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Dr R K Singh, DGM, SIDBIAmit Kumar, Sr Technical Expert , GtZ

New Delhi, India

We Empower MSMEs

Presentation Structure

SIDBI- Empowering Indian MSMEs CLUSTERING AND SIDBI

ApproachMSMEFDP -Key Achievements GTZ : experience and learning Experiential LearningLooking Ahead

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Cluster as Focal point for us - Why Broad convas- MSME Focus- 290 lakh

enterprises, 95% ME, 660 lakh employment, 8000 products

Multiplier benefits- Replication of interventions in other clusters became easier, Harmonisation with other programmes / schemes of other agencies turned simple.

Leverage the strength of clustering –

Through Networks

Lead Nodal Agency of several schemes GOI

Effective Outreach – faster credit delivery , create examples for fellow institutions

DEVELOPMENTAL(A)

FINANCIAL(B)

multi agency , multi program, nation wide

1. Cluster support programs –75 clusters

2. Thrust on unserved/underserved areas – RIP/NER

3. Capacity building

4. Synergy with Support Institutions – UNIDO etc.

5. Skill Development-STUP etc.

Provision of efficient financial services with focus on business goals

1.New Products - Green Loan Scheme

2. New Channels –SEFCs 214 Clusters, WC, BMO route

3.New Tools- CART

Financing & Promotional role to be played simultaneously to enhance competitiveness.

Fostering Green Agenda through international partnerships ( UNIDO, WorldBank, GtZ, DFID, KfW, JICA, AFD, ADB, ) “ Green Loan Scheme”, Green Ratings, MOU with BEE , WB GEF project

MSMEFDP

MSMEFDP and Clustering Making Market Work for MSMEs – Participative and market

driven , Experimenting( internal expert and FA, simultaneous

implementation across clusters with subsectors)

Piloting ( 3 clusters) and Scaling up (16 clusters)

Partnering key players – FMC (UNIDO experience and

expertise) – as Independent reviewer, M&E and Strategic

Inputs

Outreach of the adopted clusters -Some like Knitwear

Ludhiana, leather-Chennai/Kolkata account for more than 80%

of India’s total production output in selected products

Value for Money

GTZ partnership with SIDBI under MSMEFDP

4 Regions

Subsectors of Pharma, Apparel, Engineering,

Leather Toys , Handloom

Financial Services

Business Development Services

BDS Market Development

Objective: Systemic Change Approach:

Developing and Strengthening systems of service delivery; Whole system and framework conditions in which a market for service delivery can develop (supply and demand side measures)

Using BDS to promote responsible competitiveness

Improving BDS Market

Eco Systems

BDS Supplier MSME Units

Lack of awareness

Inappropriate service offerings Because of limited understanding of SMEs

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Non existance coordination amongst Public Service providers

and institutions

Access to information i.e issue of transparency

BMO not ready/competent to engage In service provisioning /facilitation

Cluster driven govt support programmes

Costly offer by estbl SPLow capacity to solve SME prob

Doesn’t value SME as a profitableclient thus don’t take the efforts to

market their services, Inappropriate products ,

limited reach

Lack of knowledge and informationAttitude & willingness to payNo long term planning & vision

Ability and willingness to pay

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BDS Market Eco Systems

Challenges

Enabling MSME Demand for services

Detailed Performance and Need Assessment , www.b-smartonline.com

Information gap between service providers & MSMEs

Focused issue based linkages workshops and tool,

www.consultwho.com

High cost of client acquisition

Consortia of service providers CAPSULE

MSME not convinced with the likely benefits & finds the cost too high

Facilitate demand aggregation & assist with pilot , Breaking the service package into module

Ensuring sustainability

Cost of consumption not supported , capacity development of Lead firms and local training institutes

CAPSULE Consortium of Service Providers for developing and

strengthening whole systems of service delivery Pooling up of resources to minimise the cost of client

acquisition Cross selling /references Advantage MSMEs: access of different services from

single platform Started with 20 Service Providers in Hyderabad Being replicated in other clusters Chennai,Coimbatore,

Tirupur

Overall Competitiv- eness of the units

Inconsistency in

conformance of quality

Too focussed on US and

Europe Mrkt

Availability and Quality of Fabric

Fabric Mills Fabric Processing

Marketing /Sales

Low productivity

Lack of knowledge on Improvement potential and

various tools

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High cost of quality coz of improper quality control system

High labour turnover Lack of skilled workforce

Inefficient supply chain for outsourcing work

e.g fabrication , embroidery

limited usage of ICT, Lack of design capability , Market intelligence input

Access of quality finance

e.g electrical supply, long

transportaion, condition of roads ,ports

Infrastructural Weakness

Apparel Sector NCR: Factors affecting competitiveness

Increasing Awareness

amongst units

GTZ

GTZDocumentation and

publications of findings for knowledge dissemination

GTZLinking Apparel Trade Magazine

GTZ

Performance Assessment & Training Need

Analysis conducted in 10 firms

BDS-provider assist in formu-

lation of Assessment

GTZ

Overall strategy implementation plan for creating awareness on

improvement potentials and process and tools

Facilitation of strategybuilding process

between main players(BMOs, Service

Providers)

Improved awarenessAmongst

participating units and other members

of BMO

Organize sensitization events and short knowledge-

building seminars

Process and Tools for Enhancing Competitiveness

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BMO convinces its members and get their buy in to do a pilot Assessment

Initiate the thinking process and facilitate

consensus

GTZ

Part Financial support and

facilitation

Dissemination of publication amongst all

stakeholders (More than 5000)

Facilitating linkages with AEPC and their support

for publication and knowledge dissemination

ImpactBMO initiated cutting room improvement programme

ImpactSome units have appreciated the

findings and have shown there willingness to

initiate the process

innovative financial models, instruments and services/ products; Capacity Development of SIDBI & partner BanksMicro Enterprise Finance; Development of sector /sub sector specific BDS market development methods, quality assessment and standardization tools;Capacity development (networks, organizations, human resources) of Industry Associations;Policy analysis and advocacy;Sourcing and sharing of International best practices

Next Phase till 2014 with SIDBI

Glimpse of Important initiatives Overall - •Outreach 30000 plus

•International Merit Award by ADFIAP for LED•BDS-outreach over 22000 MSMEs, women 2226 • 400 plus BDSPs services used, mainly in flagship areas ( 22% skill, 14% quality, 12% energy,14% marketing and 5% in finance)

Innovative Tools-

Voucher , BDS clinic , BDS Bazaar , BDS on Wheel, BDS Consortium, MSME Mentor,

Upstream •Ganjam: 2 SHGs wages has increased from Rs 50 to Rs 80 per women. being up-scaled to 14 more SHGs•Ludhiana: 568 unskilled workers get trained which increases their efficiency by 10-15%.

Knowledge Management

• Mother and each cluster website, 2.5 Million hits• Sectoral guidebooks/Posters/do’s and Don’ts ,• CB of FAs (National workshops, learnshops)• CB of BMOs- World SME Expo

Glimpse of Important initiatives

Institutional support-

• BD Centre Alleppey, NAFARI , JFOA,FSIA • Mobile testing Laboratory in Pune • CB through ACF – Green Dhabha, Solution Centre

Skill Development

1. Integrating BMO- Leverage Social Capital• First SD centre – PPP mode, Baseline-BPL-Avg age 22

yrs-tracking, Over 2500 trained, over 90% placements• Replication to 5 more centres in the cluster• Govt. Initiated prog with same agency to train 25000

people 2. 37 Skill Development Centres (12 established, 21 linked

up 4 in pipeline)3. MRIP

Energy Efficiency

Four Dos and Donts/tip sheet/ posters Conducted 108 walk through audits and 25 detailed

audits first Yr. Estimated saving of Rs. 55 mio/year approx captured.

ESMF 110 Credit officers trained

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1. 2500 brass units, employment 2.15 lakh( D+I)

2. JFOA - Viability gap funding

3. CFC setup under PPP mode, Target 3000 MSMEs

4. Till date over 10000 samples of 1050 MSMEs directly benefitted,income Rs 17 lakh

5. Helped JFOA to leverage Govt support amounting to Rs. 17 Lakh

6. Enabled Market corrections

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Cluster Development Programme

1. NAFARI – Testing Lab setup on PPP mode in UNIDO intervention

2. After project intervention Bus.plan/website- turned profit ( loss in 2007, 2008 profit), FY2010 Rev. 47lakh/consl. 20 lakh

3. Extended its services from mere testing lab - Diversified as trainer /knowledge Net worker

4. Emerging as Natural FA in the cluster - Vision

document

HIGH PREMIUM ON EFFECTIVENESS

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1. 900 Women Engaged in making Whips out of scrap earning R 10-15 p/d

2. Helped in product introductions, new design development, skill upgradation, marketing linkages

3. Income increased by over by 400%

4. Deptt. of Industries has linked the initiative with their prog.

5. Women got artisan card which facilitates access to credit, market and Health insurance

CREATING VALUE- Waste to Market Taste

Experiential Learning• Cluster Approach Works –

• SIDBI has established edge and example in Greening clusters - 6000 plus MSMEs reached with financing,

• Networks imp- Local, National, Global • Leverage international partnerships• Addressing Enabling Envtt is important – ACF• Customising products and services as per uniqueness of each cluster

• Balanced approach towards financial and non financial needs is crucial

Market led eco system - has inherent sustainability traits

Access to and Quality of BDS enables quick replication

Experiential …. Appropriate Mix of Long Term Intervention with Short

Term support also helps Regular CB of cluster actors as exit vehicle crucial Ownership at each stage important Action Plans to be dynamic, identifying flagship areas for

thrust • Facilitating agencies ( 7 FA & 7 Sub sectors ) have a

tendency to work especially in its area of core competence . Compatibility/ complementarity among facilitators must

• Create Knowledge Networks/Pool to Manage Growth- D3A (Deduce, Document, Disseminate and Assimilate)

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• WB GEF Project with BEE in 5 clusters ( Finance-E.E Linkage) Scaling up equity capital assistance to innovative MSMEs

through risk capital/venture capital products (finance – technology linkage)

Documenting Global best practices for MSMEs (MSME – International environment linkages)

MSME Info Kit ( a complete supporting guide for MSMEs) (MSME environment linkage)

Policy Advocacy to continue.( SIDBI- Government linkage) Taking forward flagship activities under IInd phase of GTZ-

SIDBI under MSMEFDP.

Looking ahead…

THANK YOU

For more details, please contact:-

Project Management DivisionSmall Industries Development Bank of India,

Mail :- pmd_ndho@sidbi.in, singhrk@sidbi.in, amitkumar@gtz.de

Website : www.msmefdp.net, www.sidbi.in , www.gtz.de

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ClusterNumber of

FirmsType of product

Turnover

(Rs. Cr)Employment

Bhadohi 1820 Carpets - knotted, tufted, shaggy; durries 1480 345000

Panipat 331 Carpets - tufted, shaggy; durries 1010 50000

Dehradun 302 Tablets, capsules, liquid, orals, ointments 3248 18074

Indore 256 Allopathic & ayurvedic formulations 2500 18500

Hyderabad 421 Bulk drugs & formulations 8187 20000

Ludhiana 14000 Knitted wears & grey fabric 5000 400000

Tirupur 2400 Knitwear - cardigans, jersey, nightwear, etc. 11000 408250

Mohali 2410 Engineering cluster 1028 21000

Rajkot 666 Engineering cluster 3000 24700

Rourkella 220 Machining & Fabrication 150 5750

Coimbatore 9704 Pumps and motors and related foundry 2000 129500

Kolkata 4024 Leather, leather goods, hand gloves 4430 62440

Shantiniketan 60 Leather handicraft items 6 1200

Chennai 1150 Leather, footwear, leather and garments 2000 40000

Ganjam 260 Cashew processing and kewda water 240 14650

Ahmedabad 1200 Dye/chemicals & packaging 10150 38000

Pune 550 Fruit & Vegetable Processing Cluster 408 5720

Kanpur 1600 Leather products 2900 100000

Alleppey 950 Coir products 1800 200000

Total 41774 60537 1902784

Macro Data of 19 Clusters Back

Value for MoneyEstimated

FiguresUNIDO (Pharma,

Ahmedabad) (1999-2003)

SIDBI (Pharma, Hyderabad)(2009-11)

Duration 4 years 2.6 years (worked for 15 months)Personnel CDE, TA, PM CDE, SME, NDE, PMAP cost at current prices of the project

Rs. 4.3 million Rs. 2.4 million

No of activities 69 116No of activities for year 1

4 56

Type of activities in year 1

Trust building Trust Building, Quality Up-gradation, Training, Marketing

Output after Year 1

None Energy audit (30 firms), Quality audit (30 firms), Skill development (270), Financial Linkages (2 firms)

No of BDSPs 10 24 (by year 1) Major Outcomes Savings (Rs 50 mn),

Turnover (Rs 18 mn) Quality Up gradation (60 firms)

Estimated as: Energy savings, Quality up-gradation, Pollution reduction, Productivity Improvement

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Courtesy : FMC, New Delhi