Presentation for Patna 28th March, 2011

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ALL INDIA MANAGEMENT ASSOCIATIONALL INDIA MANAGEMENT ASSOCIATIONJointly withJointly with

PATNA MANAGEMENT ASSOCIATIONPATNA MANAGEMENT ASSOCIATION

Workshop OnWorkshop On

MANAGEMENT SKILLS TO SOURCE & LEAVERAGE FINANCE MANAGEMENT SKILLS TO SOURCE & LEAVERAGE FINANCE

AND AND

TECHNOLOGY FOR BUSINESS GROWTH BY SMES TECHNOLOGY FOR BUSINESS GROWTH BY SMES

With the support ofWith the support of

State Bank of IndiaState Bank of IndiaATAT

PATNAPATNA

PresentationPresentationByBy

Dr. J.S. JunejaDr. J.S. JunejaChairman SME Task Force, &Chairman SME Task Force, &

Past President AIMA andPast President AIMA andChairmanChairman

Global Projects & Services (P) Ltd.Global Projects & Services (P) Ltd.707-708, Ansal Chamber II, Bhikaji Cama Place,New Delhi -110066707-708, Ansal Chamber II, Bhikaji Cama Place,New Delhi -110066

Tel: ++91 1126170126,26178443 Fax: ++91 11 26172457Tel: ++91 1126170126,26178443 Fax: ++91 11 26172457 E-mail: [email protected] & [email protected]: [email protected] & [email protected]

28th March, 201128th March, 2011

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“It is through the process of innovation that Knowledge is converted into wealth”

Dr. -A P J Abdul Kalam

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Concept of innovationConcept of innovation

To define “innovation in a broad sense that includes innovation To define “innovation in a broad sense that includes innovation

as constant improvement in doing things in a new ways, taking as constant improvement in doing things in a new ways, taking

actions, making decisions, process of enforcement of the actions, making decisions, process of enforcement of the

decisions made, all of which contributing to better working decisions made, all of which contributing to better working

environment, rule of law and belongingness in the nation’s environment, rule of law and belongingness in the nation’s

development process”. development process”.

“ “Innovation is not limited to R & D and product Innovation is not limited to R & D and product

design, but extends across the entire value chain”design, but extends across the entire value chain”..

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R & D InvestmentsR & D Investments

• India Expenditure 0.9 % of GDPIndia Expenditure 0.9 % of GDP

• China 1.4 % ,,China 1.4 % ,,

• Europe 2.0 % ,,Europe 2.0 % ,,

• USA 2.6 % ,,USA 2.6 % ,,

• South Korea 3.2 % ,,South Korea 3.2 % ,,

• Japan 3.2 % ,,Japan 3.2 % ,,

Major R & D Expenditure in India from Major R & D Expenditure in India from

Public Sector InstitutionsPublic Sector Institutions

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OBJECTIVES OF THE WORKSHOPOBJECTIVES OF THE WORKSHOP

Management Skills to Leverage Finance and Technology for Growth Management Skills to Leverage Finance and Technology for Growth

To have detailed deliberations on sourcing of finance for ongoing and emerging SME’s.To have detailed deliberations on sourcing of finance for ongoing and emerging SME’s.

To bring Awareness, Knowledge and Methodology to source and Manage finance :To bring Awareness, Knowledge and Methodology to source and Manage finance :

Term LoansTerm Loans

Working Capital,Working Capital,

Innovative Financing, for Business GrowthInnovative Financing, for Business Growth

Management of Finance & Fund FlowsManagement of Finance & Fund Flows..

Management of TechnologyManagement of Technology

Modernization.Modernization.

Technology Upgradation.Technology Upgradation.

Support & Sources of Financing for Technology.Support & Sources of Financing for Technology.

Perspective : Perspective :

Opportunities in Knowledge SectorsOpportunities in Knowledge Sectors

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Recent InitiativesRecent Initiatives The following five initiatives taken by the Government of India.The following five initiatives taken by the Government of India.

i). MSME Development Act 2006.i). MSME Development Act 2006.

ii). Skill Developmentii). Skill Development

a) National Council On Skill Development.a) National Council On Skill Development.

b) National Skill Development Coordination Board.b) National Skill Development Coordination Board.

c) National Skill Development Corporation.c) National Skill Development Corporation.

iii) National Manufacturing Competitiveness Program.iii) National Manufacturing Competitiveness Program.

a) Lean Manufacturing Competitiveness Scheme.a) Lean Manufacturing Competitiveness Scheme.

b) Technology & Quality upgradation.b) Technology & Quality upgradation.

c) Competitiveness through Quality Management c) Competitiveness through Quality Management

Standards.Standards.

d) Setting up of Mini Tool Rooms.d) Setting up of Mini Tool Rooms.

e) Promotion for the usage of ICT Tools.e) Promotion for the usage of ICT Tools.

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f). Awareness for IPR.f). Awareness for IPR.

g). Entrepreneurial & Managerial Development g). Entrepreneurial & Managerial Development through through

Incubation.Incubation.

h). Design Clinic Scheme.h). Design Clinic Scheme.

i) Marketing Support.i) Marketing Support.

j). Marketing Assistance & Technology upgradation j). Marketing Assistance & Technology upgradation Scheme.Scheme.

iv). Limited Liability Partnership (LLP) Act 2008.iv). Limited Liability Partnership (LLP) Act 2008.

v). Prime Minister’s Task Force.v). Prime Minister’s Task Force.

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Indian MSME Sector at a GlanceIndian MSME Sector at a GlanceIndian MSME Sector at a GlanceIndian MSME Sector at a Glance

MSME units : 2 Crore 85 LakhsMSME units : 2 Crore 85 Lakhs

Employment generated in MSMEs : Employment generated in MSMEs :

6.59 Crore6.59 Crore

Production : Rs. 880,850Crores Production : Rs. 880,850Crores (At (At

Current Price)Current Price)

Exports : Rs. 202,017 Crores Exports : Rs. 202,017 Crores (2007-2008)(2007-2008)

MSME account :MSME account :

• Industrial Production : 45 %Industrial Production : 45 %

• Export Earning : 40 %Export Earning : 40 %

• GDP Share : 8.00 %GDP Share : 8.00 %

Produces Diverse range of products (more than 6000- Produces Diverse range of products (more than 6000- consumer items, capital goods and intermediates)consumer items, capital goods and intermediates)

Produces Diverse range of products (more than 6000- Produces Diverse range of products (more than 6000- consumer items, capital goods and intermediates)consumer items, capital goods and intermediates)

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Location:Location:

• Urban Enterprises : 55%Urban Enterprises : 55%

• Rural Enterprises : 45%Rural Enterprises : 45%

Classification : Classification :

Micro : 95.05 %Micro : 95.05 %

Small : 4.74%Small : 4.74%

Medium : 0.21% Medium : 0.21%

• MSMEs Maintaining MSMEs Maintaining

Accounts : Accounts :

28.23%28.23%

Ownership pattern : Ownership pattern : Proprietorships : 90.36% Proprietorships : 90.36%

Partnerships : 3.85%Partnerships : 3.85%

Private Ltd Co. : 2.69%Private Ltd Co. : 2.69%

Public Ltd Co. : 0.53%Public Ltd Co. : 0.53%

Others : 2.57%Others : 2.57%

Type of Units Type of Units

• Industrial Units : 66.67%Industrial Units : 66.67%

• Repair and Maintenance : 16.33%Repair and Maintenance : 16.33%

• Service Enterprises : 17%Service Enterprises : 17%

• Women Enterprises : 13.85%Women Enterprises : 13.85%

• Ancillary Units : 8.21%Ancillary Units : 8.21%

Recent CensusRecent Census

Source : Ministry of MSME, GOI: Annual Report 2009-10 Source : Ministry of MSME, GOI: Annual Report 2009-10 and economic survey GOI Feb 2010and economic survey GOI Feb 2010

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India – Region wise GrowthIndia – Region wise Growth

RegionRegion PercentagePercentage

North North -18.61 -18.61

East East -0.15 -0.15

West West 9.65 9.65

South South 25.79 25.79

Overall Overall -5.18 -5.18

AIMA Study – August 2003

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Policy Reforms & Regulatory FrameworkPolicy Reforms & Regulatory FrameworkApproach: Regulatory to Growth orientation.Approach: Regulatory to Growth orientation.

Definition:Definition:

Enactment of MSMED Act June 2006Enactment of MSMED Act June 2006

a) Recognition of Micro, Medium Enterprisesa) Recognition of Micro, Medium Enterprises

b) Services sectorb) Services sector

EnterprisesEnterprises ManufacturingManufacturing ServicesServices

Micro Micro EnterprisesEnterprises

Upto Rs. 25 LakhsUpto Rs. 25 Lakhs Upto Rs. 10 LakhsUpto Rs. 10 Lakhs

Small Small EnterprisesEnterprises

Rs. 25 Lakhs – Rs. 5 CroresRs. 25 Lakhs – Rs. 5 Crores Rs. 10 Lakhs – Rs. 2 Rs. 10 Lakhs – Rs. 2 CroresCrores

Medium Medium EnterprisesEnterprises

Rs. 5 Crores – Rs. 10 CroresRs. 5 Crores – Rs. 10 Crores Rs. 2 Crores – Rs. 5 Rs. 2 Crores – Rs. 5 CroresCrores

Cont..

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Launching of Credit Rating AgenciesLaunching of Credit Rating Agencies

Doubling of Credit in Five Years (20 % Yearly growth)Doubling of Credit in Five Years (20 % Yearly growth)

Composite Loan Scheme raised to Rs. 50 lacsComposite Loan Scheme raised to Rs. 50 lacs

Credit Guarantee Scheme Cover of 80% for Micro Enterprises and Service Credit Guarantee Scheme Cover of 80% for Micro Enterprises and Service

charge reduced to 0.5%charge reduced to 0.5%

Credit Guarantee cover under Credit Guarantee Trust Fund to Credit Guarantee cover under Credit Guarantee Trust Fund to 249,164 249,164

unitsunits for for Rs. 9,192 croreRs. 9,192 crore till 31st December 2009 (approx till 31st December 2009 (approx 50,000 units50,000 units

in 2008-09)in 2008-09)

Credit Rating Scheme – about Credit Rating Scheme – about 20,000 units20,000 units covering so far covering so far ( ( 5011 in 5011 in

2008-09 & 50392008-09 & 5039 during April – December,09 (NSIC),during April – December,09 (NSIC),

Fiscal support Excise Duty limit increased to Rs. 1.5 crores,Fiscal support Excise Duty limit increased to Rs. 1.5 crores,

TechnologyTechnology

Credit link subsidy scheme for technology upgradation – Credit link subsidy scheme for technology upgradation – Investment limit Investment limit

increased from 40 lakh – 1 crore and percentage subsidy from 12 % – 15 % increased from 40 lakh – 1 crore and percentage subsidy from 12 % – 15 %

[ [ 8286 units availed Rs. 368Crores8286 units availed Rs. 368Crores upto December 2009] upto December 2009]

Cont…Cont…

Financial

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Incentives to obtain ISO 9000 / 14000 etc. - Subsidy upto Rs. 75,000 Incentives to obtain ISO 9000 / 14000 etc. - Subsidy upto Rs. 75,000

(19,468 Units(19,468 Units availed amounting to availed amounting to Rs. 95.30Rs. 95.30 Crores upto Crores upto

December 2009).December 2009).

Cluster Development Program - Govt. Support upto Cluster Development Program - Govt. Support upto Rs. 15Rs. 15 crore crore

for each cluster.for each cluster.

Limited liability partnership (LLP Act 2008) LLP entitles an SME to Limited liability partnership (LLP Act 2008) LLP entitles an SME to

be body corporate and a legal entity with a limited liability separate be body corporate and a legal entity with a limited liability separate

from its partners.from its partners.

Major Initiatives for Skill Development participating Major Initiatives for Skill Development participating

entrepreneurship development management and business entrepreneurship development management and business

development skills.development skills.

Others

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Credit Rating SchemeCredit Rating Scheme

Sl.Sl.No.No.

Name of the Name of the SchemeScheme

Grant / Subsidy/ Grant / Subsidy/ BenefitBenefit

BeneficiariesBeneficiaries Whom Whom to to ContactContact

Details of the SchemeDetails of the Scheme

1.1. Performance Performance and Credit and Credit RatingRating

Reimbursement of Reimbursement of 75 % for cost of 75 % for cost of Performance and Performance and Credit Rating.Credit Rating.

Individual Individual MSME.MSME.

NSICNSIC The Scheme aims at inducing MSEs to go The Scheme aims at inducing MSEs to go for Credit Rating – as it provides an for Credit Rating – as it provides an independent, trusted third party opinion on independent, trusted third party opinion on capabilities and credit worthiness of MSEs. capabilities and credit worthiness of MSEs. It helps in availability of credit at attractive It helps in availability of credit at attractive interestinterestRecognition in global trade.Recognition in global trade.

Credit Rating Scheme – 20,000 units(Est) Covered till December

2009

Government Assistance for 17,000 SMEs for two years period

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Credit Guarantee Fund Scheme For Small IndustriesCredit Guarantee Fund Scheme For Small Industries Eligible Lending Institutions:Eligible Lending Institutions: Guaranteeing of loans extended by all scheduled Guaranteeing of loans extended by all scheduled

commercial banks and specified Regional Rural Banks, NSIC, NEDFi, SIDBI.commercial banks and specified Regional Rural Banks, NSIC, NEDFi, SIDBI.

Eligible Borrowers:Eligible Borrowers: New as well as existing SSI units engaged in manufacturing New as well as existing SSI units engaged in manufacturing activities, IT and software industry, Small Scale Service & Business (Industry Related) activities, IT and software industry, Small Scale Service & Business (Industry Related) Enterprises (SSSBEs ) .Enterprises (SSSBEs ) .

Maximum Risk Cover:Maximum Risk Cover: Trust shall guarantee, in case of default by the borrower, up Trust shall guarantee, in case of default by the borrower, up to 75 % of principal amount in respect of term credit, outstanding working capital to 75 % of principal amount in respect of term credit, outstanding working capital inclusive of interest, becoming NPA, or filing the suit, whichever is less. Other charges inclusive of interest, becoming NPA, or filing the suit, whichever is less. Other charges shall not qualify for the guarantee cover. shall not qualify for the guarantee cover.

Rehabilitation Assistance:Rehabilitation Assistance: The unit covered under CGFSI becoming sick due to The unit covered under CGFSI becoming sick due to various factors beyond the control of management. Rehabilitation assistance could be various factors beyond the control of management. Rehabilitation assistance could be covered under the scheme within the credit cap of Rs.25 Lakh.covered under the scheme within the credit cap of Rs.25 Lakh.

Non-Eligibility:Non-Eligibility: Facility given on collateral security or third party guarantee shall Facility given on collateral security or third party guarantee shall disqualify coverage under the scheme. disqualify coverage under the scheme.

Stimulus PackageStimulus Package Announced (December 7, 2008):Announced (December 7, 2008): Credit Guarantee extended Credit Guarantee extended beyond Rs. 50 lakhs to Rs. 1 crore subject to Credit Guarantee cover of 50%beyond Rs. 50 lakhs to Rs. 1 crore subject to Credit Guarantee cover of 50%

Coverage of 50,000 units a yearCoverage of 50,000 units a year ((Covered 2,49,164 units till Dec 2009 )Covered 2,49,164 units till Dec 2009 )

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Project AppraisalProject Appraisal Business PlanBusiness Plan Technical Appraisal:Technical Appraisal: Consisting ofConsisting of Plant layout, Location, Manufacturing Plant layout, Location, Manufacturing

process, Product-mix, Raw material, Market, Labour, Utilities., Effluent process, Product-mix, Raw material, Market, Labour, Utilities., Effluent disposal, Transportation,, Development of other industries, Project schedule.disposal, Transportation,, Development of other industries, Project schedule.

Commercial Appraisal:Commercial Appraisal: Demand forecasting, Import substitution, Past Demand forecasting, Import substitution, Past trends, Export market, Competition, Pricing policy, Packing and Transport, trends, Export market, Competition, Pricing policy, Packing and Transport, Distribution channels, Sales promotion-Advertising Servicing,.Distribution channels, Sales promotion-Advertising Servicing,.

Financial Appraisal:Financial Appraisal: Capital cost, Land and site development, Buildings, Capital cost, Land and site development, Buildings, Plant and machinery, Engineering and consultancy fees, Working capital, Plant and machinery, Engineering and consultancy fees, Working capital, Sources of finance, Financial projections, Profitability estimates, Cash flow Sources of finance, Financial projections, Profitability estimates, Cash flow estimates, Projected balance sheets, Break-even point.estimates, Projected balance sheets, Break-even point.

Management Appraisal:Management Appraisal: Qualities of an entrepreneur, Honesty, integrity, Qualities of an entrepreneur, Honesty, integrity, Financial resources, Risk taking, Initiative, Patience, Various forms of Financial resources, Risk taking, Initiative, Patience, Various forms of organizations, Board of Directors, Chief Executive.organizations, Board of Directors, Chief Executive.

Fund Flows And Capacity to Repay Loan.Fund Flows And Capacity to Repay Loan.

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Project AppraisalProject Appraisal

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Suggestions for Strengthening Banker-Borrower Suggestions for Strengthening Banker-Borrower RelationshipsRelationships

IssueIssue BanksBanks BorrowerBorrower

1. Insufficient 1. Insufficient CreditCredit

• Fear Psychosis of likely NPAs should be Fear Psychosis of likely NPAs should be removed through proper assessment of risk, removed through proper assessment of risk, moral support from the higher authorities. moral support from the higher authorities. Positive outlook, database and up-to-date Positive outlook, database and up-to-date records, support to credit appraisal in hi-tech records, support to credit appraisal in hi-tech projects and joint appraisal by banks and DFIsprojects and joint appraisal by banks and DFIs

• Develop Business Plan and Develop Business Plan and Plan for credit needs with Plan for credit needs with Supporting documents, discuss Supporting documents, discuss financial problems and financial problems and prepare for presentation, and prepare for presentation, and interview, etc.interview, etc.

2. Delays in credit 2. Delays in credit SanctionsSanctions

• Requirements for credit appraisal to be Requirements for credit appraisal to be communicated to borrowers, Planned approach communicated to borrowers, Planned approach in appraisal for interview, Use of computers in in appraisal for interview, Use of computers in BS analysis, Single window approach for BS analysis, Single window approach for appraisal, Risk Models to be developedappraisal, Risk Models to be developed

• Produce all documents, Keep Produce all documents, Keep the books updated, Extend the books updated, Extend cooperation cooperation

3. Promoter’s 3. Promoter’s Contribution Not Contribution Not AdequateAdequate

• Not to insist on equity in case of genuine weak Not to insist on equity in case of genuine weak cases, National Equity Fund Scheme to be cases, National Equity Fund Scheme to be popularized, The scheme should be made user-popularized, The scheme should be made user-friendly.friendly.

• Entrepreneurs to be educated Entrepreneurs to be educated on National Equity Scheme, on National Equity Scheme, Source for promoter’s Source for promoter’s contribution to be disclosed.contribution to be disclosed.

4. Securities-too 4. Securities-too much insistence much insistence on collateral on collateral securitiessecurities

• Checklist on requirements along with Checklist on requirements along with application form, In genuine cases, not to insist application form, In genuine cases, not to insist on collateral securities. Cash surplus from on collateral securities. Cash surplus from operations should be the primary security.operations should be the primary security.

• Securities are to cover risk, Securities are to cover risk, Co-operate with banks in Co-operate with banks in complying with the security complying with the security and data requirementsand data requirements

Continued

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IssueIssue BanksBanks BorrowerBorrower

5. Information 5. Information are not are not Readily Readily Available with Available with BorrowersBorrowers

• Checklist to be prepared for borrowers, use Checklist to be prepared for borrowers, use information received more meaningfully, Use information received more meaningfully, Use computers for data storage, Uniforming data computers for data storage, Uniforming data requirements of different institutions.requirements of different institutions.

• Keep the books of accounts, Keep the books of accounts, Use of computers for Use of computers for statement etc. Appreciate data statement etc. Appreciate data needs of banks.needs of banks.

6.6. Compliance of Compliance of post Sanction post Sanction FormalitiesFormalities

• Banks to carry on post sanction inspection etc., Banks to carry on post sanction inspection etc., Borrowers to be explained about the purpose of Borrowers to be explained about the purpose of follow-up i.e. to understand difficulties and work-follow-up i.e. to understand difficulties and work-out strategies, Develop follow-up systemout strategies, Develop follow-up system

• Extend cooperation to banks, Extend cooperation to banks, Submission of statements and Submission of statements and returns regularlyreturns regularly

7.7. Rehabilitation Rehabilitation support to sick support to sick unitsunits

• In rehabilitation-timely declaration of a sick unit, In rehabilitation-timely declaration of a sick unit, required support to be extended, Monitoring of required support to be extended, Monitoring of sick units, Entrepreneurs to be guided to various sick units, Entrepreneurs to be guided to various Government schemesGovernment schemes

• Seriousness in rehabilitation, Seriousness in rehabilitation, Cooperate with bank, Not to Cooperate with bank, Not to withdraw cash surplus until withdraw cash surplus until loans are repaid.loans are repaid.

8. Recovery8. Recovery • Continuous follows-up, Compromise scheme in Continuous follows-up, Compromise scheme in genuine cases only, Stern action against willful genuine cases only, Stern action against willful defaulters.defaulters.

• Repay the loans to the bank, Repay the loans to the bank, Discuss problems, if anyDiscuss problems, if any

9. Others9. Others • Banks to open more SME branches, Cost to credit Banks to open more SME branches, Cost to credit to be reduced, liberal approach to be adopted, All to be reduced, liberal approach to be adopted, All services under one roof, Branches to have more services under one roof, Branches to have more powers, required infrastructure and support, powers, required infrastructure and support, advisory services at free cost, assessment in detailadvisory services at free cost, assessment in detail

• Consider banks as financial Consider banks as financial advisor, business growth, to advisor, business growth, to reduce dependence on banks, reduce dependence on banks, Professional techniques to be Professional techniques to be adopted, Financial disciplines adopted, Financial disciplines are for mutual benefits.are for mutual benefits.

Continued

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Financial Management Financial Management Financial management entails: Financial management entails:

i). Planning for the future to ensure a positive cash flow. i). Planning for the future to ensure a positive cash flow. ii). Administration and maintenance of financial assets. ii). Administration and maintenance of financial assets. iii). Covers the process of identifying and managing risks.iii). Covers the process of identifying and managing risks. iv). Managerial finance is an interdisciplinary approach iv). Managerial finance is an interdisciplinary approach

that borrows from both managerial that borrows from both managerial accounting and corporate finance to judge the accounting and corporate finance to judge the performance of enterprises.performance of enterprises.

v). Financial management is important at all levels of v). Financial management is important at all levels of human existence because every entity needs to look human existence because every entity needs to look after its finances.after its finances.

Generation of surpluses through projects is the key for expansion and growth.Generation of surpluses through projects is the key for expansion and growth.

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Management of FundsManagement of Funds

Strong financial management in the business arena requires managers to focus on Strong financial management in the business arena requires managers to focus on the followings:the followings:

1.1. Interpret financial reports including income statements, Profits and Loss, cash Interpret financial reports including income statements, Profits and Loss, cash flow and balance sheet statements.flow and balance sheet statements.

2.2. Improve the allocation of working capital within business operations.Improve the allocation of working capital within business operations.

3.3. Review and fine tune financial budgeting, and revenue and cost forecasting.Review and fine tune financial budgeting, and revenue and cost forecasting.

4.4. Look at the funding options for business expansion, including both long and Look at the funding options for business expansion, including both long and short term financing.short term financing.

5.5. Review the financial health of the company or business unit using ratio Review the financial health of the company or business unit using ratio analyses, (such as the gearing ratio, profit per employee and weighted cost of analyses, (such as the gearing ratio, profit per employee and weighted cost of capital).capital).

6.6. Understand the various techniques used in project and asset valuations.Understand the various techniques used in project and asset valuations.

7.7. Apply critical financial decision making techniques to assess whether to Apply critical financial decision making techniques to assess whether to proceed with an investment.proceed with an investment.

8.8. Understand valuations frameworks for businesses, portfolios and intangible Understand valuations frameworks for businesses, portfolios and intangible assets. assets.

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Referring his Meeting with SME Representatives on 26Referring his Meeting with SME Representatives on 26thth

August 2009, the Hon’ble PM observed on credit to SMEs :August 2009, the Hon’ble PM observed on credit to SMEs :

““At the meeting two day’s ago, it was pointed out and rightly so that credit At the meeting two day’s ago, it was pointed out and rightly so that credit

is the lifeline of any business more so for businesses in MSME sector. Our is the lifeline of any business more so for businesses in MSME sector. Our

government is committed to double the flow of credit to MSMEs in five government is committed to double the flow of credit to MSMEs in five

years. I note with some satisfaction that loans outstanding to this sector years. I note with some satisfaction that loans outstanding to this sector

from the public sector banks have registered a growth of close to 25% from the public sector banks have registered a growth of close to 25%

during the one year. Today we have felicitated some public sector banks during the one year. Today we have felicitated some public sector banks

for their commendable role in providing credit to MSMEs. I would urge for their commendable role in providing credit to MSMEs. I would urge

other banks also to ensure higher flow of funds to these enterprises. other banks also to ensure higher flow of funds to these enterprises.

Greater availability of credit can contribute to the faster modernization Greater availability of credit can contribute to the faster modernization

and expansion of these enterprises and the augmentation of their and expansion of these enterprises and the augmentation of their

productivity and competitiveness. I would urge MSMEs to also explore productivity and competitiveness. I would urge MSMEs to also explore

new and emerging sources of finance such as venture capital and private new and emerging sources of finance such as venture capital and private

equity.equity.

Dr. Manmohan SinghDr. Manmohan Singh Hon’ble Prime Minister of India at theHon’ble Prime Minister of India at the

National Award Function for MSMEs on National Award Function for MSMEs on 2828thth August 2009 August 2009

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Action Taken Action Taken on on

Prime Minister’s Task Force RecommendationsPrime Minister’s Task Force RecommendationsRBI has given instructions to banks regarding quantum of advances to be RBI has given instructions to banks regarding quantum of advances to be given to MSE sector as follows:given to MSE sector as follows:

• 40% of the total advances to micro40% of the total advances to micro and small enterprises to go to micro manufacturing and small enterprises to go to micro manufacturing enterprises havingenterprises having investment in plant and machinery investment in plant and machinery up to Rs 5 lakhsup to Rs 5 lakhs and micro service and micro service enterprises having investment in equipment up to Rs 2 lakhsenterprises having investment in equipment up to Rs 2 lakhs

• 20% of the total advances to micro and small enterprises sector to go to micro manufacturing 20% of the total advances to micro and small enterprises sector to go to micro manufacturing enterprises with investment in plant and machinery above enterprises with investment in plant and machinery above Rs 5 lakhs and up to Rs 25 lakhsRs 5 lakhs and up to Rs 25 lakhs and and micro service enterprises with investment in equipment above Rs 2 lakhs and upto Rs10 lakhsmicro service enterprises with investment in equipment above Rs 2 lakhs and upto Rs10 lakhs

• In order to increase the outreach of formal credit to MSME sector, RBI has advised the Banks In order to increase the outreach of formal credit to MSME sector, RBI has advised the Banks to make concerted efforts to provide credit cover on an to make concerted efforts to provide credit cover on an average to at least 5 new Small and average to at least 5 new Small and Medium enterprises at each of their semi-urban/urban branches per yearMedium enterprises at each of their semi-urban/urban branches per year ..

• In terms of recommendation of Prime Minister’s Task Force on MSME, the RBI has advised In terms of recommendation of Prime Minister’s Task Force on MSME, the RBI has advised the banks to as under:the banks to as under:

i). Achieve a 20 per cent year – on – year growth in credit to micro and small i). Achieve a 20 per cent year – on – year growth in credit to micro and small

enterprises to ensure enhanced credit flow.enterprises to ensure enhanced credit flow.

ii). The allocation of 60% of the MSE advances to the micro enterprises is to be ii). The allocation of 60% of the MSE advances to the micro enterprises is to be

achieved in stages viz. 50% in the year 2010-11, 55% in the year 2011-12 andachieved in stages viz. 50% in the year 2010-11, 55% in the year 2011-12 and

60% in the year 2012-13 and60% in the year 2012-13 and

iii). iii). Achieve a 10% annual growth in number of micro enterprise accountsAchieve a 10% annual growth in number of micro enterprise accounts

Source Source RBI circular 1RBI circular 1stst July 2010. July 2010.

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TECHNOLOGYTECHNOLOGY Technology upgradation, Modernization involves the following:Technology upgradation, Modernization involves the following:

Introduction of new tools / equipments used in productionIntroduction of new tools / equipments used in production,,

Use of appropriate / new materialsUse of appropriate / new materials,,

Adaptation of new environment friendly technologies,Adaptation of new environment friendly technologies,

Introduction of new designs of existing product varietiesIntroduction of new designs of existing product varieties,,

Changes in the manufacturing process to improve quality Changes in the manufacturing process to improve quality of products minimizing waste,of products minimizing waste,

More efficient work and other associated changes i.e. More efficient work and other associated changes i.e. systems approachsystems approach,,

Measures to reduce overall production cost,Measures to reduce overall production cost,

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Recent Recent InitiativesInitiatives

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TECHNOLOGY MANAGEMENTTECHNOLOGY MANAGEMENT

• To provide technical inputs to bridge the gaps.To provide technical inputs to bridge the gaps.

• Support mechanisms for efficient transfer and Support mechanisms for efficient transfer and management of technology.management of technology.

• Facilitate further research and analysis in respect of Facilitate further research and analysis in respect of

value addition, technology upgradation and information value addition, technology upgradation and information

dissemination.dissemination.

• Complement the attainment of Technological Excellence.Complement the attainment of Technological Excellence.

ContinuedContinued

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Technology Management – OutcomeTechnology Management – Outcome

To increase productivity,To increase productivity,

Standardization of products,Standardization of products,

ISO Certification,ISO Certification,

Energy efficiency,Energy efficiency,

Waste minimization,Waste minimization,

Cost saving,Cost saving,

Higher Profitability,Higher Profitability,

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Credit Linked Capital Subsidy Schemes (CLCSS) for Credit Linked Capital Subsidy Schemes (CLCSS) for Technology Upgradation of the Small ScaleTechnology Upgradation of the Small Scale IndustriesIndustries

• Due to insufficient investment, lack of awareness about, quality standards, access to Due to insufficient investment, lack of awareness about, quality standards, access to modern technologies, SSI units continue with outdated technology and plant & modern technologies, SSI units continue with outdated technology and plant & machinery. Increasing competition due to liberalisation, the survival of SSI units machinery. Increasing competition due to liberalisation, the survival of SSI units are critically dependent on modernization, technological upgradation in the process are critically dependent on modernization, technological upgradation in the process of manufacture is necessary for the small enterprises to reduce the cost of of manufacture is necessary for the small enterprises to reduce the cost of production.production.

• The Credit Linked Capital Subsidy Scheme of the Ministry of Small Scale The Credit Linked Capital Subsidy Scheme of the Ministry of Small Scale Industries (SSI) aims at facilitating technology upgradation by providing upfront Industries (SSI) aims at facilitating technology upgradation by providing upfront capital subsidy to SSI units on institutional finance (credit) availed of by them for capital subsidy to SSI units on institutional finance (credit) availed of by them for modernisation. The Scheme (pre-revised) provided for 15 percent capital subsidy to modernisation. The Scheme (pre-revised) provided for 15 percent capital subsidy to units, including tiny units, on institutional finance for induction of well established units, including tiny units, on institutional finance for induction of well established and improved technology, selected sub-sectors and products approved under the and improved technology, selected sub-sectors and products approved under the Scheme. Scheme.

Loan under the Scheme is Rs. 40 lakhs to Rs. 1 crore Loan under the Scheme is Rs. 40 lakhs to Rs. 1 crore

and subsidy from 12% to 15%and subsidy from 12% to 15%(8286 Units availed Rs. 368 Crores upto December 2009)(8286 Units availed Rs. 368 Crores upto December 2009)

32

National Manufacturing Competitiveness Programme National Manufacturing Competitiveness Programme (NMCP)(NMCP)

The 10 Components of the programme will deal with Firm level The 10 Components of the programme will deal with Firm level Competitiveness against global challenges and it will be implemented in Competitiveness against global challenges and it will be implemented in the Public Private Partnership mode. The components are as follows:the Public Private Partnership mode. The components are as follows:

S.No.S.No. ComponentComponent RemarksRemarks

1.1. Mini Tool Room & Training Centres Mini Tool Room & Training Centres Operational Operational

2.2. Enabling Manufacturing Sector to be competitive through Quality Enabling Manufacturing Sector to be competitive through Quality Management Standards and Quality Technology Tools (QMS / QTT)Management Standards and Quality Technology Tools (QMS / QTT)

Operational Operational

3.3. Lean Manufacturing Competitiveness scheme for MSMEsLean Manufacturing Competitiveness scheme for MSMEs Operational Operational

4.4. Technology and Quality upgradation Support for MSMEs (TEQUP)Technology and Quality upgradation Support for MSMEs (TEQUP) OperationalOperational

5.5. Promotion of ICT in Indian Manufacturing SectorPromotion of ICT in Indian Manufacturing Sector OperationalOperational

6.6. Design Clinic Scheme to bring Design expertise to the Manufacturing sectorDesign Clinic Scheme to bring Design expertise to the Manufacturing sector OperationalOperational

7.7. Building Awareness on Intellectual Property Rights (IPR) for SMEsBuilding Awareness on Intellectual Property Rights (IPR) for SMEs OperationalOperational

8.8. Support for Entrepreneurial and Managerial Development of MSMEs through Support for Entrepreneurial and Managerial Development of MSMEs through IncubatorsIncubators

OperationalOperational

9.9. Marketing support - Assistance to MSMEs (Bar Code)Marketing support - Assistance to MSMEs (Bar Code) OperationalOperational

10.10. Marketing Assistance and Technology Upgradation Scheme for MSMEsMarketing Assistance and Technology Upgradation Scheme for MSMEs Approved.Approved.

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Government Support To

MSME’s

34

Funding Requirement for the National Funding Requirement for the National Manufacturing Competitiveness Program (NMCP) Manufacturing Competitiveness Program (NMCP)

for the 11th Plan Period:for the 11th Plan Period:Sl. No. Sl. No. Name of the Sub-Scheme Name of the Sub-Scheme Amount Amount

Rs CroresRs Crores

11 National Programme on Application of Lean Manufacturing National Programme on Application of Lean Manufacturing 300.00 300.00

22 Promotion of ICT in Indian Manufacturing Sector Promotion of ICT in Indian Manufacturing Sector 160.25 160.25

33 Mini-Tool Rooms to be set up (by Ministry of SSI) Mini-Tool Rooms to be set up (by Ministry of SSI) 135.00 135.00

44 Technology And Quality Upgradation Support for SMEs Technology And Quality Upgradation Support for SMEs 93.50 93.50

55 Support for Entrepreneurial and Managerial Development of SMEs Support for Entrepreneurial and Managerial Development of SMEs 66.50 66.50

66 Design Clinic scheme to bring design expertise to the Manufacturing Sector Design Clinic scheme to bring design expertise to the Manufacturing Sector 50.00 50.00

77 Enabling manufacturing sector to be competitive through quality management Enabling manufacturing sector to be competitive through quality management standards and quality technology tools standards and quality technology tools

50.00 50.00

88 National campaign for investment in Intellectual Property National campaign for investment in Intellectual Property 50.00 50.00

99 Market assistance/SMEs and technology upgradation activities (Ministry of Market assistance/SMEs and technology upgradation activities (Ministry of SSI in co-operation with TIFAC/CSIR) SSI in co-operation with TIFAC/CSIR)

26.50 26.50

1010 Marketing Support/Assistance to SMEs Marketing Support/Assistance to SMEs 24.25 24.25

TOTAL TOTAL 956.00 956.00

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1. Mini Tool Rooms Under PPP Mode1. Mini Tool Rooms Under PPP Mode

• Ministry of MSME, Government of India is implementing the Ministry of MSME, Government of India is implementing the scheme “Setting up of New Mini Tool Rooms under PPP scheme “Setting up of New Mini Tool Rooms under PPP Mode”, by providing financial assistance to Private Partners / Mode”, by providing financial assistance to Private Partners / States / State Agencies during XI plan. States / State Agencies during XI plan.

• State Government / State Government Agencies can State Government / State Government Agencies can implement this. SME Associations will be encouraged to implement this. SME Associations will be encouraged to create “Mini Tool Rooms” as per the needs of their member create “Mini Tool Rooms” as per the needs of their member MSMEs.MSMEs.

• The Government of India financial assistance under the model The Government of India financial assistance under the model would by 90% of the cost of machinery and equipments, would by 90% of the cost of machinery and equipments, restricted to Rs. 9.00 crore.restricted to Rs. 9.00 crore.

• The Government of India has made a provision of Rs. 135 The Government of India has made a provision of Rs. 135 crore for this project for setting up 15 Mini Tool Rooms crore for this project for setting up 15 Mini Tool Rooms during XI Plan. during XI Plan.

Contd/-Contd/-

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2. Quality Management System / Quality Technology Tools2. Quality Management System / Quality Technology Tools

• This scheme will support setting up of Quality Systems conforming to This scheme will support setting up of Quality Systems conforming to international standards like ISO 9000, ISO 14000 by MSMEs. international standards like ISO 9000, ISO 14000 by MSMEs.

• 100 Awareness Programmes will be conducted every year.100 Awareness Programmes will be conducted every year.

• These programmes will be conducted by Certified Quality Consultants, These programmes will be conducted by Certified Quality Consultants, whose cost will be borne by the Government.whose cost will be borne by the Government.

• The Government will support the services of Quality Consultants to cover The Government will support the services of Quality Consultants to cover 100 selected MSME per year, upto Rs. 2.5 lakh per unit, 25% of this cost 100 selected MSME per year, upto Rs. 2.5 lakh per unit, 25% of this cost will be collected from participating Micro Enterprises.will be collected from participating Micro Enterprises.

Contd./-Contd./-

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3. Lean Manufacturing Programme3. Lean Manufacturing Programme

• Lean Manufacturing can help reduce manufacturing costs Lean Manufacturing can help reduce manufacturing costs significantly by improving labour use, decreasing inventories, significantly by improving labour use, decreasing inventories, reducing manufacturing order to shipment cycle times and increasing reducing manufacturing order to shipment cycle times and increasing capacities without incurring substaintial capital expenditure. With the capacities without incurring substaintial capital expenditure. With the elimination of non-value added activities, it helps firms to produce elimination of non-value added activities, it helps firms to produce more with the same resources.more with the same resources.

• The Programme has been tried out successfully in manufacturing like The Programme has been tried out successfully in manufacturing like Toyota, and has shown very good results.Toyota, and has shown very good results.

• The Quality Council of India has identified Consultants / Counsellors The Quality Council of India has identified Consultants / Counsellors who are capable of taking up ‘Lean Management’ for MSMEs and who are capable of taking up ‘Lean Management’ for MSMEs and identified organizations that are similarly capable. identified organizations that are similarly capable.

• Industry Association that acts as the ‘Implementing Authority’ would Industry Association that acts as the ‘Implementing Authority’ would also be entitled to receive a maximum support of Rs 8 lakh which also be entitled to receive a maximum support of Rs 8 lakh which brings the total cost per Lean Manufacturing Mini Cluster to Rs 32 brings the total cost per Lean Manufacturing Mini Cluster to Rs 32 lakhs.lakhs.

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4. Entrepreneurial & Managerial Development of SMES Code 4. Entrepreneurial & Managerial Development of SMES Code Registration Registration

100 business incubators (BIs) to be setup under Technology 100 business incubators (BIs) to be setup under Technology (Host) Institutions over the next 4 years.(Host) Institutions over the next 4 years.

ObjectivesObjectives

To promote and support untapped creativity of individual innovators.To promote and support untapped creativity of individual innovators.

To promote emerging technological and knowledge based innovative To promote emerging technological and knowledge based innovative

ventures.ventures.

To assist them to become technology based entrepreneurs.To assist them to become technology based entrepreneurs.

““100 Business Incubators” are to be set up under Technology (HOST) 100 Business Incubators” are to be set up under Technology (HOST) Institutions over the next 4 years, each BI is expected to help the incubation of Institutions over the next 4 years, each BI is expected to help the incubation of about 10 new ideas.about 10 new ideas.

Each Business Incubator will be given Rs 4 lakh and Rs 8 lakh per idea / unit Each Business Incubator will be given Rs 4 lakh and Rs 8 lakh per idea / unit nurtured by them. Institution may get Rs 4 lakh for supporting the activities. nurtured by them. Institution may get Rs 4 lakh for supporting the activities.

To promote entrepreneurship creation of self employment. To promote entrepreneurship creation of self employment.

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5. Building Awareness on Intellectual Property Rights5. Building Awareness on Intellectual Property Rights

• Establishment of Intellectual Property Facilitation Centres Establishment of Intellectual Property Facilitation Centres (IPFC) by Associations / Engineering Colleges /R&D (IPFC) by Associations / Engineering Colleges /R&D Establishments to protect MSMEs.Establishments to protect MSMEs.

• Provision of computers along with softwares required to Provision of computers along with softwares required to search latest development schemes like technology / search latest development schemes like technology / manufacturing processes and provide financial support upto manufacturing processes and provide financial support upto Rs 65 lakhs for each centre which will include one time grant Rs 65 lakhs for each centre which will include one time grant of Rs 45 lakhs and Rs 18 lakhs to meet recurring expenses for of Rs 45 lakhs and Rs 18 lakhs to meet recurring expenses for three years. The recurring expenses will be provided in the three years. The recurring expenses will be provided in the ratio of 75%, 60% and 30% for three years.ratio of 75%, 60% and 30% for three years.

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6. Bar Code Registration6. Bar Code Registration

• As we all know, BAR CODES are alternate white and black strips on a As we all know, BAR CODES are alternate white and black strips on a label put on packaged products for their identification. Bar Codes help in label put on packaged products for their identification. Bar Codes help in computerised stock management, billing, orders processing etc. It has computerised stock management, billing, orders processing etc. It has become essential for large retailers for quick flow of goods and orders. become essential for large retailers for quick flow of goods and orders. Adoption of Bar Codes will be of immense help for MSMEs for supplying Adoption of Bar Codes will be of immense help for MSMEs for supplying products to large retailers and for export. For availing this facility the products to large retailers and for export. For availing this facility the manufacturers has to registered with GS-1 India, the competent agency.manufacturers has to registered with GS-1 India, the competent agency.

• The registered MSMEs will be provided subsidy for renewal of Bar Code The registered MSMEs will be provided subsidy for renewal of Bar Code registration for three years to the extent of 75% of the fee.registration for three years to the extent of 75% of the fee.

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7. Government launches Design Scheme7. Government launches Design Scheme

Government has announced a Rs 50 crore Scheme for MSMEs to Government has announced a Rs 50 crore Scheme for MSMEs to provide them design expertise and make their products more provide them design expertise and make their products more competitive. Under the design scheme, the designers would conduct competitive. Under the design scheme, the designers would conduct workshops at cluster level across the country and prepare a report workshops at cluster level across the country and prepare a report which would talk about design deficiencies and requirement of new which would talk about design deficiencies and requirement of new designs. The scheme is a part of the National Manufacturing designs. The scheme is a part of the National Manufacturing Competitiveness Program during the 11th Five-Year Plan. The Competitiveness Program during the 11th Five-Year Plan. The National Institute of Design (NID) will act as a nodal agency, where it National Institute of Design (NID) will act as a nodal agency, where it would undertake on behalf of the MSME Ministry the necessary would undertake on behalf of the MSME Ministry the necessary planning, coordination and follow-up on the scheme. The program planning, coordination and follow-up on the scheme. The program named “Design Clinic Scheme for Design Expertise” is a combination named “Design Clinic Scheme for Design Expertise” is a combination of design awareness programs and project based assistance, which of design awareness programs and project based assistance, which would cover about 200 MSME clusters during the 11th Five-Year would cover about 200 MSME clusters during the 11th Five-Year Plan. Of the total scheme budget of Rs 73.58 crore, Rs 49.08 crore Plan. Of the total scheme budget of Rs 73.58 crore, Rs 49.08 crore will be funded by the government and the balance amount will be will be funded by the government and the balance amount will be contributed by the beneficiary MSME.contributed by the beneficiary MSME.

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8. Energy8. Energy

Under the above components of NMCP proposed by Under the above components of NMCP proposed by

National Manufacturing Competitiveness Commission National Manufacturing Competitiveness Commission

(NMCC), MSMEs will be provided support for energy (NMCC), MSMEs will be provided support for energy

conservation.conservation.

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9. Marketing Assistance And Technology 9. Marketing Assistance And Technology Upgradation Scheme Upgradation Scheme

The objective of this scheme is to identify and encourage those clusters of The objective of this scheme is to identify and encourage those clusters of

MSMEs which have quality production and export potential and assist MSMEs which have quality production and export potential and assist

them to achieve competitiveness in the national and international markets. them to achieve competitiveness in the national and international markets.

The scheme aims at improving the marketing competitiveness of MSME The scheme aims at improving the marketing competitiveness of MSME

sector by improving their techniques and technology for promotion of sector by improving their techniques and technology for promotion of

exports. The broad activities planned under the scheme include exports. The broad activities planned under the scheme include

technology upgradation in packaging, development of modern marketing technology upgradation in packaging, development of modern marketing

techniques, competition studies etctechniques, competition studies etc

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10. Promotion of Information & 10. Promotion of Information & Communication Technology (ICT ) Communication Technology (ICT )

Aimed At Clusters:Aimed At Clusters:

ICT Intervention such as:ICT Intervention such as:

• Develop Webpage Portals.Develop Webpage Portals.

• Skill Development of SME Staff in ICT Applications.Skill Development of SME Staff in ICT Applications.

• Local Software Solutions.Local Software Solutions.

• Construction of e-catalogue, e-commerce etc.Construction of e-catalogue, e-commerce etc.

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Limited Liability Partnership (LLP)Limited Liability Partnership (LLP)

A law to allow "Limited Liability Partnership" (LLP) in India has A law to allow "Limited Liability Partnership" (LLP) in India has

been enacted by the Parliament of India recently. (Limited Liability been enacted by the Parliament of India recently. (Limited Liability

Partnership (LLP) Act of 2008) LLP is an alternative corporate Partnership (LLP) Act of 2008) LLP is an alternative corporate

business entity that provides the benefits of limited liability of a business entity that provides the benefits of limited liability of a

company but allows its members the flexibility of organizing their company but allows its members the flexibility of organizing their

internal management on the basis of a mutually-arrived agreement, as internal management on the basis of a mutually-arrived agreement, as

is the case in a partnership firm. This format would be quite useful for is the case in a partnership firm. This format would be quite useful for

small and medium enterprises in general and for the enterprises in small and medium enterprises in general and for the enterprises in

services sector in particular, including professionals and knowledge services sector in particular, including professionals and knowledge

based enterprises.based enterprises.

46

The Salient features of the LLP Act of 2008 are as follows:-The Salient features of the LLP Act of 2008 are as follows:-

(i) The LLP will be an alternative corporate business vehicle that would give the benefits of limited liability (i) The LLP will be an alternative corporate business vehicle that would give the benefits of limited liability but would allow its members the flexibility of organizing their internal structure as a partnership based on but would allow its members the flexibility of organizing their internal structure as a partnership based on an agreement.an agreement.

(ii) The proposed Bill does not restrict the benefit of LLP structure to certain classes of professionals only and (ii) The proposed Bill does not restrict the benefit of LLP structure to certain classes of professionals only and would be available for use by any enterprise which fulfills the requirements of the Act.would be available for use by any enterprise which fulfills the requirements of the Act.

(iii) While the LLP will be a separate legal entity, liable to the full extent of its assets, the liability of the (iii) While the LLP will be a separate legal entity, liable to the full extent of its assets, the liability of the partners would be limited to their agreed contribution in the LLP. Further, no partner would be liable on partners would be limited to their agreed contribution in the LLP. Further, no partner would be liable on account of the independent or un-authorized actions of other partners, thus allowing individual partners to account of the independent or un-authorized actions of other partners, thus allowing individual partners to be shielded from joint liability created by another partner’s wrongful business decisions or misconduct.be shielded from joint liability created by another partner’s wrongful business decisions or misconduct.

(iv) LLP shall be a body corporate and a legal entity separate from its partners. It will have perpetual (iv) LLP shall be a body corporate and a legal entity separate from its partners. It will have perpetual succession. Indian Partnership Act, 1932 shall not be applicable to LLPs and there shall not be any upper succession. Indian Partnership Act, 1932 shall not be applicable to LLPs and there shall not be any upper limit on number of partners in an LLP unlike a ordinary partnership firm where the maximum number of limit on number of partners in an LLP unlike a ordinary partnership firm where the maximum number of partners can not exceed 20.partners can not exceed 20.

(iv) An LLP shall be under obligation to maintain annual accounts reflecting true and fair view of its state of (iv) An LLP shall be under obligation to maintain annual accounts reflecting true and fair view of its state of affairs. Since tax matters of all entities in India are addressed in the Income Tax Act, 1961, the taxation of affairs. Since tax matters of all entities in India are addressed in the Income Tax Act, 1961, the taxation of LLPs shall be addressed in that Act.LLPs shall be addressed in that Act.

(v) Provisions have been made in the Bill for corporate actions like mergers, amalgamations etc.(v) Provisions have been made in the Bill for corporate actions like mergers, amalgamations etc.

(vi) While enabling provisions in respect of winding up and dissolutions of LLPs have been made in the Bill, (vi) While enabling provisions in respect of winding up and dissolutions of LLPs have been made in the Bill, detailed provisions in this regard would be provided by way of rules under the Act.detailed provisions in this regard would be provided by way of rules under the Act.

Limited Liability Partnership (LLP)Limited Liability Partnership (LLP)

47

Schemes offered by Ministry of Micro Small Medium Schemes offered by Ministry of Micro Small Medium EnterprisesEnterprises

S.No.S.No. Name of the Name of the SchemeScheme

Grant / Subsidy/ Grant / Subsidy/ BenefitBenefit

BeneficiariesBeneficiaries Whom to Whom to ContactContact


1.1. Performance Performance and Credit and Credit RatingRating

Reimbursement of Reimbursement of 75 % for cost of 75 % for cost of Performance and Performance and Credit Rating.Credit Rating.

Individual Individual MSEs.MSEs.

NSICNSIC The Scheme aims at inducing MSEs to go for The Scheme aims at inducing MSEs to go for Credit Rating – as it provides an independent, Credit Rating – as it provides an independent, trusted third party opinion on capabilities and credit trusted third party opinion on capabilities and credit worthiness of MSEs. It helps in availability of worthiness of MSEs. It helps in availability of credit at attractive interestcredit at attractive interestRecognition in global trade.Recognition in global trade.

2.2. Credit Linked Credit Linked Capital Subsidy Capital Subsidy Scheme for Scheme for Technology Technology UpgradationUpgradation((CLCSSCLCSS) )

15% Up front grant 15% Up front grant – subject to a limit – subject to a limit of Rs. 15 lakh for of Rs. 15 lakh for technology technology upgradation.upgradation.

Individual Individual MSEsMSEs

Nationalised Nationalised Banks, TIIC, Banks, TIIC, SIDBI, etc,SIDBI, etc,

Offered to 45 products/sub-sectors for Technology Offered to 45 products/sub-sectors for Technology Upgradation - for identified technologies only. Upgradation - for identified technologies only. Both existing undertaking technology upgradation Both existing undertaking technology upgradation as well as new units started with recommended as well as new units started with recommended technology are eligble.technology are eligble.

3.3. ISO 9000/ISO ISO 9000/ISO 14001 14001 certification certification reimbursement reimbursement schemescheme

Reimburse of 75% Reimburse of 75% of the total of the total expenditure for expenditure for certification subject certification subject to Maximum of to Maximum of Rs.75,000 Rs.75,000


MSME-DI, MSME-DI, Incentive Scheme of Reimbursement of expenses Incentive Scheme of Reimbursement of expenses for acquiring ISO 9000/ ISO 14001 certification. for acquiring ISO 9000/ ISO 14001 certification.

4.4. Credit Credit Guarantee Fund Guarantee Fund Trust Scheme Trust Scheme for Micro & for Micro & Small Small EnterprisesEnterprises((CGTMSECGTMSE))

Collateral free Loan Collateral free Loan upto a limit of Rs. 1 upto a limit of Rs. 1 Crore to MSEs.Crore to MSEs.


Nationalised Nationalised Banks, Banks, SIDBI, etc.SIDBI, etc.

Credit Guarantee Trust for Micro and Small Credit Guarantee Trust for Micro and Small Enterprises provides guarantee to banks to the Enterprises provides guarantee to banks to the extent of 75 % on Collateral free Term loan, extent of 75 % on Collateral free Term loan, working capital and composite loan. The Trust working capital and composite loan. The Trust charges one time Guarantee Fee @ 1.5% on loan charges one time Guarantee Fee @ 1.5% on loan amount and Service Charge @ 0.75% per year amount and Service Charge @ 0.75% per year during the tenure of loan / 5 years. during the tenure of loan / 5 years.

48


Grant / Subsidy/ BenefitGrant / Subsidy/ Benefit BeneficiariesBeneficiaries Whom to Whom to ContactContact


5.5. MSME MSME Market Market Development Development Assistance Assistance (MDA)(MDA)

The scheme offers funding upto The scheme offers funding upto

a) 75% cost of economy class air a) 75% cost of economy class air fare-(to and fro) for subject to fare-(to and fro) for subject to upper limit of Rs. 40,000 (Rs. upper limit of Rs. 40,000 (Rs. 60,000 for Latin American 60,000 for Latin American Countries) for small manufacturing Countries) for small manufacturing enterprises and 90 % (with enterprises and 90 % (with corresponding absolute ceiling) for corresponding absolute ceiling) for Micro manufacturing enterprises. Micro manufacturing enterprises.

b) 60% subsidy on space rent. b) 60% subsidy on space rent.

c) Subsidy of Rs. 15,000/- for c) Subsidy of Rs. 15,000/- for shipping cost of exhibits.shipping cost of exhibits.

The scheme also provide for The scheme also provide for funding for producing publicity funding for producing publicity material (upto 25% of costs material (upto 25% of costs maximum Rs. 15,000) Sector maximum Rs. 15,000) Sector specific studies (upto Rs. 2 lakhs) specific studies (upto Rs. 2 lakhs) and for contesting anti-dumping and for contesting anti-dumping cases (50% upto Rs. 1 lakh). cases (50% upto Rs. 1 lakh).

Individual Individual MSEs/ MSEs/ AssociationsAssociations

DC DC (MSME) (MSME) New DelhiNew Delhi

Through Through Director Director MSME DIMSME DI

Total subsidy on space rent and Total subsidy on space rent and travel expenses and shipping cost of travel expenses and shipping cost of exhibits will be limited to Rs. 1.25 exhibits will be limited to Rs. 1.25 lakh for small manufacturing lakh for small manufacturing enterprises and Rs. 1.50 lakh for enterprises and Rs. 1.50 lakh for Micro manufacturing enterprises. Micro manufacturing enterprises. Any unit can avail of this facility Any unit can avail of this facility only once a year. Only One only once a year. Only One representative from one unit would representative from one unit would be eligible for subsidy.be eligible for subsidy. Units participating in international Units participating in international exhibitions should send 40% of exhibitions should send 40% of space hiring charges by DD space hiring charges by DD favouring PAO (SSI), new Delhi, favouring PAO (SSI), new Delhi, through MSME-DIsthrough MSME-DIs

49

Schemes of Ministry of TextilesSchemes of Ministry of Textiles




1.1. Technology Technology Upgradation Upgradation Fund Scheme Fund Scheme (TUFS)(TUFS)

15 % capital subsidy or 5 % interest 15 % capital subsidy or 5 % interest subsidy for technology upgradationsubsidy for technology upgradation

20% Credit linked Capital subsidy 20% Credit linked Capital subsidy (CLCS @20%) on machinery cost (CLCS @20%) on machinery cost exclusively for powerloom units in exclusively for powerloom units in MSE sector. The cost of modern MSE sector. The cost of modern weaving machinery admissible is weaving machinery admissible is upto Rs. 60 lakh (i.e. Subsidy ceiling upto Rs. 60 lakh (i.e. Subsidy ceiling is Rs. 12 lakh).is Rs. 12 lakh).

Individual Individual MSEs in MSEs in textile sectortextile sector

Banka, Banka, SFCs, SFCs, SIBDISIBDI

Promoting technology upgradation in Promoting technology upgradation in textile sector providing grant.textile sector providing grant.

50

Schemes of Ministry of Food-Processing IndustriesSchemes of Ministry of Food-Processing Industries




1.1. Scheme for Scheme for technology technology Upgradation/ Upgradation/ Establishment/ Establishment/ Modernisation Modernisation of Food of Food Processing Processing IndustriesIndustries

Grant of 25% of cost of plant Grant of 25% of cost of plant and machinery and technical and machinery and technical civil work subject to the ceiling civil work subject to the ceiling of Rs. 50 lakh.of Rs. 50 lakh.

MSEs in food MSEs in food processing sectorprocessing sector

Min. of Food Min. of Food Processing Processing Industry, GOI Industry, GOI thro’thro’

Agriculture Agriculture Marketing Marketing Society,Society,

Govt of Govt of TamilnaduTamilnaduGuindy Indl Guindy Indl Estate. Estate.

Eligible sectors:Eligible sectors:Fruits & VegetableFruits & VegetableMilk products,Meat, Poultry, Milk products,Meat, Poultry, Fishery, cereal, Pulses, Oil Fishery, cereal, Pulses, Oil seeds seeds and other such agri-horti sectors and other such agri-horti sectors leading to Value additionleading to Value additionEnhancing shelf lifeEnhancing shelf life

51

PerspectivesPerspectives

52

Meltdown will boost medical tourismMeltdown will boost medical tourism

Growth Plans: Mr. Shivinder Mohan Growth Plans: Mr. Shivinder Mohan Singh, CEO and Managing Director, Singh, CEO and Managing Director, Fortis Healthcare, at the launch of Fortis Healthcare, at the launch of ‘Malar Heart Institute’ at Malar ‘Malar Heart Institute’ at Malar Hospital, in ChennaiHospital, in Chennai

53

EMERGING OPPORTUNITIES EMERGING OPPORTUNITIES KNOWLEDGE-BASED SECTORSKNOWLEDGE-BASED SECTORS

Fashion TechnologyFashion Technology

Information TechnologyInformation Technology

Design TechnologyDesign Technology

Health TechnologyHealth Technology

Bio TechnologyBio Technology

Hospitality IndustryHospitality Industry

54

FASHION TECHNOLOGYFASHION TECHNOLOGYOpportunitiesOpportunities

Glamour & LimelightGlamour & Limelight

Creative Creative

High Value AdditionHigh Value Addition

Coverage (Extensive) Coverage (Extensive)

ClothesClothes

Dresses Dresses

Garments Garments

Textile Textile

Footwear Footwear

Various Leather Products Various Leather Products

Jewellery Jewellery

Travel GoodsTravel Goods

Fashion Accessories Fashion Accessories (purses, (purses, bags, carryon, watches etc.) bags, carryon, watches etc.)

Personal Embellishment (Face, Hair, Personal Embellishment (Face, Hair, Hands, Feet, Cosmetics, Perfumes etc.) Hands, Feet, Cosmetics, Perfumes etc.)

55

INFORMATION TECHNOLOGYINFORMATION TECHNOLOGY

OPPORTUNITIES:OPPORTUNITIES:

Media & Media &

Entertainment Entertainment

ContentsContents

AnimationAnimation

GamesGames

GamingGaming

56

““By the end of 2010, there will be only two By the end of 2010, there will be only two kinds of businesses: kinds of businesses:

those with an Internet presence, those with an Internet presence, and and those with no business at all.”those with no business at all.”

Bill GatesBill Gates

57

OPPORTUNITIES IN ANIMATIONOPPORTUNITIES IN ANIMATIONOPPORTUNITIES IN ANIMATIONOPPORTUNITIES IN ANIMATION

• 2D, 3D, and gaming2D, 3D, and gaming

• Animation solution one fourth of the Animation solution one fourth of the

cost made by U.S.A.cost made by U.S.A.

• Growth rate 28% by 2009.Growth rate 28% by 2009.

• Expected earning US$ 46 billion Expected earning US$ 46 billion

by 2009by 2009

• Skilled manpower / Robust software Skilled manpower / Robust software

Industry.Industry.

• Already being outsourced to Walt Disney, Already being outsourced to Walt Disney,

I Max, Sony.I Max, Sony.

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Potential Sectors for futurePotential Sectors for future• Knowledge Process Outsourcing (KPO)Knowledge Process Outsourcing (KPO)

The future of Knowledge Process Outsourcing (KPO) business in The future of Knowledge Process Outsourcing (KPO) business in India presents an encouraging picture to rejoice for everybody in the India presents an encouraging picture to rejoice for everybody in the country. Not only the scope of business opportunities shall give country. Not only the scope of business opportunities shall give endless area for businesses to explore but also shall create lacs of endless area for businesses to explore but also shall create lacs of jobs for the large amount of the talented and skilled workforce of jobs for the large amount of the talented and skilled workforce of engineers, MBAs, doctors, lawyers and other professionals having engineers, MBAs, doctors, lawyers and other professionals having skill in the core areas and computer knowledge.skill in the core areas and computer knowledge.

• Information Technology in Service SectorInformation Technology in Service Sector

Concerted action-plans were formulated on short, medium and long-Concerted action-plans were formulated on short, medium and long-term basis up to 2020 AD and seventeen key technology areas of term basis up to 2020 AD and seventeen key technology areas of prime importance to the country. Services, the 'prime importance to the country. Services, the 'tertiary sector'tertiary sector' of the of the economy, covers a wide gamut of activities like trading, banking economy, covers a wide gamut of activities like trading, banking and finance, infotainment, real estate, transportation, security, and finance, infotainment, real estate, transportation, security,

management and technical consultancy among several others.management and technical consultancy among several others.

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OPPORTUNITIES:OPPORTUNITIES:

Interiors - (Furniture & Furnishing – homes, work places, community, Interiors - (Furniture & Furnishing – homes, work places, community, hospitals, schools, shopping places, recreation, sports) hospitals, schools, shopping places, recreation, sports)

Exteriors - (Architectural)Exteriors - (Architectural)

Industrial productsIndustrial products

TextilesTextiles

Electrical appliancesElectrical appliances

White goodsWhite goods

Leather productsLeather products

Engineering productsEngineering products

MachineryMachinery

Dies and toolsDies and tools

Watches Watches

JewelleryJewellery

Hospital equipments Hospital equipments

Medical instrumentsMedical instruments

Electronics and Communication Products and EquipmentsElectronics and Communication Products and Equipments

DESIGN TECHNOLOGYDESIGN TECHNOLOGY

Furniture ItemsLeather Products

Jewellery & Wathces

Textiles

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HEALTH TECHNOLOGYHEALTH TECHNOLOGYHEALTH TECHNOLOGYHEALTH TECHNOLOGY

Opportunities Personal Health CarePersonal Health Care Preventive Health CarePreventive Health Care PhysiotherapyPhysiotherapy Monitoring (sensors)Monitoring (sensors) Community HealthCommunity Health VaccinesVaccines Public HealthPublic Health Surveillance of Health Surveillance of Health

Status (AIDS, Bird Flu etc)Status (AIDS, Bird Flu etc) Medical Imaging Medical Imaging

Technology such as X-ray, Technology such as X-ray, Cat scanning, Computed Cat scanning, Computed Tomography Scan (CTs), Tomography Scan (CTs), Magnetic Resource Images Magnetic Resource Images (MRIs), Sonograms etc.(MRIs), Sonograms etc.

Surgical & PhysiotherapySurgical & Physiotherapy

Health Information Health Information ManagementManagement

Medical Laboratory Medical Laboratory TechnologyTechnology

Beauty Care and WellnessBeauty Care and Wellness NursingNursing Pharmacy TechnologyPharmacy Technology Medical Research LaboratoryMedical Research Laboratory Yoga & NaturopathyYoga & Naturopathy Herbal TherapiesHerbal Therapies Environmental HealthEnvironmental Health Food SupplementsFood Supplements Food, Inspection and Testing Food, Inspection and Testing

etc.etc. Medical Waste ManagementMedical Waste Management Hospital Supplies & Staffing Hospital Supplies & Staffing

ServicesServices

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HEALTH TECHNOLOGYHEALTH TECHNOLOGYHEALTH TECHNOLOGYHEALTH TECHNOLOGY

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BIO TECHNOLOGYBIO TECHNOLOGY

With the industry zooming past the US $ 1 billion mark, registering revenues of US $ 1.07 billion, the sector has achieved a significant milestone. The biotech industry continues to grow at almost the same rate The biotech industry continues to grow at almost the same rate

that it did in last year. The industry recorded 36.55 percent growth that it did in last year. The industry recorded 36.55 percent growth compared to the previous year’s figure. There are 28 companies.compared to the previous year’s figure. There are 28 companies.

An Ernst and Young study has named India as one of the five An Ernst and Young study has named India as one of the five emerging biotech leaders in the Asia Pacific besides Singapore, emerging biotech leaders in the Asia Pacific besides Singapore, Taiwan, Japan and Korea, with mainland China catching up Taiwan, Japan and Korea, with mainland China catching up quickly. The study ranked India third in the region based on the quickly. The study ranked India third in the region based on the number of biotech companies in the country, after Australia and number of biotech companies in the country, after Australia and China, including Hong Kong.China, including Hong Kong.

The above-expected growth will facilitate SMEs to enter into this The above-expected growth will facilitate SMEs to enter into this field by setting up contract Research Organisations (CROs) and in field by setting up contract Research Organisations (CROs) and in other areas to meet the demand of US $ 3.1 billion market of other areas to meet the demand of US $ 3.1 billion market of Indian Pharmaceutical Industry.Indian Pharmaceutical Industry.

Target for 2015 US $ 15 billionTarget for 2015 US $ 15 billion

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BIOTECH INDUSTRY 2004-15BIOTECH INDUSTRY 2004-15

SectorSector Revenues in Rs. croresRevenues in Rs. crores

2004-2004-0505

2005-2005-0606

2006-2006-0707

2007-2007-0808

20152015ProjectedProjected

BioPharmaBioPharma 35703570 47084708 59735973 6,9006,900 2472424724

BioServicesBioServices 425425 720720 11021102 1,572 1,572 56335633

BioAgriBioAgri 330330 598598 926926 12021202 43064306

BioIndustrialBioIndustrial 320320 375375 395395 410410 14691469

BioinformatiBioinformaticscs

100100 120120 145145 190190 681681

TotalTotal 47454745 65216521 85418541 1027410274 6446664466

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BIOTECH INDUSTRY GROWTH IN 2007-08BIOTECH INDUSTRY GROWTH IN 2007-08

SectorSector Biotech Related Revenues Biotech Related Revenues (Rs. in crores)(Rs. in crores)

2006-072006-07 2007-082007-08 % Growth% Growth

BioPharmaBioPharma 5973 5973 (69.93%)(69.93%)

6,9006,900(67.16%)(67.16%)

16%16%

BioServicesBioServices 1102 1102 (12.90%)(12.90%)

1,572 1,572 (15.30%)(15.30%)

43%43%

BioAgriBioAgri 926 926 (10.84%)(10.84%)

12021202(11.70%)(11.70%)

30%30%

BioIndustrialBioIndustrial 395 395 (4.62%)(4.62%)

410410(4.0%)(4.0%)

4%4%

BioInformatiBioInformaticscs

145 145 (1.69%)(1.69%)

190190(1.80%)(1.80%)

31%31%

TotalTotal 85418541 1027410274 20%20%

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Budget Hotels Budget Hotels

Multicusine RestaurantsMulticusine Restaurants

Car Rental ServiceCar Rental Service

Tour OperatorsTour Operators

Medical TourismMedical Tourism

Ayurvedic SpaAyurvedic Spa

Heritage TourismHeritage Tourism

Multilingual Translation Capacity BuildingMultilingual Translation Capacity Building

Event ManagementEvent Management

HOSPITALITY INDUSTRYHOSPITALITY INDUSTRY

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Projected Market opportunities Projected Market opportunities

in the knowledge sector in the knowledge sector

including above is US $ 365 including above is US $ 365

billion in 2020.billion in 2020.

as per High level strategic group of as per High level strategic group of

AIMAAIMA

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Road Ahead For GrowthRoad Ahead For Growthof of

Your EnterpriseYour Enterprise

• Vision - To AchieveVision - To Achieve““Leadership is the capacity toLeadership is the capacity to translate vision into reality “translate vision into reality “

- - Warren BennisWarren Bennis

• ConsultationsConsultations

• Draw Plan of ActionDraw Plan of Action

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Sourcing FinanceSourcing Finance


HRD – Skills & HRD – Skills & ProfessionalProfessional

ManagementManagement

Target MarketTarget Market

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ImplementationImplementation

CorpotrisationCorpotrisation

ProfitsProfits

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Work Done by AIMA for SME DevelopmentWork Done by AIMA for SME Development

Study onStudy on Small Scale Industry in India Assessment of Growth After Small Scale Industry in India Assessment of Growth After LiberalizationLiberalization

Development of Seven Management ModuleDevelopment of Seven Management Module

• How to manage your Business?How to manage your Business?• How to manage your Money?How to manage your Money?• How to manage your Market?How to manage your Market?• How to manage your Personnel?How to manage your Personnel?• How to manage your Creativity & Innovation?How to manage your Creativity & Innovation?• How to manage Export Markets?How to manage Export Markets?• How to manage and expand your business using ICT tools?How to manage and expand your business using ICT tools?

Workshops on “Workshops on “Management Skills to Source Financing and Management Skills to Source Financing and Management of Technology by SMEs” Management of Technology by SMEs” conducted at Coimbatore, conducted at Coimbatore, Kochi, Indore, Hyderabad, Kanpur, Bhubaneswar,Jaipur, Ludhiana, Kochi, Indore, Hyderabad, Kanpur, Bhubaneswar,Jaipur, Ludhiana, Chandigarh, Noida, Lucknow, Guwahati, Surat, Kolkata, Chennai, Rajkot, Chandigarh, Noida, Lucknow, Guwahati, Surat, Kolkata, Chennai, Rajkot, Delhi, Meerut, Faridabad, Patiala.Delhi, Meerut, Faridabad, Patiala.

A detailed Study on A detailed Study on “SMEs in Asian Region: Harnessing the Growth “SMEs in Asian Region: Harnessing the Growth Potential” Potential” on behalf of Asian Association Management Organizations on behalf of Asian Association Management Organizations (AAMO)(AAMO)

AIMA - Dr. J. S. Juneja Award for Creativity & Innovation.AIMA - Dr. J. S. Juneja Award for Creativity & Innovation.

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Documents

Presentation for Patna 28th March, 2011