could position a share of this growing market.

Food represents a 55% share of total con-sumer expenditure in Romania - as a percent-age of GDP, food consumption is estimated at

The economic resurgence of the Romanian economy has strengthened the case for Indian companies including SMEs to establish their footprints in this country.

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12.35% in 2009 and it is expected to rise by 8.23% in local currency terms between 2009 and 2014. For Indian companies, the oppor-tunities are in foods & beverages, ingredients and equipment supplies.

Likewise, the Romanian market of secu-rity technology and services registered a boom in the past years. Usually, the clients that acquire burglar alarms, CCTV and other security equipment in Romania are banks, exchange offices, hotels, casinos, shops etc. Also, owners of smaller businesses, such as pizzerias or small shops, started to use video monitoring systems.

In the Romanian manufacturing industry the highest increases of the total turnover value index were recorded in the following industrial sectors:l Production of motor vehicles, trailers and semi-trailers (+44.5%) l Production of coke and refined petro-leum products (+36.0%) l Production of computer, electronic and optical products (+26.9%) l Production of electrical equipment (+20.2%) l Production of basic pharmaceutical products and pharmaceutical preparations (+20.0%).

Main industrial manufacturing sectors in

a diversified and flexible industrial base by creating a pool of entrepreneurs willing and able to take risks, to stimulate competition for small and large firms alike, leading to an energetic enterprise culture, to stimulate in-novation. In a broader view, SME activity can be considered as a lever linking employment policy and regional policy.

The importance of this sector for revital-izing the Romanian economy is also high-lighted by the setting up, at the end of the year 2000, of the Ministry for SMEs, subse-quently transformed into the National Agen-cy for SMEs and Co-operation (ANI-MMC) in June 2003. The SME Act (No. 346/2004) has been adopted as well, providing for stimu-lation of SME creation and development (provisions related to priority access to hir-ing, license or leasing of the available assets of the state-owned firms, priority to public acquisitions of goods and services, access to assistance, information, consulting, inno-vation and technological development ser-vices for finance and banking, management and marketing, etc.).

With the exigencies of the European integration in mind, the Government of Romania launched in August 2004 the Governmental Strategy for Supporting the SME Sector in 2004 - 2008, focusing on five main priorities, namely:l Creation of a business environment fa-vourable to SME start-up and development.l SME competitive capacity development.l Improvement of access of SMEs to financ-ing sources.l Improvement of access of SMEs to exter-nal markets.On a broader plane, the major items of ex-ports from India to Romani include drugs, pharmaceuticals and fine chemicals, machin-ery & instruments, manufactures of metals, cotton yarn, fabrics, plastic & linoleum prod-ucts and electronic goods. The major items of imports from Romania into India include iron & steel, organic chemicals, machinery except electric & electronic, metalifers ores & metal scrap, etc. This will become more broad-based as SMEs in both countries enter into long-term sustainable partnerships.

Romania include metal forming, machinery, components, chemical and petrochemical, plastics, furniture, garments, footwear, leath-er objects, and agricultural.

Romania lacks technology and know-how in collecting, storing and processing the solid waste and means of raising the awareness at the local level of the importance of the selec-tive waste collection.

In respect to the water system, Romania is characterised by a low percentage of popu-lation connected to the sewerage and waste water treatment systems, non-functioning of the all existent treatment stations, non-conform waste management, and the insuf-ficient protection of the water resources.

The key business sectors in Romania have created investment and commercial oppor-tunities for SMEs, both within the country, and overseas. Reports say the economic reform that has occurred in Central and East European countries has also emphasised the role of SMEs, this sector being considered to have a key role in restructuring the old centr-alised economies and maintaining economic dynamism.

SMEs are able to create a significant number of new jobs, to improve industrial relations and to provide a superior work-ing environment for employees, to create

"There is a need for a frequent exchange of political and business delegations from both the sides as it would help identify mutually beneficial areas of cooperation. Romania is a European Union member and India has strategic partnership with the EU. Consequently, we are part of that partnership, therefore, there is a need to see what we can do together to boost relationship through bilateral interaction, in the field of economy. "

Ms Valerica Epure, Romanian Ambassador in India

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Uptrend in CII Business Confidence Index for SMEs

The CII Business Confidence Index for SMEs for July-Sep 2010 indicates a healthy expansion of the sector over the first quarter. The overall (industry plus services) Business

Confidence Index (BCI) is estimated to be 65.6 on a scale of 0-100 (from most unfavorable to the most favorable change in outlook).

Based on a large number of responses on 14 business outlook indicators, the BCI indi-cates strong positive movement in SME con-fidence for the current quarter as compared to the previous quarter. Within SMEs, BCI for services at 66.1 is found to be higher than that of industrial sector at 65.2, indicating greater optimism in the services sectors.

SMEs have exhibited varying degrees of confidence for different business outlook indi-cators. They expect the gross sales to record the largest increase among all the variables. The BCI for sales amounted to 86.1, implying an expectation of a significantly high increase in revenues of the firms during the current quarter over the previous quarter. One of the main reasons for buoyancy in sales could be the expectation of a relatively high increase in selling prices, the BCI value for which stands at 60.8.

New orders / contracts and capacity utilisa-tion of SMEs have fetched the second and third largest places, with their BCI values calculated at 78.8 and 78.3, respectively. This, coupled with buoyant expectations for sales, points to the rapidly growing demand prospects in the post-crisis period. Export demand, which is a lifeline for many SMEs, also looks up during the current quarter with its BCI value stand-ing at 70.1.

In an indication of strengthening demand prospects, SME firms foresee a decline (1-10%) in inventory stock during the current quarter over the previous one. The BCI value for inven-tory level stood at 53.6, with 0 as substantially high and 100 as substantially low inventory. Riding on growing demand prospects, firms project a rapid increase in capacity expansion, both in terms of employees as well as fixed capital. The BCI values for employment and capacity expansion has been calculated at a

high of 73.7 and 71.1, respectively. On the negative side, SMEs expect unfavor-

able movement in costs of inputs during the current quarter as the BCI for overall input costs stood at a low of 29.2. This is not surpris-ing given continued prevalence of high infla-tion. The situation on cost front might have been even worse if firms were not expecting some favorable impact on account of credit cost. The BCI for credit cost for capacity ex-pansion and working capital stood at 60.3 and 58.2, respectively.

SMEs see an improving opportunity on the front of availability of credit. The BCI for credit availability for working and fixed capital stood at 66.7 and 65.5, respectively. Much of this im-

provement has to do with the credit drought of last year, which now seems to be getting eased with acceleration in economic recovery. With sharp improvement in overall economic prospects along with that of their own financial health, many SMEs can now secure better cred-it ratings for obtaining easier loans from banks at relatively cheaper rates. But the fact that around 14 lakh SMEs, forming about 90% of the country's industrial units, are able to access less than 10% of bank loans points to the need for rigorous policy intervention on this front.

The following major points can be drawn for the ongoing quarter:l Sales in services sector of SMEs is seen to pick up faster than in case of industrial sec-tor, notwithstanding better prospects on new contracts / orders, selling prices and exports for industrial SMEs.l Net profit margin in case of Industrial SMEs is expected to be smaller than in case of services SMEs. l Employment prospects look better in services sector than in industrial sector of SMEs.l The prospects of credit availability look better for industrial sector of SMEs than for SMEs of services sector.

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Business Confidence Index of SMEs66.2

66.0

65.8

65.6

65.4

65.2

65.0

64.8

62.6Industrial

BCIServices

BCIOverall

BCI

BCI of SMEs: Major Outlook Indicators

(WC = Working Capital; CE: Capacity Expansion)

contact: Muruganandham; Email: muruganandham@cii.in

Thoothukudi District Office

contact: C M Tungare; Email: Email-id c.tungare@cii.in

CII Western RegionTitle/Theme date venueThird Meeting of the wr MsMe sub committee Meeting 7 oct cII Board room, ahmedabadMsMe Mission to germany and Italy 17 -24 oct germany and Italy

contact: S M Manoharan; Email: s.manoharan@cii.in

CII Southern RegionErode Zonal OfficeTitle/Theme date venueerode energy conclave 2010 13 oct hotel club Melange, erode

contact: Ms Ishita Bhattacharya; Email: ishita.b@cii.in

Karnataka State OfficeTitle/Theme date venuedeep dive (4 half day sessions in a month) oct Bommasandra

contact: Vikas Nagrare; Emai: vikas.nagrare@cii.in

Hyderabad Zonal OfficeTitle/Theme date venueworkshops on Foundations for profitability october -

contact: M S Sujith Unni; Email: sujith.unni@cii.in

Kerala State OfficeTitle/Theme date venueseminar on how to become supplier to defence Industry october kochi

contact: Arun Roberts; Email: arun.roberts@cii.in

Trichy Zonal OfficeTitle/Theme date venue5 s Training workshop october -

Title/Theme date venuestudy Mission to venus home appliances & vvd oil Mill & ramesh Flowers ltd, Thoothukudi sept -oct Thoothukudi

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upcoming events

For further details, contact Marut Sengupta, Confederation of Indian Industry, 23 Institutional Area , Lodi Road - 110 003, New Delhi; Ph: 9350800950, Direct Tel: 91-11-24653006; Tel: +91-11–24629994–97 Ext 407; Fax: +91-11–24682229; Email: marut.sengupta@cii.in

contact: Nishi Bhardwaj; Email: Email-id: nishi.bhardwaj@cii.in

CII Northern Region

SME Focused Projects, Events, Meetings, Interactions & Training Programmes (Oct 2010)

Title/Theme date venue23rd Qc preliminaries 6 oct haridwar

Qc circle competition 11 oct ludhianasession on Biomedical waste Management 19 oct noida23rd Qc preliminaries 21 oct noidaMsMe conclave 3rd week of oct Baddiworkshop on autonomous Maintenance after oct 20 -conference on Best labour practices after oct 20 -workshop on Bio-Medical waste after oct 29 -cII Bee workshop oct pantnagarworkshop on energy conservation oct JammuTraining session on concrete roads oct lucknowcII Bee workshop 25 oct varanasi