businessFROM THE CHAIRMAN’S DESK

Ramesh DatlaChairman, CII National MSME Council

MSME

Journal of Small BuSineSS and enterpriSe Volume 1, iSSue 10, July 2011

Please write to me at: Chairman.CIIMSMEcouncil@cii.in

Plus

Sector FocuS Pg5FDI Factor Pg7agenDa Pg9InDex Pg11BranD equIty Pg12PolIcy PerSPectIve Pg13catalySt Pg14InSurance Pg16InternatIonal Pg17

Small WorlD Pg3uPcomIng eventS Pg19

Inside this Issue

`SuPPly DIverSIty IS a neeD'... Pg13 Dr Shyam AgarwalAdditional Secretary & DC, Ministry of Micro, Small and Medium Enterprises, Govt of India

`Procurement PolIcy on the anvIl'... Pg4 Mr Virbhadra SinghMinister of Micro, Small and Medium Enterprises, Govt of India

`aDDItIonal FocuS grouP For Sme Sector unDer uS-InDIa'... Pg17

Mr Uday Kumar VarmaSecretary, Ministry of Micro,

Small and Medium Enterprises, Govt of India

The current decade will truly belong to the Indian MSME sec-tor as there is widespread recognition of its vital role in India's inclusive growth and sustainable development. The contribu-

tion of the MSME sector to domestic industrial output, exports and employment can hardly be overstated. Nonetheless firm steps are called for to bolster the overall performance of the sector, such that the National Manufacturing Growth goals are met, supplier diversity and inclusivity are pursued and the spirit of innovation and excel-

lence drives Indian entrepreneurship. CII National MSME Council is taking proactive steps to meet these challenges and is working closely

with the Working Group on Micro, Small & Medium Enterprises (MSMEs) Growth for 12th 5-Year Plan (2012-17). The Working Group has constituted eleven (11) sub-groups with specific terms of reference to address the key issues underpinning domestic MSME growth and development. An integrated ap-proach like this will provide the necessary impetus for the sector's growth in the 12th Plan period.

A delegation of CII National Council also met with Mr Virbhadra Singh, Union Minister of Micro, Small and Medium Enterprises (MSMEs), Government of India, on June 7th, and highlighted the need for simplification of government procurement process with regard to the MSMEs and expeditious implementation of the draft procurement policy. The delegation also urged the ministry to impress upon the state governments to fast-track the implementation of the National Manufacturing Com-petitiveness Programme for the MSME sector.

The delegation drew the Minister's attention to issues related to the implementation of the la-bour laws, complex registration procedures, and the need for lower interest rates MSMEs. Besides, a `single window registration' process would greatly alleviate the problem of multiple registrations that bedevil MSMEs. The delegation also highlighted the industry concern for facilitating adequate and timely bank credit for Small enterprises on the lines extended to Micro enterprises.

Women entrepreneurs have a key role in the MSME sector's growth and expansion. Both Govern-ment and Industry have recognised the significance of Women entrepreneurship. As part of the CII focus on Supplier Diversity and Inclusivity, CII organised a series of two (2) conferences on `Con-necting Women Entrepreneurs' in Mumbai and New Delhi. The platform provided an opportunity to the participants to discuss at length the integration of women entrepreneurs in the Global Value Chains (GVCs) in the line with focus on supplier diversity and inclusive growth processes. Several large corporations have already introduced supplier diversity programmes to be more competi-tive with more dynamic and innovative supply options. Importantly, at the event, the Office of the Development Commissioner (MSME) reiterated that it would facilitate the growth and development of women-owned enterprises through capacity building, strengthening of database and advocacy by industry/enterprise associations.

To deepen the MSME sector's global linkages, CII mounted an SME delegation to the United States during 20 - 24 June 2011, with support from the Ministry of MSME and the Embassy of India in Washington DC. In the interaction with senior US Administration officials from the US Small Business Administration (US SBA) and the US Department of Commerce, CII highlighted the need to create a CEO-led institutional mechanism that will encourage midsize companies from both countries to find opportunities for bilateral commercial engagement and to strengthen the global supply chain management systems. This would also be in line with the thrust for acquisition of foreign firms and access to IPRs and new Technologies.

This edition of ̀ MSME Business' captures the key issues that impact the growth and development of the sector in the medium term. We invite you to proactively participate in the development of this journal and in the MSME Council's activities.

SIDBI Credit to MSMEs Grows by 22%The Smal l Indust r ies De-ve lopment Bank o f Ind ia ' s

(S IDBI ) outs tand ing cred i t to the MSME sec tor increased by 22% to touch 46 ,331 c rore in the f inanc ia l year 2010-11 and the bank a ims to grow th i s segment by another 35% in the current f i sca l year . Cha i rman and Manag ing D i rec -tor , S IDBI , Mr Sush i l Muhnot sa id that the in teres t ra te r i se wou ld have some e f fec t on the MSME

sec tor but he was conf ident that S IDBI 's target for the current f i sca l wou ld be ach ievab le . He sa id that the overa l l g rowth in the MSME sec tor be-s ides the i r p lans to ca ter to t h e r e q u i r e -ment o f equ i ty by M S M E ' s wou ld en-

ab le S IDBI to ach ieve i t s growth target . S IDBI had ach ieved the mi les tone o f cu-mula t ive d i sburse-ment o f Rs 2 lakh crore a t the end o f March 2011 , and the bank expects to grow by 18-20% in the cur -rent f i sca l , Mr Sush i l Muhnot sa id .

CII MSME Conclave on Challenges, Sustainability

CII Himachal Pradesh State

Council has orga-nized a conclave on Challenges and Sus-tainabil i ty to discuss various challenges that pose threat to the sustainabil i ty of MSME sector which is considered as the backbone of industri-al ization in India. The Conclave was orga-nized in association with BBN Industries Association. Mr Virb-hadra Singh, Union Minister for MSMEs and Mr Kis-han Kapoor, Minister for Indus-tries, Government of Himachal Pradesh graced the occasion where more than 150 MSME rep-resentatives from the state par-t icipated. Long pending demand for sett ing up of a Tool Room with an objective of ski l l devel-opment was sanctioned by Mr Virbhadra Singh. The Tool Room wil l be established with 90% funding by the MSME ministry to a maximum l imit of Rs. 9.0 crore and rest of the 10% wil l be borne by the industry through a special purpose vehicle (SPV). Land for

the same was committed by the state government. Other who attended the conference include Ms Harinder Hira, Addit ional Chief Secretary, Industries, Gov-ernment of Himachal Pradesh, Dr Shyam Aggarwal, Development Commissioner, MSME Ministry, Government of India; Mr Ra-man Saluja, Chairman, Regional Committee on MSME, CII NR, Mr Raj iv Malhotra, Chairman, CII Himachal Pradesh State Council and Mr Arun Rawat, President, BBN Industries Association & Convenor, MSME Panel, CII Hi-machal Pradesh.

(l-r) mr rajiv malhotra, chairman, himachal Pradesh State council, mr virbhadra Singh, union minister of micro, Small and medium enterprises (mSmes) and mr Kishan Kapoor, minister for Industries, government of himachal Pradesh during the mSme conclave at Baddi

New IIP Will Track Growth of MSMEs

The government is expected to come out soon with a separate

index to track growth of the Micro, Small and Medium Enterprises (MSME), sharpening focus on the unorganised segment that contributes substantially to the country's economy. India's Chief Statistician Mr TCA Anant has been quoted in the media saying that the existing Index of Industrial Produc-tion (IIP) data covers only big indus-trial segments. "A lot of industry units, which employ less than 10 workers, do not get covered under the current sur-vey. But such industries are a major component of our manufacturing sec-tor, with a big share in overall pro-duction and exports of the country....So MSME ministry is thinking about releasing a new index to capture such industries," he said. Mr Anant said a new methodology would be required to cover such a segment but declined to give a specific time-frame by when the new index for MSME would be out. He said the new series of IIP, which has 2004-05 as the base year, has left MSME out of the index. Other 14 source agencies, which were part of the old series, have been included in the new one as well. "As for the MSME segment, a separate index will be de-veloped. The sector is very important. The time-frame and other details will be decided later," he said.

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CII National MSME Council Meets Virbhadra Singh

A delegation of the CI I Na-t ional MSME Counci l met

Mr Virbhadra Singh, Minister of Micro, Small and Medium En-terprises (MSMEs), on June 7, 2011, in New Delhi . During the meeting the delegation urged the minister to s impli fy pro-curement process for the MSME sector and expedit iously imple-ment the draft pol icy for res-ervation of 20 per cent for the sector in government procure-ment. The government released a draft pol icy last year and the pol icy has now been circulated among various ministr ies. Be-sides, last year the government has come up with the National Manufacturing Competit iveness Programme for the MSME sector. There were dif ferent schemes under the programme for basic software, low-cost automations, promoting clusters, direct pat-enting, market development and entrepreneurship training. How-ever, i t has not gathered pace, s ince i t has to be implemented by the state governments. The ministry has also been urged

to take up the matter with the state governments to implement the scheme expedit iously. More-over, the delegation has urged the minister that that recom-mendations of the Task Force, const ituted by Prime Minister Mr Manmohan Singh last , to be im-plemented fast . I t has been also asked to create a s ingle-window registrat ion system for reducing procedural hassles during regis-trat ion. The industry represen-tat ives have also apprised the minister that they wanted banks to come up with a concessional scheme for small industry on the l ines of micro enterprises. Historical ly , f inance has always been a key issue with MSMEs. Now, there is a concessional rate scheme for micro enterprises for loans below Rs 10 lakh. The con-cession is 2-3 per cent compared to the normal rates of interest . Small enterprises are now get-t ing loans at 15-17 per cent. The industry wants banks to come up with a concessional scheme for small industry on the l ines of mi-cro enterprises.

(l-r): mr virbhadra Singh, union minister of micro, Small and medium enterprises (mSmes), mr ramesh Datla, chairman, cII national mSme council, mr nalin Kohli, chairman, cII national mSme Defence council, mr gurpal Singh, Deputy Director general, cII, in new Delhi.

Government Will Safeguard Toy Industry: Minister

Union Minister for Micro, Smal l and Medium Enterpr is -

es (MSME) Mr Virbhadra S ingh has sa id recent ly that the government would take a l l s teps to safeguard the interests of Indian toy indus-try . "We are ready to render any k ind of support to the industry by provid ing easy credi t , market ing ass is tance l ike bar coding and ISO cert i f icat ion. China has i ts pres-ence not only in toys but a lso in other sectors , as they have mass product ion. They dump their prod-ucts a l l over the wor ld . I am sure that our products wi l l compete wi th China," Mr S ingh sa id in the media . Stat ing that the Indian toy indus-try that was worth Rs .6 ,000 crore was competent enough to compete wi th the Chinese products , Mr . S ingh sa id the Indian industry had immense potent ia l as the country has 2 .4-crore k ids below the age group of 10. "Only 20 per cent of the market i s served by Indian manufactures and rest by import of toys f rom di f ferent countr ies , inc luding China. We hope that In-d ian manufacturers would not only improve their presence in the In-d ian market but would a lso excel in exports , " the Min ister added. Part ic ipants f rom over 80 coun-tr ies inc luding Germany, China and Spain are tak ing part in the fa i r .

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Life sciences MSMEs are poised to leverage the growth opportunities that a globalised business environment presents

Life Means More

India is at the forefront of the life sciences industry progress in Asia. A BioSpectrum Asia survey conducted in 2009 estimated the combined revenues of Indian life

sciences companies at $21 billion, just a notch below China ($22 billion) in Asia. Seven Indian companies were ranked in the Asia's 'Top 20 Publicly Listed Life Sci-ence Companies'.

The Indian life sciences industry's spectacular growth was largely facilitat-ed by the rapid GDP growth and higher dispos- a b l e

income in the hands of the burgeoning middle class. The economic uptrend has also vitalised the industry's R&D activi-ties, which in turn has raised India's at-tractiveness as a global R&D base.

A large part of India's attractiveness stems from the sheer size of its demo-graphics. According to industry experts 65% of the market is untapped because the current infrastructure only enables a connect with 30-35% of the population. The improving microeconomic situation in India has led to greater affordability and access to pharmaceutical products. Taking into account the current per cap-ita spend on medicine in India of about $7 and the projections for demand in emerging countries, it is abundantly clear that the growth opportunities for the industry are manifold.

Also, to cope with the rising costs of drug discovery and development, the

big pharma and biotech companies are looking for low cost destinations

to explore opportunities in collab-orative research and develop-ment. These growth opportu-

nities have drawn a significant number of MSMEs into the life sci-ences industry fold.

Growth driversFor those already in business, the ma-

jority of MSMEs in the life sciences sector seek long-term sustainable growth, be it organically, or through mergers and ac-quisitions. Further, obtaining appropriate patent protection for key business assets can be a critical driver for their growth.

For MSME entrepreneurs foraying into this field, the SIDBI Venture SME Growth Fund is a vital source for initial seed capi-tal. Likewise, a host of other venture capi-tal and private equity funds have demon-strated their interest in funding big ideas in the life sciences segment.

Pertinent to note that several state governments have recognised the huge growth potential that this sector holds in terms of entrepreneurship, invest-ments and employment generation. As a case in point, Gujarat has positioned itself as a hub for MSME life sciences and pharma innovations.

In this, the Foundation of MSME Clus-ters, a New Delhi-based NGO specialising in cluster development is implementing the Promoting Innovative Clusters (PICs) for life sciences industry with support of the Department of Science and Technol-ogy (DST). The foundation has created mentors' groups in various pharma hubs

in Gujarat to identify and

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support potential innovators showing them the right roadmap for success.

The foundation has developed an eco-system that promotes the life sci-ences, largely the pharmaceuticals, medical devices and Indian systems of medicine (ISM) clusters along with strengthening the existing stakehold-ers in the cluster. The mentors' group identifies the potential innovators and start-up firms to take their dis-covery further to commercialisation by giving roadmap including techni-cal expertise and linkages.

Emerging opportunityLife sciences MSMEs have a critical role

in making India a global hub for R&D and innovation. What is perhaps needed is a greater coordination between industry and academia in realising this goal. CII provides a common platform for the key stakeholders including MSMEs to collec-tively take this domain to the next level.

Importantly, Indian life sciences MSMEs have a strong business case for international collaborative research and partnerships. The life sciences in-dustry in the UK, for instance, has rec-ognised this potential. This was keenly discussed at the UK-India SME Manufac-turing Conference held in Birmingham on November 11 last year.

The conference, organised by Aston University, and supported by Birming-ham Science City, showcased the latest research in life and health sciences in a workshop to Indian businesses.

The purpose of the event was to pro-mote business collaborations between companies from the UK and India, from within the MSME manufacturing and tech-nology sector. The life sciences workshop was led by Aston University's School of Life and Health Sciences, which already works with a number of key SMEs, pursu-ing interdisciplinary research in the fields of biomedical sciences, health sciences and neurosciences. The School's work ranges from understanding health and

disease at the molecular and cellular lev-els, through neural systems and human behaviour, to the restoration of health.

Israeli life sciences industry too has evinced deep interest in work-ing with Indian players, especially for commercialising Israeli R&D in this domain. The Israeli life sciences sector derives its strength from a ro-bust three-way partnership between hospitals, universities and industry. There are 12 technology transfer or-ganisations (TTOs) that play a key role in this. Model partnerships like this could greatly aid Indian life sciences MSMEs in their rise to pre-eminence.

Also the Israeli government grants tax exemption for foreign investments in the life sciences sector. These compa-nies also enjoy income tax exemptions for 10-20 years. In addition, there is a safety net for local investors in R&D, with a downside protection for losses in excess of 35% of investmentsÐpolicy aspects that will have their relevance in the Indian context too.

Key enablersLooking ahead, life sciences MSMEs

would greatly benefit from a sharper Government policy focus on the health sector as a whole. The policy should not be limited to developing medical infrastructure alone. It has to be built

up by the status of health of common man in India. Funding should be available for patient education, quality assurance and regulatory assistance.

There are challenges too in terms of a general understand-ing of what is patentable, to in-frastructure and policy issues. The biggest challenge apparent-ly is one of talent management. The severe dearth of right talent means that companies have to pragmatically decide how best to manage and leverage the tal-ent that they have, understand-

ing that the education system may only be able to plug the demand and supply gap in 10 years rather than two.

The market of having patented prod-ucts means that MSME life science play-ers can no longer rely on the current marketing capabilities of brand building but must include more scientific selling skills and build the capabilities for part-neringÐwith both privately held compa-nies and with the government, especially to provide the infrastructure.

The growing incidence of lifestyle diseases, large market of untapped customers, rising disposable incomes, greater penetration of health insur-ance and expanding medical infra-structure will continue to drive growth in the domestic Indian pharma market and fuel the R&D imperative.

Mr Jay Kizer, Global Managing Direc-tor of Korn/Ferry International's Life Sci-ences practice, rightly summed up the In-dian life sciences industry outlook when he said in a report entitled `Life Sciences in India: Reaching New Heights': ªI see some of the greatest opportunities for India moving towards this global mental-ity, growing from reverse engineering to innovation. I really think that the intellec-tual talent is here, the opportunities are here to be grabbed, and the workforce will spur this country to really become a world leader over time."

Indian Biotech industry is at the cusp of growth path in terms of transition from generics to innovative R&D. The proposed government funding with regard to PPP models will certainly boost the new league of entrepreneurs to come forward and contribute to the industry's growth.

Dr Rajeev Soni, Member, CII National Committee on Biotechnology & President and COO, PREMAS Biotech Pvt Ltd.

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FDI in LLPs to Change Small Sector Landscape

The Cabinet Committee on Economic Affairs (CCEA) approves the proposal to amend the Policy allowing Foreign Direct Investments

(FDI) in Limited Liability Partnerships (LLPs). The Limited Liability Partner-ship Act 2008 (LLP Act) was notified in April 2009. However, FDI in LLPs was not permitted under the FDI policy.

In September 2010, the Depart-ment of Industrial Policy and Pro-motion, Ministry of Commerce & Industry, Government of India, had issued a discussion paper on permit-ting FDI in LLPs, surrounding issues and invited comments thereon from various stakeholders. The CCEA on 11 May, 2011, has ap- proved the proposal to amend t h e policy on allowing FDI in LLPs in a cali-brated manner begin-ning with Open Sectors i.e. where monitoring is not required subject to the following conditions: (i) FDI in LLPs will be allowed under the Government Approval Route in those sectors/activities where 100 percent FDI is allowed under the Automatic Route and there are no FDI-linked per-formance related conditions. (ii) The LLPs with FDI will not be allowed to operate in agricultural/plantation activities, print media or real estate. (iii) The LLPs with FDI will not be eligible to make any down-stream investments.

Further, FDI in LLPs will be subject to the following conditions: (1)

Funding of LLPs: (a) An Indian compa-ny with FDI will be permitted to make downstream investment in LLPs, pro-vided both, the company and the LLPs, are in sectors where 100 percent FDI is permissible under the Automatic Route and there are no FDI-linked per-formance related conditions. (b) The Foreign Capital Participation in the capital structure of the LLPs will be by way of cash consideration received either by inward remittances through normal banking channels or by debit to NRE/FCNR bank account in India of the person con- cerned. (c) Foreign Institution- al Investors a n d F o r e i g n

Venture Capital Investors would not be permitted to invest in LLPs. (d) LLPs will not be permitted to avail External Commercial Borrowings. (2) Ownership and Management of LLPs: (a) With re-spect to `Designated Partners' in LLPs with FDI, the term `resident in India' would have the meaning as defined for "Person Resident in India" under Section 2(v)(i)(A) & (B) of the Foreign Exchange Management Act 1999. (b) In case the LLP has a Body Corporate as a Designated Partner then the Body Corporate should only be a company registered under the Companies Act and not any other body, such as LLP or a Trust. (3) An Indian Company with FDI, meeting the stipulated condi-

tions can be converted into LLP with Government / Foreign Investment

Promotion Board approval. (4) The Designated Partners will be responsible for FDI conditions

and compliances and liable for all penalties imposed

on the LLP for their contravention.

CII View FDI in LLPs

is a significant step. It should benefit the

Indian economy by augmenting FDI, as LLPs are relatively simple and tax efficient entity form as compared to company. However, the term, `FDI-linked performance related condi-tions', used in the official state-

ment needs clarification. It is expected that the policy would clarify the factors, aspects and need for ap-

proval requirement for FDI in LLPs even for activities/sectors fall-ing under the Automatic Route.

The Cabinet Committee on Economic Affairs approves proposal to amend FDIpolicy in Limited Liability Partnerships (LLPs)

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Rising Rates: Key Imponderable For MSMEs

Rising inflation has taken its toll on micro, small and medium enter-prises (MSMEs) in terms of rise in interest cost, higher cost of raw materials and limited access to

capital. Reports have indicated that higher in-terest rates would have negative fallout on the economic growth as a whole, with the impact being uneven across sectors. Hence industry has urged the government to restore the in-terest rate subvention scheme of minimum 2% administered by the Commerce Ministry that was set with an expiry date of March 31.

Even with the Reserve Bank of India (RBI) trying to control inflation by raising interest rates, it still hovers around 9% after rais-ing key rates a record 10 times in the last 15 months, the latest being in June. Following this, most Indian banks hiked lending rates by 25 basis points to 9.5% effective July 4. With the economy slowing down, the State Bank of India (SBI), for instance, has lowered its credit growth projections for the current financial year due to resistance from borrowers whose businesses were becoming unviable.

Underlining the importance of easy and af-fordable credit access to MSMEs, Mr Virbhad-ra Singh, Union Minister for MSMEs, said at a conference: "I consider it to be my prime duty to see that the recommendations of the Task Force are implemented expeditiously and adequate bank funds are made available to MSMEs at softer rates of interest and without hassles." To ensure timely and speedy imple-mentation of the report, a Steering Group has been constituted under the chairmanship of the Principal Secretary to the Prime Minister.

Reflecting on the issues linked with MSME access to bank credit, Mr HP Kumar, Chairman and Managing Director, National Small Indus-tries Corporation Ltd (NSIC), questioned why banks do not adopt easy to understand stan-dard formats in documents offering finance to MSMEs. SEBI's conditions are also difficult to comply with so a balance needs to be attained.

On the government's role in strengthen-ing the MSME sector, the MSME Act, 2006, was enacted and a policy package an-nounced to achieve a minimum 20% year-on-year growth in credit to the sector by Public Sector Banks (PSBs) with the objec-tive to double the flow of credit by 2009-10.

Budget 2008-09 announced the creation of funds for risk capital financing and en-hancing refinancing capability to MSMEs through SIDBI. On December 7, 2008, to stimulate the economy and facilitate credit flow to MSMEs, RBI announced a refinance facility of Rs 7,000 crore for SIDBI to sup-port incremental lending either directly to MSMEs or indirectly via banks, NBFC and SFCs. To boost collateral free lending under a Credit Guarantee Scheme for MSEs sev-eral packages were announced in 2009.

And yet a recent study by ratings agency Crisil shows with growth already hampered by limited borrowing power, MSMEs are like-ly to fare worse than large companies based on analyses by the report's author Mr Ram-raj Pai, Director of Crisil's SME ratings.

Crisil's study also noted that funding pat-terns of MSMEs reveal a scope for banks to increase their lending. Against the accept-able banking practice of financing 75% of an MSME's incremental working capital re-quirement, on an average only around 60% was funded between 2006-07 and 2008-09. Apparently, bank branches in urban ar-eas have greater scope than their counter-parts in the semi-urban and rural areas to increase funding support to MSMEs.

To mitigate these problems, Mr Ramesh Dharmaji of SIDBI says that MSMEs can get preferential capital, private equity, bank loans, and yet the funding issue is the biggest chal-lenge. Since funds are limited in terms of in-ternal accruals and promoter's contribution, the government has been providing subsidies for setting up of units and for investments in growth. SIDBI does provide funds without

third-party collateral and recommends that other banks should do the same.

Governments can help in promoting MSMEs by providing incentives for the pri-vate sector with various options available from official, private and bank programmes. Informal risk capital or `business angels' can operate efficiently through government tech-nical support to encourage development of venture capital and exit policies. Additionally, priority sector lending, government procure-ment, credit and performance ratings along with market support and technology trans-fers (green technology) through networking can help to revive MSMEs growth.

Given this scenario can today's `Missing Middle' of growth-oriented young entre-preneurs, as described by Ms Lakshmi Ven-kataraman Venkatesan, Founding Trustee and Executive Vice President, Bhartiya Yuva Shakti, be far behind? Not likely, since they approached her organisation with ideas and given a little financial help were able to build successful enterprises providing employment opportunities in short time spans.

And then there is the London Stock Exchange (LSE) Head Ð Business Devel-opment, Mr Ibukun Adebayo, South Asia, Middle East and Africa, who explained how 65.86 billion pounds were raised for SMEs, with 25 Indian companies currently listed on it. The LSE has no minimum size re-quirements with the additional attraction of $1-2 trillion available for funding.

Over time, industry has called for fi-nance to be provided to the MSMEs at the same rate of interest as the farm sector and with a similar amnesty scheme for waiving loans. They have also urged banks to deploy specialist bank staff with sepa-rate targets for financing MSMEs.

In times of monetary tightening, a broader portfolio of financing options will aid the MSMEs to steer their business effi-ciently with forward-looking initiatives.

The sector’s growth requirement mandates access to adequate bank funds at softer rates and a broader range of financing options to choose from

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Big Plans For Small Sector

Credit and Institutional Finance (Sub-Group I), Skill Development & Training (Sub-Group II), Technology & Innovation (Sub-Group III), Marketing & Procurement (including IC) (Sub-Group IV), Infrastructure (Sub-Group V), Khadi & Village Industries Sector (Sub-Group VI), Coir Sector (Sub-Group VII), Programmes for Special Areas & Groups (Sub-Group VIII), Emerging Technologies (Sub-Group IX), In-stitutional Structure (Sub-Group X) and Un-organized Sector (Sub-Group XI).

However, Mr Varma has mentioned that the terms of reference (ToR) of vari-ous sub-groups are only indicative, and the respective SGs will have the liberty to expand and modify the ToRs and composi-tion. The Working Group has to submit the report to Steering Committee by August 30, 20011.

cII invites the membership to send in views and suggestions on the working of the sub-groups. your views and sugges-tions in this regard may be forwarded to: gurpal.singh@cii.in

Working Group (WG) on Micro, Small & Medium Enterprises (MSMEs) Growth for 12th Five-year Plan (2012-17) constitutes sub-groups to catalyse MSME growth and development

Micro, Small and Medium Enterprises (MSMEs) play a significant role in the economic and social de-velopment of the country

owing to their contribution in generating employment, exports and GDP. The sector contributes 8% of the country's GDP, 45% of the manufactured output and 40% of its exports. The sector provides employment to about 6.2 crore people through 2.6 crore enterprises. However considering the im-portance of MSME sector in India's econom-ic and social development, the contribution of the sector to the entire manufacturing spectrum is negligible. It is, therefore, sug-gested that in 12th Five-year Plan, MSME sector should be given deeper thrust.

Mr Uday Kumar Varma, Secretary, Minis-try of MSME, has said recently that the de-cade would legitimately belong to MSMEs while mentioning the significant contri-bution of MSMEs in the overall growth of Indian economy, "The sector will not only

dominate the manufacturing sector but also play a leading role in emerging areas of biotechnology, nanotechnology, etc," he said in the meeting of Working Group (WG) on Micro, Small & Medium Enterprises (MSMEs) Growth for 12th Five-year Plan (2012-17), organised by CII National MSME Council under the aegis of the Ministry of MSME, Government of India.

He emphasised that recommendations of WG would be crucial in enabling the MSME sector to face new challenges. He mentioned that various recommendations of PM's Task Force should be the reference point of discussions in WG, and also in con-stituting different sub-groups (SGs).

In the meeting, Additional Development Commissioner and Economic Adviser, Ministry of MSME, made a presentation on recommendations of PM's Task Force, followed by a presentation on proposed composition and terms of reference (ToR) of various SGs.

The eleven sub-groups constituted are:

ToR: Working Group (WG) on Micro, Small & Medium Enterprises (MSMEs) Growth for 12th Five-year Plan (2012-17)

SUB-GROUP ToR

Credit and Institutional Finance

To take stock of recommendations of PM’s Task •Force on Credit and Institutional Finance.To assess adequate and timely availability of •credit at an affordable cost.To assess ability of MSMEs to access equity •capital and alternative sources of capital like Angel funds/Risk capital.To specify the milestone to be achieved within •12th Plan period.To suggest/ recommend programmes / schemes •those are to be terminated in 11th Plan or initi-ated or continued in 12th Plan period, together with broad budgetary implications, if any.

SUB-GROUP ToR

Skill Development & Training

To take stock of recommendations of PM’s Task Force on •Skill Development and Training.Suggesting ways to fine-tune existing Skill Development / •Entrepreneurship Development programmes.Giving focus on Training of Trainers and Assistance to Train-•ing Institutes to ensure a cascading effect.Thrust on Public Private Partnership and Industry Linkages.•To specify the milestone to be achieved within 12th Plan •period.To suggest / recommend programmes / schemes those are •to be terminated in 11th Plan or initiated or continued in 12th Plan period, together with broad budgetary implica-tions, if anyy.

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SUB-GROUP ToR

Technology & Innovation

To take stock of recommendations of PM’s •Task Force on Technology & Innovation.Promoting symbiotic relationship between •MSME Clusters and Technical Institutions.Focus on Research & Development and en-•hanced funds for Innovation.Assessment of various components of NMCP.•To specify the milestone to be achieved •within 12th Plan period.To suggest / recommend programmes / •schemes those are to be terminated in 11th Plan or initiated or continued in 12th Plan period, together with broad budgetary impli-cations, if any.

SUB-GROUP ToR

Infrastructure To take stock of recommendations of PM’s •Task Force on Infrastructure.Measures to strengthen and expand existing •IID Scheme of M/o MSME.Promoting PPP for Infrastructure Develop-•ment. Proactive role of State Governments in Infra-•structure Development.To specify the milestone to be achieved •within 12th Plan period.To suggest/ recommend programmes/ •schemes those are to be terminated in 11th Plan or initiated or continued in 12th Plan period, together with broad budgetary impli-cations, if any.

SUB-GROUP ToR

Emerging Technologies

Adoption of ICT Tools in MSME Clusters•Application of ICT Tools in production and •business processesPromotion of e-business•Enhancement of competitiveness of MSMEs•Focus on emerging areas like bio-technology, •nano-technology etc.To specify the milestone to be achieved •within 12th Plan period.To suggest / recommend programmes / •schemes those are to be terminated in 11th Plan or initiated or continued in 12th Plan period, together with broad budgetary impli-cations, if any.

SUB-GROUP ToRUnorganized Sector

To take stock of recommendations of PM’s •Task Force on Unorganized Sector.To take stock of recommendations of National •Commission for Enterprises in Unorganised Sector (NCEUS) and the way ahead.To specify the milestone to be achieved within •12th Plan period. To suggest / recommend programmes / schemes those are to be terminated in 11th Plan or initiated or continued in 12th Plan period, together with broad budgetary impli-cations, if any.

SUB-GROUP ToR

Marketing & Procurement

To take stock of recommendations of PM’s Task Force on •Marketing & Procurement.Measures to strengthen NSIC for Brand building and better •Marketing Intelligence.Developing a workable system for distribution of raw mate-•rial to MSMEs.Assessment of problems relating to Government procure-•ment.Ways to promote E-Marketing.•Access to international market•To specify the milestone to be achieved within 12th Plan •period.To suggest / recommend programmes / schemes those are •to be terminated in 11th Plan or initiated or continued in 12th Plan period, together with broad budgetary implica-tions, if any.

SUB-GROUP ToR

Khadi & Village Industries Sector

To deliberate on the basic aspects of the approach to XII •Plan (2012-2017) relating to development and growth of khadi and village industries as well as conceptual issues, keeping in view the ongoing process of economic liberal-ization and incorporate all elements and components of financial assistance that are expected to be met from Plan funds under various heads of khadi and village industry (VI) grants into a single comprehensive scheme or absolutely es-sential bare minimum number of schemes in each Grant.In line with (i) above, suggest a policy framework and cor-•responding measures (schemes/ programmes) for the khadi and village industries, consistent with social and economic objectives of XII Plan for the sector with particular refer-ence to employment generation, technology upgradation (for modernization, productivity improvement, increased competitiveness and efficiencies), ongoing reform initiatives and innovations like solar garments, exports, supportive credit policies and practices, marketing support and strate-gies, training need of entrepreneurs etc. Monitorable annual targets for each area may be suggested

SUB-GROUP ToR

Institutional Structure

To take stock of recommendations of PM’s Task Force on •Institutional Structure.Legal Framework, keeping in view : •(a)Environmental Issues (b)MSMED Act (c)Exit Policy (d)Labour IssuesOrganizational aspects : •(a) MSME Field Institutes (b) State Government Set Up, including DICs.To specify the milestone to be achieved within 12th Plan •period.To suggest / recommend programmes / schemes those are •to be terminated in 11th Plan or initiated or continued in 12th Plan period, together with broad budgetary implica-tions, if any.

SUB-GROUP ToR

Programmes for Special Areas & Groups

To take stock of recommendations of PM’s Task Force on •Special Areas & Groups.Focus on Backward Regions including North East Region.•Thrust on special categories like Women, SC, ST & Minorities•To specify the milestone to be achieved within 12th Plan •period.To suggest / recommend programmes / schemes those are •to be terminated in 11th Plan or initiated or continued in 12th Plan period, together with broad budgetary implica-tions, if any.

SUB-GROUP ToR

Coir Sector To deliberate on the basic aspects of the approach to XII Plan (2012-2017) relating to development and growth of coir industries •as well as conceptual issues, keeping in view the ongoing process of economic liberalization and incorporate all elements and com-ponents of financial assistance that are expected to be met from Plan funds under various heads of Plan (General) and Plan (S&T) grants into a single comprehensive scheme or absolutely essential bare minimum number of schemes in each Grant.In line with (i) above, suggest a policy framework and corresponding measures (schemes/ programmes) for the coir industries, •consistent with social and economic objectives of XII Plan for the sector with particular reference to employment generation, technology upgradation (for modernization, productivity improvement, increased competitiveness and efficiencies), ongoing reform initiatives and innovations, exports, supportive credit policies and practices, marketing support and strategies, training need of en-trepreneurs etc. Monitorable annual targets for each area may be suggested

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Index

CII BCI for SMEs Dips in Q2, Services Stay Ahead of Industry

The CII Business Confi-dence Index for SMEs for JulyÐSeptember, 2011, shows a s l ight dip. The overal l ( industr y plus

ser vices) Business Confidence In-dex (BCI) is est imated at 57.2 on a scale of 0-100 (from most un-favorable to the most favorable) . Based on more than 120 respons-es on 14 cr it ical business outlook indicators, this indicates that SMEs are expecting an unfavor-able change in business prospects as compared to previous quar ter (Apri l -June) when index stood at 62.1 points.

However, within SMEs, ser vices are expecting larger improvement than the industr ial sector. The BCI for ser vices was calculated a 61.3 compared to 53.1 for industr ial sector. The Index for Q2 2010 -11 was at 67.0 points.

Reflect ing continuity in decl ine of the business outlook , the BCI for July-September stood lower by considerable 4.9 points over the same for previous quar ter (Apri l -June). Whi le both industr ial and ser vices SMEs recorded a decl ine, ser vices SMEs did a better scoring on this front .

The BCI for ser vices SMEs de-creased by 3.7 points compared to a decl ine of 6.1 points in case of industr ial SMEs. Ser vices SMEs, hence, do not only show higher confidence than their counter-par ts but they also show faster improvement and higher resi l -ience and resistance.

Ser vices have done better than the industr ial sector in 13 out of the 14 mentioned variables. In-dustr ial sector did better than the ser vices sector in terms of the in-put costs which improved to (26.7 against 21.4) . Ser vices sector re-

corded higher BCI in cases of Gross sales (81.9 against 70.4), New or-ders/contracts (82.2 against 66.5) , Capacity expansion (72.2 against 65.5) , Expor ts (65.6 against 59.4) , Sel l ing prices (54.4 against 54.1) , Credit cost for capacity expansion (41.5 against 34.7) Employment (77.8 against 63.6) , Net prof it margin (62.0 against 51.6) , Credit avai labi l i ty for working capital (59.9 against 48.5) , Credit avai l -abi l i ty for capacity expansion (53.8 against 50.7) , Inventor y lev-el (55.3 against 47.3) and credit cost for capacity expansion (46.0 against 39.1)

the following major points can be drawn for the ongoing quarter:l Prospect of increase in Gross sales in Services sector look brighter than that in case of Industrial sector, attributable to better prospects of New orders / con-tracts, exports, selling prices and Credit availability for capacity expansion.l SMEs in industrial sector seem to be relatively less favorably placed in terms of credit availability and credit cost of working capital as compared to their counterparts in services sector.l Net profit margin in industrial SMEs is far lower than that in Services SMEs. This could be owing to greater adversity of rising costs in former than in later.

Business Confidence Index for SMEs

53.159.2 65.261.3

65.0 66.1

57.262.1 65.6

Apr - Jun 2011July - Sep 2011

Industrial BCI Services BCI Overrali

July - Sep 2010

BCI for SMEs, Industrial vs Services, July-Sep, 2011

Gro

ss S

ales

Empl

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New

Ord

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Co

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Expo

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it AV

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Industrial BCI Services BCI

70.4

81.9

63.6

77.8

66.5

82.2

66.3

79.4

65.5

72.2

59.4

65.6

54.1

54.4

26.9

26.4

47.3

55.3

51.6

62.0

48.5

59.9

50.7

53.8

34.7

41.5

39.1

46.0

Note: CE and WC represent capacity expansion and working capital, respectively.

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Brand Equity

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5 Marketing Tips For Small and Medium Businesses

No small business ever wants to remain small forever. While many show promise, often the differentiator for

the one that surpasses others is that they market themselves better. But marketing is a tricky business, es-pecially for small and medium busi-nesses (SMBs); you have to ensure innovative and optimal resources utilisation to build that desired level of brand equity. Small businesses perceptibly suffer the disadvantages of not having enough time, money and resources; on the bright side they are more agile, more flexible, they can be more adventurous and experimental. It's time small and medium businesses move beyond li-quidity and budgeting to refocus on the fundamentals of marketing. Here are five marketing tips that could be of immense help to SMBs:

Elevate Your BrandAll great companies offer great

products and services but differenti-ate themselves by the brand equity. SMBs should be no different:l Ask what is unique about you? l Listen and know your customer l Start building your brand before the customers buyl Integrate your customers into your so-cial media activities.

Foster An SEO (Search Engine Optimisa-tion) Culture

50% of people who search online share recommendations with friends and family and often write positively about their purchase online. SMBs need to:

l Make it easy for ªSpidersº to access and crawll Include keyword rich contentl Include quality inbound links from trustworthy, high traffic websites.

Use Your Ecommerce Platform for More Than Just Sales

While making sales from your web-site, it is important that SMBs capital-ise on their ecommerce platforms to:l Listen and engage with customers to better understand their wants/ needsl Develop and optimise robust promo-tions, online demand generation, mer-chandising and search programmes to drive traffic and conversions.

Knowing your customers is knowing your business. That's why I encourage my team to interact with customers at every opportunity. We need to deeply understand each customer's needs and priorities and this holds even more relevance for small businesses.

Embrace Social MediaFor small businesses, two of the

easiest engagement tools are blogs and Twitter. Blogs are a great sound-ing board, engaging key audiences in fast and honest conversations. Cut out business talk and make sure to get across your personality and opinion. Yes, you can attract negative com-ments but you can respond openly and transparently by answering ques-tions and updating a personal blog.

Micro-blogging allows companies large or small to send out regular chunks of news or insight easily. Even when expanding your small business and hiring new recruits Twitter and Facebook can be great ways of get-ting the word out there. We have cre-

ated guides for SMBs on how to do both via Dell's Facebook page.

Measure Your SuccessSet measureable objectives for

your company's marketing efforts and track your progress. To do these SMBs can:l Leverage free programmes such as Google analyticsl Measure website and blog trafficl Track the number of mentions about your company.

These are simple and straight forward practices used and revis-ited which will help small businesses and emerging enterprises showcase their brand promise and create an increased level of attractiveness to-wards their brand. Having said this, these are not the only tools avail-able while building your brand. It's often in the intricacy of implement-ing simple practices that companies get it wrong.

A careful look at history will show that all great companies were once small businesses. Be it Dell, Google or Facebook Ð they all started in ga-rages or dorm rooms and are today fueling the growth of the economy in their own proportions and changing the way the world works radically. Today's small businesses are do-ing the same, only the possibilities and means have increased multifold. Small businesses only need the right partners to guide them towards the directions that are best for them and in an effort to slide into that role, the entire ecosystem including technol-ogy companies like Dell are gearing up to help guide these entrepreneurs take their own path.

Ensure innovative and optimal resources utilisation to build the desired level of brand equity

Quality and merit would always stand above gender, in any business deci-sion. This was stated by Dr Shyam Agarwal, Additional Secretary and De-velopment Commissioner (DC-MSME), Ministry of Micro, Small and Medium Enterprises (MSMEs), while speak-ing at the Conference on Connecting Women Entrepreneurs: Sourcing from Women as Vendors in Global Value ChainsÐSupplier Diversity & Inclusiv-ity, organised by Confederation of Indian Industry (CII), in New Delhi. However, without compromising on merit and quality, there is a need for the integration of women in the global value chain, he said. Mr Rakesh Re-wari, Deputy Managing Director, Small Industries Development Bank of India (SIDBI), said that buying from women-owned businesses unlocks not only po-tential women entrepreneurs, but also

the potential of corporations and gov-ernments. Earlier, Mr Ramesh Datla, Chairman, CII National MSME Council, in his welcome remarks mentioned that the participation of women in supply chains introduces new competition to existing supply chain. Including women-owned businesses in the supply chain brings value, as women make majority

of consumer decisions and understand market requirements, he said. Mr Gur-pal Singh, Deputy Director General, CII, said that the objective of the conference is to inspire corporations and govern-ments to adopt inclusive procurement practices. Ms Elizabeth Vazquez, Presi-dent & CEO, WEConnect International, also spoke on the occasion.

‘Integration of women into supply chain is a need’(l-r): ms elizabeth vazquez, President & ceo , Wec onnect International, mr rakesh rewari, Deputy mD, SIDBI, Dr Shyam agarwal, additional Secretary & Dc-mSme, ministry of mSmes, government of India, mr ramesh Datla, chairman, cII national mSme council and mr gurpal Singh, DDg, cII, at the conference on connecting Women entrepreneurs in new Delhi.

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Policy Perspective

For A Large Procurement Pie

With MSMEs hard hit by economy measures adopted by import-ing countries due to the global economic

downturn, the government constituted a Prime Minister's Task Force in 2010 chaired by the Principal Secretary TKA Nair, to draft MSMEs Public Procure-ment Policy (PPP) making it mandatory for ministries and PSUs to procure 20 per cent of their annual purchase vol-ume from SMEs and mention it in their annual reports. Currently with only 4-5 per cent of total annual procurement from MSMEs, it will be a gigantic task to raise it to 20 per cent.

With ministries and PSUs raising multiple issues, the MSME Ministry is discussing the policy with them on concerns raised about the quality and quantity of procurement and effective

contract management. Nevertheless, the net result on the MSME policy may indeed turn out to be more `aspira-tional' than `mandatory' even though the ministry is pursuing the process to achieve this mammoth task.

Meanwhile, industry associations that consistently demanded a specific percentage earmarked in public pro-curement have welcomed the govern-ment's action in moving this policy for-ward. A CII paper notes that Australia, Brazil, China, EU, the UK and the US all have preferential procurement policies favoring small businesses. Prompt ac-tion undertaken by a delegation of the CII MSME Council headed by Chairman, Ramesh Datla, highlighted problems faced by MSMEs to the MSME Ministry that can be addressed through a pref-erential procurement policy, urging the government to expeditiously pass and

implement the draft policy that was circulated to the ministries as currently there are no reservations for MSMEs.

On the Public Procurement Policy, Mr Vir Bhadra Singh, Minister, MSME, stated that discussions are on with dif-ferent ministries to put the final PPP in place as soon as possible. Each minis-try's issues will be considered so that the Cabinet can take it up very soon. The idea of the policy was to ensure that government departments and PSUs would buy products of small en-terprises like handicrafts, handlooms, office stationery and other tangibles thereby giving the MSME sector a readymade market. It is estimated that if the government accepts the recom-mendation, MSMEs can have a poten-tial Rs 34,000 crore slice of the overall purchases, including those made by public sector companies.

Australia, Brazil, China, EU, the UK and the US all have preferential procurement policies favouring small businesses

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14

Catalyst

IPR: Fundamental To Business

patent documents. Moreover, a strong IP protection and

enforcement regime will facilitate greater FDI inflows into the sector. This will also provide an impetus for more private sector investment in R&D.

Typically, MSME seek IPR facilitation ser-vices such as IPR search, analysis, filing, and protection. IPR facilitation services are the backbone of the IPR system, which would facilitate the filing and protection of various IPRs in a faster and effective way for the benefit of the inventor.

It is perceived that the majority of the MSMEs are not conversant with the IPR norms, meaning that there is need for awareness building among this target group on this subject.

Awareness of IPR benefits to the MSMEs is seen to be on two counts: how IPRs can protect an MSME's creations, namely, IPRs; and how the enterprise can avoid violating IPRs of others. Furthermore, this increased awareness will encourage MSMEs to make better use of IPR system and make it an integral part of their busi-ness strategy.

The Ministry of Micro, Small and Me-dium Enterprises (MSMEs) has taken key steps to build IPR awareness in this sector, enabling MSMEs to understand IPR from the business perspective.

The office of the Development Com-missioner (MSME), Ministry of MSME,

IP facilitation centres are bringing a greater number of MSMEs into the IP fold

A greater number of micro, small and medium enterpris-es are foraying into emerging sectors where intellectual property rights (IPRs) are

highly protected. The traditional sectors too are fast adopting the IPR regime, man-dating all participating entities including MSMEs to up the ante on IP protection.

While most MSMEs would prefer to be IPR compliant, they seem to relatively unfamil-iar with the norms governing IPR, mainly because IP needs and concerns vary with the nature and scale of business operations and on their relationships with other enti-ties and enterprises. IPR also has a major bearing on the adoption of innovative new technologies, exploitation of indigenous research findings, and the like.

Government has stepped in to encour-age and facilitate the MSMEs to make spe-cific use of the IP system to improve their competitiveness in the domestic and global markets. The IP system provides the mech-anism to prevent those who do not have the right over protected new or original knowledge and technology, from using it without prior authorisation of its owner(s).

According to NIPO, the Indian IPR Foun-dation, IPRs can play a major role in the following areas for increasing the competi-tiveness of MSMEs: l Acquisition and exploitation of techno-logical innovation

l Preventing competitors from copying or closely imitating a company's productsl Obtaining access to new markets l Acquiring venture capital and enhanc-ing access to finance l Enhancing the market value of a company l Avoiding wasteful investment in R&D and Marketing l Creating a corporate identity.

The Foundation maintains that IP Strate-gy of an MSME should consider the policies on acquisition, exploitation, monitoring and enforcement of IP. IP audit is essential to capitalise on the potential benefits of MSME IP assets.

The IP strategy of MSMEs should take a holistic approach to the different types of IP assets. Creating an IP culture in an MSME is a first step, which begins by creating and implementing an action plan for protecting its business secrets that provide it an edge over its competitors. "It is important that the immense value of technical, business and legal information contained in a patent documents be appreciated since access to and proper use of patent information has great potential benefits for an SME," says NIPO on its website.

Identification of IP assets is a first step in this direction. Protection is the next, and management the last one, to effec-tively manage IP assets. MSMEs should also learn to use the IP system, especial-ly the technical information disclosed in

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Catalyst

Government of India, is providing as-sistance for building awareness of IPR Facilitation Centre for MSMEs. Devel-oped under the rubric of National Manu-facturing Competitiveness Programme (NMCP), the primary objective of is to guide MSMEs and other target benefi-ciaries regarding utilisation of IP tools and technologies for better manage-ment of their intellectual property re-lated needs. The awareness building programme enables the setting up of IP facilitation centres which in turn:l Provide computerised facilities for search-ing/ mapping, etc. with respect to patents, industrial designs, trade secrets, etc.l Provide basic information to file an ap-plication for grant of patent, GI, industrial design, trademarks, etc.l Facilitate successful transfer and com-mercialisation of technologies.l Facilitate collaboration with potential clients for exploring possibilities for tech-nology tie-ups and upscaling needs.l Provide information on best IPR practices.l Provide guidance in filing applications with national/ international agencies and execution of other documents concerning to licensing technology transfer agree-ments, etc.l Advise beneficiaries on legal remedies available on issues such as infringement, du-plication of patent/ industrial designs, etc.

These IP facilitation centres are seen to work closely with the National Patent Of-fices/ Regional Patent Offices and other Na-tional/ International Agencies administering implementation of IPR related matters.

Government is providing financial sup-port for setting up the facilitation cen-tres to cover expenses of hardware/soft-ware license fee, furniture and fixtures, networking, hiring services of external consultants and staff on contract basis, telecommunication, stationary, miscella-neous/institutional, overhead cost, etc.

The space for setting up of these cen-tres is to be provided by the implement-ing agencies/users body. It is expected that assets and operation of the offices will ultimately be taken by implementing agency for running them on self-sustain-able basis after an initial gestation period of three years. These centres shall create their own funding mechanism during this period with a view to become financially sustainable over a period of time.

To propagate IPR activities across the

country, IPR facilitation initiatives are being taken up at the state level. CII has played a major catalytic role in IP facilita-tion centres coming up in different states. As a case in point, CII with the support of Ministry of Micro, Small & Medium Enter-prise (MSME) has established an Intellec-tual Property Facilitation Centre (IPFC) at Indore, Madhya Pradesh. Speaking at the inauguration of the cell, Mr Sand-eep Naolekar, Vice Chairman, CII Madhya Pradesh State Council said that Intellec-tual Property Rights (IPRs) are vital for the competitive-ness of industry, in particular the MSME sector. Mr Naolekar said the IPFC at Indore will pri-marily cater to the intellectual property service requirement of MSMEs in Indore and rest of Madhya Pradesh.

The objective of the IPFC is to enable MSMEs in Madhya Pradesh to understand, iden-tify and use IP for competitive advantage. IPFC will provide services such as IP protec-tion, IP awareness building and training, counseling and advisory services.

The IPFC will draw national and international level ex-pertise through CII New Delhi and will be supported on day-to-day operations through CII's IP Facilitation Cell estab-lished at CII APTDC, Hydera-bad which was established in 2002 and has catered to more than 350 IPR service requirements across the country. CII has already established an IP Cell in TNTDPC Chennai which has delivered more than 100 IPR service requirements across the state.

In sync with these initiatives, a high level 25 member CII delegation led by Mr Ku-rush Grant, Chairman, CII Eastern Region, called on Mr Naveen Patnaik, Chief Minis-ter of Odisha, In November 2010, to brief the chief minister about creating District Development Plans in the districts of the state. CII prepared a comprehensive vision for Odisha called `Odisha@2022' which was then released. With a view to facilitate state-of-the art IP Support Infrastructure, the delegation proposed to set up an IP Fa-cilitation Cell in Bhubaneswar in collabora-tion with the state government.

Meantime, Government is making the effort to develop suitable linkages and cooperation with IPR offices in developed countries and other International agen-cies, such as, WIPO, EU, Japan Patent Of-fice (JPO), German Patent and Trademark Office, U.S. Patent and Trademark Office (USPTO), Korea Intellectual Property Office (KIPO), etc. The objective is to place Indian industry at par with world business with re-spect to IPRs. International cooperation in IPR will result in:

l Sharing IPR related information be-tween various countriesl Opening avenues for interaction in ar-eas leading to acquisition of knowledge available globally.l Building bridges to promote and strengthen bilateral ties through participa-tion in joint R&D programmes.l Capacity building in high-tech ar-eas through training and exchange pro-grammes.l Sharing of expertise in area of science & technology to facilitate implementation of IPR in the MSME sector in India.l Studying the best country practices on IPR and to explore the possibilities to adopt them for the MSMEs in India.

Indian MSME sector is well placed to perform efficiently in the IPR-regime and is indeed equipped to leverage the benefits that the regime provides.

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Insurance

Play Safe, Avoid Risk

The relevance of small and me-dium enterprises (SMEs) in any economy is very high as they play a key role in the industriali-sation of a developing country

like India with unique advantages like size, comparatively high labour-capital ratio, focus on relatively smaller markets, need for lower investments, role in ensuring a more equitable distribution of the national income, facilitation of effective mobilisa-tion of resources of capital and skills and motivation of the growth of industrial en-trepreneurship.

Numerous but significant initiatives are required for ensuring prompt supply of financial resources to SMEs. Two most im-portant one are better risk management and proper financial planning.

Emphasis on structured and planned risk management is always reinstated in this context. An important consideration in business risk management is to keep the business sufficiently sheltered from uncertainties. A small business owner in-volved in risk management should:l Identify risksl Seek ways to reduce or eliminate risksl Decide risks the business can assumel Determine risks to be transferred to an insurance companyl Get the best insurance coverage.

The various innovative insurance op-tions provided by new age insurers could help mitigate the risks. Be it insurance against theft or natural calamity or key-man insurance, ensuring availability of business continuity should be the pre-req-uisite of successful operation. Insurance helps business to transfer risks that may hamper business continuity or short-term profitability to a third party at pre-identi-fied costs that can be offset by the avail-able tax benefits.

Common losses which can be protected by insurance are:

Property: Losses with respect to prop-

erty can be in the form of theft, physical damage (human or non-human induced) and loss of use. Different policies covering different risks are available in the market and for MSME a comprehensive insurance policy should be preferred.

Legal Liability: Either general or prod-uct related, a general liability policy cov-ers employee accidents and injuries that may occur on or off company's premises. Policies cover medical expenses, attorney fees and court fees associated with the li-ability. Product liability policy covers prob-lems arising due to faulty merchandise or inadequate services.

Worker's Compensation: Provides medical and disability coverage for job related injuries to employees, on or off company property.

Company Vehicle: Similar to personal vehicles, the policy covers losses suffered on the asset as well as to the third party.

Key Personnel: Covers losses on account of permanent disability or death of the key personnel of the company including owners, partners, managers etc. Helps in securing management of the business, credit worthi-ness and continued operations.

Life & Health: Employee benefit plans which help by covering employees and their families against illness and death.

Business Interruption: Indirect policy of business interruption plan takes care of losses generated out of temporarily discon-tinued/interrupted business operations.

Business Opportunity: An extension of business interruption plan which provides basic property coverage for computers and other office equipment, plus liability pro-tection for work-related accidents. Ecommerce: Policies that protect busi-

nesses from losses if their internet pres-ence and transactions are disrupted by hackers or other problems.

For business planning and execution, the financing requirements (amount, tenor, mode of repayment, end use and means to repay the same) should be well communicated to the financial institution/advisors. This would help the financial in-stitution to provide the best suited option for the business.

Making oneself aware of the require-ments of the financial institution would also help in smoothing the process of availing finances. Typically, financial insti-tutions look at the strengths and composi-tion of the management of the company, legality of the business, positive outlook of the industry in which the business oper-ates, acceptable financial conditions (in-cluding present and projected position of revenues and capital structure), collateral value (if applicable), quality and strengths of business plans and clean track records of repayments for earlier borrowings by the company or promoter group.

A financier should provide finance for the business and also educate the business owners to help them grow. A financier-borrower relationship starts with a small financial assistance and gradually grows as mutual trust and belief is established.

At Religare we believe our success lies in the success of our customers. We un-derstand that as businesses grow so do their needs and have tailormade our of-ferings and processes to facilitate cus-tomer growth. Whether it is for new plant and machinery, equipment or inventory purchase, working capital or business ex-pansion, with our sectoral expertise and simplified processed, we provide the fi-nance to businesses and help them gain uninterrupted growth.

credits: management team of religare Finvest limited -- lending arm of religare enterprises limited

SMEs are well advised to explore the whole gamut of insurance options to mitigate risks of all kinds

ms Karen g mills, administrator, uS Small Business administration (on the left) appreciating the cII memento, in the presence of mr uday Kumar varma, Secretary, ministry of mSmes, mr ramesh Datla, chairman, cII national mSme council, mr gurpal Singh, DDg, cII, and the other members of the cII Sme mission delegation, in Washington Dc.

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International

India-US SME Cooperation: A New High

US President Barack Obama's state visit to India in November 2010 ac-celerated the bilateral trade and in-vestment cooperation, creating in its wake new opportunities for bi-

lateral SME cooperation. The US Administration was categorical in stating that the bilateral SME cooperation had acquired key importance in the context of employment generation in the US. At the same time, Indian government and industry viewed the American SME cooperation focus as an opportunity for Indian micro, small and medi-um enterprises (MSME) to access new technolo-gies and move up the global value chain.

The India-US SME cooperation has since gained significant momentum. Ministry for Commerce and Industry, Government of India and the US trade representatives have formed the Trade Policy Forum (TPF) that aims to inte-grate India and US SMEs in global supply chain to create new opportunities for small companies in both countries. This initiative will also help the larger firms in both countries in establishing a dynamic relationship between India and US through increased public awareness, enhanced public and private collaboration, and having a great focus on the benefits of collaboration of large and small companies.

The TPF is co-chaired by the minister of commerce and industry, Government of In-dia and United States Trade Representative. The issues related to TPF will be discussed under five focus groups such as agriculture, tariff and non-tariff barriers, services, inno-vation & creativity and investment.

Hence like IT industry, the Indian MSME sec-tor is hoping for vital linkages with the US. Com-menting on this development, Mr Anand Shar-ma, Commerce & Industry Minister, Government of India, said, "The two countries have launched an initiative of integrating US and Indian SMEs in the global supply chain, which would create new opportunities for U.S. and Indian SMEs."

The potential cooperation areas are in-

formation & communication technologies, biotechnology & nanotechnology, defence & homeland security, healthcare, processed food, education/skill training, clean tech-nologies/renewable energy, etc.

Underscoring the importance of India-US SME cooperation, Mr Virbhadra Singh, Minister of Micro, Small and Medium Enterprises, Govern-ment of India, said, "The SME initiative presents a `win-win' opportunity for both India and the US and enriches the global value chain to mutual advantage, encouraging companies to explore the competencies with the counterparts. Like in India, software and information technology (IT) services, communication, agri business, precision engineering, food processing, entertainment, en-ergy generation, social services including educa-tion and health are the priority sectors which can be tapped by US SMEs."

In furthering this cooperation, a CII SME delegation visited the US during 20-24 June 2011. The mission, coordinated and support-

ed by the Embassy of India in US, CII and the Ministry of MSME, was led by Mr Uday Kumar Varma, Secretary, Ministry of Micro, Small and Medium Enterprises (MSMEs) and Mr Ramesh Datla, Chairman, CII National MSME Council. The delegation comprised 12 members with interest in information technology, defence, homeland security and clean technology.

The delegation met with Mr Francisco Sanchez, Under Secretary, US Department of Commerce and Ms Karen G Mills, Administra-tor, US Small Business Administration, dur-ing the visit to Washington DC, and apprised them about the need to create an institutional mechanism for the small businesses between US and India. Such an institutional mechanism will engage the CEOs from midsize companies in each country to work towards facilitating a policy enabling-environment for SMEs, high-lighting the concerns of SMEs in US and India, leveraging technology and sourcing, finding opportunities for bilateral commercial en-

The two countries have launched an initiative for integrating Indian and American SMEs in the global supply chain which will culminate in myriad global collaborations

members of the cII Sme delegation with mr Francisco Sanchez, under Secretary, uS Department of commerce, (sitting on the left) and mr uday Kumar varma, Secretary, ministry of mSmes (sitting on the right)

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gagement as well as strengthening the global supply chain management systems.

Earlier at a meeting with the CII SME delega-tion, the Indian Ambassador to US, Ms Meera Shankar, highlighted the need for the SMEs to create projects in the US markets to effectively leverage the vast financial resources available there. She said that with the US economy look-ing promising after the 2008 economic crisis, the time was ripe for the Indian SMEs looking to acquire (or otherwise build relationships abroad) foreign firms to leverage their market network and business relationships.

Another reason for acquisition might be for getting access to IPR and technology (includ-ing factory floor processes and quality control). Strategic acquisition of the foreign firms human resources and skills, or embedded privileged ac-cess to procurement (government or with spe-cific private firms) and natural resources may be the other objectives for acquisition, she added.

With Indian government giving serious thought to government facilitating of acquiring firms abroad, it is the Indian medium sized in-dustries that would stand to gain the most from

such facilitation. A comprehensive programme to identify and help acquire US SMEs by Indian mid-sized firms would be a win-win for both par-ties, and will be possible once an institutional mechanism is set up between the SMEs in the two countries, he noted. The National Manufac-turing Policy envisages the setting up of a special fund to help Indian firms acquire firms abroad with specifically these objectives, he added.

Mr Ramesh Datla, Chairman, CII National MSME Council mentioned that the US SME have long expertise in the US market, and Indian SMEs are already looking to invest/acquire them as they develop supply chains linking India and the US. Such JVs and acquisitions are helping In-dian firms to build on their US partner/acquisi-tions business networks and get a better idea of product development for the US market.

Further to this, Mr Gurpal Singh, Deputy Di-rector General, CII, said that involving SMEs from both sides will help in achieving bilateral trade targets. CII is strongly in favour of constituting an SMEs CEO Forum to address the specific needs and interest of small- and mid-sized companies.

The CII delegation also met with Mr Aaron

Brickman, Director, Invest America, Ms Holly Vineyard, Deputy Assistant Secretary, US De-partment of Commerce, Mr Joe Bhatia, Presi-dent & CEO, ANSI, Mr Mark Pearl, President & CEO, Homeland Security and Defense Business Council, and visited the US Green Building Coun-cil and the International Finance Corporation.

The new developments in this bilateral space follow from the key initiatives in year 2010, in-cluding the Growth in Emerging Metropolitan Sector (GEMS) conference. Speaking at the GEMS conference in Pune, Mr Varma had suggested creating an additional focus group for the SME sector under US-India Trade Policy Forum for SMEs with representatives from both sides.

Mr Varma said that Defence Production Pol-icy and the proposed Procurement policy were expected to play a catalytic role for opening-up a plethora of opportunities for the SMEs, in addition to the IT enablement of SME, that as-sumed priority for the Ministry of MSME.

Likewise, the US Department of Com-merce's first Aerospace Supplier Development Trade Mission to India maintained that many traditional first tier supplier responsibilities are being pushed down the supply chain to second and third tier suppliers. As the larger firms move into aerospace system integration, low-er-tier firms have little choice but to globalise themselves. In many cases, once established in India, first tier firms require their supply chain partners to begin dealing directly with Indian members of the supply chain. While extremely challenging for SME suppliers, these new rela-tionships bring an added benefit; the opportu-nity for additional sales with other aerospace companies doing business in India.

The goal is to integrate more of these types of American companies into India's global value chain, and vice versa, leveraging the US-India commercial link, already sur-passing $40 billion in two-way trade.

The India-US SME cooperation is aligned with the growing Indian investments in the US. India is the second largest investor in the US after UAE and in the last few years, Indian companies have invested over $21 billion in the US economy.

In December 2010, Indian exports to US were $17,629.72 million and growth was 27.9%. During the same period Indian imports was $13,106.98 million with growth of -1.80%. Gems and jew-ellery are major exports from India to US. The major imports from US are transport equip-ment including aircraft, spacecraft and other parts, machinery, fertilizers, pearls, electronic goods, precious and semi-precious stones, pro-fessional instruments, chemical materials and products, and plastic materials.

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members of the cII delegation interacting with ms meera Shankar, ambassador of India in united States (seated on the head table) and mr uday Kumar varma, Secretary, ministry of mSme, in Washington Dc, uS (seated on the head table)

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Upcoming Events

contact: Mr N Deep; Email ID: n.deep@cii.in; Ph: 9845353135

CII Business Excellence/CO Regiontitle Date venueWorkshop on assessment for Business excellence for Small and medium Businesses 20-21 July nasikconsultancy assignment on Business excellence - Wendt India limited tbd hosurBusiness excellence Implementation at unique Punch Systems tbd BangaloreBusiness excellence Implementation at Primex Plastics tbd Bangalore

For further details please contact Gurpal Singh, Confederation of Indian Industry (CII), ‘The Mantosh Sondhi Centre’, 23, Institutional Area, Lodhi Road, New Delhi 110 003 Tel. : +91 (011) 24629994 - 97 * Fax : +91 (011) 24626149 * e-Mail : gurpal.singh@cii.in

title/theme Date venuehealth care Study mission 21-22 July 2011 new DelhicII Bee Workshop on enhancing competitiveness through energy efficiency 22 July 2011 agra

cII Bee Workshop on energy efficiency 22 July 2011 India habitat center, new DelhiInfra conclave rajasthan 2011 22 July 2011 hotel Sheraton rajputana, Palace road, JaipurcII Ð Bee Workshop 18 or 22 July 2011 amritsarcII Seminar on Doing Business with china for business development of mSmes members

23 July 2011 cII nr hq, chandigarh

mSme conclave 2011 27 July 2011 gurgaon

conference on logistic Infrastructure 19 august 2011 radisson hotel, noidacontact: Ms Navdeep Kaur; Email: navdeep.kaur@cii.in; Ph: 0172-5080124

CII Northern Region

title/theme Date venuetwo Day manufacturing mission to nashik 14 - 15 July 2011 nashikthird vidarbha mSme meet 26 July,2011 nagpurBuyer Ð Seller meet 26 July,2011 nagpurWorkshop on m & a,Jvs & Private equity 27 July 2011 IndoremSme Buyers Sellers meet 4 august,2011 Indore

Second meeting of the Wr mSme Subcommittee 5 august 2011 Indore

training Programme on Inventory and Warehouse management 10 august,2011 gwalior

training Programme on Positive attitude 24 august 2011 Bhopal

Buyer Ð Seller meet last Week august,2011 nashikcontact: Mr C M Tungare; Email: c.tungare@cii.in; Ph: 9867510622

CII Western Region

MSME focused Projects/Events/Meetings/Interactions/Training Programmes (July-August 2011-2012)

© CONFEDERATION OF INDIAN INDUSTRY

contact: Mr Surendranath; Email: surendra.mondreti@gmail.com; Ph: 040 27765964

CII Southern Regiontitle/theme Date citymission on manufacturing excellence to amara raja group of companies 7 & 8 July tirupati

contact: Mr Rahul Singh; Email: rahul.singh@cii.in; Ph: 09835151666

CII Eastern Regiontitle/theme Date cityInteraction Session with Divisional railway manager July 2011 Jamshedpur

contact: Ms Suparna Nanda; Email: suparna.nanda@cii.in; Ph: 09937154773

contact: Mr Prateek Pandey; Email: prateek.pandey@cii.in: Ph: 09993012040

Interaction Session on "Delayed Payment to mSme" 5 July 2011 hotel Swosti , Bhubaneswar

mSme Forum 26 august 2011 raipur