We Empower MSMEs
Dr R K Singh, DGM, SIDBI
Amit Kumar, Sr Technical Expert , GtZ
New Delhi, India
1
Presentation Structure
 SIDBI-
Empowering Indian MSMEs
 CLUSTERING AND SIDBI

Approach
 MSMEFDP -Key Achievements
 GTZ : experience and learning
 Experiential Learning
 Looking Ahead
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
4
Financial –
business
driven
Developmental
–activity based
Hybrid –
competitive
advantages
DEVELOPMENTAL
(A)

1.
multi agency , multi
program, nation wide
Cluster
programs
clusters
support
–75
2.
Thrust
on
unserved/underserve
d areas – RIP/NER
3.
Capacity building
4.
Synergy
with
Support Institutions –
UNIDO etc.
5.
Skill DevelopmentSTUP etc.
FINANCIAL
(B)

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
competitiveness
to
promote
responsible
BDS Market Eco Systems
3
5
Lack of awareness Cluster driven govt support
programmes
BMO not ready/competent to engage
6
In service provisioning /facilitation
Ability and willingness to pay
7
MSME Units
BDS Supplier
Costly offer by estbl SP
Low capacity to solve SME prob
Doesn’t value SME as a profitable
client thus don’t take the efforts to
market their services,
Inappropriate products ,
limited reach
Inappropriate service offerings
Because of limited understanding of SMEs
4
Lack of knowledge and
information
Attitude & willingness to
pay
No long term planning &
vision
Improving
BDS Market
Eco
Systems
Non existance coordination
amongst Public Service providers
and institutions
Access to information
i.e issue of transparency
1
2
12
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
Apparel Sector NCR: Factors affecting competitiveness
Low productivity
High cost of quality coz of improper
quality control system
High labour turnover
Lack of skilled workforce
Infrastructural Weakness
Fabric Mills
Availability
and Quality
of Fabric
Marketing /Sales
Fabric Processing
Inconsistency
in
conformance
of quality
Overall
Competitiv
- eness of
the units
Lack of knowledge on
Improvement potential and
various tools
Inefficient supply chain
for outsourcing work
e.g fabrication , embroidery
e.g electrical
supply, long
transportaion,
condition of roads
,ports
Too focussed
on US and
Europe Mrkt
limited usage of ICT, Lack of design
capability , Market intelligence input
Access of quality finance
15
GTZ
GTZ
Part Financial
support and
facilitation
BDS-provider
assist in formulation of
Assessment
Initiate the thinking
process and facilitate
consensus
Organize sensitization
events and short knowledgebuilding seminars
BMO convinces its
members and get
their buy in to do a
pilot Assessment
GTZ
Facilitating linkages with
AEPC and their support
for publication
and knowledge
dissemination
Process and Tools for
Enhancing Competitiveness
Impact
BMO initiated
cutting room
improvement
programme
Improved awareness
Amongst
participating units
and other members
of BMO
Performance
Assessment &
Training Need
Analysis conducted
in 10 firms
Linking Apparel Trade Magazine
GTZ
GTZ
Increasing
Awareness
amongst
units
Dissemination of
publication amongst all
stakeholders (More
than 5000)
Documentation and
publications of findings
for knowledge
dissemination
Overall strategy implementation plan
for creating awareness on
improvement potentials and process
and tools
Impact
Some units have
appreciated the
findings and have
shown there
willingness to
initiate the
process
Facilitation of strategy
building process
between main players
(BMOs, Service
Providers)
GTZ
16
Next Phase till 2014 with SIDBI
innovative financial models, instruments and services/
products;
Capacity Development of SIDBI & partner Banks
Micro 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
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,
•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%.
Upstream
Knowledge
Manage
ment
•
•
•
•
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
Develop
ment
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
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
20
HIGH PREMIUM ON EFFECTIVENESS
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
Cluster
Development
Programme
21
CREATING VALUEWaste to Market Taste
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
22
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 GrowthD3A
(Deduce,
Document,
Disseminate
and
Assimilate)
Looking ahead…
•





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 GTZSIDBI under MSMEFDP.
25
THANK YOU
For more details, please contact:Project Management Division
Small 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
Macro Data of 19 Clusters
Cluster
Number of
Firms
Type of product
Back
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
6
1200
Shantiniketan
60
Leather handicraft items
Chennai
1150
Leather, footwear, leather and garments
2000
40000
Ganjam
260
Cashew processing and kewda water
240
14650
Ahmedabad
Pune
1200
550
Dye/chemicals & packaging
Fruit & Vegetable Processing Cluster
10150
38000
408
5720
Kanpur
1600
Leather products
2900
100000
Alleppey
950
Coir products
1800
60537
200000
1902784
27
Total
41774
Value for Money
Estimated
Figures
UNIDO (Pharma,
Ahmedabad)
(1999-2003)
Duration
4 years
Personnel
CDE, TA, PM
AP cost at current Rs. 4.3 million
prices
of
the
project
No of activities
69
No of activities for 4
year 1
Type of activities Trust building
in year 1
Output after Year None
1
No of BDSPs
Major Outcomes
Back
SIDBI (Pharma, Hyderabad)
(2009-11)
2.6 years (worked for 15 months)
CDE, SME, NDE, PM
Rs. 2.4 million
116
56
Trust Building, Quality Up-gradation,
Training, Marketing
Energy audit (30 firms), Quality audit
(30 firms), Skill development (270),
Financial Linkages (2 firms)
10
24 (by year 1)
Savings (Rs 50 mn), Estimated as: Energy savings, Quality
Turnover (Rs 18 mn) up-gradation,
Pollution
reduction,
Quality Up gradation Productivity Improvement
(60 firms)
Courtesy : FMC, New Delhi