Presented By:

Dhariti Walia(10810021)
Saryu Kamra(10810056)
Yuki Jain(10810074)
Creating Competitive SMEs in India
Agenda
Overview of Indian MSMEs
Opportunities for MSMEs
Challenges being faced by MSMEs
Creating Competitive SMEs
Policies and Initiatives taken by Government of
India
ICT Value Chain
Financing Options
Way Forward


Overview of the Indian MSMEs
In accordance with the provision of Micro, Small &
Medium Enterprises Development (MSMED) Act,
2006 the Micro, Small and Medium Enterprises
(MSME) are classified in two Classes :


MSMEs
Manufacturing
Enterprises
Service
Enterprises
Definition of MSMEs
The limit for investment in plant and machinery / equipment for
manufacturing / service enterprises, as notified, vide S.O. 1642(E)
dtd.29-09-2006 are as under :
Investment Limits for service
sector
Some quick estimates
The number of enterprises is estimated to be about
26 million and these provide employment to an
estimated 60 million persons
Of the 26 million MSMEs, only 1.5 million are in the
registered segment while the remaining 24.5 million
(94%) are in the unregistered segment
The state-wise distribution of MSMEs show that more
than 55% of these enterprises are in 6 States, namely,
Uttar Pradesh, Maharashtra, Tamil Nadu, West
Bengal, Andhra Pradesh and Karnataka.
Source: 4th All-India Census of MSMEs, for reference year 2006-07
Some quick estimates (contd..)
About 7% of MSMEs are owned by women and more
than 94% of the MSMEs are proprietorships or
partnerships
MSMEs contribute 8 per cent of the countrys GDP, 45
per cent of the manufactured output and 40 per cent
of our exports
The labour and capital ratio in MSMEs and the overall
growth in the MSMEs are much higher than in the
larger industries.
Source: 4th All-India Census of MSMEs, for reference year 2006-07
Opportunities for MSMEs in India

Opportunities provided by clustering approach:

Tirupur Garment Cluster
Ahmedabad Pharmaceutical Cluster
Chennai Leather Cluster
Railways
Defence

Opportunities for MSMEs in
India(contd..)
Automotive
Metallurgy
Dairy machinery
Industrial machinery and machine tools
Auto and auto ancillary
Key challenges faced by Indian
MSME sector
High cost of credit
Collateral requirements
Limited access to equity capital
Problems in supply to government departments and
agencies
Procurement of raw materials at a competitive cost
Lack of access to global markets
Key challenges faced by Indian
MSME sector(contd..)
Inadequate infrastructure facilities, including
power, water, roads, etc
Low technology levels and lack of access to
modern technology
Lack of skilled manpower for manufacturing,
services, marketing, etc
Absence of a suitable mechanism
Branding and Marketing
Steps that can be taken to meet
these challenges

Adopting new standards in technology, quality and
pricing to be able to survive in the marketplace.
This sector is very seriously looking for ICT
enablement
Restructuring
Building online presence as well as e-mail
facilities.
E-Commerce and enterprise management
solutions
Creating competitive SMEs
Major thrust areas for increasing
competitiveness of MSMEs
Government has identified three major areas
that contribute to competitiveness of MSMEs

Technology (including quality): ICT systems like ERP,
HR & Information Systems, etc.
Skills development
Finance: MSMEs are beginning to move from a
reliance on bank credit to a variety of other specialized
financial services and options
Measures taken for promoting
emerging Financial Resources
Setting up of a separate trading exchange
exclusively for the MSMEs
Provision of special incentives for encouraging
larger flow of Venture Capital & Private Equity
funds into the sector
More liberal All-in-Cost Ceilings for SMEs to
raise low-cost funds through the External
Commercial Borrowing route
Bringing legislation on Factoring Services.
Policy Initiatives & Measures
taken by the Indian Government
Udyami Helpline, the Call Centre of Ministry of
Micro, Small and Medium Enterprises (MSME)
Vocational Training Centres (VTCs) in African
countries under the Indo-Africa Forum Summit in
2008.
Proposed to link the Charkhas Scheme of Khadi
and Village Indutries Commission (KVIC) with the
Mahatma Gandhi National Rural Employment
Guarantee Act (MGNREGA).
Enactment of the Micro, Small and Medium
Enterprises Development Act, 2006.
National Manufacturing Competitiveness
Program(NMCP)
Task Force to reflect on the concerns & issues
regarding MSMEs and formulate an agenda for
action.
National Manufacturing
Competitiveness Scheme (NMCP)
Nodal programme of the Government of India to
develop global competitiveness among Indian
MSMEs.
10 components under the NMCP targeted at
enhancing the entire value chain of the SME
sector.
Programme is to be implemented through Public
Private Partnership mode with close physical and
financial participation of the MSME sector.
Component Schemes of NMCP
Marketing Assistance/ Support to MSEs
Building Awareness on Intellectual Property
Rights
Providing Support for Entrepreneurial and
Managerial Development of MSMEs through
Incubators
Enabling Manufacturing Sector to be
Competitive through Quality Management
Standards (QMS) and Quality Technology Tools
(QTT)
Mini Tool Rooms under PPP mode
Component Schemes of NMCP
contd.
Lean Manufacturing Competitiveness Programme
for MSMEs
Promotion of Information & Communication Tools
(ICT)
Design Clinics Scheme for MSMEs
Marketing Assistance and Technology
Upgradation Scheme for MSMEs
Technology and Quality Upgradation Support to
MSMEs
Task Force for MSMEs
It was set up by the Prime Minister in August 2009 to
address the concerns and issues regarding MSMEs
and formulate an agenda for action.
It classified the common issues into 6 major thematic
areas into:
(i) Credit
(ii) Marketing
(iii) Labour
(iv) Rehabilitation and exit policy
(v) Infrastructure, technology and skill development
(vi) Taxation.
A separate Sub-Group was also constituted to look
into the development of MSMEs in the North-East and
Jammu & Kashmir.
Recommendations by Task-
Force
Measures that need immediate action
Separate fund creation with SIDBI, Public
Procurement Policy
Medium Term Institutional Measures
Standing Review Committee, Rehabilitation Funds
Legal and Regulatory Structures
SME Exchange, securitization of trade credit
receivables
North-Eastern States and J &K
incentives available for MSMEs in the State be
brought on par with the modified NEIIPP of NER
ICT Value Chain

Case: Bharath Beedi
Challenges for IT implementation

Simplification of highly transactional sales cycle.
Synchronization between production, logistics and
transportation, warehousing, sales and distribution
management.
Tracking market scenarios and easy monitoring of sales
volume fluctuation
ROI on marketing campaign.
Reduction in duplication and ease communication flow
across the sales and distribution network.

Phases of Implementation
Financing Options

Financing through Banks
Working Capital
Risk Capital
Rating SMEs
SME Exchange
Micro Credit


Way forward

Export lines for credit

Hedging for MSMEs