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MSME INDEPENDENCE DAY 2009

NSIC-PROMOTION AND DEVELOPMENT OF MSMEs

Dr. H. P. Kumar*

National Small Industries Corporation Ltd.(NSIC), since its establishment in 1955, hasbeen working to fulfil its mission for promoting, aiding and fostering the growth of micro andsmall enterprises in the country. Over a period of five decades of transition, growth anddevelopment, NSIC has proved its strength within the country and abroad by promotingmodernization, upgradation of technology, quality consciousness, strengthening linkages withlarge enterprises and enhancing exports projects and products from small enterprises sector.

NSIC operates through nine Zonal Offices, 39 Branch Offices, 12 Sub Offices, 23 NSICBusiness Development Extension Offices, five Technical Services Centres, three ExtensionCentres and two Software Technology Parks supported by a team of professionals spreadacross the country. To manage operations in African countries, NSIC operates from its office inJohannesburg. NSIC continues its journey of growth and further firmed up the same during2008-09. The Corporation earned a net profit of Rs. 4.27 crore during the year 2008-09 asagainst Rs. 4.06 crores during the previous year.

To enhance the competitiveness of micro, small and medium enterprises NSIC provides

integrated support services under Marketing, Technology, finance and other support services.

MarketingMarketing, a strategic tool for business development is critical to the growth and

survival of small enterprises in todays intensify competitive market. NSIC acts as a facilitator topromote the products of micro & small enterprises and has devised a number of schemes tosupport micro and small enterprises in their marketing efforts, both in and outside the country.

Schemes

Raw Material DistributionNSIC has made arrangements with bulk manufacturers like Steel Authority of India Ltd,

(SAIL), Rashtriya Ispat Nigam Ltd. (RNIL), National Aluminium Company Ltd, (NALCO) and

Sterlite group for procuring raw materials like Steel, Aluminium, Zinc, Copper etc. Thesearrangements are aimed to provide the raw material along with financial assistance as per therequirements of small enterprises. The distribution of raw materials like steel, aluminium, zinc,copper, parafin wax etc to MSMEs increased from Rs. 2894 crores to Rs. 3297 crores, registeringa growth of 32% in terms of the quantity.

NSIC has also opened godowns at Tarapur, New Delhi, Faridabad and Silvassa tofacilitate the small enterprises making available the required material at ease, to bring down theirinventory cost and also by arranging to provide them raw material closer to their work.

Consortia and Tender MarketingMicro and Small enterprises in their individual capacity face problems to procure and

execute large orders which restrict their growth. NSIC accordingly adopts consortia approachand forms consortia of units manufacturing the same products, their by easing out marketing

problems of these enterprises. The Corporation explores the market and secures orders for bulkquantities. These orders are then distributed to small enterprises in tune with their productioncapacity. During the year 2008-09 marketing assistance of Rs. 49.31 crores was provided tomicro and small enterprises against the assistance of Rs. 22.85 crores provided in the previousyear.

Single Point Registration Scheme for Government PurchaseNSIC operates a single point registration scheme under the Government Purchase

Programme, wherein the registered MSMEs get price preference exemption from payment ofearnest money deposit, etc. The MSMEs registered under the scheme get facilities of Issue of

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Tender Set free of cost; Advance intimation of Tenders issued by DGS&D; Exemption frompayment of earnest money; Waiver of Security Deposit upto the monetary limit for which theenterprise is registered and Issue of Competency Certificate in case the value of an orderexceeds the monetary limit, after due verification.

During the year 2008-09, 2677 units were registered under the scheme as against 2345units in the year 2007-08

Buyer-Seller MeetsBulk and departmental buyers such as Railways, Defence, Communication Departments

and large companies are invited to participated in buyer seller meets to enrich MSMEs knowledgeregarding terms and conditions, quality standards etc., required by the buyers. Theseprogrammes are aimed at vendor development from MSMEs for the bulk manufacturers.

Seminars and Intensive CampaignIntensive campaign and seminar are organised all over the country to disseminate/

propagate about the various schemes for the benefit of the MSMEs and to enrich the knowledgeof MSMEs regarding latest developments, quality standards etc.Exhibition and Technology Fair

To showcase the competencies of Indian MSMEs and to capture market opportunities,NSIC participates in select International and National Exhibition and Trade Fair every year. NSIC

facilitates the participations of MSMEs by providing concession in stall rental, airfare, freight etc.The participation in these events exposes MSMEs to International practices and enhances theirbusiness prowess. During the year 2008-09 NSIC organized and participated in 98 exhibitionscum buyer-seller meets against 97 such events in the previous year.

Technology SupportTechnology is the key to enhancing a companys competitive advantage in todays

dynamic information age. MSMEs need to develop and implement a technology strategy inaddition to financial, marketing and operational strategies and adopt the one that helps integratetheir operations with their environment, customers and suppliers. NSIC offers the followingsupport services through its technical service centres and extensions center: Advising onapplication on new techniques; Material Testing facilities through accredited labotaries; Productdesigning including CAD; Common facilities support in machining, EDM,CNC, etc.; Energy and

environment services at selected centers and Practical training for skill Upgradation.A total of 6013 units were served under common facility services during the year 2008-

09 as compared to 5743 units served during the year 2007-08.Financing Schemes

One of the major challenges faced by MSMEs is inadequate access to finance due tolack of financial information and non-formal business practices. To meet this challenge, NSIC haslaunched a new scheme, for sanction of loans for MSMEs from Commercial banks. NSIC has tie-up with several banks like Union Bank of India, United Bank of India, UCO Bank, Oriental Bankof Commerce, Central Bank of India, Bank of Maharashtra, Yes Bank, Axis Bank, HSBC andKarur Vyasa Bank for sanction of term loan and working capital facilities to the MSMEs as pertheir requirement. Such arrangements has facilitated smooth credit flow to MSMEs.

NSIC also facilitates raw material requirement of the SMEs by making arrangement withbulk manufacturers for procuring the materials and supplying the same. In case any credit

support is needed, NSIC provides financial support for raw material procurement by making thepayment to the suppliers. NSIC facilitates financing for marketing activities such as internalmarketing, exports and bill discounting to MSMEs. Under this scheme, NSIC provided creditfacilitation to small and medium enterprises to the tune of Rs. 663.59 crores during 2008-09 asagainst Rs. 448.87 crores during the previous year.

On behalf of the Ministry of Micro, Small and Medium Enterprises, NSIC is implementing Performance and Credit Rating Scheme for micro and small enterprises and is operating thescheme through seven accredited rating agencies i.e CARE, CRISIL, D&B, FITCH, ICRA,ONICRA and SMERA. The fee to be paid by the MSEs for the rating, is subsidised by the

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Government to the extent of 75% upto a maximum of Rs. 40,000/-. The scheme has becomequite popular and is receiving good response.

During the year 2008-09 a total of 4900 units have been rated under the scheme asagainst 3850 units during the year 2007-08. The rating serves as a trusted third party opinion onthe units capabilities and credit worthiness. A good rating enhances the acceptability of the ratedunit in the market and also makes it access to credit quicker and cheaper and thus helping ineconomizing the cost of credit.

Infomediary ServicesInformation plays a vital role in the success of any business. However, MSMEs have

limitations in accessing such information. NSIC provides infomediary services to MSMEs. Besidehosting a website (www.nsic.co.in), NSIC hosts sector specific portals for focussed informationdissemination. Under this scheme, MSMEs can become members and avail a number of valueadded services like Supplier data base, Market intelligence, Technology providers, Informationproviders, Linkages with relevant institutions, E to E services, E to B services and Valueadditions like directories of machine makers, component makers, spare capacity bulletin boards,discussion forums, vitual exhibition etc. A total of 2808 units were registered under the schemeduring 2008-09 as against 2754 units registered during 2007-08.

International Co-Operation Activities

NSIC during the last five decades, has acquired various skill sets for the developmentof small enterprises. These skill sets are intended to be shared with developing countriesthrough consultancy services offered in diverse areas namely:- Policy and InstitutionalFramework; Business Development Services and capacity building of institutions engaged inMSME development.

New InitiativesEnterprise development is one of the thrust areas for nurturing the development and

growth of micro and small enterprises in the country which is being facilitated by providinghandholding support to micro and small enterprises in every field of business--incubator is oneof the tools to achieve this as it provides necessary facilities for prospective/potentialentrepreneurs and start-up companies to learn product manufacturing processes coupled withtechnology development under one roof.

There is a huge requirement of such incubators all over the country. NSIC launched ascheme of NSIC TrainingCumIncubation Centre (NSIC-TIC) under PPP mode. With suchleveraging, 20 NSIC-TICs have been set up so far.

Another significant initiative of NSIC is launching of International SME DevelopmentWeb Portal to facilitate MSMEs exchange their information in respect of technologies, investmentopportunities and marketing of products and services with other partner institutions with whichNSIC has signed MOUs.

NSIC has also set up an Info-Call Centre to enhance its service delivery to theexisting customers and further enlarge its reach to the potential MSMEs. The Centre will playsignificant role in spreading the awareness of various schemes and programmes among themicro & small enterprises in the country and attend to their queries with regard to such schemesand programmes. The Centre will also help in providing required information about thevendors and technology suppliers to the potential first generation entrepreneurs and existing

small enterprises as and when required by them. (PIB Features)

*Chairman-cum-Managing Director, National Small Industries Corporation (NSIC)

RTS/VN

SS-78/SF-78/10.08.2009