Call centre ‘Udyami Helpline’, has been inaugurated by Prime Minister Manmohan Singh, opening scope for entrepreneurs to find information on Business opportunities and loan facilities available to them. SMEs shall be the main beneficiary as now they will find guidance and support for solving their inherent problems.

During the occasion, Dr. Singh said, “The Ministry of Micro, Small and Medium Enterprises (MSMEs) call centre will satisfy the need of a single point facility providing a wide range of information and accessibility of banks to such units. This initiative would help in expanding the outreach of support provided under the various schemes and programs of the government.”

Toll free number for ‘Udyami Helpline’ is 1800-180-6763 and the working hours of this Helpline shall be 6 am to 10 pm. Here, SMEs can find all required information and guidance on availing bank loans, setting up new units, project profiles and knowledge about other MSME schemes.

First generation entrepreneurs faced a lot of problems in finding credit, technology and even in marketing. But now the SME problems will be solved and they can even lodge complaints with Central and State Government agencies. The call centre facility is made available in both English and Hindi languages.

Tags: bank loans, Banks, business, business opportunities, Central and State Government agencies, entrepreneurs, government, guidance on availing bank loans, MSMEs, SMEs, Udyami Helpline
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Lean manufacturing technique as a philosophy has its roots ingrained in Japan. This is a method of production where customer value is taken care of while minimizing waste and using fewer resources. It is an effort to do “more with less” and hence increase productivity. SMEs in Northern region of the country are applying such lean manufacturing techniques for its various industries under a scheme of the union MSME.

It is a Business initiative to improve quality, delivery and reduce cost of production. The scheme is a curb on waste that includes inventory, over-production, over-processing, transportation and defects. The Union government is slated to spend 80 % of the project cost. The development commissioner, MSME, will be responsible for execution of projects through a special purpose vehicle (SPV) established by SME clusters.

Presently, clusters have been formed by SMEs in Mohali and Baddi (Himachal Pradesh). In Mohali, SMEs manufacture bathroom fittings and accessories, and in Baddi engineering goods are being produced. Manish Trehan, manufacturing consultant for the Mohali and Baddi clusters, says, “The participating units will be assisted in becoming ‘lean’ through better planning, better manpower allocation, better space utilisation, scientific inventory management, improved process flows and reduced processing time with the application of lean manufacturing techniques.”

The programme has been initiated with a tri-partite agreement between PGSTE, the SPV formed by the cluster and National Productivity Council. It has been agreed upon that to reduce “waste” (“non-value added” activities) when it comes to manufacturing, is essential for sustainable growth and competiveness building.

In the pilot stage of the Lean manufacturing scheme initiated by MSME ministry, forming 100 mini clusters averaging 10 MSMEs per cluster have been targeted. After achieving this, another 1,000 MSME clusters in the entire country will be formed.

Tags: Lean manufacturing scheme, manpower allocation, manufacturing, more with less, MSME, MSME ministry, National Productivity Council, SPV, Union government
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HSBC’s Small Business Confidence monitor surveyed the economic growth parameter and has made it evident that 69 % of SMEs in India have a stable economic outlook. The HSBC gauges the confidence level on parameters like capital investment plans, economic growth and recruitment.

“Our research indicates confidence levels in the emerging markets are stable. SMEs in India are not changing their business strategy in the next six months, despite the global uncertainty. This bodes well for the Indian economy,” says Dheeraj Dikshit, SME Business Head, HSBC India.

The latest wave is a survey conducted on 6,300 SMEs whose annual sales turnover is US $10m. These SMEs are spread across 21 markets such as Middle East, Asia, North America, Latin America and Europe.

Confidence levels of Global markets

Confidence levels of developed markets increased 9 points from 106 to 115. Confidence level of the entire globe increased from 111 to 118. The emerging markets showed an index of 122 that is seven points higher in comparison to developed markets that showed 115.

Positive confidence levels in Asian Markets

Since the financial crisis, Asian markets have shown signs of positivity for the first time, according to the survey. The positive waves are in terms of their economic growth, recruitment and CAPEX plans. Among the most confident countries surveyed, Vietnam ranks first with 164 index mark, Singapore (136), mainland China (123) and India (121).

Tags: Asian Markets, CAPEX plans, capital investment plans, economic growth, Global markets, HSBC, recruitment, Small Business, SME, SME Business Head
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Seeing the capability of SME in executing projects, the Union ministry is considering reserving 10 percent of IT enabled projects for Small and Medium Enterprises (SMEs). The proposal is being circulated among the state governments to get a better response and to receive recommendations from stake holders. It is expected that the companies will get direct orders and even if the projects are given to big companies there will be provision for outsourcing 10 percent of the orders to SMEs.

The focus of the IT policy 2010-15 is on start up companies, IT products, SMEs and women entrepreneurs. Promoting women’s participation in the ICT sector is also its objective. More e-governance projects in local languages are also on its agenda.

At present there are 1,200-odd IT and IT-enabled Service (ITeS) companies. Out of these, 70-75 percent belongs to the SME category earning annual revenues not exceeding Rs 100 crores. A company is considered a start up if its annual return is between 50 lakh and 10 crore, with 50 employees and operating for less than five years.

The government has made provisions to grant incentives in the form of 25 per cent power subsidy to start-up companies, 25 percent reimbursement for premises rental expenses and recruitment assistance of 2.5 lakh per 50 persons recruited.

L Suresh, president IT and IT-enabled Service Industry Association of Andhra Pradesh (ITsAP) says, “Usually, SMEs are good at executing projects. But because of their size, they are disqualified from participating in large projects. Earmarking about 10 per cent of e-governance tenders for SMEs will ensure that companies will have a level playing field.”

To market intelligence, prepare research reports & analysis for SMEs, understand new trends in technology, the Andhra Pradesh government will create libraries with support from NASSCOM, IT Exporters Association, Software Technology Parks of India, ITsAP and Institute of Electronic Governance. For the libraries, Rs 10 lakh fund will be facilitated so that the SME sector can grow. In order to evaluate the strengths of SMEs, the government shall tie up with business analyst firms. This will enable smaller ICTs to establish linkages with bigger firms and help SMEs to find international markets.

Andhra Pradesh has set a target to raise its export value to Rs 70,000 crore by 2015. The current value is 32,000 crore. The state provided 2.51 lakh employment in 2009. New employment for 125,000 people is being targeted. IT sector’s export is 50 percent of the total exports from other sectors in the state.

Tags: e-governance, ITsAP, NASSCOM, SMEs, stake holders, start up companies, state governments, Union ministry, women entrepreneurs
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Small and medium enterprises (SME) fund is planned to be floated in next 1 ½ years with an initial corpus of Rs 100 crore by SBI Capital Markets Ltd. SBI has many SME clients who would be benefitted from this plan.

So far, SMEs of the country did not witness much support from private equity (PE) players because of a low capital base. Rajeev Krishnan, executive Vice President, SBI Capital Markets, says “The SME fund will be used to rope in private equity investment in SME, which otherwise is facing dearth of capital for furthering its business growth.”

FPOs (follow-on public offers) and financial services are also being guaranteed by SBI Capital Markets Ltd in this fiscal. This will definitely attract revenue growth as the PE funds are utilised to invest in the company’s growth phase. Krishnan says, “We expect to witness a 60 per cent rise in our revenue to Rs 1000 crore by end of this fiscal on the back of higher earnings from advisory services.”

Opportunity in the advisory space is further magnified by the central government’s disinvestment programme in public enterprises. $9 billion worth of proceeds is likely to be generated in the current financial year. A larger role is anticipated in ‘mergers and acquisitions’ from investment banks as it is going to leverage SBI’s banking relationship with other Indian corporates.

SBI caps in the last financial year had made loan arrangements of Rs 187,000 crore. In 2009, SBI caps concentrated in five major equity issues that generated Rs 136.5 billion. Mega issues like National Hydro Power Corporation (NHPC) Ltd raised $1.25 billion and Adani Power raised $630 million from the capital market.

Tags: financial services, investment banks, NHPC, SBI Capital, SBI Capital Markets Ltd, SBI’s banking relationship, SME
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Under the Prime Minister’s Employment Generation Programme (PMEGP), the government asked banks to disburse loans so as to meet its target of financing 59,714 projects in the current fiscal year. The margin money assistance is Rs 836 crore and this should help in generation of employment for 5.97 lakh persons.

Since the PMEGP launch in 2008, one lakh projects have been sanctioned and 10 lakh people employed. Out of the total loans sanctions, 15 percent is for SC, 7.5 per cent for ST, 27 per cent for OBCs, 5 percent for minorities and 30 percent for women. The general category entrepreneurs can find a subsidy of 15 percent and 25 percent on the project cost. The weaker sections of society can avail 25 per cent and 35 per cent subsidy.

Dinsha Patel, minister of state for MSME, has urged CMD of banks to issue policy circulars to all financing branches so as to fulfill the allocated targets. He said that the disbursements this year has been just 10 percent of the target. What is important now is that Khadi and Village Industries Commission (KVIC) should reach every village. The KVIC is the nodal agency for the implementation of PMEGP .

The Union Bank of India and KVIC signed an agreement for a ‘one bank, one nodal branch’ formula. This concept shall enable a single nodal branch to be used to coordinate with all other branches of the bank spread in the entire country.

Tags: Banks, financing branches, Khadi and Village Industries Commission (KVIC), MSMEs, MSMEs under PMEGP, one bank & one nodal branch formula, Union Bank of India
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The Uttar Pradesh industrial sector shall face more stringent financial constraints in coming days. This seems more likely in the wake of the recent hike in key policy rates of the Reserve Bank of India (RBI). The MSMEs in UP would be hit hard by this hike as it is expected that funds would get costlier for the sector.

Central Bank has already announced hikes of repo and reverse-repo rates by 25 and 50 basis points amounting to 5.75 and 4.50 respectively. Major banks have also raised deposits rates by nearly 100 points and the credit rate is also expected to increase in future. The large MSME base of Uttar Pradesh, estimated at 1.2 million, will be affected by these policy changes.

The Indian Industries Association (IIA) president, Anil Gupta said “it would be double whammy for the MSME sector, which was already operating under ‘wafer-thin’ margins with little support from the government.” He added that we should take lessons from China that provides incentives and funding for the growth of the industrial sector. He also informed that in Lucknow there is no land bank for industrial units.

IIA has recently nominated veteran professionals for the constitution of a ‘consultancy cell’ so as to promote MSME entrepreneurship. The cell would give advice on different subjects relevant to MSMEs that includes technical & financial project appraisal, rehabilitation of sick units and more.

Tags: Banks, Central Bank, credit rate, Indian Industries Association, industrial sector, MSME entrepreneurship, MSMEs, Reserve Bank of India (RBI)
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With economies of Europe and US are hard-hit by recession, SMEs in India has also witnessed decline in the last three quarters of 2008. The strong linkage with agricultural sector is one reason for micro, small and medium enterprises’’ (MSMEs) economic recession. But it would be wrong to conclude that this sector will not withstand the crisis as Indian SMEs are resilient lot.

There are sectors and business places in India that are hard-hit and are struggling in the aftermath of the recession.

1. Decline in IT and ITeS sectors (IT enabled services) have curved the graph of negative consequences on industries like Tourism and consumer durables.
2. Moradabad, famous in the entire world for its handicraft industry is now witnessing closing of its workshops due to price rise of raw materials like brass. The artisans are left unemployed.
3. Kanpur, the Manchester of India, is neglected, has a poor infrastructure and its industries are closing down.
4. The famous Tussar silk fabric of Bhagalpur, exported to places like US, Europe, West Asia and Japan, is jeopardized by competition from new silk manufacturing centres like Bangalore and Ahmedabad. Lack of credit and power shortage has added to the decline of this big trade centre of Eastern India.
5. Tirupur has serious infrastructural constraints, despite Union and State government’s support in the past. For past several months, the city is struggling with power cuts and poor transport system.

Neo Liberal policy

Neo liberal policies offer solutions to problems faced by SMEs. The policies offer reduction in taxes, credit guarantee and related measures.

The efficacy of such policies can be analyzed from the impacts on SMEs. The impact can be categorized as under:-

1. Shadow entrepreneurship where an individual is left with no other choice but to become an entrepreneur.
2. Pseudo entrepreneurship meaning the start up and sustenance of entrepreneurs who are lacking in the key elements of entrepreneurship like value creation and business ethics.

Recessionary Trend

The symptoms of recessionary trend spread from financial sector to real sector. Its effects on MSMEs follow this pattern. Recessionary trend shows up in the economy in terms of effects like ‘Sentiment’ and ‘Expenditure’. The sentiment effect results from signals received from financial system. It may be failure of stock markets and crisis in leading sectors. In such a case, financial institutions become more cautious about their lending policies. The expenditure effect is a curb on expenditure by MSMEs as business orders start reducing due to recession. Postponement of payments to creditors and workforce also become common due to the expenditure effect.

Less Protection

Initiative taken to improve labor laws is half-way inspite of efforts to liberalise labor laws. Paradigms like ‘flexible specialisation’ and ‘global value chains’ as found in international level are absent in MSME sector in India as it functions as ‘Sweat shops’. Then ‘blanket freedom’ in some sectors is another key problem that has hidden the policy advantages related to MSMEs.

The interests of MSME sector is jeopardized by distortions in public policy. However, attempts are being made to bring about improvements. For example, the ‘MSME cluster development programme,’ enhances individual firm’s competitiveness on a ‘collective efficiency’ mode. The advantage of the Indian manufacturing sector is its highly distributed character. So, because of its distinct economics and sociology, any recessionary shock does not straightway percolate in the sector. To provides resistance to economic downturns and toendure upon this situation, public policy needs to amplify from its current neo-liberal approach. When policies are broad-based, it will be possible to distribute the loads of a recession in the entire economy.

Tags: blanket freedom, business, economies, financial system, global value chains, industry, linkage with agricultural sector, MSMEs, Neo Liberal policy, raw materials, Recessionary Trend
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A new national level call-centre, named Udayami Helpline is about to be launched to help entrepreneurs of the country seek information and to redress their grievances. The call centre is given a single window model with a single toll-free number to serve entrepreneurs in India. Under the XIth plan, the helpline has received a sanction of Rs. 7.6 crore from the government.

The ministry of micro, small and medium enterprises (MSME) took the initiative to model the call-centre. The initiative started in 2009, after the appointment of turnkey consultant, the ‘Telecommunications Consultants India Limited’ (TCIL). This consultant did its job by inviting bids to operate Udyami Helpline.

Caretel Infotech has been given the responsibility to operate Udyami. The MSME ministry has provided all support in the form of finance, data base and monitoring of the centre. The database has the details of banks, financial institutions, stakeholders and other related agencies.

” This call-centre is an innovative idea of the ministry to disseminate information, help and support a large number of entrepreneurs based in far-removed destinations. It’s ready to be launched soon and its staff members are undergoing skill-development training. An appropriate interface will be established with each bank to ensure that the queries of MSMEs are satisfactorily replied and monitored till closure,”said Dinesh Rai, secretary ministry of MSME.

Tags: bank, call centre, Caretel Infotech, government, MSME, TCIL, Udyami
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MSMEs are facing a lot of hurdles according to a report published by Sidbi (Small Industries Development Bank of India). One major concern of Micro, Small and Medium Enterprises is lack of proper infrastructure support needed for their growth and development. The 2010 report is based on survey conducted on 200 MSMEs from every place of India.

Non-availability of infrastructure is not just one concern. There are other issues of concern to the MSMEs . The other key issues that need to be addressed are

1. Inadequate and Non-availability of timely credit.
2. Non-availability of skilled personnel.
3. Non-responsive cost competitiveness due to unavailability of greater automation in production facilities.
4. Inefficiency of energy in production processes.
5. Inadequate R&D and lack of brand building support.
6. Improper knowledge of government schemes with reference to information and communication technology (ICT).

These findings are part of a recent survey conducted by SIDBI among 42 micro, 114 small, and 44 medium enterprises spread across cities like Chandigarh, Hyderabad, Jamshedpur, Surat, Rajkot and Bangalore. The research has been conducted based on questionnaires, on-field discussions and interviews with MSME associations and trade chambers representing different sectors located in different places of India.

Tags: government schemes, MSMEs, Sidbi
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