businessFROM THE CHAIRMAN’S DESK

The MSME sector in India has reached an inflection point man-dating a new roadmap driven by technology and innovation for them to scale up and achieve a higher growth trajectory.

The sector demonstrated remarkable resilience in the difficult times posed by the global economic slowdown to act as the bulwark for the national economy against debilitating forces. There is now a greater recognition of the importance that this sector holds in realising the Government's twin goals of growth and inclusivity.

At this crucial juncture it is our good fortune that Mr Virbhadra Singh, a senior political leader and astute statesman, has taken over as the Minister of Micro, Small and Medium Enterprises. Mr Singh has led developmental change in myriad areas and his experi-ence and leadership will be invaluable to the MSME sector.

In the Union Budget 2011-12, Finance Minister, Mr Pranab Mukherjee, has addressed a few key concern areas by increasing the outlay for the MSME Ministry to Rs 2,700 crore and by allocat-ing Rs 5,000 to SIDBI for refinancing incremental lending by banks to MSMEs. The soon-to-be-announced National Manufacturing Policy will also have a major bearing on the MSME sector. However, it is felt that the Budget could have touched upon areas like technology adoption by MSMEs and fast-tracking of SME Exchange.

The year 2011 will be a good year for MSMEs as the new Public Procurement Policy is likely to come into effect. It will make it mandatory for all ministries and public sector undertakings (PSUs) to reserve 20% of their annual procurement from MSMEs. It is expected that this policy would be introduced in a phased manner over a three-year period.

The CII Business Confidence Index (BCI) for MSMEs for the quarter January-March 2011 indicates a marginal decline, calling for careful scrutiny and informed decisions and interventions. The BCI for the current quarter, estimated at 65.2 points on an outlook scale of 0-100 points, has declined by 1.8 points over the previous quarter, which has been attributed to a variety factors such as increasing overall inputs costs. The survey suggests that the increasing input costs are going to cut into the net profits of MSMEs. The rising interest rates and shrinking credit availability have also been cited as stumbling blocks in the way of MSMEs. The enterprises would indeed be hard put in the face of bottlenecks in working capital availability.

So, while on the one hand, Indian MSMEs have collectively set sights on making a bigger dent in the key domestic business sectors as well as overseas through greater international cooperation endeavours, on the other hand, the current economic and financial constraints seem to put up barriers to the sector's growth prospects.

Taking cognizance of the emerging challenges, the Ministry of Micro, Small and Medium Enterpris-es has come up with a Draft Strategy Action Plan that has been formulated based on the (i) aspiration of the ministry; (ii) assessment of the situation; (iii) potential strategies; and (iv) implementation of the plan. The central objective of the Plan would be to bring all stakeholders on a common platform so that concerted action is taken on the identified priority areas keeping in view the sectoral chal-lenges and opportunities. Notably, the Plan has maintained a keen focus on the knowledge dimen-sion of MSME business, which will act as a key growth propellant in the coming days.

The MSME sector is highly diversified. The content mix that this edition offers is designed to meet the differentiated needs of our readership. Therefore, aspects like crowdfunding, voca-tional training and the cooperation endeavour with Syria have received focused attention, as also the growing opportunities in the sports goods segment.

We hope to further broadbase the content in the forthcoming editions. I invite you to pro-actively participate in the shaping of this journal and in the Council's activities.

Ramesh DatlaChairman, CII National MSME Council

MSME

Journal of Small BuSineSS and enterpriSe Volume 1, iSSue. 8, marCH 2011

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

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smAll World Pg3events Pg19

Inside this Issue

‘MSME is Key to Industrial

Development’...Pg 3

‘The Decade Could Well Belong to MSMEs’... Pg 9

Mr Virbhadra SinghMinister of Micro, Small & Medium Enterprises (MSME), Government of India

Ms Ayumi FujinoUNIDO Representative in India and Regional Director for South Asia

Union Cabinet Minister, Mr Virbhadra Singh, took over as the Min-ister of Micro, Small & Medium Enterprises (MSME) in January this

year. Mr Singh has succeeded Dinsha J Patel, who is now Minister of State with Independent charge in the Ministry of Mines.

Mr Singh said soon after assuming charge that his ministry has a key role in the country's industrial progress considering that MSMES constitute about 60% of industries in the country and touches the heart of India.

The minister has since made a clarion call for easy access to cheaper and hassle-free bank credit for the sector. He said at a recent industry meeting that MSMEs face several difficulties in their quest for growth. These relate mainly to easy access to capital, technology, marketing and infrastructure, availability of information critical to business growth and simplified systems and procedures.

Mr Singh also recently gave an assurance to the leather industry that the ministry would introduce supportive measures which would make the sector globally more competitive. He stated that the Central Government has recognised the leather sector as a target sector in the Foreign Trade Policy and have introduced various supportive measures for it. He added that the MSME sector, which sourced 40% of the net exports, is seen to play a significant part in raising the Indian leather industry's contribution to the world trade and in creating more employment opportunities and raise the standard of living.

Virbhadra Singh assumes charge as MSME Minister

Ind ia may soon have a reg i s t ry for movab le as -

se ts , mak ing i t eas ier for mi -cro , smal l and medium enter -pr i ses (MSMEs) to borrow f rom banks to meet fund ing requ i re -ments . A s imi lar in i t ia t i ve had w idespread impact in Ch ina , wh ich has jus t over taken Japan as the wor ld ' s second b igges t economy, says a med ia repor t . In ternat iona l F inance Corp . ( IFC ) , a member o f the Wor ld Bank Group , i s repor ted ly in ta lks w i th the f inance min i s t ry to se t up a reg i s t ry for such as -se ts , wh ich inc lude raw mate-r ia l s and equ ipment . Banks in Ind ia on ly accept f i xed assets as co l la tera l wh i le g iv ing loans to such companies , wh ich have most o f the i r cap i ta l inves ted in moveab le assets .

Ind ia and Indones ia have s igned an MoU for coopera-

t ion in the f ie ld of MSMEs. In a jo int s tatement af ter delegat ion level ta lks between the Pr ime Min-is ter , Dr Manmohan S ingh, and the v is i t ing Indones ian Pres ident , Sus i lo Bambang Yudhoyono, i t was stated that the two nat ions have s igned 18 MoUs worth $15 .1 b i l l ion. The two s ides have a lso have set a target to take their t rade re lat ion-ship to the next level by doubl ing b i latera l t rade volume to $25 b i l -l ion in 2015 from the current $12 b i l l ion in 2010. India 's fore ign d i -rect investment has increased in Indones ia f rom the $1 .1 b i l l ion in 2007 to $4.4 b i l l ion in 2010.

Registry for movable assets on the anvil

India, Indonesia ink pact for SME cooperation

‘Agro-based MSMEs need greater support’

Union Minister for Micro, Small and Medium Enterprise (MSME),

Mr Virbhadra Singh, was quoted saying that inadequate infrastructure is a ma-jor hurdle for the MSMEs in the food and agriculture sector. He has sought more private sector investments to help the sector overcome the challenge and stat-ed that the government has introduced a number of supportive policies to meet its goals such as increased focus on agro-based small & medium industries in the trade policy, automatic approval for foreign equity up to 100% in food processing units and significant customs duty exemption.

He also highlighted that despite being a major food producer, India's share in world food trade is less than 2%. There is very high wastage and low value ad-dition in the country in this sector. The MSME ministry has implemented various schemes and programmes to enable the MSEs including food processing industry

to enable them to complete in the glob-al market and strengthen their export competitiveness. These MSEs are mainly in fruit and vegetable processing, cere-als, oil milling, bakery, confectionery, breakfast, spice processing, soft drink, mineral water, cattle feed and dairy products, he said.

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Tech fund for SMEs likely in 2012

The Ministry of Micro, Small and Medium Enterprises (MSMEs) is

working on a Rs 2,500 crore technology upgradation fund for the MSMEs.

Ministry of MSME Secretary Mr Uday Kumar Varma maintained, a proposal has been forwarded to the Planning Com-mission to allocate the fund for the up-gradation of MSMEs. The Rs 2,500 crore technology upgradation fund is expected to find place in the 12th Five Year Plan (2012-2017), to be unveiled next year. The technology upgradation fund is expected to facilitate those SMEs which are looking to improvise their technological skills and is likely to benefit thousands of MSMEs.

He maintained, apart from the technol-ogy upgradation fund, there were many other schemes available for the MSMEs. While the National Manufacturing Competi-tive Programme aimed at helping MSMEs by providing them with marketing support and building awareness on intellectual property rights, the Cluster Development Program was aimed at helping varied SMEs rise as a cluster.

US-India SME Cooperation

SMEs form the backbone of Indian and US economies. Their contribution to overall economic growth has been

increasing rapidly. Creating a favourable business and policy environment remained crucial to strengthening economic re-covery, stimulating growth and creating jobs in both countries, said Mr Uday Kumar Varma, Secretary, Ministry of MSME, at an interaction organised with the US SME delegation, visiting India, along with the US Commerce Secretary, Mr Gary Locke.

While stressing upon the need for a more intense engage-ment between industry in India and the US, with a specific focus on enterprise-to-enterprise cooperation, Mr Varma out-lined Information & Communication Technology (ICT) and De-fence Procurement as priority sectors for the US companies, while exploring commercial opportunities in India.

Mr Dale Tasharski, Commercial Counselor, Embassy of the United States, India said that the next phase of growth in Indo-US bilateral economic relations will come from the SME sector. The

US Department of Commerce has initiated a Growth in Emerging Metropolitan Sectors (GEMS) programme to accelerate business growth. The platform will provide impetus and, take Indian and US businesses to the next level of partnership, he said.

Mr Nalin Kohli, Chairman, CII SME Task Force on Technology, International Cooperation and Government Procurement men-tioned that the SME initiative presented a 'win-win' opportunity for both sides and enriched the global value chain, encouraging companies to explore beyond the well-known cities.

India and Malaysia signed a land-mark trade agreement in Kuala

Lumpur to enhance economic coopera-tion between the two nations in several areas including small and medium enter-prise (SME) sector. The Comprehensive Economic Cooperation Agreement (CECA), which follows India's signing of a similar agreement with Japan two days earlier, covers trade in goods and services, invest-

ment and economic cooperation. The pact was signed by the Commerce Minister, Mr Anand Sharma, and his Malaysian coun-terpart, Mr Mustapa Mohamed. The CECA marks a new era in bilateral ties, with both the ministers calling the agreement a ve-hicle that would serve to enhance trade and investment flows and encourage freer movement of goods, services and profes-sionals between India and Malaysia.

India, Malaysia for SME cooperation

‘Study impact of GST on MSMEs’The government should ad-dress the concerns of the

Micro, Small and Medium Enter-prises (MSME) sector before im-plementing the GST, says industry. Since introduction of GST would be a major change in the system of levying/collection of tax, it was suggested that before implement-ing GST an effective dialogue and/or white paper on the proposed tax system and its modalities should

be developed and discussed with various industry associations rep-resenting the MSME sector. In-dustry has maintained that VAT rates in all commodities across all states should be uniform, and states should be restrained from levying any additional tax in addi-tion to VAT and the rates across the country be not increased from the rates as prescribed by the Em-powered Committee.

(L-R) Mr Dale Tasharski, Commercial Counselor, Embassy of United States; Mr Uday Kumar Varma, Secretary, Ministry of MSME; Mr Nalin Kohli, Chairman CII SME Task Force on Technology, International Co-operation and Government Procurement; and Mr Amarendra Sinha, Joint Secretary, Ministry of MSME

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Union Budget 2011-12: MSME Allocation Up 12.5%

T he Union Budget 2011-12 has brought cheer to several segments of the micro, small and medium enterprises (MSME) sector. In pre-senting the Budget in Parliament,

Finance Minister, Mr Pranab Mukherjee, raised the allocation for the Ministry of Micro, Small and Medium Enterprises (MSME) from Rs 2,400 crore to Rs 2,700 crore, which is 12.5% higher than the previous year's outlay.

Union Minister for Micro, Small and Medi-um Enterprises (MSME), Mr Virbhadra Singh, welcomed the Budget proposals stating the provisions for the MSME sector will spur growth and development.

Keeping in view the credit needs of the sector, Mr Mukherjee allocated to SIDBI an amount of Rs 5,000 crore, which is 20% high-er than what had been allocated to SIDBI last year. SIDBI will use the corpus for refinancing incremental lending by banks to MSMEs.

Additionally SIDBI has been entrusted with two funds for development of priority sec-tors. The FM said that an India Micro Finance Equity Fund would be created to provide eq-uity support to the micro finance institutions (MFIs) with a corpus of Rs 100 crore. Another fund with a corpus of Rs 500 crore has been named as Women's Self Help Group Develop-ment Fund which will help support and pro-vide funding to the women's self help groups all across India.

Finance Minister, Pranab Mukherjee said that the Government is also considering ap-propriate framework to protect interests of small borrowers. He said, "The Committee set up by RBI to look into issues relating to micro-finance sector in India has submitted its re-port. The Government is considering putting in place appropriate framework to protect the interests of small borrowers."

In October 2010, the Reserve Bank consti-

tuted the Malegam Committee to study the state of MFIs in the country. The committee, which submitted its report on January 19, sug-gested among other things capping interest rate at 24% for MFI loans. The committee also suggested that small loans cannot exceed the ceiling of Rs 25,000 and asked for creating a separate category of non-banking financial companies (NBFC-MFI) for the MFI sector.

As of March 31, 2010, there were 1,659 MFIs availing the total credit of Rs 13,955 crore from the banking system. The sector currently provides credit to over 100 million households.

The FM has also proposed that Rs 3,000 crore is to be given to NABARD to provide support to handloom weaver cooperative societies which have become financially unvi-able due to non-repayment of debt by hand-loom weavers facing economic stress.

The MSME sector welcomed the progress on Goods and Service Tax (GST) with the states. The resolve to implement GST and talks with

state governments has raised hopes of trad-ers and industries towards the new regime.

In the gems and jewellery segment, the customs duty on precious metal rhodium, used for polishing jewellery, ghas been re-duced from 10% to 2%. FM has also pro-posed reduction of customs duty on raw silk, textiles intermediate and inputs for chemi-cals sector which will add to the competitive-ness of these sectors.

Certain quarters of the MSME sector have told media that the FM could have taken steps to facilitate cheaper credit to the sector which is of critical importance to the economy in terms of industrial production, employment and exports. It was also cited that moving the service tax from cash to accrual basis will mean that MSMEs will have to pay service tax for the money that hasn't come to them.

Importantly, the FM stated that the Na-tional Manufacturing Policy will be announced soon, which will have a key bearing on MSMEs engaged in manufacturing. Share of manufac-

Finance Minister, Mr Pranab Mukherjee, raised the allocation for the Ministry of Micro, Small and Medium Enterprises (MSME) from Rs 2,400 crore to Rs 2,700 crore, which is 12.5% higher than the previous year's outlay.

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turing in GDP is expected to grow from about 16% to 25% over a period of 10 years.

The MSME sector will also benefit from two Committees to be set up for greater transpar-ency and accountability in procurement poli-cy; and for allocation, pricing and utilisation of natural resources.

Among the other key provisions that will have a bearing on the MSME sector, the Bud-get proposes to amend the Indian Stamp Act, 1899. The minister said that while the initiatives to introduce a modern and people friendly e-stamping facility have been taken five years ago only five states have introduced this system. A new scheme with an outlay of Rs. 300 crore will be launched to provide as-sistance to states to modernise their stamp and registration administration and roll out

e-stamping in all districts in the next three years. Also, a new simplified form ‘Sugam' to be introduced to reduce the compliance burden of small tax payers falling within pre-sumptive taxation.

While the Budget has been well received by industry in general, for the MSME sector in particular there was expectation of a higher allocation. It was also expected that the FM would fast-track the recommendation of the Prime Minister's Task Force Report, which was not to be. There was also lack of focus on support for the tech upgradation of MSMEs.

More specifically, Dr Navita Mahajan, Di-rector, The Northern India Rubber Mills & Chair CII ÐYI Chandigarh Chapter, said, "As a young Indian who has joined business in the post-reforms era, a lot more was expected

out of the Budget".According to Mr Soeb Bandukwala, Part-

ner, Ansons Electro Mechanical Works, "It is a so Ð so Budget, about which I am neither excited nor dejected".

Mr P I Chacko, Managing Director, Waves Electronics Pvt Ltd, "Apart from 5,000 crore to be provided to SIDBI for refinancing, noth-ing directly has been touched upon."

Ms Rupa Mehta, Director, Rupam Conduc-tors Pvt Ltd, opined that while the allotment to SIDBI for refinancing incremental lending by banks to the MSME sector has been revised from Rs 4,000 crore to Rs 5,000 crore, "It will now depend upon SIDBI as to how it disburses these to the MSME Sector and at what interest rate. Apart from this no other fiscal measure has been aimed at the MSME sector."

The Ministry of Micro, Small and Medium Enterprises (MSME) has drawn up a Strategic Action Plan based on the following

parameters: (i) Aspiration of the Ministry; (ii) Assessment of the situation; (iii) Potential Strategies; and (iv) Plan Implementation.

Aspiration: It is envisioned that the MSME sector will be up-graded through modern and new technologies to achieve global quality standards. Niche markets will be identified and developed for MSME products, including khadi and coir products.

Assessment: Of the 2.6 crore enterprises, a predominant num-ber is in the unorganised sector, often located in non-conforming urban zones. The sector is heterogeneous with pockets of high technology enterprises and majority suffering from low technol-ogy base resulting in low productivity and poor quality of prod-ucts. The units being small in size also have poor access to credit and equity. The sector also continues to face shortage of skilled manpower due to lack of paying capacity and poor managerial capabilities. Another major weakness is absence of marketing channels and brand building capacity.

There exist a strong institutional structure at the State and Cen-tral level for the promotion and development of the sector. How-ever, the present structure suffers from poor delivery of services at the field level. The schemes and programmes have limited out-reach with a large number of very small schemes. The lack of reli-able and updated data base is another area of concern as it inhibits monitoring of development initiatives and formulation of appropri-ate schemes to meet the differential needs of the heterogeneous profile of the beneficiaries.

Potential Strategies: (i) Engage stakeholders by ensuring regular meetings through the existing mechanism of National Board for MSMEs and the governance structures laid down under individual schemes, institutionalising annual meetings with State/UT Governments, MSME associations and Banks/ Financial Institu-tions and establishing a coordination mechanism at the national

level across Departments. It is also envisaged that greater in-volvement of training & R&D institutions and large enterprises will be built into the schemes and programmes. An interactive web-site and a web-enabled grievance redressal mechanism will be introduced for public feedback; (ii) The knowledge and capabilities will be built up through proper documentation, introduction of a Management Information System (MIS) in all major schemes, regular training of programme officers and capacity building of MSME Associations.

Priority Areas: Amendments in the MSMED Act, 2006 for providing an exit mechanism to the MSMEs; Strengthening of District Industries Centres (DICs) across the country to improve the delivery of services at the field level; Strength-ening of khadi institiutions through implementation of the Khadi Reform and Development Programme; Introduction of a Public Procurement Policy for MSMEs for assisting the MSMEs in increasing their market share; Encouraging corporatisa-tion of the MSME sector; Introducing a scheme for supporting the States to set up Rehabilitation Funds and operationalise appropriate schemes for the rehabilitation of units temporar-ily rendered sick due to circumstances beyond their control; Upscaling existing schemes or evolving new schemes to assist MSMEs in acquisition, adaptation and innovation of modern clean technologies as well as creation of a Technology Bank/product specific technology centres to enable them to move up the value chain; Encouraging innovations through setting up of large number of business incubators in educational institutions of repute; Expanding the outreach of the major schemes/programmes of the Ministry, including National Manufacturing Competitiveness Programme (NMCP), Prime Minister's Employment Generation Programme (PMEGP), Scheme of Market Development Assistance (MDA) for Khadi, Micro and Small Enterprises-Cluster Development Programme (MSE-CDP), Credit Linked Capital Subsidy Scheme (CLCSS), Credit Guarantee Scheme, etc.

Draft Strategy Action Plan

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Indian sporting goods are well known and have made a mark in the global market. However, for increasing the export share the industry needs to focus on modern, value-added and technology-based items

On The Ball

A creative approach, sportsman spirit and a sense of responsi-bility of society at large char-acterises the sports goods in-dustry of a county. And Indian

sporting goods are well known around the world and have made a mark in the global sports goods market. It has established an identity in many countries across the world. The industry, which largely operates at the small scale, has emerged as a principal and reliable supplier of quality sports goods to the international market. Besides, the in-dustry, which exports nearly 60% of its total domestic output to the sports loving people the world over, has matured into a globally competitive and creative entity. Be it a cricket bat or a hockey stick or a foot-ball, the contribution by the Indian sports goods industry to the international sports goods market has been remarkable.

Moreover, it has devoted itself to meet future demand by innovating new prod-ucts for new markets. The economic re-form and the liberalised industrial poli-cies have motivated the small scale units, which have remained the hallmark of the industry, to achieve the goals set forth by the government.

Importantly, big sporting events held in India like the Commonwealth Games, the ongoing ICC World Cup Cricket and Chen-nai Open Tennis and the development of new sports infrastructure across the country have also sparked off renewed in-terest among the youth to play the game with greater intensity. Alongside, there is a mushrooming of sports clinics and coaching camps that draw a very large number of players to hone their skills. All these factors have contributed to a rapid increase in the demand for sports goods in the country.

The sports industry, which is now more than 125 years old, is spread over the length and breadth of the country. However, there are major manufacturing concentrations in

and around Jalandhar, Delhi, Agra, Morada-bad, Mumbai, Kolkata and Chennai. The in-dustry, which is centered largely in Meerut and Jalandhar, exports sporting goods and equipment worth more than Rs 450 crore annually. Both these cities together claim a75-80% of the total domestic production with more than 3,000 manufacturing units, including around 130 exporters.

These industries came into existence mainly after Partition when some fami-lies belonging to Sialkot (presently in

West Pakistan) migrated and settled in these two towns. These families, having sufficient knowledge of manufacturing of sports items, started units to meet the lo-cal requirements. Some of these units, by virtue of their long experience in the field, have built up a good brand name of their products, thereby getting orders from do-mestic market as well as from other coun-tries. In and around the city of Meerut, approximately 1,000 tiny units are located in villages, namely, Abdullahpur, Jangethi, Mukampur, Naibasti, Malayana and Daura-la, etc. These units provide employment to approximately 12,000 people.

In the city of Jalandhar, industrial pro-duction of sports goods began on a small scale during the late 1940s. Over the years, the sports goods industry has grown at an impressive rate. Rough estimates suggest that today Jalandhar has about 20,000 small-scale industries with a most con-servative estimate of turnover of approxi-mately Rs 450 crore. Also, various estab-lishments are engaged in the manufacture of sports goods for the domestic market.

Most of India's sports goods are ex-ported to the United Kingdom, the United States, Germany, France and Australia. There are around 400 registered sports

Major sports equipment exports

Source: Sports Goods Export Promotion Council

26%29%

18%

8% 9%

7%3%

Inflatable Balls

Inflatable Balls

Other Items

Boxing Equipment

Atheletic Goods

Nets

Hammocks

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goods exporters with the Sports Goods Ex-port Promotion Council (SGEPC) alone.

The Indian sports goods industry is a highly labour intensive industry, which provides employment to the weaker sec-tions of society and also employs a large number of women.

Future Focus To forge ahead in the international arena, the Indian sports goods manufacturers need to focus on modern, value added and technology based items that have increas-ing demand in the global market. Equip-ment used in golf, skiing, winter sports, water sports, fitness/gymnasium, tennis, skating, mountain climbing and pool ta-bles are some of the items that have high growth potential in the global market.

The sports goods industry in India is largely concentrated in the cottage and small-scale sector. Hence, there is a pauci-ty of resources for technology upgradation and effectively marketing of the products. This industry is highly labour intensive, providing employment to the weaker sec-tions of society and also employs a large number of women workforce.

The industry is seeking joint ventures and technical collaborations preferably with buy- back arrangements, for the sports goods items having vast export po-tential and hitherto not manufactured in India. Already a number of manufacturing-cum-marketing collaborations have ma-

tured in certain non-traditional disciplines. Many more are in the offing, with the help and assistance of the leaders in the sports world.

More attention needs to be paid to pro-moting Indian goods in the major world markets like the USA, Germany and Japan by studying the trends in their sporting activities. The use of better technology and cost-effective production techniques would also help tremendously in cutting manufacturing costs and reduce wastage, resulting in production of items at more competitive rates. Investment in more sophisticated machinery and technology,

access to production methods of advanced nations and international product & pro-cess quality certifications like ISO 9000, and CE/GS marking would boost the Indian sports goods industry further.

CII Action PlanA shift in focus from the traditional and low value items is the need of the hour. The traditional sporting goods have a shrink-ing market towards modern, value-added and technology-based items that have in-creasing demand in the global market. The Indian sports goods manufacturers should come out of the traditional mindset and tune themselves into the changing market tastes and preferences in terms of sports goods.

For export promotion of sports goods CII has been focusing on: (a) identifying few thrust products within sports goods and fitness equipment for production and export, (b) identifying major markets for these goods, (c) launching a series of sports goods missions to identified markets to identify partners, technology transfers and buy back arrangements, (d) adopting a consortium approach for export promotion by involving international trading houses, and (e) continuously disseminate informa-tion on the potential of these sectors to at-tract more players in this field.

The stage is set for this industry to enter the big league of sports goods manufac-turing exports worldwide.

India has few strong domestic brands of its own, but it is also a manufacturing hub for sports prod-

ucts and many global sports brands. India has a comparative advantage in low cost skilled manpow-er vis-�-vis developed countries. All the segments of sporting goods i.e. Sports Apparels, Sports Equip-ment, Sports Shoes and other sports accessories are manufactured in India. The manufacturing of Sports Equipment is geographically concentrated in Northern India (Jalandhar, Meerut and Delhi).

Sports equipment manufacturing industry is ex-port-oriented and more than one third production of sports equipment is exported out of India. The export of sports equipment has been growing 10% to 15% every year

for last five years. Top six items of exports ac-count for more than 70% of exports of sports equipment from India namely inflatable balls (26%), cricket equipment (18%), boxing equip-ment (9%), hammocks (8%), athletic goods (7%) and nets (3%). More than 75% of exports of sports equipment from India goes to six countries namely UK (27%), USA (19%), Austra-lia (16%), South Africa (5%), France (4.5%) and Germany (4%). India presents a huge potential in sports business and its market size is poised for a quantum jump in the coming years due to boom-

ing economy, large middle class with disposable income and increased government spending in this sector.

‘Sports business is poised for a quantum jump in the coming years’Ð Mr Tarun Dewan,Secretary, Sports Goods Export Promotion Council

Mr Tarun Dewan, Secretary, Sports Goods Export Promotion Council

Source: Sports Goods Export Promotion Council

Major sports equipment export destinations

27%

16%

4%

5%

4.5%19%

24.5%UNITED KINGDOM

Australia

USA

Other Countries

FranceSouth Africa

Germany

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Ms Ayumi Fujino, UNIDO Representative in India and Regional Director for South Asia, talks about the opportunities for MSME growth and development in an exclusive interview. Excerpts:

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‘The coming decades could well belong to the MSMEs’

Ms Ayumi Fujino, a national of Japan, took over as the Representative to India, and Head of the Regional Office for South Asia of the United Nations Industrial Develop-ment Organisation (UNIDO) in July 2010. Prior to taking up her current position, Ms Fujino was the UNIDO Representative in Thailand and Head of the Regional Office (2006-2010). During her career with UNI-DO, Ms Fujino has been involved in inter-agency collaboration in the programmes and projects with organisations such as the World Bank, Asian Development Bank, African Development Bank, Islamic Development Bank, IFAD, UNDP, UNFPA, UNIFEM, UNHCR, FAO, ILO, UNESCO, WHO, as well as the international NGOs like CARE and World Vision.

How far the five-year Country Programme of Cooperation could achieve the goal of strengthening the competitiveness and productivity of micro, small and medium enterprises (MSMEs) in India?Let me begin by first giving a brief introduc-tion to the United Nations Industrial Devel-opment Organisation (UNIDO) Ð the special-ised agency of the United Nations dedicated

to promoting sustainable industrial develop-ment in countries with developing and tran-sition economies; and also the only world-wide organisation dealing exclusively with industry from a development perspective.

It harnesses the joint forces of gov-ernment and the private sector to foster competitive industrial production, develop international industrial partnerships and promote socially equitable and environ-mentally friendly industrial growth. This, in essence, covers UNIDO's three thematic priorities, which are: a) poverty reduction through productive activities (providing a customised range of services ranging from industrial policy advice to entrepreneur-ship and development of small and medium enterprises, especially the development of micro, small and medium enterprises (MSMEs) through the cluster approach); b) trade capacity building; and c) energy and environment.

India is a major UNIDO development cooperation partner in Asia and the Pa-cific, and has been active in India since 1967, almost since the very establishment of the organisation, in 1966. It has completed more than 380 projects in the country during the pe-riod 1979-2009 with a total expenditure of US$162 million. Currently, we have 33 ongo-ing projects in India with a total allotment of US$32.6 million and another four projects with a global coverage but chiefly executed in India with a consolidated budget of US$6 million. Taking into account the pipeline projects with an estimated budget of US$33 million, the volume of our operations under the UNIDO Country Programme for India 2008-12 comes to well over US$71 million Ð making it one of the largest, and certainly among the most diversified UNIDO initia-

tives globally. The Department of Indus-trial Policy and Promotion (DIPP), Ministry of Commerce and Industry, Government of India, as the nodal ministry for UNIDO pro-motes the expansion of UNIDO programmes in India. We are also working very closely with the Ministries of MSMEs; Heavy Indus-tries; Environment and Forests; Ministry of New and Renewable Energy Sources; and the Ministry of Chemicals and Fertilisers.

The Country Programme of Cooperation between India and the UNIDO 2008-2012, signed in May 2008 in Vienna, focuses on MSMEs; clean technology; energy and cli-mate change; skill development and South-South Cooperation.

The Programme, which is now a little over half way through its implementation, aims at raising the competitiveness of in-dustrial enterprises, especially the MSMEs through industrial policy advice; investment

and technology promotion; technology-oriented initia-tives to increase productivity, quality, energy efficiency, oc-cupational health and safety and the overall environmen-tal sustainability of industrial production.

Hence, you will find that the Country Programme includes several projects targeted at promoting MSMEs Ð notably, the MSME Cluster Development Programme in Orissa, implemented in asso-ciation with the Government of Orissa under which four clusters were selected covering handloom, handicrafts ( stone carving and non-timber forest product clusters) and light engineering; the brass and bell metal industries cluster project at Khagra in West Bengal; support to small and medium sized manufacturers in the automotive compo-nent industry in India across several states; and the landmark Consolidated project for

UNIDO Representative in India and Regional Director for South Asia

Ms Ayumi Fujino,

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SME development in India through the es-tablishment of mutual credit guarantee scheme, cluster twinning and foreign in-vestment and technology promotion. Some of these projects, including the one in Orissa as well as the project for upgrading the auto component industry, have already been suc-cessfully completed with positive impact on the productivity and competitiveness lev-els of the enterprises that participated in them.

What are the challenges and obstacles that you found while implementing the Programmes in India?I would say there are no obstacles Ð but opportunities and challenges, yes. The suc-cess of a programme hinges not only on identifying and addressing the right issues in the right way, but also on the procedures and manner of facilitating its timely ex-ecution. The effort on our part, therefore, is to promote regular and proactive dia-logue with counterparts and stakeholders, constantly streamline administrative pro-cesses, ensure appropriate monitoring, and stimulate innovation from a broad group of stakeholders. This enables us in turn to maintain the course of a coherent strategy and capture opportunities for enhancing cooperation wherever they arise.

How much the UNIDO Country Pro-gramme of Cooperation could support the national goal of inclusive growth, job cre-ation and poverty alleviation? The strategy underpinning the Country Pro-gramme of Cooperation 2008-2012 is inclu-sive growth. This is clearly reflected in the title of the Programme which is:

"Towards inclusive growth: Strengthen-ing the competitiveness and productivity of industrial enterprises". I must also mention that the Country Programme is fully aligned to the objectives of India's 11th Five Year Plan 2008-2012 which envisages promotion of a more inclusive, broad-based and high growth economic development across all sectors, and aims at creation of employment opportu-nities as an integral part of the process of eco-nomic growth and poverty alleviation. It also envisages that the micro, small and medium enterprises (MSME) sector, the second largest provider of employment in the country after agriculture, will be instrumental in creating off-farm employment to reduce unemploy-ment in both urban and rural areas.

The objective of the Country Programme is the diffusion of best practices for sustain-able industrial development, and to this end,

it covers the technology aspects of produc-tion (with emphasis on environmentally sus-tainable technologies, productivity improve-ments and quality management) on the one hand, and on the other, social capital issues encompassing human resource manage-ment and industrial organisation in clusters of small and medium enterprises. The focus thus is very much on the key manufactur-ing sectors with a view to enhancing em-ployment generation and ensuring a more balanced and inclusive pattern of economic growth in the country, in line with the na-tional goal that you have mentioned.

What are the specific action plans for skill development and investment promotion for MSME sector under the Programme?Skill development and investment pro-motion are, in fact, among the eight key areas being addressed under the Country Programme. Skill development by way of training and capacity building assistance to stakeholders and investment promotion for the MSME sector is an integral part of al-most every project being implemented un-der the Country Programme. And specific action plans are prepared and executed as part of each project.

In the recently completed project titled "Support to SMEs in the auto-component industry: the business partnership pro-gramme" (Phase II Ð enhanced), a large number of trainers and experts have been trained for the delivery of training and coun-seling services at the shop floor level. The element of Training of Trainers (TOT) is an indispensable element of our capacity build-ing assistance so that a pool of qualified trainers, counsellors, advisers is formed.

I would also like to make a mention of the Orissa Investment Project - a project complet-ed a year ago that was dedicated exclusively to investment promotion and implemented in association with the State Government of Orissa and DFID/UK - which resulted in the establishment of an investment promotion agency (‘Team Orissa') in IPICOL (the state government investment corporation) with the thrust on capacity building; and the launch of an Investor Perception Survey for the state, for the first time.

In one of our flagship projects Ð the "Con-solidated Project for SME Development in India through Establishment of Mutual Credit Guarantee Scheme, Cluster Twinning and For-eign Investment and Technology Promotion" , being carried out with funding by the Gov-ernment of Italy, cooperation between Indian

and foreign SME clusters in selected industrial sectors with particular emphasis on training is a key component, as also the upgrading of the capacities of institutions operating in the field of training in each of the clusters.

Similarly, the investment and technology promotion component of the project aims at strengthening the abilities of the concerned associations to promote business for their members, and at establishing and maintaining local and international trade and investment networks with the corresponding business pro-moter associations Ð also known as Business Promotion Institutions (BPIs). Among the in-novative tools introduced by UNIDO to support business promotion as part of this project is SPX or Subcontracting and Partnership Exchange Programme, which is basically a matchmak-ing centre for industrial subcontracting, supply chain management and partnerships between buyers and suppliers.

In fact, the SPX model provides an inter-esting example of CII-UNIDO collaboration in the area of business promotion of SMEs. In 2007, UNIDO and CII created a joint work plan for profiling auto component compa-nies in Chennai and Pune as part of our Consolidated Project for SME Development in India. As a result, over 350 auto compo-nent companies from the New Delhi region and another 350 from the Pune region were profiled by engineers from CII. Later, CII Chennai helped in further profiling about 200 auto component companies. This ini-tiative has facilitated B2B matchmaking of the associations, and buyers have also vis-ited companies of the SPX members as SPX enabled the associations to introduce the members to international buyers and part-ners. SPX members are also offered other services like investment evaluation and preparation of feasibility reports; supplier development programmes; and utilisation of private equity and venture capital.

What are the key elements incorporated in the Programme for sustainable devel-opment and environmental protection?A major key component of the 5-year Coun-try Programme is precisely to raise the competitiveness of industrial enterprises in India through the introduction of environment-friendly technologies, as the overarching objec-tive of the Programme is diffusion of best prac-tices in sustainable industrial development.

Hence, the Programme has been designed to focus on environmentally sustainable in-dustrial technologies, apart from the other two key focus areas of productivity improve-

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ments and quality management. While un-derlining the induction of clean technologies, the Country Programme clearly states: "This should be done under a broad framework of ‘Industry and Climate Change', and should aim at developing a clean-green industry". The strategy includes, among other things, measures to introduce energy efficiency and conservation in various industries; and wa-ter conservation practices in enterprises.

To this end, UNIDO is currently imple-menting in India several projects geared specifically towards furtherance of the vi-sion of clean-green industry working within international schemes such as the three Global Environmental Facility (GEF)-funded projects namely: Environmentally sound management of PCBs (poly chlorinated bi-phenyls) in India; Promoting Energy Ef-ficiency and Renewable Energy in Selected MSME Clusters in India; and Development of a National Implementation Plan for the Elimination of Persistent Organic Pollutants (POPs) to enable the country to take the first key steps towards implementation of the Stockholm Convention. Also in this category is a project in compliance with the Montreal Protocol, namely, CTC (ozone-depleting sub-stances) phase-out in selected manufactur-ing companies (eg, pharmaceuticals and agro-chemical enterprises). What are the detailed initiatives taken for technology transfer under the Pro-gramme?The acquisition, assimilation and develop-ment of new manufacturing technologies figures prominently in UNIDO's Country Programme for India, and the most cost-effective intervention here is at the level of industrial SME clusters in the country, aimed at enhancing the productivity and competi-tiveness of industrial enterprises through induction of cleaner technologies, technol-ogy transfer/promotion, commercialisation and diffusion of advanced manufacturing technologies, etc. Ð all inputs that are im-perative to increase the turnover, exports and quality of products manufactured by enterprises in various industrial clusters. The enhancement and competitiveness of enterprises in turn is expected to generate employment and contribute towards a bal-anced and inclusive pattern of industrial de-velopment in the country which could serve as a strategy for poverty alleviation.

Which are key areas of focus (sectoral and geographical) of the Programme?

As you will notice from what I have already indicated, the Country Programme covers a wide range of sectors encompassing both traditional and the non-traditional Ð from handicrafts and leather to pharmaceuticals and from engineering and auto components to the emerging new areas of environment management.

The Programme features, to the extent possible, a sectoral and geographical focus reflecting UNIDO's domains of expertise as well as the priorities given by local authori-ties to particular sectors and regions. UNIDO's interventions are therefore in principle open to any regions/states. However, as for the sec-toral focus, industrial enterprises in leather, textiles, auto components, machine tools, chemicals and food processing industries are close to UNIDO's areas of specialisation.

How far the five-year Integrated Clus-ter Development Programme (ICDP) has helped in improving MSME sector in India? How these programmes facili-tate Indian MSME in participating in the global economy?The Integrated Cluster Development Pro-gramme (ICDP) is a five-year programme (2009-2014) and so it is an ongoing pro-gramme being executed by UNIDO with DIPP as our counterpart agency. Out of eight iden-tified clusters, currently two clusters (plas-tics and machine tools) are ongoing, with other clusters to be launched soon. Given that the project started a little over a year ago, the impact will be seen over the span of the next few years. The project is very much on course, with its focus on achieving the objective of delivering turnkey solutions to the challenges facing selected clusters Ð helping them address quality, technology and environmental constraints by providing customised services to meet the specific re-quirements of each cluster.

ICDP cuts across a number of key initia-tives of the Country Programme such as: raising the competitiveness of industrial en-terprises through the induction of environ-ment-friendly technologies; the integration of total quality management and cleaner production services; and raising the com-petitiveness of MSMEs in relatively backward areas through innovative cluster-based ap-proaches. The key objective is to facilitate their participation in the global economy through enhanced competitiveness in terms of productivity, quality and compliance with global economic and environmental norms.

We believe that UNIDO is uniquely posi-

tioned to help enterprises in attaining this goal, as it has increasingly focused its atten-tion over the past one decade on the promo-tion of foreign investment and technology transfer on the one hand, and strengthen-ing the technical and managerial capacities of MSMEs to respond effectively to the chal-lenges and opportunities posed by the pro-cess of globalisation on the other. By doing so, the integration of small and medium en-terprises into local and global supply chains of domestic and multinational companies has been an integral part of UNIDO's work.

How far Indian MSME could face the glob-al competition? Where do you see Indian MSME sector in the next five years? MSMEs play a critically important role in eco-nomic and industrial development, as micro, small and medium enterprises make up over 90% of enterprises in the world and account for 50-60 % of employment in developing countries. The major challenge for MSMEs is to combine employment potential with in-creasing productivity Ð of shifting from low value to higher value quality production.

There is no doubt that in most countries, including India, MSMEs are the engine of growth because of their inherent strengths and geographical spread. I understand that in India, according to current estimates, the MSME sector employs about 60 million persons in over 26 million units across the country and contributes about 45% of the country's industrial output ! Further, that this sector has shown consistent growth in terms of output, exports and job creation. There is, however, a lot of latent potential waiting to be tapped. Improving the pro-ductivity and competitiveness of MSMEs, especially through cluster development, holds the key to their meeting the challenge of today's growing global competitive envi-ronment. With appropriate growth strate-gies in place, the coming decades could well belong to the MSMEs. I need hardly emphasise the importance of creating good enabling environment for busi-nesses/SMEs to operate, and addressing the crucial role of the government/public sector for policy implementation as well as of the private sector working together with the public sec-tor since public-private partnership (PPP) is a crucial element of success for the MSME sector. The private sector is a key driving force behind industrial development in almost all countries. And here, in our view, the role of private sector institutions like Confederation of Indian Indus-try (CII) is very important.

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Skills Can Change the World

ship, to identify, design and conduct training programmers for existing entrepreneurs, and to organise seminars, workshops and confer conferences for providing a forum for interaction and exchange of views by vari-ous agencies and entrepreneurs.

Other institutes are MSME Development Institutes, Central Footwear Training Cen-tres, Agra & Chennai, Fragrance and Flavour Development Centre, Kannauj, Process-cum-Product Development Centre, Agra, Electronics Service & Training Centre, Ram Nagar, and Institute for Design of Electrical Measuring Instruments, Mumbai.

CII Skills Development TrustTaking advantage of the considerable strength of younger generation in India, the aging world and requirement of skilled la-bour, CII has registered a Skills Development Trust with a skills development fund and also created an over arching CII skills and knowl-edge mission, to guide the functioning of its skills development initiative.

The main objective of the trust is to em-power youth to find income earning oppor-tunities with high productivity. Besides, the trust focuses on to generate conditions for social inclusiveness and provide the socially and economically vulnerable population a chance to be part of the mainstream econ-omy. It also provides training to multi-collar task forces with a view to make India the skills capital of the world.

The trust has partnered with leading training and awarding bodies and institu-tions nationally and globally to address the skills gap and unemployment. Besides, it helps industry deliver internationally competitive performance by having access to locally available, internationally bench-marked skilled manpower trained in line with their requirements.

In the dynamic and fast growing liberalised world only skilled personnel will help India in realising it true growth potential

The micro, small and medium enterprises (MSMEs) sector has emerged as a highly vibrant and dynamic sector of the Indian economy over the last five de-

cades. MSMEs not only play a crucial role in industrialisation of rural areas but also help in providing large employment opportuni-ties at comparatively lower capital cost than large industries. The sector is complemen-tary to large industries as ancillary units and contributes enormously to the socio-economic development of the country.

The promotion of MSMEs in the country is done with an objective of creating self-em-ployment opportunities and upgrading the relevant skills of existing and potential en-trepreneurs. However, the sector has been experiencing shortage of skilled personnel which is a major constraint to realise its true growth potential, especially in a dynamic and fast growing Indian economy.

Studies have indicated that Chinese products are more competitive as the skill content of their MSME workforce is higher than that of India. According to the Global Competitiveness Report (World Economic Forum, 2010), lack of educated workforce remains one of the leading problems for do-ing business in India. More so in the case of MSME sector where shortage of adequately skilled and employable talent pool poses a significant barrier for their accelerated growth and competitiveness.

Ministry Initiative For providing relevant skills for productive employment the Ministry of Micro, Small and Medium Enterprises has established various skill development institutes and centers that included National Institute for Entrepreneurship and Small Business Devel-opment (NIESBUD), Noida, for coordinating,

training and overseeing the activities of var-ious institutions engaged in entrepreneur-ship development. Particularly in the area of small industry and small business, Na-tional Institute of Micro, Small and Medium Enterprises (NIMSME), Hyderabad, is tasked with the primary objective to be the trainer of trainers. The institute has widened the scope of activities to consultancy, research, extension and information services.

National Small Industries Corporation, established to promote entrepreneurship development in the country, is engaged in basic skill development training programmes through its NSIC Technical Service Centres (NTSCs) and NSIC Technical Service Extension Centres (NTSECs). It is giving special empha-sis on technical/vocational education and skill development so as to increase the skilled workforce from 5% at present to about 50% as envisaged by the government policies.

Indian Institute of Entrepreneurship (IIE), Guwahati, undertakes training, research and consultancy activities in small and mi-cro enterprises focusing on entrepreneur-ship development. The main objectives of the institute are: to organise and conduct training for entrepreneurship develop-ment, to identify training needs and offer training programmers to government and non-government organisations engaged in promoting and supporting entrepreneur-

Vocational Training

Promoting MSMEs In Sunrise Sectors

entrepreneurs who will contribute to the future economy of India.

As an effort to develop and promote these sunrise industries, many EDIs with laudable infrastructure located in sufficient land duly equipped with state-of-art equipments/gad-gets/training aids offering a wide spectrum of training programmes are now focusing on sunrise sectors in consonance with changing market trends and matching requirements of modern industry, business, services and cor-porate sectors. Of late, the trend has been in tune with the global scenario of laying stress on skill upgradation, product diversification, value addition and export orientation both in the manufacturing and services sectors.

Religare's in-depth knowledge of emerg-ing sectors has enabled it to deliver effi-cient and customised solutions, resulting in significant traction for developing new opportunities and ideas that add long-term shareholder value.

Religare, one of the largest NBFCs is committed to support the growth and de-velopment of the MSMEs in the sunrise sec-tors like agribusiness, healthcare, life sci-ences, telecommunications, infrastructure, retail, information technology, etc., which are the future industries of India and will facilitate the overall development of the country through strategic initiatives.

Religare has a strong knowledge capital, a key ingredient of all the internal and external processes. This will help in promoting MSMEs in the sunrise sectors through structuring of innovative, superior and sustainable financial solutions, based on efficient product delivery, industry benchmarked service levels, and strong client orientation.

credits: management team of religare finvest limited Ð lending and distribution Arm of religare enterprises limited

In the Indian context, information technology (IT), biotechnology (BT), pharmaceuticals and nanotechnologies along with IT-enabled services are often cited as sunrise industries. India is seen as competitive in these industries

Each industry in this present sce-nario is seen to exhibit a pecu-liar life cycle. Industries flour-ish, boom and at the end die out as saturation takes place

or substitutes emerge. Some examples for this are black and white television sets and manual typewriters. In some industry sectors, innovation helps to extend the life cycle as new products replace earlier offerings. It therefore becomes necessary to identify sunrise industries so that an ap-propriate policy regime can be put in place to promote MSMSEs in this sector and en-able them to grow and expand.

OPPORTUNITIES FOR GROWTHIn the Indian context, information technol-ogy (IT), biotechnology (BT), pharmaceuticals and nanotechnologies along with IT-enabled services are often cited as sunrise industries. India is seen as competitive in these indus-tries which are in line with the fast changing economic, technological and global context.

CHALLENGES FACED BY SUNRISE INDUSTRIESMany of the sunrise industries are in the service sector and the following challenges confronting them are quite different from those faced by traditional manufacturing in-dustries. l Issues such as IPR protection l Managing rapid upscaling of operations is often more important than raw material costs.

ROLE OF MSME The MSME sector has a limited presence in most sunrise industries. Yet opportunities ex-ist for them within the value chain.

INITIATIVES: l The Ministry of MSME has encouraged

the setting up of more MSMEs in these in-dustry sectors.l The establishment of a Biotechnology Cell at SIDO and the conduct of Sensitisation Workshops on Biotechnology in the MSME sector in collaboration with the Department of Biotechnology are steps in that direction. l A number of IT-enabled services have been recognised as MSMEs/SSSBEs. l The investment ceiling for reserved items in the pharmaceutical sector has been en-hanced to Rs 5 crore.

NEED TO PROMOTE MSMEs IN SUNRISE INDUSTRIESExtra efforts need to be put in to promote MSMEs in sunrise industries. MSME phar-maceutical units need to adopt Good Man-ufacturing Practices (GMP). MSME units in software and software related services often find themselves helpless in the face of predatory pricing by large competitors. A focused Action Plan which is industry specific is needed to promote these sunrise industries which have the potential to be the winners of tomorrow.

EFFORTS TO PROMOTE MSMEs IN SUNRISE INDUSTRIESThe sunrise sectors have large enter-prises which can be complemented by the MSMEs. MSMEs can also promote big

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Be Part Of The Crowd

theless, crowd-funding is not for people who are looking for millions of rupees in startup capital. However, it is for those who are looking for a small amount to get the business launched.

3 Steps into CrowdJoin crowd-funding site(s): You need to join one or more crowd-funding sites to start tapping into the power of support-ers-powered business funding.

Post your projects: Not every crowd-funding site is created equal. You need to learn the ropes first to use all the features possible on a particular crowdfunding site. Be sure to check out each crowdfunding site and see whether the business funding system works for you.

Repeat: For serial entrepreneurs who like to start things out, getting their busi-ness launched, and start all over again, crowd-funding services are heaven. You can have mini-startups to turn your busi-ness ideas into reality. Doing so on regular basis can help you establish a reputation as someone who is successfully getting startups financed and launched.

Crowd-funding substitutes more formal fundraising techniques with a more casual approach based on crowd participation for startup businesses

Great business ideas are always popping up in an entrepre-neur's mind. But to take one or two business ideas into reality needs one of the most

important ingredients: startup capital. Thanks to the ever-evolving online busi-ness services, budding entrepreneurs with limited startup budget can now tap into a new powerful funding option: crowd-fund-ing. No more borrowing from your friends and family that can impact your relation-ship when things go wrong; Getting fund-ing from your project's supporters allow you to start up without the fear of failing.

Crowd-funding, sometimes called crowd-financing or crowd-sourced capital, describes the collective cooperation, at-tention and trust by people who network and pool their money and other resources together, usually via the Internet, to sup-port efforts initiated by other people or organisations.

In common parlance, it is about getting a startup funded by a community. So, in-stead of submitting a business plan and funding proposal to banks and lending institutions, one can join a crowd-funding site, post the project. If the community views the startup as promising it will get the necessary funding, all without inter-ests and collateral.

Crowd-funding replaces more formal fundraising techniques with that of a more casual, yet powerful, approach based on crowd participation. Examples of the basis of crowd-funding can be seen in coopera-tives (co-ops) around the world. However, the Internet can provide new streamlined approaches to quickly imitating the co-operatives model for low-level and sud-den needs. It is this reason that a term be used to encompass the act of informally generating and distributing funds, usually online, by groups of people for small busi-ness initiative.

Crowd-funding is very much related to online communities and social networks. The crowd can already exist as a com-munity but they can also suddenly form disparate groups around the world who all happen to share an interest in funding a person or a project. The Internet allows for information to flow around the world, increasing awareness. A crowd-funded network can assemble and disassemble at any time. This is the primary difference to traditional cooperatives.

Influence of the crowd is another fac-tor. Crowd psychology sometimes can play a part in the success or failure of crowd-funding efforts.

Crowd-funding, in essence, is similar to angel investing Ð project supporters don't require any principals returned or interests paid. They are just happy to sup-port a startup they like and be successful. However, on certain crowd-funding sites, you can offer something in return for your supporters' money. According to PaidCon-tent.org, approximately $80 million has been raised through crowd-funding sites by almost one million supporters. Never-

Innovation

Marginal Dip in BCI for MSMEs

March 2011) at 73.9, again an increase of 0.4 points over the previous quarter.

Most of the other variables in Survey regis-tered BCI values in the range of 51-75, indicat-ing a decline in the outlook over the previ-ous quarter. Only Input costs (25.1) fell in the range of 25-49%, a decline of 3.8 points, indi-cating that firms expected an increase in the inputs costs vis-�-vis the previous quarter.

Within MSMEs, services sector is found to have convincingly outshined the industrial sector with regard to gross sales, new orders / contracts, exports, selling prices and net profit margin. Industrial sector has done well in capacity utilisation and inventory levels.

CII has found that MSMEs in industrial sector seem to be relatively less favourably placed in terms of credit availability and credit cost of working capital as compared to their counterparts in services sector, pos-sibly highlighting the need for a policy inter-vention. Further, the prospects on Net profit margin for January-March 2011, quarter in industrial MSMEs is found to be far lower than that in services MSMEs, owing primarily to greater adversity of rising input costs in former than in latter.

The CII Business Confidence Index (BCI) for MSMEs for the current quarter January-March 2011 reflected a marginal decline over the previous quarter (October-December 2010)

The CII Business Confidence Index (BCI) for MSMEs for the current quarter January-March 2011 re-flected a marginal decline over the previous quarter (October-

December 2010). The BCI for MSMEs for the current quarter is estimated at 65.2, on an outlook scale of 0-100, moving from most unfavourable to favourable situation. A value of 50 is the dividing line between favourable and unfavourable change in the outlook.

According to the survey, much of the de-cline is attributed to the increasing overall in-put costs which are also going to affect the in-ventory levels for the MSMEs. Persistent and high inflation is going to adversely affect the raw materials and other commodities that are to be used by MSMEs. Additional impact is expected from the increasing input costs eating into the net profit margins of MSMEs.

Interest rates are also expected to stiffen up in the coming quarter, which is going to adversely affect the credit cost and the credit availability for proposed/planned capacity ex-pansion of the MSMEs. Same is the case with credit cost and credit availability for working capital which play an extremely pivotal role for the expansion and consolidation of the MSMEs. The adverse effect of these variables has had the similar effect on the anticipated inventory levels, for the next quarter. Inven-tory levels have shown a decline of 5.5 points vis-�-vis the previous quarter, with the cur-rent value being 55.2 points.

The silver lining to the cloud is the buoy-ancy expected in the gross sales, that is on account of domestic demand, according to Mr Chandrajit Banerjee, Director General, CII. Given the optimistic outlook in gross sales it is hardly surprising that selling pric-es and new orders/contracts are reflecting an upward trend over the previous quar-

ter. The much expected and awaited noti-fication about the procurement policy may also be a reason for buoyancy expected in the gross sales, he added.

CII Business Confidence Index (BCI) for MSMEs, which aims at understanding the business sentiments of the MSMEs a quar-ter in advance, shows that services sector on average are expecting to perform bet-ter than the industrial sector. Estimated BCI value of services MSMEs stood at 66.4 compared to 64.0 for industrial MSMEs, for this quarter (January-March 2011). Servic-es exuberance even in the previous quar-ter had surpassed the industrial sector by a reasonable margin.

Out of a list of 14 exhaustive outlook indi-cators, the CII Survey highlights four (4) vari-ables Ð Gross sales, new orders / contracts, capacity utilisation, and capacity expansion that have done exceptionally well to cross the mark of 75 on BCI scale to not only in-dicate good performance but these variables are expected to do well in this quarter (Janu-ary -March 2011) as well. This, in turn, is also keeping the prospects of employment in the sector bright, with its BCI standing (January-

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BCI of SMEs: Critical Outlook Indicators (Jan-Mar)

Overall BCI Change From Prv Qtr87.3

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-7.2-3.4-4.9-5.9-5.5-3.70.70.5 0.91.51.10.33.7

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Due Credit To MSMEs

tem to address the issue of NPAs. These committees suggested a new legislation for securitisation, and empowering banks and FIs to take possession of the securities and sell them without the intervention of the court and without allowing borrowers to take shelter under provisions of laws.

Meanwhile, in a latest research report published rating agency Crisil has warned that Indian banks may see deterioration in their asset quality, while their collective gross non-performing assets (NPA) ratio may increase to 3.6% in 2010-11 from 2.3% in 2008-09. As of March 2009, the value of assets restructured by banks stood at Rs 76,500 crore. Restructured assets as a percentage of total advances are estimat-ed to have increased to 3.4% in 2009-10 from 2.5% in 2008-09.

Crisil predicted that some of these re-structured assets would eventually turn into non-performing assets, leading to higher gross NPAs in the near term. Crisil expects net NPAs to rise by 30 basis points between 2008-09 and 2010-11, despite higher provisioning.

The SARFAESI Act was put in place to allow banks and financial institutions (FIs) to take possession of securities and sell them. However, the MSMEs need to be provided some level of protection with a more liberal approach on rescheduling/rephasing, revival/rehabilitation

With an attempt to provid-ing a structured platform to the banking sector for managing its mounting non-performing assets

(NPAs) stocks and keep pace with inter-national financial institutions, the Secu-ritisation and Reconstruction of Financial Assets and Enforcement of Security Inter-est (SARFAESI) Act was put in place to al-low banks and financial institutions (FIs) to take possession of securities and sell them. SARFAESI Act empowers banks and FIs to recover their NPAs without the in-tervention of the Court. The Act provides three alternative methods for recovery of non-performing assets, namely, securiti-sation, asset reconstruction, enforcement of security without the intervention of the Court.

However, the provisions of the Act are applicable only for NPA loans with out-standing above Rs 1 lakh. NPA loan ac-counts where the amount is less than 20% of the principal and interest are not eli-gible to be dealt with under the Act.

Besides, the Act empowers the bank to issue demand notice to the defaulting bor-rower and guarantor, calling upon them to discharge their dues in full within 60 days from the date of the notice. The bank can also give notice to any person who has acquired any of the secured assets from the borrower to surrender the same to the bank. If the borrower fails to comply with the notice, the bank may take recourse to one or more of the following measures: take possession of the security, sale or lease or assign the right over the security, manage the same or appoint any person to manage the same

MSME & SARFAESI ActThe Act views all defaulters alike without any distinction as between a willful de-

faulter and a defaulter by circumstances beyond his control. A fast track exit mecha-nism, one of the intended outcomes of the Act, is expected to cut short the inordinate delay of the legal process benefiting bor-rowers, too. However, many media reports have suggested that the SARFAESI Act is going against the smallest of the small borrowers and against the micro, small and medium enter-prises (MSMEs) all over the coun-try. More often, the assets of the MSMEs are seized and sold at throwaway prices, enriching only the middlemen. Both the small borrower and the banks lose out on this score. It has been reported that small borrowers are not given any reschedul-ing/rephasing, revival/rehabilitation as liberally as the large borrower. Moreover, the industry view is that an amendment exempting MMSEs from the SARFAESI Act and amendment giving time up to 180 days to the borrower to repay, instead of the present 60 days, should be done.

RBI & SARFAESI ActThe Reserve Bank of India (RBI) has asked the banks not to dispose of their NPAs at less than their NPV (net present value). Besides, the RBI had a clear and categori-cal differentiation in the treatment of a defaulter by circumstances and a willful defaulter. Besides, an amendment to the Income Recognition & Asset Classification norm of the RBI specifying an asset to be classified as an NPA only after 180 days, instead of the present 90 days.

NPA & SARFAESI ActBy the late 1990s, rising level of Bank NPAs raised concerns and panels like the Narasimham Committee II and Andhyaru-jina Committee which were constituted for examining banking sector reforms consid-ered the need for changes in the legal sys-

Finance

Retracing The Silk Route: India-Syria MSME Cooperation

market access that a presence in Syria will ensure in reaching out to contigu-ous markets in the region.

Syria has been taking steps to in-tegrate with the world economy by carrying out reforms. The country is member of the Greater Arab Free Trade Area and has a free trade agreement with Turkey while those with Russia, Belarus, Kazakhstan and a number of other countries are in the pipeline.

The $100-million line of credit (LOC) that Government of India has extended to Syria is an enabling fac-tor for Indian businesses seeking to establish footprints in the West Asian country. As such, the LOC is provided with the view that Indian companies would be able to involve themselves in developmental projects in Syria and thereby obtain good exposure to the Syrian market, and showcase to Syria the potential of Indian industry.

India and Syria have taken strident steps to strengthen the bilateral economic cooperation. MSME cooperation is the next big opportunity for businesses on both sides

Traditional partners India and Syria are retracing the Silk Route through which the two regions conducted trade several centuries ago.

While modern transport and communi-cations have limited the scope of eco-nomic exchanges by the historic land route, the cultural contiguity and eco-nomic complementarity are contribut-ing in a major way toward cement the India-Syria economic relations.

The solidity of the bilateral ties came to the fore when President of India Pratibha Patil visited Syria in late November 2010. During the state visit, the two countries reiterated the need for closer cooperation in the ar-eas of agriculture, health, oil, mineral resources, phosphates, electricity, transport, telecommunications, tech-nology and higher education, while examining the possibility of building a strategic partnership in areas like software, textiles, pharmaceuticals and food industry, using advanced In-dian technology.

Notably, both the sides also recog-nised the importance of establishing closer cooperation between Indian and Syrian small and medium enter-prises. This was earlier highlighted when Mr Anand Sharma, Union Minis-ter of Commerce & Industry, Govern-ment of India, held discussions with industry heads in Syria during his

visit in June 2010 accompanied by a business delegation from Confedera-tion of India Industry (CII).

Business TiesThe MOU that was subsequently signed between CII and the Federa-tion of Syrian Chambers of Industry (HOMS) also referred to cooperation in SME business, apart from stepping up partnerships in sectors like IT, oil and natural gas, phosphatic fertiliz-ers, pharmaceuticals, automobiles, processed food products, agricultural machinery and marine transport.

While several large enterprises from India have established their presence in Syria in domains like fertisers, steel, IT & IT education, the growing oppor-tunity for Indian MSMEs to strike joint ventures in Syria cannot be overstat-ed. The opportunity stems from the fa-vourable investment climate that pre-vails in Syria, as well as the extended

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The centre has three classrooms/labs and can train 90 students at a time. About 500-600 students can be trained at the centre per year. Courses on in-formation security, software engineer-ing and information management and advanced data centre operations will be taught in the centre in the beginning.

The Centre for Development of Ad-vanced Computing (C-DAC), an autono-mous scientific society under the Min-istry of Communications & Information Technology, Government of India is of-fering assistance to the Syrian side in execution of the project.

MSME CooperationThe stage is indeed set for Indian and Syrian micro, small and medium enterprises (MSMEs) to explore new ways to do business together. The In-dian MSME growth model is viewed as relevant in the developing and emerg-ing economies. Perhaps, the Indian MSME growth experience would be of essence to Syrian industry. This would also pave the way for key knowledge sharing opportunities, leading to ca-pacity building initiatives.

In Indian, the MSME sector has a critical role in boosting the country's manufacturing sector. In view of Syria's own focus on manufacturing sector in the context of its overall development, bilateral cooperation in this regard would go a long way in furthering the business to business engagements.

Key SectorsThe investment opportunities are clearly emerging from long years of bilateral trade relations. Essentially, Indian exports to Syria consists of man-made fabrics and yarns, machin-ery and transport equipment, phar-maceuticals & chemicals, manufacture of metals, and jute and jute products. And Indian imports from Syria largely constitute rock phosphates, pulses, spices, raw cotton and raw wool.

Although Indian investments in Syr-ia are still growing, by year 2006 itself Syria received investments from India worth $84 million out a total of $800 million. India was, therefore, the third highest investor in the country and ahead of Germany's with $24 million.

Over the years Indian companies have been involved in building electric-ity transmission towers/network in the Jordan-Syria sector, supplying earth-

moving equipment to Syria, setting up of electric sub-stations, etc.

In recognition of the mu-tual gains from the trade and investment ties, the two countries also launched a Joint Business Council to double the bilateral eco-nomic and trade volumes. This was concluded during President Pratibha Patil's state visit to Syria.

Syrian Minister for Econ-omy and Trade, Ms Lamia Mari Assi, had said that investment was welcome by way of joint ventures or foreign di-rect investment or even public-private partnerships in the IT, R&D, pharma-ceutical and energy sectors. Ms Assi had called for "big involvement" by Indian companies in the infrastruc-ture projects in Syria, mentioning it requires $115 billion investment in the country's current five-year plan.

IT is one area where India has much to contribute in Syria's development. In this context, the India-Syria Centre of Excellence for Information Technol-ogy which was set up in Damascus is a key milestone. The Centre will impart IT training to Syrians in public and private sectors. The decision to establish such a centre was taken during the state visit of Syrian President Bashar Al Assad to India in June 2008. Syria has provided infrastructure for the centre.

Trade relations between India and Syria are at least 4,000 years old. Given this long history,

current level of trade is far below the potential. Both countries are committed to expanding bilat-eral trade substantially in the coming 2 -3 years.

Following the visit of the Syrian President H.E. Dr. Bashar al-Assad to India in June 2008, there is now added momentum to strengthening economic relations. Syria is gearing up to become the trans-port hub of the region and a major transit place for oil and gas. Further, the focus of Syria's 11th Five

Year Plan commencing this year is infrastructure. These offer plenty of opportunities for Indian com-panies to participate in and contribute to Syria's economic development.

Most of the industries in Syria would fall in SME category. Nearly 70% of the membership of CII is also SMEs and these have made invaluable contribution in accelerating economic growth in India. It would be mutually beneficial if our knowledge and experience of SMEs, the regulatory mechanisms and making a success of SMEs could be shared with Syrian SMEs.

‘Our knowledge and experience of SMEs could be shared with Syrian SMEs’ Ð Mr V P Haran, Indian Ambassador to Syria

Mr V P Haran, Indian Ambassador to Syria

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title/theme date venuechandigarh Annual session 1 march chandigarhIndustrial expo 4-6 march sIdcul, IIe, HaridwarHP state Annual session 5 march shimlaWestern uP Annual session 10 march Jammuseminar on latest Hr mobilisation Practice 11 march JhansiPunjab state Annual session 12 march chandigarhrajasthan state Annual session 2010Ð11 & Panel discussion on

Building rajasthan as a Preferred Investment destination16 march

sms convention centre, Jaipur

cII uP state Annual session 17 march lucknowcII J&K state Annual session 18 march Jammu2nd lean six sigma summit 22 march delhitraining Programme: How to be a star Performer 24 march dehraduncoolex 2011 8-11 April chandigarhtraining Programme on employee Performance 23 April Jammucoolex 2011 22-25 April lucknowKitchen & Beyond 2011 22-25 April chandigarh

Upcoming Events

contact: Mr CM Tungare, Email: c.tungare@cii.in, Ph: 9867510622

contact: Mr N Deep, Email: n.deep@cii.in, Ph: +91-80-23289390/098453 53135

contact: Ms Navdeep Kaur, Email: navdeep.kaur@cii.in, Ph: 0172-5080124

CII Western Region

CII Institute of Quality

title date venue3rd meeting of maharashtra state msme Panel 17 march mumbai

msme mission to germany (Hannover fair) and Italy (milan) 2-9 April Hannover and milan

title date venueWorkshop on Assessment for Business excellence for small and medium Businesses 28 february - 1 march BangaloreWorkshop on Assessment for Business excellence for small and medium Businesses 5-6 April Bangalore

contact: Ms Prashanthi B, Email: prashanthi.b@cii.in, Ph: 0431 - 2410641

contact: Mr Vikas Nagrare, Email: vikas.nagrare@cii.in, Ph: 040 - 2776 5933

contact: Mr V. Murugan, Email: v.murugan@cii.in, Ph: 044 - 42444555 Extn 581

contact: Mr Sujith Unni, Email: Sujith.unni@cii.in, Ph: 0484-4012300

contact: Mr Solomon, Email: Solomon@cii.in, Ph: 0471-2438922

contact: G K Nair, Email: g.k.nair@cii.in, Ph: 0484-4012300

contact: Ms Ishita Mukherjee, Email: Ishita.b@cii.in, Ph: 080-42889595

contact: Mr Y J Franklin, Email: y.j.franklin@cii.in / cii.puducherry@cii.in, Ph: 9443140772 / 0413 2226201

CII Southern Regiontitle date venuecyber security for msmes march/April trichytotal Quality management for sme's April trichy

Workshop on finance for non finance executives April gBc, Hyderabad

Buyer - seller meet April msme dI, chennai

design sensitisation seminar 2 march Kottayam

design sensitisation seminar march trivandrum

vendor development Programm April Palakkad

ffP deep dive Workshops , manufacturing excellence march/April Bangalore

World is your market II April Bangalore

Buyer-seller meet Ð A vendor development Programme 20 April Hotel Anandha inn, Puducherry

For further details please contact Gurpal Singh, Confederation of Indian Industry (CII), ‘The Mantosh Sondhi Centre’, 23, Institutional Area, Lodhi Road, New Delhi 110 003 Tel. : +91 (011) 24629994 - 97 * Fax : +91 (011) 24626149 * e-Mail : gurpal.singh@cii.in

CII Northern Region

MSME focused Projects, Events, Meetings, Interactions, Training, Programmes (Mar-Apr 2011)

© CONFEDERATION OF INDIAN INDUSTRY

The Confederation of Indian Industry (CII) works to create and sustain an environment conducive to the growth of industry in India, partnering industry and government alike through advisory and consultative processes.

CII is a non-government, not-for-profit, industry led and industry managed organisation, playing a proactive role in India's development process. Founded over 115 years ago, it is India's premier business association, with a direct membership of over 8100 organisations from the private as well as public sectors, including SMEs and MNCs, and an indirect membership of over 90,000 companies from around 400 national and regional sectoral associations.

CII catalyses change by working closely with government on policy issues, enhancing efficiency, competitiveness and expanding business opportunities for industry through a range of specialised services and global linkages. It also provides a platform for sectoral consensus building and networking. Major emphasis is laid on projecting a positive image of business, assisting industry to identify and execute corporate citizenship programmes. Partnerships with over 120 NGOs across the country carry forward our initiatives in integrated and inclusive development, which include health, education, livelihood, diversity management, skill development and environment, to name a few.

CII has taken up the agenda of "Business for Livelihood" for the year 2010-11. Businesses are part of civil society and creating livelihoods is the best act of corporate social responsibility. Looking ahead, the focus for 2010-11 would be on the four key Enablers for Sustainable Enterprises: Education, Employability, Innovation and Entrepreneurship. While Education and Employability help create a qualified and skilled workforce, Innovation and Entrepreneurship would drive growth and employment generation.

With 64 offices and 7 Centres of Excellence in India, and 7 overseas in Australia, China, France, Singapore, South Africa, UK, and USA, and institutional partnerships with 223 counterpart organisations in 90 countries, CII serves as a reference point for Indian industry and the international business community.

Confederation of Indian IndustryThe Mantosh Sondhi Centre

23, Institutional Area, Lodi Road, New Delhi - 110003 T: 91-11-24629994-7; F: 91-11-24626149

E: ciico@cii.in; W: www.cii.in

Reach us via our Membership Helpline: 00-91-11-435 46244 / 00-91-99104 46244 CII Helpline Toll free No: 1800-103-1244