SMEBusiness

Inside This IssueTOP STORY Pg4

SMEs in Defence Industry

INTERVIEW Pg8MSME: integral to industrial resurgence

FEATURE Pg12Building Next-Gen Entrepreneurs

PlusSMALL WORLD Pg2

FINANCE Pg16INTERNATIONAL Pg18

TECHNOLOGY Pg20EVENTS UPDATE Pg21

TRAINING Pg23

Journal of Small Business and Enterprise Vol 7, No. 1, January 2010

FROM THE CHAIRMAN’S DESK

Salil SinghalChairman

CII National MSME Council

Exports from the MSMEs are on the rise, inspite of the rising cost of raw materials and international competition, according to the MSME outlook sur-vey on exports, conducted by the Confederation of Indian Industry (CII). It is in fact a triumphant

moment for the Indian MSMEs as we have overcome a chal-lenging yet successful year and prepare ourselves for more vibrant and dynamic future. While mentioning this, I also convey to you the message of Mr Dinsha J Patel, Hon'ble Minister of State (Independent Charge) for Micro, Small and Medium Enterprises (MSMEs), whom I had the opportunity to meet in New Delhi, on 4 November 2009. Appreciating the contribution of CII National MSME Council, the Minister reiterated his support in taking forward the industry sugges-tions towards simplification and rationalisation of policy and procedures for the MSMEs.

We also had the opportunity of engaging with Mr Arun Maira, Member, Planning Commission, Government of India, at the India Global Summit on MSMEs (organised by CII along with the Ministry of MSME). While giving the Inaugural ad-dress, he said that "We look at the moon for light, but we miss the fireflies". Substantiating this view, he said that the 26 million MSMEs in the country provide employment to 60 million people, and account for 30% of the manufacturing GDP and 40% of the total exports. According to him, to pro-mote inclusivity, the focus should necessarily be on taking the MSME sector to a higher growth trajectory.

CII has always maintained that the Indian MSME sector would need to collectively build its global competitiveness, which will happen if due focus is directed towards the adop-tion of innovative practices and new technologies. This at-tains greater significance since the MSME sector is being in-creasingly viewed as the fulcrum of Indian industry's global competitiveness. This is writ large in business sectors such as defence equipment manufacturing.

This issue of SME Business provides an overview of the opportunities that beckon the SMEs in the global defence industry, as also the challenges. Indian SMEs have the

wherewithal to make a serious dent in the global defence equipment exports market, with the due support of the large players and an enabling policy environment. At the same time, the SMEs should seek to develop niche products and capabilities, continuously innovate and fully leverage the export opportunities that are available to them under the defence offset policy.

On a larger plan, the growth and development of the Indian MSME sector would hinge on the establishment of a robust eco-system that guarantees steady financial, techno-logical and manpower support to the enterprises. This issue has dealt with this subject in some detail, supported with exclusive interviews with international experts.

Raising capital is one of the key challenges for the sector. Traditional bank credit continues to be a key funding source for the new and existing enterprises, but serious attention is being paid toward bringing the MSMEs into the capital markets loop. This issue has focused attention on the capital market listing opportunities for Indian MSMEs and the regu-latory provisions thereof, as released by SEBI.

Among the other key areas touched upon, we also bring to you a report on the opportunities for doing business and investing in Canada, as well as the CII-AOTS initiative to pro-mote production management activities in India.

Your feedback has been of tremendous value for improv-ing upon the last issue of SME Business and I hope that you will find value in the content presented in this issue. At the same time, I seek your continued participation in the content development of SME Business and in the different activities of the CII National MSME Council.

Wish you a very happy & a prosperous 2010.

I would be really pleased to be posted with your views and suggestions on Chairman.MSMEcouncil@cii.in

At a Meeting of the Governing and Technology Approval Board (GTAB) of the Credit Linked Capital Subsidy Scheme (CLCSS) for Technology Up-gradation of Micro & Small Enterpris-es, held in New Delhi on December 18, CII pointed out that there was lack of incentive for micro and small enter-prise to grow beyond their current levels. Hence, it was suggested that all registered enterprises graduating from Micro & Small category to Me-dium category were to be treated at par for the applicability of all promo-tional schemes CLCSS for technology upgradation. At a broader level, there is a felt need for greater sensitisa-tion of the MSMEs about the scheme which may be done through aware-ness programmes at various locations throughout the country.

exports." To develop the MSME sec-tor, the government is planning to raise Rs 1,000 crore, he said.

Meantime, industry experts have sug-gested that to serve the MSME sector profitably, there is a need to understand the market, provide indigenous and simple solutions that build confidence among the MSME community, about the benefits of IT.

data (as on 23 December 2009) which says that banks parked Rs 40,000 crore through the re-verse repo auction as against Rs 90,000 crore on December 14, a day before the payment of the third instalment of advance tax.

CII has called for a well-round-ed Credit Linked Capital Sub-

sidy Scheme (CLCSS) for technology up-gradation for the MSME sector. Currently, subsidy under the CLCSS is available for an SME as a one-time subsidy, at the time of graduation from small to medium category. It is pertinent to mention that for the pur-pose of this scheme, the investment limit for the SSI sector is pegged at Rs 1.0 crore instead of Rs 5.0 crore.

Since any existing Micro & Small unit, which has availed subsidy under the CLCSS scheme earlier, has the en-titlement to avail full permissible sub-sidy under the scheme, CII has sug-gested that the permissible subsidy may not be denied to any registered enterprise graduating from Micro & Small category to Medium category.

Dinsha Patel, minister of state for MSME, said on December 19

at an industry gathering that the MSME sector is the second-largest contribu-tor in terms of gross domestic product (GDP) after the agriculture sector. It provides almost 80-90% of employ-ment to the Indian population and has 45% share in production and 35% in

Bank credit to Small and Medium En-terprises (SMEs) is likely to get costlier

as lenders are shying away from lending to this sector due to a fear of hike in cash reserve ratio (CRR) by the Reserve Bank of India (RBI), says a media report. The report adds that while credit off-take had picked up marginally to double digit levels (10.5%) from last year's high of 26.4%, banks are lending idle cash for higher returns to companies for advance tax payments, which has sucked up about Rs 40,000 crore-Rs45,000 crore from the system. This is supported by RBI

Exports from the MSMEs are on the rise even in the face of rising cost of raw materials, difficult global market and stiff international competition, according

to the MSME outlook survey on Exports, conducted by the Confederation of Indian In-dustry (CII). The CII MSME Outlook Survey on Exports was undertaken to analyse the ac-tual export performance of the MSMEs during the first half (H1) of the year 2009-2010, understand the future export prospects/plans during the second half (H2) of the year 2009-2010, besides identifying key factors that are limiting exports, and the emerging export markets for the Indian MSMEs.

According to the Survey on Exports, 42 % of respondents registered an increase in volume of their exports over the past six months , for the 9 % of the respondents there was no change in volume of their exports while 49 % respondents registered a decline in volume of their exports.

Promote Growth of MSMEs Govt to raise Rs 1,000 cr for MSMEs

As the US economy emerg-es from the crevasse that

most nations have slipped into during the past few years, two things are very clear: small busi-nesses and financing have both fallen on hard times and both will be instrumental in the econ-omy’s march forward. The Small Business Administra¬tion and the Office of Advocacy are both tuned into these related issues: the SBA as an important source of loan guarantees, and the Of-fice of Advocacy as a key source of research and analysis on small busi¬ness lending.

The Small Business Advocate reported in December that jump-starting small business bor-rowing and commercial lending was the focus of a forum spon-sored by the SBA and the U.S. Depart-ment of the Treasury in November. President Obama called for this summit during meetings with small business owners in October, as part of the effort to get credit flowing to them again. Small business owners from many regions of the country were in attendance and were able to discuss the current environment and the credit challenges they face. Small and large lenders, indus-try associations, and community devel¬opment financial institu-tions also took part.

Treasury Secretary Timo-thy Geithner discussed the govern¬ment’s policies that have stabilised the financial system, and he urged banks to lend to qualified business¬es. SBA Administrator Karen Mills stressed that SBA financing has filled some of the gap during this credit crunch for small businesses.

The government set a target to set up 30 more facilitation

centers for making MSMEs aware of Intellectual Property Rights (IPR). The MSME ministry has a target to set up around 40 IPR facilitation centers all across the country by the end of the 11th Five Year Plan. Of these, 10 facilitation centers have already been estab-lished, according to one report. There is a need to spread aware-ness of intellectual property rights (IPR) whether it is in relation to traditional products, trade mark or technology. IPR facilitation centers are where all the information with regard to patents and other form of property rights will be main-tained. Advice will be given on how to file a patent application, on trademark, on technology, etc.

With companies reviewing the way they market themselves to

win customers effectively, the Inter-net for many has come to the fore-front as their most important sales and marketing channel. Developing an effective online presence has topped the priority tree and for more reasons than one. Forty one per cent use search engines to identify new companies and websites and more than half are actively using the In-ternet before making a purchase in shops, educating themselves on the best deals out there, reports utalk-marketing, a web-based publication. A website is no longer just a nice to have but a must have for companies looking to tap into huge audiences and punch above their weight irre-spective of their size.

Small biz holds key to

growth

40 centres to facilitate IPRs for MSMEs

Search marketing tool for success

Bank credit may turn costlier

Exports rising: outlook survey

SMEs should audit before outsourcing: report

still have a "single point of failure" a system where operations will grind to a halt if one element of the system crashes.

A senior official of Fifosys was quot-ed in a US publication Computing as saying: "While businesses routinely as-sess the single points of failure in core operations, from manufacturing to distribution, they are patently failing to apply the same robust operations practices to IT."

He explained that the problem lies with the culture of the IT department: "Individuals within the IT team are not encouraged to look at mapping busi-ness needs with IT risks and availabil-ity, nor do they typically have the skills to do so."

Small companies may also find that inadequate third-party supplier con-tracts fail to reflect their operational requirements. These can be expensive and risk making small firms less ag-ile. The report recommends that SMEs avoid some of these problems by com-missioning an IT infrastructure audit from a professional audit firm.

Small businesses are expos-ing themselves to unnecessary

risk through a lack of in-house skills, according to a white paper from Fifo-sys. "It is difficult for small companies to acquire the IT skills necessary to support today's complex technology requirements. These can include the management of online order taking, continual email services, maintaining and servicing local and wide area net-works, as well as business continuity. A one or two-person IT team simply will not be able to manage this," the report says.

As a result, many of these companies

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l The direct purchase or execu-tion of export orders for defence products and components manu-factured, or services provided, by Indian defence industries, i.e., DP-SUs, OFB and any private defence industry player manufacturing these products or components un-der an industrial licence granted for such manufacture. For the purpose of defence offset, services refer to maintenance, overhaul, upgrades, life extension, engineering, design, testing and defence-related soft-ware or quality assurance services. l This includes FDI in the Indian defence industry for industrial in-frastructure for services, co-devel-opment, joint ventures and co-pro-duction of defence products.l It also includes FDI in Indian organisations engaged in defence R&D as certified by the Defence Off-set Facilitation Agency.

Offsets should be directed to pro-mote self-reliance and indigenous capability involving advanced tech-nologies. To attract foreign invest-ment and enhance domestic indus-trial capability, the offset policy needs to be suitably modified by a favourable atmosphere including a realistic banking period, offset trading, licensing policies and other innovative provisions. Several coun-tries have and continue to success-fully enforce such offset clauses in the interests of their economies to enhance their knowledge base and industrial capabilities.

SMEs strategyLargely, OEMs do not make de-fence systems by themselves; they are integrators. In 90% of the cases, subsystems are made by SMEs. They are likely to ben-efit through the offset or the in-volvement of local tier-I integra-tors. OEMs often discharge their offset obligations by purchasing a wide range of components and materials from the client's coun-try. SMEs can participate suc-cessfully in offset programmes since the offset applies to the contract value and not the size

velopment at No cost No Commitment has made the industry reluctant to in-vest in defence R&D.

There is a need to adopt the US ap-proach of 100% financing in a partner-ship between industry, the DRDO and the armed forces. The requirements, scope of the project estimates, dura-tion, etc., should be shared with in-dustry. Industry will then discuss the assessment with the defence procure-ment committee, which will decide on which company will design and manu-facture the products. Most importantly, the entire cost of design needs to be paid by the government.

Sourcing value propositionToday, India is a leading technology major and known as a knowledge and intellectual capital hub in certain key domains. Its expertise and technical know-how are in high demand. How-ever, major investments are required in design, technology and operations in the country. OEMs plan to leverage the capabilities of Indian high technol-ogy suppliers and tier-I partners, who are capable of investing in change. The global defence industry is witnessing an enhanced focus on organization-wide learning processes, followed by the development of a whole new net-work of tier-II and tier-III partners. In-dian defence suppliers need to appre-ciate processes and absorb external knowledge and learning from past and present experiences to gain the posi-tion as a risksharing partner.

Highlighting the importance of pro-moting SME defence exports, Cmdr. (Rtd) YVV Prasad, Vice Pres-ident, Strategic Projects Group, Trident Infosol Pvt Ltd, said that concentrated efforts in this direc-tion will lead to substantial export earnings for the country apart from raising the overall quality consciousness. He said that lack of access to adequate capital has limited the sector's capacity to in-novate and engage in R&D.

Mr Prasad said that direct ex-ports are necessary but meeting the domestic defence needs is just as important. Quality should be paramount regardless of whether

of the company.India is expected to spend close to

Rs 4,000 billion (USD100 billion) on defence procurements during the pe-riod of implementation of the 11th Plan (2007-2012). Considering that imports account for 70% of the expenditure on defence procurements, offset obliga-tions worth Rs 860 billion (USD21.4 bil-lion) will be generated at 30% of the contract value. The Ministry of Defence has confirmed that offset contract worth about Rs7,500 crore have been signed till July 2009.

Research and developmentCurrently, SMEs and large private sec-tor companies are keen to get engaged in defence R&D with DRDO. However, barring some exception such as PINA-KA, almost all production opportunities have gone to OFB/DPSUs. Once there is parity, the private sector will become the recipient of defence technologies as a prime contractor. The DRDO needs to look at the time lag between design, development and product realisation throughout the industry. Hence, there

is a need to enter into an economic long-term partnership with industry. Companies that have invested in R&D will seek assurance of a long-term commitment for future orders.

Without such assurances, industry will not invest in R&D. Major corporate organisations will get involved in de-fence R&D once such practices are in place. Defence projects are typically investment-intensive with long-term engagements. The current policy of de-

Small and Medium Enter-prises (SMEs) play a vital role in the economic de-velopment of all coun-tries worldwide. SMEs

account for 90% of business estab-lishments and half or more of the output and export share, and gen-erate employment opportunities accounting for close to 70% of the labour force. Hence, it is no surprise that globally SMEs are an indispens-able part of the supply chain in all major industrial sectors including the defence industry.

Mr Baba N Kalyani, Chairman, CII National Committee on Defence & Chairman & Managing Director, Bharat Forge Limited, wrote in the report Enhancing role of SMEs in

Indian defence industry that the global defence industry, which is primarily dominated by a few Original Equipment Manufacturers

(OEMs), works in close coordination with SMEs and their prime contractors through a well defined supply chain. The reason why OEMs / prime contrac-tors prefer to work with SMEs is be-cause of their innovative capabilities in niche manufacturing, greater flex-ibility, lower overhead costs and their ability to learn and absorb new tech-nologies.

OEMs require that the SMEs they work with should have the ability to perform, maintain continuity of sup-plies and clearly understand how the defence procurement procedure works. Hence, to be able to integrate successfully in the value chain, SMEs must try to develop niche products and capabilities, continuously innovate and fully leverage export opportunities that are now available to them under the Defence offset policy.

To be able to integrate in the sup-ply chain, SMEs need to know their

customers well, understand their re-quirements, gain their confidence and demonstrate a strong commitment to develop a long-term business re-lationship. Such initiatives by SMEs coupled with government's policy to enhance the role of SMEs in the Indian defence industry, including participa-tion in defence R&D, are the need of the hour if India is to emerge as one of the most important defence markets in the world.

Indian defence offset provisionsIndian defence industry is likely to benefit from offset provisions. Off-sets are applicable to all procurement proposals where the indicative cost of procurement is above Rs 3 billion and the schemes are categorised as Buy Global and Buy and Make with transfer of technology.

Discharging offset obligations is achieved through the following ways:

SMEs in Defence Industry SMEs should have the ability to perform, maintain continuity of supplies and clearly understand how the defence procurement procedure works

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should also consider tapping the pool of experts who are on the point of retiring and are willing to work on a consultancy basis.

Innovation: Innovation is the key to underpinning the defence in-dustry's productivity and economic success. It opens up boundaries, revitalises energies and improves synergies on thought leadership in the defence industry space. In fact, innovation is imperative to improve our solutions, equipment, pro-cesses and services to the armed forces. Innovation plays a key role in the defence strategy, underlying the need to be on guard always. In-dia needs to stay ahead in the race by applying technology innovations against conventional and emerging threats. It needs to respond quickly as new threats emerge and evolve, especially now that global commu-nication and the world-wide web allow unrestricted proliferation of these threats. Policy- makers and our political and industry leader-ship have the onus of developing a strong and innovative science and engineering base in research agen-cies, the industry and in universi-ties to meet this need. The MoD's commercial approach is not always applied in a flexible, transparent or fast enough way to engage in-novative suppliers, including SMEs. There is a tendency for the MoD and the industry to apply terms of busi-ness through historical precedent, irrespective of the type of R&D be-ing procured. Further, there are often perceived risks of the long-term sustainability of supply from SMEs. The MoD must encourage innovation from within its existing supplier base and also broaden this base to include other innovative suppliers not traditionally associ-ated with defence.

Reaching out to OEMSThe report on 'Enhancing role of SMEs in Indian defence industry' notes that in reaching out to for-eign OEMs, Indian defence SMEs

would be faced myriad challenges that include the government's unwritten policy to encourage DPSUs as system integrators; non-disclosure by the government of prospective procure-ment plans for weapon systems and their details; lack of clarity in DPP and offset rules on the process of imple-mentation; the OEM dilemma whether the Indian partner will be committed to technology and capital investments; technology gap between OEMs which have best business practices and their Indian partners; low costs being the only consideration for OEMs to come to India with no technology transfer; relating to the systems and proce-dures followed by foreign OEMs in their selection of Indian offset part-ners; and understanding OEMs' export control procedures and their offset obligations

Facilitation as an offset partnerWhile financial, infrastructural and technological assistance were sought by a few, the other areas where assis-tance was sought included simplifica-tion of existing licensing process; clear identification of areas where offsets will be eligible and quick clarification in cases of ambiguity; in cases of dual/common technology, there is a require-ment for extension of offsets to other commercial applications; a common offset policy with separate guidelines for different industries such as power, defence and civil aviation;

issue of eligibility of service compa-nies for offsets should be clarified to all foreign players; and empanelment of SMEs and private companies and the provision of a structured forum for for-eign vendors to directly interact with empanelled SMEs and private compa-nies, so that they can choose offset partners of their choice.

Dynamic changesSince the offset policy is still evolv-ing, it should be dynamically reviewed to implement any required changes. It was also recommended that the MoD should share some commercial risks with vendors participating in tenders, especially in the case of NCNC

Trials and prioritize and make avail-able a list of its desired technologies to their vendors well in advance, as well as of new projects that will be eli-gible for offset. RFIs/ RFPs issued, to be published on the MoD website. Also, the government needs to address the industry's concerns quickly so that im-plementation is not adversely affected.

It was recommended that OEMs will commit annual liquidation of offset obligations by the minimum laid down percentage of the total offset value. The minimum percentage should be decided by considering the total offset value, the period of completion as well as the capabilities of Indian industries. The industry is further of the view that the penalty for an unfulfilled annual obligation should be deducted from the nextmilestone payment or disqualified for future acquisitions if OEMs fail to hon-or the minimum offset obligation.

DOFAThere is a need for the government/CII to provide a platform for the industry to interact with OEMs, develop a na-tional offset policy and establish a na-tional offset management body, which is independent and professional and not under the ambit of the MoD. The role of DOFA needs to be redefined and strengthened with the required man-power. DOFA could hold regular inter-action with potential OEMs and Indian offset partners to encourage a healthy dialogue and better understanding of the offset policy.

Product supportThe DPP 2008 is oriented toward ord-nance factories (OFs) and DPSUs since it mainly focuses on defence equip-ment manufactured by them. These or-ganisations, which are predominantly engaged in defence production, do not provide product support services for imported/indigenous equipment. No selection/qualification criteria are de-lineated even for their own products provided to private companies. Product support services through SMEs offsets need to be included in the policy and their qualification criteria laid down.

the firm is meeting foreign or do-mestic markets.

He said that if Israel which is about the size of Mumbai could make significant defence exports, Indian SMEs could make a bigger dent in the world defence exports market. He added that if India could buy defence equipment and compo-nents from small players in the US, why can't Indian SMEs make similar exports.

He said the three focus areas for SME defence production capabili-ties should be: data capture, data processing and data presentation. In the case of data presentation, In-dia is strong.

In the case of data processing too India is strong, with respect to computers, micro-processing, embedded systems, software pro-grammes, hardware, etc. India has achieved indigenisation in both ar-eas but data capture is an area of weakness.

He said the greater problems for Indian defence-industry oriented SMEs are that:l They are made to compete with each other, forcing them to quote extremely low for contracts.l They are not being allowed to work in clustersl Having to face payment delays.In the case of clusters, SMEs with different capabilities could come together in a win-win situation, he said, adding that what is needed are:l Innovation strategy wherein the scarcity is leveragedl Network strategy leading to self-reliance.

Mr Prasad said that currently the big companies work like project directors and project integrators. They add to the cost of equipment. So, if an SME delivered an equip-ment at Rs 2.0-2.5 lakh, it would eventually be delivered to the client at 10 times the cost.

He said that all major contracts must be co-terminus on big houses. The offset provision should be co-terminus with the main contract.

He asserted that while the big proj-ects of Rs 50-200 crore can go to the big corporates, Rs 10 crore projects should go to the SMEs.

He said that out of the 6,000 de-fence SMEs, 2,000 are competitive. Out of that even if 200-250 firms export, the country will be richer manifold.

Talking about the limited scale of SME engagement in the defence indus-try, Mr Guru Murthy, CEO, Processware Systems Pvt Ltd, said the key issues are: (i) inability of DRDO to articulate worthy packages for SMEs; (ii) lack of a common database on SME vendors across key defence and infrastructure sectors; (iii) limited scale of outsourc-ing by DRDO. In this context, Mr Murthy said that policy action is required to greater outsourcing to defence SMEs.

He said that greater efforts are also needed to build the SME capabilities in this domain through capacity building initiatives. At the same time, the SMEs should not be put through any credit squeeze as that would affect the ca-pacity building efforts.

Mr Rudra B Jadeja, General Manager, Centum Electronics Limited, said that while large enterprises come together for manufacturing and outsourcing, that is more for integration than manu-facturing. The OEMs would eventually turn to the SMEs to supply the equip-ment and components. He said that in view of this arrangement, the large enterprises should progressively work more closely with the SMEs and pro-vide the latter the right level of experi-ence and exposure to technologies.

He felt that since many of the SMEs are at nascent stage of growth, they should be given due protection from international competition. This is more important than the policy of reserva-tion which is impractical, he said.

Instead, he advocated more compe-tition in the domestic sphere, which will help the enterprises to scale up and be in a state of preparedness to make a dent in the world markets.

Moving up the value chainCost efficiencies: Indian companies need to focus on their core competen-cies to downscale their manufacturing

costs through multiple channels re-duced material costs or machining op-erations, using fewer parts and reduc-ing assembly costs through innovation. This is expected to help OEMs derive as much as 50% cost savings on engi-neering design by outsourcing the pro-cess to India. The quantum of savings can thus be increased by outsourcing machining- related activities, special processing and assembly-related ac-tivities. These companies need to know how to deliver cost savings, and also understand how replacement of opera-tions automated in the West can be re-placed by skilled labor in India.

Companies derive as much as 50% cost savings on engineering design, roughly 40% in processing and assem-bly and around 25% in machining- re-lated activities. These varying degrees of saving can be directly attributed to the labor content and labor cost dif-ferential between developed countries and emerging markets.

Quality and productivity: Indian sup-pliers should consider breaking up their manufacturing processes and study which automated activities can be replaced by labor without com-promising on quality. Substitution of automation with labor must be sup-ported by streamlining of systems and practices, ensuring that a skilled la-bor force with the right knowledge is put to the task. This entails extensive training, and strict adherence to stan-dard operating procedures and quality consciousness. The initial cost of this effort can be high due to the learning curve, but it delivers higher savings in subsequent years. Further cost savings can be achieved by formulating the process design in such a manner as to take into account the new de-automat-ed manufacturing process. Currently, global OEMs are not transferring high-level/ complex work in large volumes to India. Indian companies tend to re-ceive a relatively lower portion of such work through further subcontracting by western suppliers to OEMs.

Indian suppliers require people skilled in networking, to move up the defence supplier value chain. They

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The Indian MSME model is recogn-ised as the model to be emulated by many developing countries. Yet, there is no visible eco-system in the country that supports the growth and development of MSMEs. What are the impediments in the creation

and small enterprises are some of the key features of this Act.

Other initiatives like doubling the net bank credit to this sector in five years with 20% year-on year growth, mak-ing MSEs as part of the Priority Sec-tor Lending of the banks, setting up of Credit Guarantee Fund Trust for Micro & Small Enterprises (CGFTMSE), and capi-tal subsidy for technology upgradation and marketing support have been in-strumental in creating great impact on the growth of MSMEs.

The Government has already played its part in creating an eco-system and facilitating an environment of growth by liberalising various aspects related to MSME sector. Certain other measures like raising private equity through stock exchanges, and bringing in a direct tax code and GST which are in pipeline will further provide impetus to the growth of MSME sector. It is for the MSMEs now to take advantage of such an eco-sys-tem and show their mettle.

The Indian MSME sector is vast and encompasses enterprises that are diverse in scale and operations. Would you say that the micro, small and medium enterprises need to be addressed separately in terms of financial and technological support systems?As we all know, Indian MSMEs produce a wide range of products, from simple consumer goods to highly precision and sophisticated end-products. As ancil-laries, they produce a variety of so-phisticated components and services required by the large enterprises. Their contribution to GDP, manufacturing and exports make them a vital element of the Indian economy.

MSMEs in India, with their dyna-mism, flexibility and innova-tive drive are increasingly focusing on improved pro-duction methods, penetrative marketing strategies and modern scientific management capabilities to sustain and strengthen their op-erations. They are poised for global partnerships and have the potential to absorb latest technologies in diverse fields. The potential and opportunities are much higher. There are challenges of competition from China and other

of such an eco-system?The micro, small and medium enterpris-es (MSME) sector has been an integral part of the industrial resurgence of India. Since the early 1950s, India has adopted a conscious policy for the promotion and development of MSMEs in view of their

developing economies. Indian MSMEs have to pull up their socks by matching not only the costing of products through imports but also by upgrading the qual-ity of products so as to face competi-tion and make a mark in the global are-na. The challenge is, to become globally competitive and face competition from cheap imports.

Keeping the above in mind, Govern-ment of India had set up a separate Min-istry of Micro, Small and Medium Enter-prises a few years back. The schemes devised by the Ministry cater to specific needs of micro, small and medium en-terprises respectively in terms of their technology upgradation, marketing of their products, raw material assistance, making them IT enabled, meeting their credit needs, skill development, etc. Therefore, a separate system to ad-dress their needs already exists. The need of the hour is to bring innovations and remodify these schemes according to the present environment and make MSMEs globally competitive.

Are the Indian policies sufficiently geared to create the next genera-tion of MSME entrepreneurs? What key steps have NSIC taken to fur-ther this goal?As told earlier, the Government has already played its part in creating an eco-system for the generation and sustenance of MSMEs in India. Policies are regularly being reviewed/modified as per the needs emerging out of the global industrial environment.

With the changing needs of SMEs sec-tor due to globalisation, NSIC has also re-oriented its various schemes for

rendering assistance to the sec-tor. The schemes of hire purchase and leasing of machinery and equipment which were the prime focus of NSIC's assistance in the past 40 years have now been replaced by other innovative

vital role in the generation of employ-ment, dispersal of economy and better utilisation of resources. The continuous support provided to this sector in the form of incentives, infrastructural facili-ties and other assistance in the industri-al policy resolutions has facilitated the sector to acquire a place of prominence in the socio-economic development of the country as well as to be a role model for other developing countries.

Several initiatives and measures have been taken by the Government of India in recent years for enhancing the com-petitiveness of MSMEs in the present global environment and help them to successfully participate in global value chains.

First and foremost among them was the enactment of the Micro, Small and Medium Enterprises Development Act, 2006 which provides a dedicated statu-tory framework to facilitate the promo-tion and development of MSMEs and enhancement of their competitiveness. Simplification of registration process, progressive credit policies, preference in Government procurement to the products and services of MSEs, more effective mechanism for mitigating the problems of delayed payments to micro

products which are more relevant in to-day's scenario.

Quality certification of products manufactured by SMEs, rating of per-formance and credit worthiness of mi-cro and small enterprises, management and skill development, training, infor-mation support, marketing facilitation through B2B Portals and international exposure are some of the new schemes which have been implemented by NSIC to enhance the competitiveness of micro and small enterprises sector in India. This is in addition to various schemes of assistance, operated by NSIC, for providing help in marketing, technol-ogy, credit and infomediary support. These schemes are designed keeping in view of the needs of the micro and small enterprises operating in various clusters or elsewhere. The schemes are user- friendly with least paper work. The aim is to render assistance well in time when it is needed.

Pertaining to the creation of next gen-eration MSME entrepreneurs, NSIC has started a new programme by providing integrated support through incubation of unemployed people in order to empower them with knowledge and infrastructure and other support services for setting up of new small enterprises in manufacturing and services sectors. We have developed a package of training programmes which provide complete hand-holding right from start, i.e., from practical on-the-job-training to preparation of project reports, market survey, raw material assistance, identification and procurement of plant and machinery, credit support, testing and handing over of the project. Through

‘MSMEs Are Integral to India’s Industrial Resurgence’HP Kumar, Chairman and Managing Director, National Small Industries Corporation (NSIC) shares his thoughts on the opportunities that beckon the Indian MSME sector in an interview with SME Business. Excerpts:

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this programme, our objective is to equip unemployed people with adequate techni-cal and supervisory skills so that they can either support their own businesses or be-come employable to earn their livelihood. This is a very useful programme consider-ing the need of creating more and more employment opportunities in the country.

You have said in the past that while the banking and financial institu-tions in the country have increased the credit flow to the MSMEs, the need gap is still large. What would be the right approach toward meet-ing the credit needs of this sector?The right approach would be building trust in the capabilities and business models of MSMEs. There should not be any problem in devising modern risk assessment tools like credit rating, per-formance rating and finding ways to mitigate the perceived risks by way of building synergies. The MSMEs work-ing in clusters can draw upon the clus-ters strengths which should be bench-marked and recognised. Similarly, the relationship between principal and ancillary MSMEs can be utilised by the lending institutions. These are some of the approaches towards meeting the credit needs of the MSME sector.

Do you see the MSMEs generating any fresh interest among the VCs and PEs? What would it take for the sector to attract a greater volume of venture funds?

addition to financial, marketing and op-erational strategies and adopt the one that helps integrate their operations with their environment, customers and suppliers.

In this regard, NSIC under the Inter-national Cooperation Scheme of the Ministry of MSME organises technology missions to different countries. The ob-jective of these delegations/missions is to expose Indian MSEs to the latest tech-nologies and the business practices of different countries and also to enhance enterprise-to-enterprise cooperation between Indian MSEs and MSEs abroad.

Also, NSIC, through its Technical Ser-vices Centres offers various technical support services, which include advising on application of new techniques, mate-rial testing facilities through accredited laboratories, assistance in product de-sign including CAD and common facility support in machining, EDM, CNC, etc.

Training is key to the development of a strong manpower base for any industry. Are you satisfied with the quality of training programmes that are available for prospective and existing employees and entre-preneurs in the MSME sector?Training and entrepreneurship devel-opment is one of the key elements of Government policy for the promotion of MSMEs in the country, particularly for creation of new enterprises by first generation entrepreneurs. To cater to this need, Ministry of MSMEs has set up three national level Entrepreneurship Development Institutes at Hyderabad, Noida and Guwahati. These institutes are engaged in developing training modules, undertaking research and training and providing consultancy services for entrepreneurship develop-ment and promotion of MSMEs.

Apart from above, NSIC also provides training in different trades through its technical services centres located in different parts of India. These centres provide training starting from conven-tional trades to hi-tech sectors which include CAD, CAM, Software develop-ment, CNC machines etc.

However, there is a need to have more training institutes especially in rural ar-eas. Keeping this in view, NSIC is open-ing up Training cum Incubation Centres

If at all, there is any sector which can bring VCs and PEs to life by offering greater volumes in business, better re-wards and higher wealth creation pro-portionate to associated risks, it is the MSME sector in India. This is the right time to acquire stakes in the SMEs as they are growing in leaps and bounds in many fields. The recent slowdown may have temporarily affected their growth but, the innovations in products and strategies are continuously driving this sector to higher levels. Venture funds are already seeing the potential. Maybe they are a bit conservative due to lack of clarity on exit policy. The proposed stock exchange for MSMEs would be able to attract greater volumes of PEs and VFs to this sector.

What steps has NSIC taken to boost the Indian MSME presence in the world markets?NSIC has recently launched two dedi-cated web portals for providing global marketing access to MSMEs. NSIC's B2B web portal www.nsicindia.com pro-vides a unique platform to small enter-prises to virtually exhibit and market their products globally. In addition, NSIC's portal on international SME development www.nsicpartners.com provides an exclusive platform where the recognised partners of NSIC in dif-ferent countries would be exchanging information and facilitating sustain-able collaborations amongst MSMEs of their countries. The website, assists

under Public Private Partnership mode in different parts of the country in or-der to create skilled manpower to cre-ate more MSMEs or which can be effec-tively utilized in existing MSMEs thus enhancing their capabilities.

What is NSIC's role in the business development of MSMEs? Are there any marketing initiatives that help the MSMEs to enhance their reach?Business development of MSMEs is one of the prime objectives of NSIC. To assist MSMEs in their business development and enhance their reach, NSIC provides integrated support to MSMES in terms of marketing, technology, credit and in-formation. Many initiatives undertaken by NSIC in this regard are as follows:

NSIC has been operating a Single Point Registration Scheme for small industries under Government Purchase Programme. Small industries which are registered by NSIC get many benefits like free tender form, exemption from security and ear-nest money deposit and price preference over large industries while bidding for government procurement.

Apart from this, NSIC also facilitates participation in tenders on their behalf for securing bulk orders from large buy-ers. Additionally, NSIC holds exhibitions, buyer seller meets, vendor development programmes which are some of the other ways to help in marketing of their products. We also help in exhibiting the products manufactured by small indus-tries in various international exhibitions to secure orders from foreign buyers. NSIC also organizes Techmart India a premier exhibition, every year in Pragati Maidan, New Delhi to exhibit technolo-gies, machineries and products of the

the selected international MSME sup-port institutions in disseminating key information on marketing, technology and investment opportunities to MSMEs across the world. This is a very compre-hensive portal providing information on trade leads, trade statistics, infor-mation on machinery manufacturers, investment opportunities, information on Indian technologies, etc.

NSIC also holds exhibitions, buyer seller meets, vendor development pro-grammes to help in marketing of their products in domestic as well as interna-tional markets. We also help in exhibit-ing the products manufactured by MSEs in various international exhibitions to secure orders from foreign buyers and also encourage their participation in these exhibitions.

NSIC also organises Techmart India a premier exhibition, every year in Pra-gati Maidan, New Delhi to exhibit tech-nologies, machineries and products of small enterprises. This exhibition covers the entire range of manufacturing and allied industries and provides a perfect platform to discover new market op-portunities in India and abroad.

Further, to empower small enterpris-es to face internal & global competition and enhance their creditability, NSIC with the support of the MSME Ministry has launched a unique scheme of Per-formance & Credit Rating for Small En-terprises through which enterprises are rated by accredited rating agencies. The rating benefits MSEs in many ways like establishing their creditworthiness which helps them in accessing easier credit from the banks, thus economising the cost of credit. It also certifies their performance-ability which would help procuring orders from foreign and other bulk buyers and analyzing the strengths and weaknesses of units. It also prompts the owner in bringing changes to improve upon their operating performance.

Is NSIC actively engaged in the propagation of new technologies in the MSME sector? If so, what are the specific steps taken in this regard?Technology is the key to enhancing a company's competitive advantage in today's dynamic and volatile industrial environment. MSMEs need to develop and implement a technology strategy in

small enterprises. This exhibition cov-ers the entire range of manufacturing & allied industries and provides a perfect platform to discover new market oppor-tunities in India and abroad.

As informed earlier, NSIC has also recently launched two dedicated Web Portals www.nsicindia.com & www.nsicpartners.com for providing global marketing access to MSMEs.

What are NSIC's own growth and expansion plans in the next three years?Increasing the reach of NSIC to a larger number of micro and small enterprises & providing them the integrated support services will be the main focus. We have plans for expansion of NSIC's reach from 40 offices four years back to 200 of-fices over next three years with the aim to provide services to MSMEs at their door steps. We have also signed MOUs with various Industry Associations in or-der to work with their members closely and synergise our products with their requirements. Inspite of being a promo-tional organization, NSIC has achieved self sustainability in its operations and has become a dividend paying com-pany. Our endeavour is to strengthen our financial results while continuing to extend promotional services to this sec-tor. This would enable us to serve wide spectrum of Micro and Small Enterprises (MSEs) in the country and also enhance our business volumes thus making each product of NSIC a self sustaining module. It will be NSIC's endeavour to strengthen small enterprises to meet the demand of global competitiveness, which is the key to the future of small enterprises in the present context.

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tor would be: (i) adoption of appropriate tech-nologies, (ii) promotion of owner-producers, and (iii) greater cooperation and collabora-tion among the MSMEs themselves.

Mr Maira pointed to the success of in-dustrial clusters to amplify his point on driving a culture of cooperation. The fire-flies will thus be brighter, he said.

MSMEs around the world are poised to leverage the business opportunities that stem from the gradual recovery of the global economy. Stating this in his keynote address, Mr Dinesh Rai, said the MSMEs, having weathered the difficult economic times, will emerge stronger if due financial and technological support is extended to them.

Mr Rai said the Government of In-dia had introduced two growth stimulus packages and a series of fiscal and mon-etary measures that have greatly allevi-ated the financial problems that Indian MSMEs faced in the wake of the global economic slowdown. The challenge hereon would be for these enter-prises to estab-lish their global

Micro, small and medium enterprises (MSMEs) make up 99% of all indus-trial enterprises globally. In both developing and

developed economies alike, these enter-prises account for the bulk of national industrial output, employment and export earnings. Yet, a certain vulnerability un-derpins the sector given that most MSMEs continually encounter roadblocks while accessing three vital resources: finance, technology and people.

The current global economic slowdown has amplified this vulnerability, especially in the face of shrinking markets. At the same time, governments have come to recognise the fact that their respective country's economic re-

competitiveness, for which they will need to focus upon new technologies, R&D and market expansion globally.

Skills development will be a key thrust area for the sector. Referring to the estab-lishment of the National Skills Development Corporation, Mr Rai said the Government is working toward creating a pool of 500 mil-lion skilled people by year 2022.

He invited the private sector to present fresh proposals on taking this skills develop-ment initiative to a higher level. Mr Rai as-sured the audience that the Government will provide the financial support for the proposals to be translated into actionable programmes.

Talking about the need for greater credit flow to the MSMEs, Mr Rai said the Government has already accorded prior-ity sector lending status to the MSMEs. Meanwhile, banks have successfully met their goal of doubling the credit to the MSME sector within 5 years. The Credit Guarantee Trust Fund provides the guar-antee for banks to extend loans of up to Rs 1 crore to MSMEs. Further, according to the Reserve Bank of India (RBI) guidelines, banks are called upon to extend loans of up to Rs 5 lakh to the MSMEs without the need for any collaterals.

Mr Rai said that rural jobs creation will be a key focus area for the Government

covery would largely hinge on the revival of the MSME sector. Therefore, the challenge is two-pronged: of providing the sector a boost-er dose by way of growth stimulus packages to tide over the current difficulties, and of cre-ating the necessary conditions for long-term sustainability of MSME businesses.

The India Global Summit on MSMEs 2009, organized by CII in November, pro-vided a significant opportunity for rep-resentatives from 32 countries to share their experiences in guiding MSME growth and development. Building the next-gen entrepreneurs came up for discussion.

Building Next-Gen EntrepreneursMSMEs provide the energy for the econ-omy to grow. Stating this, Mr Arun Maira,

and under the Prime Minister's Employ-ment Generation Programme, 37 lakh new jobs will be created in rural India. Further, MSMEs will play a key role in this, he asserted.

Underlining the need for creating a suf-ficient number of entrepreneurship de-velopment institutes across the country, Mr Rai said the Government will provide 50% grant for any initiative towards set-ting up such institutes in the country. In the North-East region, grant to the order of 90% will be given for such initiatives.

Mr Salil Singhal, Chairman, CII National MSME Council, said that at a meeting of the representatives of industry asso-ciations with Prime Minister Manmohan Singh, CII highlighted the need for pro-viding procurement incentives, enhanced depreciation on IT products, establish-ment of SME exchange, simplification of labour laws and creation of a uniform credit rating format and processes to fa-cilitate credit availability for the MSMEs.

CII has been actively working with 180 industrial clusters; 106 clusters comprising 800 companies have be-come highly successful, he said.

Preparing For Economic CyclesMeasuring up to the global production stan-

Member, Planning Commission, said, We look at the moon for light, but we miss the fireflies. Substantiating this view, he said that the 26 million MSMEs in the country provide employment to 60 million people, and account for 30% of the manufactur-ing GDP and 40% of the total exports. So, to promote inclusivity, the focus should necessarily be on taking the MSME sector to a higher growth trajectory.

Mr Maira said that instead of viewing capitalism as damaging to the interests of small enterprises, the objective should be to promote millions of entrepreneurs who are capitalists themselves. We need to create businesses that are by the people, for the people and of the people, he said.

He said the key growth drivers for the sec-

Building Next-Gen EntrepreneursThe challenge is two-pronged: of providing the sector a booster dose by way of growth stimulus packages to tide over the current difficulties, and of creating the necessary conditions for long-term sustainability of MSME businesses.

Mr Rana Hassan, Principal Economist, Economic Research Department, Asian Development Bank, believes that pub-lic-private partnerships could be vital in helping MSMEs deal with the economic cycles. With a sharp decline in ex-ports, domestic demand for MSME products and services were severely affected and manufacturing employment has registered the biggest decline. Keeping these trends in view, Mr Hassan said that policy makers will have to take strong steps to help the entrepreneurs to deal with the crisis. Support could be extended in terms of credit guarantee, workers training and tax incentives.Referring to the various government programmes, he said it was important that they are rigorously monitored and evaluated time to time. He also said that where structural problems are seen, the focus should be on developing sustainable solutions and not any stop-gap arrangement.

Are the SMEs key to global economic recovery?The economic recovery is being triggered mainly by

the stimulus packages that governments have intro-duced in the recent months. In India, factors like the implementation of the 6th Pay Commission recom-mendations, infrastructure expansion and the like have kept the economy on the growth path.

What steps are needed to strengthen Indian MSMEs?There are far too many policies originating from dif-ferent departments that govern the MSME sector. This is not helping the cause of the sector. The miss-ing middle is also a concern area for the sector.

Could you elaborate on the missing middle? It is the middle segment of the sector that will bring about innovations. But their growth is stymied by lack of adequate credit flow. It is the missing middle that limits the growth of next-gen entrepreneurs.MSMEs should also play a greater role in external trade. That will bring in more discipline.

Rana Hassan is Principal Economist, Economic Research Department, ADB

‘Monitor programme implementation’

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dards will be one of the key challenges for the Indian MSMEs. At the same time, the en-terprises would be called upon to prepare for the economic cycles for sustained competi-tiveness. Mr R Vanamali, Executive Director, Chemtrols Engineering Ltd & MD, Endress & Hauser Pvt Ltd, said that domestic enter-prises will need to benchmark their practices with global standards. All stakeholders will have to chip in with their efforts to make this possible, he said. The right strategy, in his view, would be to develop MSMEs that meet global standards, provide remedial economic and business support, and prepare them for the eventuality of another downturn.

He also advocated the need for strong public-private partnerships to build the MSME sector and specifically mentioned the need for developing customised CRM tools for the sector.

Ms Uma Reddy, President CLIK & CEO, Hitech Magnetics, said that consolidation will be a big challenge for the sector in the coming times. So, the units will have to stay flexible and adaptable to the chang-ing economic circumstances.

She also said that it was important for the government to maintain multi-sectoral focus by pro-viding equal access to fi-

commitment to the cause, he observed.Mr Sanjiva Dubey, Asia Pacific Service De-

livery Executive, IBM Global, said while the problems faced by MSMEs across the globe do not vary so much with each year, the solutions are found to be very different from each other. He said that MSMEs face three kinds of chal-lenges: strategic, manage-ment and execution.

nance to MSMEs in different business sectors.The key challenges for MSMEs, in her

view, were better money management, customer focus, R&D, marketing strate-gies, employee retention.

She felt that government role in the MSME turnaround may be defined by way of effec-tive policy making, provision of tax breaks, access to finance, infrastructure support, and support for trade associations.

Integrating With Global Value ChainThe other key challenge for the MSMEs would be to integrate with the global value chain. Stating that MSMEs hold the key to GDP growth, Mr Arvind Kapur, Co-Chairman, CII (Northern Region) MSME Sub-committee & MD, Rico Auto Industries Ltd, said that even in a developed economy like Germany, SMEs account for 70% of the total exports. He said that for India to increase its share of global trade from 1.64% now to 3-5% in the future, due efforts are needed to integrate the do-mestic MSMEs with the global value chain.

He said that large enterprises could play an important role in building the MSME competitiveness by increasing their procurements from this sector. A recom-mendation has already been made with the Prime Minister's Task Force on MSMEs to provide tax breaks to large companies that procure 10% of their goods and ser-vices from MSMEs.

He also said the large companies should

Mr Dubey said that IT infrastructure development is key to MSME competitive-ness. He referred to a global chart show-ing router density and population density to show how disproportionately IT infra-structure is deployed across the globe.

He also said that governments should modify the criteria for tenders for deploy-ment of IT infrastructure and encourage a larger number of companies to partici-pate in the process.

Mr Pravir Kumar, Joint Secretary, Minis-try of MSME, Government of India, said that

be induced to conduct R&D on products that are relevant to the MSME sector.

Ms Lakshmi V Venkatesan, Founding Trustee & Executive VP, Bharatiya Yuva Shakti Trust (BYST), said that 20% of every society is capable of being entrepreneurs but only 5% enter the fray. Less than 1% among them attain success in business, she said, adding that this is a big loss to society. She said that most businesses tend to fail in the first three years of operation.

Ms Venkatesan said that MSMEs can become part of the global value chain without having to establish overseas op-erations. She said that SMEs make up 80% of all enterprises in Malaysia and the unorganised sector in India accounts for 93% of all domestic enterprises. What is needed is a robust eco-system that pro-vides for mentoring, awareness creation and business linkages.

What is also needed is a global chain of mentoring that including mentoring within the country and internationally, she said.

Technology UpgradationMr Salil Singhal said that MSMEs should increasingly focus on adopting appropri-ate and affordable technologies and take the path of innovation to build their global competitiveness instead of looking for gov-ernment props for sustenance. He said that innovations and R&D could be powered with minimal sources. All it requires a firm

companies that survived the recession have emerged far more competitive, lean and mean. The ministry provides for a Credit Linked Capital Subsidy Scheme (CLCSS) un-der which MSMEs could take up technologi-cal upgradation to the order of Rs 1 crore and receive 15% subsidy. The subsidy will be paid to the bank that extends the loan.

Stating that ICT is a great leveler, he said that rentals in the cyberspace are very economical compared with brick and mortar offices. Mr Kumar advocated the cause of open source software.

Mr Chua Tiam Wee says that Michael Porter's concept of global value chain has taken different forms in different parts of the world. For instance, the global auto industry is supported by thousands of small auto component manu-facturers who are integrated with the global value chain. He says the benefits of internationalisation are greater ef-ficiency, product R&D, transfer of technology, exposure to new markets, innovations, and higher profitability. Looking ahead, he says the actions to be taken are awareness build-ing regarding global value chain, facilitation of an SME con-sortia, joint marketing and technology upgradation.

What are the prospects for the MSME sector?SMEs are the real growth drivers for the global economy. While large enterprises have been deeply affected by the economic slowdown, the SMEs are more agile and less dependent on the banking system. They are more innovative and risk-taking.

Have governments done enough to resuscitate the MSMEs?In Malaysia, the first government stimulus package of 6.7 billion ringgit was released in November 2008. The second stimulus of 60 billion ringgit was released in March 2009. The focus was on helping the SMEs to move up the global value chain.With tax cuts, people's disposable income increased and thereby the overall demand, which helped the local industry to revive. The Government also encouraged industries to buy local ma-chines and components.With Government initiatives, SME exports also picked after a 32% drop in the first quarter of current fiscal.

What is your view on the Indian MSME model?We are impressed with the attention that is directed on the micro enterprises. In Malaysia, the majority of the enter-prises are micro enterprises but we do not have a policy focus on this segment.

What are the takeaways from an event like India Global Summit on MSMEs?An event like this acts like a sounding board. We get to see that there are many others who face the same kind of chal-lenges that we face. The case studies that get discussed at such events offer interesting thoughts and ideas, which are useful. The buyer-seller meets too have helped us to connect with potential business partners. The interaction with inter-national delegates facilitates healthy exchange of ideas and experiences in the MSME domain.

What are the showstoppers for the MSME sector?There should be greater dissemination of knowledge within the domain. This could be achieved through industry newsletters and portals. Information flow will have a multiplier effect on the

entire sector.

Do you see more women entering the MSME fray as entrepreneurs?The participation is still rather limited. There is a need to promote women in engineering and technical services. You don't need a B.Tech degree to enter this field. Women could be equipped with basic engineering skills like assembly, soldering, etc., which can help them to be self-employed.

Your advise to the youth?The youth need to come out of their comfort zone and show a greater commitment toward enterprise. Today, IT has made it possible for a larger number of people to pursue their entre-preneurial goals.

Chua Tiam Wee, National President, SMI Association of Malaysia Responded by Uma Reddy, President CLIK & CEO, Hitech Magnetics'

‘Help SMEs to move up value chain’‘Information flow key to success’

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While bank credit flow to the Indian MSMEs has increased over the years, alternative financing options like ven-ture capital funds, private

equity and angel investors are drawn more towards the upper crest of the MSME sector. It is important to see how these alternative financing sources can go to the bottom rung of the MSMEs sector, which includes a large number of start-ups.

Venture capital funding for MSMEs will only happen if there is a clear exit route for the investors. An initial public offer (IPO) is one way of creating this exit route. While there is no separate stock exchange for MSMEs, the Securities & Exchange Board

of India (Sebi) has now exempted the SMEs from the eligibility norms applicable for IPOs and follow-on public offerings. These norms include a minimum pre-issue networth and profit-making track record.

The market regulator has ruled out the need for a separate SME exchange and has provided that stocks can be listed on a separate trading platform of an existing exchange. MSMEs will need to furnish an offer document to Sebi only to inform the regulator.

Given that 90% of MSME funding is debt-based, there is a need to promote equity-based funding in this sector.

Sebi has announced that companies which have paid-up capital not exceeding Rs

25 crore can list on the new platform. The is-sue needs to be 100% underwritten by mer-chant bankers. The banker must also bear responsibility for marketmaking (acting as an intermediary for buying and selling of stock) for a minimum period of three years and can rope in a disclosed nominated in-vestor (a private equity fund, HNI or quali-fied institutional buyer) for the same.

A minimum trading lot of Rs 1 lakh will be required so that participation would be re-stricted to shareholders who are ’informed, financially sound and well-researched in-vestors, with a certain risk-taking ability’. Such companies listed on the SME platform will be required to disclose their financials on a half-yearly basis. Also, as per SEBI’s

SME Trading Platform: Toward Financial InclusionSebi has announced that companies which have paid-up capital not exceeding Rs 25 crore can list on the new platform

clause 49, for a company with an executive chairman, at least 50% of the board should comprise independent directors. In the case of a company with a non-executive chair-man, at least one-third of the board should be independent directors.

The Economic Times has reported that while on the face of it these norms seem to simplify things a lot for SMEs, some small businesses could face problems. Many of the current merchant bankers might not be in-terested in very small issues of this kind. So, Sebi might have allow new kinds merchant bankers to come in CS firms, audit firms and consultants, among others. Currently, firms with a minimum net worth of Rs 5 crore are allowed to be merchant bankers. If this cri-terion is brought down to Rs 1 crore, many

cost of raising capital through the listing route could be quite steep. This will include the cost of hiring a merchant banker, SEBI's fees, remuneration of an independent direc-tor and spends on compliance. Companies that have raised one round of funding and are considering another PE round soon find this a good opportunity. It was reported that while businesses considered getting listed in 18-24 months, now they would look at listing in a year's time.

While maintaining a minimum lot of Rs 1 lakh is necessary to bring in serious investors, it can also reduce liquidity. Retail investors and day traders who are essential for pro-viding liquidity will stay away because of this move and it will be up to the merchant banker to make the market for three years.

more kind of firms can enter and help SMEs list on the new platform.

A number of new investment bankers are reportedly getting into merchant bank-ing and will be setting up separate divisions for handling SMEs. The need for adhering to Clause 49 (appointment of independent directors) could be a big impediment too as most SME businesses are family-owned or proprietor owned with old processes and systems. It will take some time for these companies to accept that there will be an external entity that will be involved in the decision making process. Appointing an in-dependent director will add to the cost for an SME in the form of payment as well as for setting up systems.

Small companies are worried that the

Companies listed on the SME exchanges would be ex-empted from the eligibility norms applicable for IPOs and FPOs prescribed in the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regu-lations, 2009 (ICDR). In order to have informed, financially sound and well-researched investors with a certain risk taking ability, a minimum IPO application size of Rs 1 lakh would be pre-scribed. The minimum trading lot would be Rs 1 lakh. An upper limit of Rs 25 crore paid-up capital would be prescribed in order for a company to be listed on the SME platform/exchange and a minimum paid-up capital of Rs 10 crore would be prescribed for listing on the main boards of NSE and BSE. The offer document will have to be filed with Sebi and the exchange. No observations would be issued by Sebi on the offer documents filed by the Merchant Bankers (MBs). The merchant banker to the issue will bear the re-sponsibility for market making for a minimum period of three years. MBs would be allowed to do market mak-ing along with a disclosed nominated investor (like PE, VC, HNI and QIB). Under this arrangement, all the stock being bought and sold as part of market making will ultimately get transferred to the disclosed nominated investor with whom the merchant Banker has a contrac-tual agreement. Merchant banker would have to disclose their intention of this arrangement and have it approved by stock exchanges where the issuer SME is listed. Certain well capitalised registered entities like VCs may be allowed to have a contractual agreement with the merchant banker to share the burden of devolvement of

underwriting obligation. SEBI regulations on Takeover (Substantial Acquisition of Shares and Takeovers Regulations) will not be applicable to acquisition of shares through Merchant Banker /Market Maker provided that the Merchant Banker/Market Maker does not have the intention of taking over the management and there is no change in control (direct /indirect) of the company. Merchant Bankers will be required to ensure that the issue is 100% underwritten. However only a minimum per-centage (15%) of the issue size will be mandated to be com-pulsorily underwritten by the Merchant Banker itself. A minimum number of investors (say 50) shall be spec-ified for the IPO only. There shall be no continuing require-ment of maintaining the minimum number of investors. However, compliance with the requirements of Companies Act, 1956 needs to be ensured at all times. No separate registration will be required for brokers in-tending to service companies listed on the SME exchange/platform. Companies listed on the SME exchange/platform shall compulsorily migrate to an equity exchange/seg-ment (main board) on exceeding the Rs 25 crore post is-sue paid up capital limit. Further also, if follow on offer/rights issue results in triggering of the above limit (of Rs 25 crore) then the company would have to migrate to the main board. Preparation and submission of financial results (as mandated in the listing agreement) on a half yearly basis for SMEs, instead of quarterly basis. All the provisions of clause 49 (corporate governance) need to be complied with.

SME Platform: Sebi Provisions

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SME Cooperation: Building Block for India-Canada Ties

Canada and India have agreed to conclude a Comprehensive Eco-nomic Partnership Agreement (CEPA). An important compo-nent of the proposed CEPA will

be cooperation between two countries to develop small and medium enterprises.

Both countries have vibrant small and medium enterprise (SME) sectors, though their growth experiences would be vastly different. For long years, SME exchanges between developed and developing econo-mies were perceived to be rather limited in scope, but with the advancements and as-pirations of SMEs in the developing econo-mies, this equation has come a full circle. Indian SMEs are taking strident steps to move up the global value chain and have evolved as likely partners for doing busi-ness globally. The India-Canada economic cooperation would indeed intensify when the enterprises from both regions enter into sustainable long-term partnerships.

Also, opportunities galore for the SMEs in both countries to share their experiences in building human capital, developing ap-propriate, affordable and adaptable tech-

nologies, and sharing growth experiences.Canada opened a new trade office in

Ahmedabad in 2009. "With a total of eight trade offices in India, our government has created one of Canada's most extensive trade networks anywhere in the world," said Stockwell Day, Minister of Internation-al Trade and Minister for the Asia-Pacific Gateway, told media. "This new trade of-fice will help bring us closer to our goal of doubling our two-way trade with India over the next five years, to reach $10 bil-lion annually."

Along with existing trade offices in New Delhi, Hyderabad, Mumbai, Kolkata, Ban-galore, Chennai and Chandigarh, the new office was set up to provide market intelli-gence and expert advice to help Canadian companies to take advantage of trade and investment opportunities in this highly sought-after market.

Canadian two-way merchandise trade with India reached an all-time high of $4.6 billion in 2008, up 22.5 percent over 2007. Merchandise exports to India in 2008 to-talled $2.4 billion-an increase of an im-pressive 35 percent over the year before-

medical devices;l sustainable and alternate energy and

environmental technologies; and,l earth sciences and disaster management.

In the area of the environment, both coun-tries are actively working towards the cre-ation of a Canada-India Forum for Environ-mental Collaboration in order to work more closely together on key global environmental issues, including climate change. Canada and India are also exploring avenues for greater cooperation in the energy field, reflecting the importance both countries attach to issues of energy security and the bilateral complemen-tarities that exist in this sector.

People-to-people links are also increas-ing as Canada and India foster greater links through academic and cultural exchange, including through the work of the Shastri Indo-Canadian Institute. This activity and interchange is taking place in tandem with a rapidly growing Indo-Canadian com-munity, now estimated to benearing one million. In 2005, Canada opened nine new Visa Application Centres across India. In-dia is currently the second largest source country of immigrants to Canada and may well become the main source country within the next few years.

At the same time, India's rapidly ex-panding economy and market reforms are opening the door to international com-merce, making India a vital trade partner for Canada's prosperity agenda. To this end, an all-of-Canada commerce strategy for India is being developed to coordinate the efforts of Canada's missions in India, partner departments, the provinces and the private sector as they work to enhance Canada-India commercial relations.

A key part of the strategy includes iden-tifying priority sectors and developing targeted action plans for a number of sub-sectors that will lead to increased two-way trade, investment and technology partner-ships. Selected priority sectors include: agriculture and agri-food, infrastructure, information and communications technol-ogies, extractive industries, life sciences and enabling services.

One key objective of the conference is to draw Indian investors to Canada. In this context, it be stated that Canada in one of the most dynamic economies in the world. Canada boasts multiple advantages and unparalleled potential - a place where businesses can achieve excellence on a global scale.

Canada's Industry Strengthsl Aerospace: Canada's global share of

aerospace activity has tripled in the last 20 years, making Canada the world's 5th largest aerospace producer.

l Ag-biotech: Canadian firms' revenues exceed those of US agro-based compa-nies and are more than double those of Japan and the UK.

l Agri-food: Canada is the world's fourth-largest exporter of agricultural products.

l Automotive: Canada is among the Top 10 automotive countries and the 3rd larg-est exporter of automotive products af-ter Japan and the U.S.

l Bio-Products: Cutting-edge Canadian firms are converting energy crops and other agricultural residues into bio-fibres, bio-fuels and bio-industrial oils - environmen-tally beneficial alternatives to conven-tional products that are as healthy for the pocket book as they are for the planet.

l Biotechnology: Canada is a leader in bio-technology-one of the top five countries in the world.

l Business Services: Canada's business services sector is a critical node in to-day's multinational, multi-value chain model, generating over $57 billion in 2007 and employing 1.1 million

l Chemicals: Nine of the top 10 chemical companies in the world have production facilities in Canada .

l Digital Media - Games: Canadian com-panies are global leaders across the entire gaming value chain - from tools development to casual games and seri-ous games, to both mobile games and gameware development.

l Financial Services: Canada's banks are ranked #1 globally by the World Eco-nomic Forum.

l Life Sciences: Canada's life sciences innova-tors are at the very forefront of discovery.

l Pharmaceuticals: Canada is the fourth fastest growing market in the world for pharmaceuticals .

l Plastics: Canada is the world's fourth larg-est exporter of moulds and eighth largest exporter of plastics processing machinery.

l Renewable Energy: With 430 companies, a rapidly growing workforce, and quality wind resources, Canada's Wind energy sector is the fastest growing renewable energy source in Canada It may also be said that Ontario has be-

come the location of choice for companies that are expanding globally. It has one of

North America's top ten economies and the second largest manufacturing sector.

The Government of Ontario, Canada has established a network of International Mar-keting Centres in key markets worldwide. Part of the Ontario Ministry of Economic Development and Trade, the Marketing Centres serve to promote investment and trade opportunities in Ontario and working with companies to find investment oppor-tunities in Ontario. Their activities include: l Attracting foreign direct investment

(FDI) into Ontario.l Promoting awareness of, and access to,

Ontario-produced goods and services;l Building strong, strategic relationships

with the media and local governments;l Networking to raise Ontario's profile as

a world-class business jurisdiction; andl Obtaining and disseminating timely com-

mercial intelligence in key markets.Ontario has strong ties with India. Almost

500,000 people in Ontario list India as their ethnic origin. India is a key emerging in-vestment market for Ontario, and Ontario's trade with India has been on the rise, in-creasing over 70% over the last five years.

In 2007, the Premier of Ontario led a business mission of more than 100 On-tarians in order to strengthen the ties between Ontario and India. More than 87 Ontario companies, universities and other organizations were part of the mission. The mission focused on infrastructure, re-search and innovation, financial services, cultural industries and education.

The International Marketing Centre is located in the Canadian High Commission. Part of the Centre's mandate is to work with Indian companies to find investment op-portunities in Ontario, promote awareness of Ontario's many investment and business opportunities, and to build relationships with the media and local governments.

Canada excels in multiple sectors, as di-verse as our vast country. As one of the world's most competitive investment lo-cations-with regional clusters of industrial excellence and indispensable connections to global value chains-Canada has clear advantages for the sophisticated investor seeking new opportunities.

Canada has created a unique business environment that allows companies to grow on the world stage. To attract the best and brightest, Canada has focused its policies, business incentives and university support around key industries.

and the commercial relationship between the two countries continues to grow.

At a broad level, Canada and India have longstanding bilateral relations, built upon shared values of democracy and plural-ism and strong people-to-people links. In recent years, both countries have been working to enhance bilateral cooperation in a number of areas of mutual priority. The 2005 Canada-India Joint Statement re-affirmed Canada and India's commitment to deepen their bilateral dialogue on key global issues and enhance their coopera-tion in areas of mutual priority, including regional security and counter-terrorism; science and technology; the environment; bilateral trade and investment; and, peo-ple-to-people links.

Canada and India signed a Canada-India Agreement for Scientific and Technological Cooperation in November 2005 that aims to foster greater bilateral S&T collabora-tion in five priority areas:l nanoscience and nanomedicine;l information and communications tech-

nology;l biotechnology and health research and

Strengthening India-Canada bilateral trade and investment ties through the SME route

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Dell is committed to the Small Medium Business space through its wide range of products and service offer-ings. This range of enterprise

products has been designed specifically to meet the needs of small and medium busi-nesses (SMBs) by simplifying operations, reducing downtime, enhancing information security and reducing operating cost. Some of the most recent additions to the SMB portfolio includes four 11th Generation Dell PowerEdge servers, Lifecycle Controller 1.2 embedded systems management, the Pow-erVault NX300 network attached storage (NAS) device, Dell Uninterruptible Power Supplies (UPS) and Dell ProConsult ser-vices to help growing businesses achieve greater IT efficiency.

Dell has developed an integrated set of hardware, software and services to help small businesses improve their ef-ficiency. Small businesses can enjoy easy set up, monitoring, and maintenance with the inclusion of advanced systems management technologies now on all Dell PowerEdge servers. Dell Lifecycle Controller 1.2, simplifies deployment and saves time and money by pre-loading the correct drivers for all the operating sys-tems and components on Dell PowerEdge servers. It also further simplifies system management through integration with popular IT management consoles. The Dell PowerVault NX300 is an entry-level Microsoft Windows Storage Server 2008 NAS solution that offers the capability to store up to 4 terabytes of data in a single device while offering the flexibility to de-ploy additional NX300 arrays as storage needs grow.

Dell PowerEdge servers, backed up by a comprehensive suite of Dell Uninter-ruptible Power Supplies, are the corner-

stone of a reliable IT infrastructure to withstand all IT environments and help reduce downtime. The PowerEdge R510 is an ideal 2U rack server for mid-sized business and remote offices that require an excellent balance of internal stor-age, redundancy and value in compact chassis. Dell unveiled 28 new uninter-ruptible power supply products with an efficiency rating of up to 95 percent, providing reduced down time and en-hanced reliability. The new UPS systems offer remote monitoring through Dell's OpenManage management console and include downloadable flash upgrades and UPS management software. The line of UPS solutions include tool-less rack mounting, multi-language graphical LCD displays and improved acoustics.

"Small and medium businesses around the world are looking for technology so-lutions that deliver more security, great-er reliability and lower operating costs. Dell is strongly positioned to help our customers be more efficient so they can spend more time growing their business and less time managing their IT invest-ments. With India among its key markets, Dell is committed to the small and me-dium businesses in the country to help them grow with a suite of specific prod-ucts and simplified IT solutions geared for their needs," says Ravi Bhardwaj, General Manager, SMB, Dell India.

Dell provides security features, data storage and support services for data protection, data back-up and recovery to ensure business continuity and to help businesses operate efficiently. The Pow-erEdge T310 offers growing businesses a tower server complete with optional advanced systems management capabili-ties including remote management, full redundancy and cost effective RAID op-

tions that help to prevent data loss by further protecting the way data is stored on internal hard drives. The PowerEdge T110 tower server and R210 rack server offer the ability to add external eSATA storage directly to ease the transition of data from a desktop or workstation to a first server.

Dell ProSupport Data Protection Ser-vices such as Hard Drive Data Recovery and Certified Data Destruction help organisations secure their business op-erations by protecting their data through risk mitigation and improved data secu-rity.

This range of enterprise products is just right for SMBs. The PowerEdge T110 is a customer inspired first server for small businesses, with a desktop sized chassis and the right combination of se-curity and basic systems management for easy system monitoring and reli-ability. The PowerEdge R210 is an ideal first rack server for a small business with space constraints or can be used as a specialised application server for larger corporations. It has the smallest energy footprint of any Dell PowerEdge server. Dell servers are engineered to save en-ergy and save money. The PowerEdge R210 is 88 percent more energy efficient than the previous generation, and the PowerEdge T310 is 65 percent more en-ergy efficient than its predecessor.

As more and more SMBs adopt newer technologies, such as virtualisation, Dell is delivering solutions and services to help simplify the adoption and use of virtual environments. Dell has designed services specifically for SMBs looking to cost effectively plan, deploy and manage growing IT environments, without requir-ing long-term consultative or outsourc-ing agreements.

Dell Drives Efficiency With New Easy-to-Use Solutions for SMBs

SME Focused Projects, Events, Meetings, Interactions & Training Programmes ( January – March 2010)

Centre for CompetitivenessTitle/Theme Date Venue

Clusters for Competitiveness Ongoing Multiple

BEE Cluster Energy Efficiency for SMEs Ongoing Jodhpur

BEE Cluster Energy Efficiency for SMEs Ongoing Alwar

BEE Cluster Energy Efficiency for SMEs Ongoing Jalandhar, Batala & Ludhiana

Corrosion Awareness Session 15 Jan, 2010 Gurgaon

Training Programme on Communication & Presentation Skills 19 Jan, 2010 Jaipur

Training Programme on 7 QC Tools for SMEs 22 Jan, 2010 Chandigarh

Advanced Training Program on Energy Management 28- 29 Jan, 2010 Chandigarh

Training Programme on Selling & Negotiating Skills 29 Jan, 2010 Gurgaon

Training Programme for SMEs Managers 15- 16 Feb 2010 New Delhi

High Performance Coating Certification Program 15- 17 Feb, 2010 Kolkata

How to achieve substantial improvements by viable vision Training by Dr Eli Goldratt 15-17 Feb 2010 Mumbai

Training Program on Energy Management for SMEs 17 Feb, 2010 New Delhi

Training Program on Autonomous Maintenance for SMEs 26 Feb, 2010 Rudrapur

Training Program on Corporate Tax Planning for SMEs 26 Feb, 2010 Gurgaon

Seminar on New Product Development for SMEs 17- 18 March, 2010 Rajkot

Training Programme on CRM for SMEs 17 March, 2010 New Delhi

Training Programme on Competency Mapping for SMEs 19 March, 2010 New Delhi

Training Program on Energy Management for SMEs 19 March, 2010 Jalandhar

Training Program on SMED & Poka Yoke for SMEs 19 March, 2010 Gurgaon

MSME Central Office

Contact: Pooja Jha; Email: pooja.jha@cii.in

Title/Theme Date Venue

Roundtable Discussion Fostering India - Canada Trade: Role of SMEs 7-Jan-10 New Delhi

SME Mission to Czech Republic 12-14 Jan-10 New Delhi

Meeting with SME delegation from Denmark 2 Feb 2010 New Dehi

Conference on Financing SME Projects in Africa 13- Mar-10 New Delhi

Contact: Harinder Singh; Email: harinder.singh@cii.in

CII-ITC Centre of Excellence for Sustainable DevelopmentTitle/Theme Date VenueHero Honda Motors Ltd - Green Vendors Development Programme (HHML-GVDP) Ongoing HHML Supply Chain

GRI (Global Reporting Initiative) Certified Training ww Programme on Sustainability Reporting 27-28 March 2010 Delhi

Programme on Environmental Health & Safety (EHS) Legislations Open Programme (available on request)

Contact: Seema Arora; Email: seema.arora@cii.in

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

Technology & Innovation Department

Title/Theme Date VenueCapacity Building Workshop on Agri Biotechnology 22 January 2010 Hyderabad

Workshop on Patents, Trademarks & Design at Midhani 27 January 2010 Hyderabad

IP Audit in MIDHANI 22-23 Feb 2010 Hyderabad

Two-day Hands-on Training on Patent Search & Analysis 25-26 March 2010 Hyderabad

NIRD-APTDC Establishment of bamboo structural facility Centre 1st Jan - 31 March 2010 Hyderabad

BMTPC-APTDC Establishment of Granite facility Centre 1st Jan - 31 March 2010 Hyderabad

IPR Facilitation Services for 8 MSMEs in Hyderabad 1st Jan - 31 March 2010 Hyderabad

Contact: Subodh Kumar; Email: subodh.kumar@cii.in

Green Business Centre

Contact: Hemant Nitturkar; Email: hemant.nitturkar@cii.in

TBD = to be decided

Title/Theme Date Venue

Interaction Funding options for Green SMEs - in collaboration with CII Bangalore 12 Jan, 2010 Bangalore

NVI - Investor/Entrepreneur Meetw 28 Jan, 2010 Bangalore

UNDP/SELCO/NEW VENTURES Workshop on Clean Energy solutions for BOP sector Feb TBD Bangalore

Interaction Funding options for Green SMEs - in collaboration with CII Mumbai Feb TBD Mumbai

World Bank InfoDev/DFID Climate Change Innovation Centre 11 Feb, 2010 New Delhi

Interaction Funding options for Green SMEs - in collaboration with CII New Delhi 12 Feb, 2010 New Delhi

NVI - Investor/Entrepreneur Meet 19 March, 2010 New Delhi

Western Region

Contact: CM Tungare; Email: c.tungare@cii.in

Title/Theme Date Venue

Sixth MSME Sub-Committee Meeting 22 January, 10 Goa

Study Mission to South India January 2010

Interactive Session with Bankers February 2010 Mumbai

Fourth Meeting of Maharashtra State MSME Panel 6 February 2010 Nagpur

Session on GST 6 February 2010 Nagpur

Fifth Meeting of Maharashtra State MSME Panel February 2010 Mumbai

Session on Supply Chain Management February 2010 Mumbai

Visit to Pipavav Port February/March 2010

Mission to South Korea and Japan February/March 2010

Production is an integral part of manufacturing and an important sub-set of in-dustry as a whole. CII has tied up with The Associa-

tion for Overseas Technical Scholar-ship (AOTS) to facilitate the training of industry professionals in the latest Japanese production management tools and techniques.

Over the years, CII has organised various technical and management training programmes for production professionals in India in collabora-tive AOTS. These programmes have enabled the participating entrepre-neurs to identify critical areas in the technical and managerial domain and apply the knowledge and skill gained thereof for improving the competi-tiveness of their enterprises. Over the years, more than 1000 participants have been nominated by CII for vari-ous training programmes organised, and these included senior profession-als representing different MSMEs.

The training programmes offered by AOTS have helped to generate keen interest among Indian organi-sations in Japanese management

methods and techniques. This has also had a visibly positive impact on India-Japan economic relations and partnerships between Indian and Japanese companies.

Commenting on the training pro-gramme, Mr Yasumi Suzuki (Suzuki San), General Manager, AOTS, told SME Business that the engineering skills and intellectual levels in India are very high but the implementation is perceived to be weak. He said the production capabilities in India do not seem to percolate from the top man-agement to the shop-floor level. There is also scope for greater team-work within the production units, he felt.

Mr Suzuki said the training of shop floor managers is key to sustained ef-ficiency of a production unit. Respect the basics, he said.

Through such training programmes, AOTS helps the participants to get an up-close view of the Japanese produc-tion techniques through video presen-tation and case study presentations. Mr Suzuki said the training programme is designed to be a learning exercise and not just a seminar.

In the context of MSME training,

he said that these enterprises would benefit by sending their own senior executives and engineers for the training programme.

Mr Suzuki said that Japanese SMEs play a key role in the growth and de-velopment of the large enterprises in the country. Hence, the Japanese experience in the SME domain would serve as crucial inputs for Indian SMEs progress.

Giving an overview of the produc-tion training needs in India, Mr Genji Tanaka, the faculty for the training programme, told SME Business that Indian shopfloor workers and man-agers in general are seen to be less adept with the QC tools. Hence, in the training programmes, Mr Tanaka has used video presentations on kaizen implementation to train the partici-pants in this regard.

Mr Tanaka trained the participants in the Japanese production methods such as Toyota Production System and TQM. The challenge hereon would be to engage a larger number of people in the training programmes over a period of 2-3 years, he said in conclusion.

The training programs offered by AOTS helps to generate interest among Indian organisations in Japanese management methods and techniques

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