ISO 9001:2000

Institutional Framework
for Small Business
Development
 Institutional Support Structure for
SMEs in India
At Federal Level At State Level
1. Ministry of SSI 1. Directorate of
Industries
2. Ministry of ARI
2. District Industries
3. Small Industries
Centres
Development
Organisation (SIDO) 3. State Finance
4. National Small MSMEs Corporation
Industries 4. State Industrial
Corporation(NSIC) Development
Corporation
5. Khadi & Village
Industries
Others 5. Technical
Commission(KVIC) 1. Industry Consultancy
Associations Organisations
6. Coir Board
2. NGOs 6. Entrepreneurship
7. Entrepreneurship
Development
Development 3. Banks/Financial Institutions (EDIs)
Institutions (EDIs) Institutions
 ABOUT
NATIONAL SMALL INDUSTRIES
CORPORATION
The Government of India through its Ministry of
Commerce & Industry in Collaboration &
deliberation with the National Planning
Commission and International planning team (Ford
Foundation) decided to set up NSIC in 1955 with
mandate:

“To aid, counsel , assist, finance,

protect and promote the interest
of Small Industries in India”
 VISION
To be a premier organisation in the country
fostering the growth of small enterprises
including Tiny and Service Enterprises

MISSION
To enhance the competitiveness of Small
Enterprises by providing integrated support
services under Marketing, Technology and
Finance.
 ORGANISATIONAL STRUCTURE

Head Office

Zonal State Foreign

Offices Offices(20) Offices(2)
(7)

Branch Software
SUB OFFICES Technology
Offices
(24) Parks(2)
(30)
 Contd….

ORGANIZATIONAL
STRUCTURE
 The Corporation is a fully owned entity of the
Government of India.

 Policy guidelines are provided by the Board of

Directors consisting of a full time Chairman-
cum-Managing Director, two full time Directors,
two Government nominee Directors, one SIDBI
nominee Director and Six independent
Directors.
 NSIC
ISO 9001:2000
INTEGRATED SUPPORT

Marketing

Support
Technology Services

Credit
 Marketing Support
Single Point Registration Scheme under
Govt. Stores Purchase Programme
Consortia & Tender Marketing
Raw material Distribution
Exhibitions & Buyer Seller Meets
Export Facilitation
 TECHNOLOGY SUPPORT

NSIC offers small units the following technology support

services through its Technical Services Centres

 Advise on application of new techniques

 Material testing facilities through accredited laboratories
 Product design including CAD
 Common facility support in machining, EDM, CNC, DNC etc.
 Energy and environment services at selected centres
 Classroom and practical training for skill upgradation
 Credit Support
 Finance for procurement of Raw Materials

 Finance for Marketing

 Credit facilitation through linkage with banks

 Limited Financing for Equipments

 SUPPORT SERVICES
 Performance and Credit Rating
Scheme
 Information Support
 Mentoring and Advisory Services
 Software Technology Park
 Technology Business Incubator
 International Consultancies &
International Cooperation
 Display Centre & Exhibition Complex
 Marketing Development cum Business
Park(Proposed)
Performance and Credit Rating
Scheme
Enables small enterprises to ascertain their strengths
and weaknesses of their existing operations and take
corrective measures to enhance their organizational
strength.
 An independent, trusted third party opinion on
capabilities and credit worthiness of SSI units is
taken.
 Good rating enhances the acceptability of the SSI
units with Banks, FIs, SSI’s customers and buyers.
 Facilitate prompter credit decisions from Banks on
proposals of SSI units.
Empanelled agencies: ICRA, ONICRA, Dun &
Bradstreet, CRISIL, FITCH and CARE, SMERA
 International Co-operation
Exchange of Business/Technology missions with various
countries.

Facilitating Enterprise to Enterprise cooperation, JVs,

Technology Transfer & other forms of sustainable collaboration.

Explore new markets & areas of cooperation:

Identification of new export markets by participating in

sector- specific exhibitions all over the world.

Sharing of Indian experience with other developing

countries
 International
Consultancy
 Feasibility studies
 Policy & Institutional Framework
 Entrepreneurship Development
 Supply of small projects for SMEs
 Setting up of Tool Room & Training Centres
 Building Synergies with Organizations
serving Small Enterprises in India

 Online Networking being established with

Directorate General of Supplies and Disposals
(DGS&D) for procurement by Government
departments and bulk purchasers

 Synergy with Export Credit Guarantee

Corporation for Export Credit Insurance for
Small & Medium Enterprises

NSIC
ISO 9001:2000
 Building Synergies with Organizations
serving Small Enterprises in India
Contd…

 Well established linkages between

organizations under Ministry of SSI & ARI
(KVIC, Coir Board & SISIs under Office of
Development Commissioner-SSI).

 Tie ups with bulk manufacturers of raw

material - Godowns opened with major raw
material supplier like HZL, RINL, NALCO,
Sterlite. Tie ups also being made with Coal
(India) Ltd for distribution of coal.
Expanding Reach

 MOUs signed with various Industry

associations to use their services for
disseminating NSIC schemes among their
members. Scheme to be operated on revenue
sharing basis.

 Linkages being developed with various public

& private R&D institutions and Production-
cum-Process Development Centres, Regional
Testing Centres, Tool Rooms

 Structured Intensive campaigns/seminars

organized for reaching out to SSI units.
 International Partner Institutions
Small Business Corporation (Formerly known as Small & Medium
Industry Promotion Corporation - SMIPC), South Korea

Taipei World Trade Centre (TWTC), Taiwan

Social Fund For Development (SFD), Egypt

Bundesverband Mitteistandische Wirtschaft (BVMW), Germany

Confederation of Small Industries (CONFAPI), Italy

 International Partner Institutions
Basotho Enterprises Development Corporation, Lesotho

Agency for Promotion of Small and Medium Enterprises,

Senegal

Federal Micro and Small Enterprise Development Agency,

Ethiopia

Uganda Small Scale Industries Association, Republic of Uganda

National Agency for Development of Small and Medium

Enterprises(NADSME), Slovakia
 International Partner Institutions

Carribean Association of Industry & Commerce, Trinidad &

Tobago

Mohammed Bin Rashid Establishment for Young Business

Leaders, Dubai, UAE

Pacific Islands Forum Secretariat, Fiji

Jeddah Chamber of Commerce & Industry, Saudi Arabia

 Case Studies

Cluster Development
 NSIC’s Approach
Holistic and demand led
•Drawing lessons from the successful clusters
•Networking with the existing cluster
development agencies to avoid duplication
and obtain synergy
•Building up of local capabilities
•Involvement of various cluster participants
like SSI units, industrial associations and
other stake holders
 The Process
• Understanding the socio-economic
environment in which the Cluster operates
• Identifying the most effective leveraging points
for intervention
• Business and Value Chain Analysis
• Analyzing potential for each Cluster participant
and drawing up plans for their capacity building
in the Cluster
• Developing a base for future monitoring and
evaluation
 Methodology

Identification of cluster stake holders, actors, units,

associations and institutions.
Networking of the same.
Diagnostic study
Technology mapping and gaps identification
Consolidated business plans to fill up the gaps
Implementations of Business Plans with respect to
NSIC’s service portfolio .
Monitoring for implementation.
Flexible Criteria of Selection

Importance of Clusters
Existence of critical gaps
Its viability & promotability
Replicability & dissemination potential
Scope of creating synergy between the cluster & NSIC.
 Monitoring Mechanism
• Cluster level Advisory Committees constituted for
policy support and evaluation
• Quarterly cluster level review by Regional Heads
• Half yearly & Annual review of the Cluster Development
Managers at Corporate level
• Benchmarking of the clusters with the best practices in
–Performance in business
–Credit absorption capacity
–Energy efficiency
–Technology upgradation
–Market penetration
Sharing of a few
Successful
Interventions
Foundry Cluster
Rourkela
 Structure of the Cluster
Total number of units 31

Cast Iron Units 17

Steel casting units 9

Non ferrous unit 5

Turnover of the cluster Rs. 1,210 millions

(USD 27 Million)
Employment 1260 nos.
 NSIC’S Initiatives
MARKETING SUPPORT
Through Tender Marketing by forming consortium
RAW MATERIAL SUPPORT
Earlier units were procuring materials through
traders. Now they are getting quality materials
directly from manufacturers such as RSP, RINL, etc
at competitive prices.
FINANCIAL SUPPORT
Procurement of raw materials, financial assistance is
being provided to the units.
 Outcome
Rs. 300 million (USD 7 Million) additional business has been
secured after NSIC’s intervention.

All the units in the cluster are registered under G.P Registration
Scheme and are members of infomediary service.
Hand Tools Cluster,
Jalandhar
 Structure of the Cluster
300
Total number of units.
Employment 8000 nos.
Turnover of the cluster Rs.3,000 millions p.a.
(USD 67Million)
Export turnover Rs.2,000 millions (USD
45 Million)
Spread of the cluster 20 km.
Pollution control Common treatment
plant not possible
due to sparsely
located. Few units
have own facility
 Problems being Addressed
• Raw material (steel) problem due to erratic
supply, exorbitant price fluctuations and
quality of steel
• Stagnation in technology upgradation
activities
– Technology being used - neither obsolete
nor the latest
• Limited exposure to domestic markets
particularly to MNCs and auto giants
• Down trend in exports in the last few years
because of products from China and Taiwan
 NSIC’s Initiatives Contd..

• Action initiated for consortia formation and

procurement of raw materials in bulk directly from
producers under NSIC’s RMA Scheme
• Business / technology delegations to China and
Taiwan organised to expose the SSI units in the
cluster for latest developments.
• Formed marketing consortia for participation in
Govt. tenders through Government Purchase
Programme
• Organised Buyer Seller meets at Jalandhar
• A workshop on improved technology for foundry
industry organised in March, 2005
 NSIC’s Initiatives
• Export order for Dubai worth US $ 19,500
executed during April – Oct 2003. Associate
SSI units were first time exporters.
• Export Orders from Dubai for wood working
and allied tools procured.
• Formed consortia for participation in
International Exhibition at Cologne
(Germany) during March, 2004
Pipe Fitting Cluster,
Jalandhar
 Structure of the Cluster
Total number of units 225
With turnover ranging Rs.1 to 20 25
Crores
With turnover ranging Rs.10 lakhs to 50 200
lakhs
Employment 6000 nos.

Turnover of the cluster Rs.2,500 millions p.a.

(USD 56 Million)
Share of the cluster in national 90%
production
Spread of the cluster 20 km.
Pollution control Common treatment plant not
possible due to sparsely spread.
Few units have own facility
 Problems Identified
• Raw material (pig iron) problem existed due to erratic
supply, exorbitant price fluctuations and bulk
requirement-
• Obsolete technology

– Losses at various stages of the process i.e.

casting, cutting, tooling, tapping

– Manual system for casting and zinc plating

– Dangerous working conditions

– Lack of information on the improved

technologies and resource agencies
• Limited exposure to export markets
 NSIC’S Initiatives
• identified Experts foundry technologists to
guide in technology improvement and R&D
needs of the cluster
• Exports worth US$ 211434 of pipe fittings &
allied foundry items like scaffolding realised.
All the associate units participated in the
exports were first timers
• Samples exhibited at various international
exhibitions
• A consortia from the cluster has been formed
for participation in Government tenders
through NSIC
 Roadmap
• Replication of energy efficient
technologies
• Enhancing share of exports from the
cluster
• Dissemination of technological
information and creating awareness of
the latest developments to the cluster
participants
 Case Studies

Performance and Credit Rating of

Small Enterprises
 Simplified Rating Process

Application for
Information Interaction &
Rating with Evaluation
Review Verification
Information

Publish Rating
Rating
Rating and Assigned
(Option to refuse) Committee
report

Total duration: 15-30 days after receipt of Information

Impact of Performance & Credit Rating Scheme for Small
Enterprises

• 67% of the rated units who had informed their banks about
their rating status got the benefit of increase in volume of
credit
• 17% of total respondents revealed that rating helped them
in negotiating cheaper interest rates from the banks
• 30% units felt the rating helped them in increased
recognition from their buyers/customers

Data based in respect of respondent units

Impact of Performance & Credit Rating Scheme for Small
Enterprises Contd..

• Nearly 16% realised a higher sales figure and almost same

proportion received higher customer queries
• 23% rated industries improved people management system
and policies equipping them for higher competitiveness.
• 38% felt that their employee pride had increased with
rating of their units

Data based in respect of respondent units

 A few Perceptions of Rated Small
Enterprises

• This rating comes as a real surprise to us, as initially

we thought that it would be useful only from the
perspective of the banks. However, we got good
response from market..” – Lexi Pens
• We are in fact, smitten over by the impact that has
resulted from this rating. We now find Banks and
Financial Institutions chasing us. A Lot of foreign
investors have suddenly become interested in Su-
Kam. I must also confess that I had perhaps
undermined the importance of this rating earlier but it
is proving to be very beneficial for our organization. –
Su-Kam Power Systems Ltd.
 A few Perceptions of Rated Small
Enterprises

• “ We would be using the report for bank appraisals

and investors. We find the rating very good and
useful.” – Xytel India Pvt. Ltd.
• “The strengths and weakness of the company,
notes, information about competitors, industry
overview, graphical representation, give a true
picture of what is happening.” – STJ Electronics
• We will work on this rating and try to improve
upon the factors, as mentioned in report” – HGS
(India) Limited.
THANKS
SUPPORT MEASURES FOR
SMES
IN INDIA
 Institutional Support Structure for
SMEs in India Contd..

SIDO – Coordinates and implements small industries promotion

programmes of Government of India
NSIC – Provides integrated support through marketing,
technology, finance and information
KVIC – Promotes village industries producing products from
handmade yarns
EDI – Augments supply of entrepreneurs through
entrepreneurship development education, training and
research
Directorate of Small Industries – Responsible for promoting
small industries at the state level.
State Financial Corporations – Provide medium and long term
credit to industries
Support Measures for SMEs in India

• Micro, Small and Medium Enterprises

Development Act, 2006: a legal framework for
development and enhancing competitiveness
• Enhanced credit support
• Support for technological upgradation
• Comprehensive support for cluster
development
• Marketing assistance and export promotion
support
 Micro, Small and Medium Enterprises
Development Act, 2006
Salient Features
1. Introduction of concept of ‘enterprise’ and
limit of small and medium enterprises
2. Constitution of National Micro, Small and
Medium Enterprises Board as the apex
advisory body for promotion and development
of MSMEs
3. Strengthening the exisiting legislation to tackle
the chronic problem of delayed payment to
micro and small enterprises by large buyers
4. Preference for products of micro and small
enterprises in Government procurement
 Micro, Small and Medium Enterprises
Development Bill, 2005

Salient Features (Contd…)

5. Provision for filing of voluntary memorandum
for investment level, product, technology and
employment etc. by enterprises
6. Provision for a scheme of fast track closure of
business
 Credit Support

1. Public sector banks advised to double the flow

of credit to SMEs within 5 years
2. A minimum of 40% of bank credit earmarked
for priority sector lending (including SEs)
3. Specialised SME Bank branches in industrial
clusters for smooth flow of credit to SMEs
4. Credit Guarantee Fund Scheme for enabling
MSEs to acquire institutional credit without
collateral security
 Credit Support (Contd..)

5. Performance and Credit Rating Scheme for

facilitating credit flow to MSEs at affordable
rates of interest
6. Scheme of Fund for Regeneration of Traditional
Industries(SFURTI) providing credit facilities
for revival of traditional industries
7. Special debt restructuring scheme for revival of
potentially viable sick MSMEs
8. One Time Settlement (OTS) scheme for settling
NPAs of MSMEs
 Technological Support
• Credit Linked Capital Subsidy Scheme for
Technology Upgradation of Small Scale
Industries
• Technology Business Incubators
• Testing Centres for Quality Certification
• Tool Rooms and Training Centres for skill
upgradation of the MSE workers
• Incentive scheme for obtaining ISO
Certification
Marketing Assistance and Export Promotion

• Support to MSE entrepreneurs for participation in

trade fairs and exhibitions – local as well as
international
• Training programmes on packaging for exports
• Purchase preference to products in Government
procurement
• Market Development Assistance Scheme for
publicity, market studies and adoption of modern
market practices
 Cluster Development
• Small Industries Cluster Development
Programme for focussed development of MSE
clusters. The programme provides for
upgradation of technology, improvement of
productivity, energy conservation, pollution
control, product diversification as well as meeting
the training capacity building needs of MSEs
• Integrated Infrastructure Development (IID)
Scheme to facilitate growth and development of
industrial clusters. The scheme also provides
common service facilities and technology back-
up services.