Evolving Need to use Technology Evolving Need to use Technology

Infusion in the MSME Infusion in the MSME

Sector & the Sector & the

BarriersBarriers

Presented by:Shri P. Udayakumar

Director (Planning & Marketing)National Small Industries Corporation

MSMEs account for about 45% of India’s manufacturing output.

MSMEs account for 95% of the industrial units. MSMEs account for about 40% of India’s total exports. The sector is projected to employ about 73 mn people in

more than 31 mn units spread across the country. MSMEs manufacture more than 6,000 products ranging from

traditional to high tech items. 20 % Procurement Policy from MSEs by PSUs and Govt Defence Offset Policy with 1.5 times multiplier and

indigenisation FDI in Retail with optional sourcing from MSMES

MANUFACTURING SECTOR

SERVICE SECTOR

Micro Enterprises Small Enterprises Medium Enterprises

Does not exceed Rs. 25 Lac (USD 40500)

More than Rs. 25 Lac (USD 40500) but does not exceed Rs. 5 Crore (USD 810000)

More than Rs. 5 Crore (USD 810000) but does not exceed Rs. 10 crore (USD 1620000)

Micro Enterprises Small Enterprises Medium Enterprises

Does not exceed Rs. 10 Lac (USD 16200)

More than Rs. 10 Lac (USD 16200) but does not exceed Rs. 2 Crore (USD 324000)

More than Rs. 2 Crore (USD 324000) but does not exceed Rs. 5 Crore (USD 810000)

Enhancing the credit limit to MSMEs

Issue of collateral securities

Higher interest rates as compared to other countries

Delayed payment issues despite an Act

Longer registration process (35 days in India) whereas some

countries do it in 2 days

Multiple registration for MSMEs (VAT, CST, Excise, PAN,

Service Tax, IEC etc.)

Outdated Acts like- Contract Act, Factories Act, Central

Labour Act, EPF, ESI, Land Acquisition Act, Industrial Disputes

Act, Insolvency Act

Very poor ranking in the Ease of Business index (142)

Multiple legal entities without scale of economy to seek

exemptions and regulatory compliances

Changing production systems

Increase in FDI in Defence/ Insurance/ Railways/ Infrastructure

Youth population 300 Million whereas job availability only 100

Million

Only three out of ten employable due to lack of skills

Need for time bound tax exemption/relaxation for start-ups

Lower investment limit for MSMEs creating hurdles in

technology up gradation and capacity build up

Increasing trend in online marketing and absence of

regulatory framework

Multiple legal entities without scale of economy to seek

exemptions and regulatory compliances

Changing production systems

Increase in FDI in Defence/ Insurance/ Railways/ Infrastructure

Youth population 300 Million whereas job availability only 100

Million

Only three out of ten employable due to lack of skills

Need for time bound tax exemption/relaxation for start-ups

Lower investment limit for MSMEs creating hurdles in

technology up gradation and capacity build up

Increasing trend in online marketing and absence of

regulatory framework

Out of total MSMEs in the country, 95% are Micro and only 5% are Small & Medium category enterprises.

Technology adoption in case of Micro enterprises is very poor & not feasible due to investment limit and an area of concern.

No technology banks and poor IPR/Patent Registration habit Multiple agencies like CSIR,DRDO,ICMR working in

compartments

Though India has a vast pool of technical talent with a well developed intellectual infrastructure, the country still scores low in the matter of developing and adapting new technologies in the MSME sector.

Lower investment ceilings for the MSMEs and Tax concessions to remain as MSMEs

Futuristic sectors like IT, ICT, Defence, Renewable energy etc. are capital intensive sectors requiring huge investments.

Need for change in the criteria for classification of MSMEs- a separate category may be introduced to bring in technology oriented units.

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Technology is the foremost factor for enhancing the global

competitiveness of the Indian MSME sector

Govt. planning to invest in sustainable development.

Vast market opportunity to the tune of $1.6 trillion

waiting to be seized in Clean Technology in the developing

countries.

Large scale investments in Defence ,Infrastructure ,Inland

Security with Off set provisions and multiplier effect.

Demographic dividend- key to success for India possible

only thro Technology adoption.

The 'Make in India' campaign is aimed at making India a manufacturing hub, and the government is pulling out all the stops for ensuring a smooth sailing for investors, by setting up a dedicated cell to answer queries of business entities within 72 hours. It will also closely monitor all regulatory processes to make them simple and reduce the burden of compliance. Here ,the technology is the Key.

Category

Manufacture (Plant & Machinery)

Services (Equipment)

Micro Less than or equal to Rs. 2.5 million

Less than or equal to Rs. 1 million

Small Greater than Rs. 2.5 million but not more than Rs. 50 million

Greater than Rs. 1 million but not more than Rs. 20 million

Medium

Greater than Rs. 50 million but not more than Rs. 100 million

Greater than Rs. 20 million but not more than Rs. 50 million

Multiplier of 1.50 : Avenues for Discharge : IOP

►OEM’s are now being incentivized to pick up SME’s. In turn the OEM’s will have to work harder to ensure the SME’s will be able to meet the global aerospace quality standards.►SME’s would be provided a better chance of

winning orders in comparison to the large-established players.

Total Internal Security spending in the Indian market under all the 8 threat domains is expected to amount to a total of US $9.7 bn by the year 2016

Over the past five years, private security business in the country has grown at a CAGR of 25% to reach an estimated value of USD2 bn

81.4% of all Internal Security spending by the year 2016 will be focussed on mass transport security, airport security and maritime security

EY has limited or no presence in these areas

Total Internal Security spending in the Indian market under all the 8 threat domains is expected to amount to a total of US $9.7 bn by the year 2016

Over the past five years, private security business in the country has grown at a CAGR of 25% to reach an estimated value of USD2 bn

81.4% of all Internal Security spending by the year 2016 will be focussed on mass transport security, airport security and maritime security

EY has limited or no presence in these areas

India’s homeland security agencies received a substantial 25% y-o-y increase in their budgetspending for 2009–10 vs only Approx 3% increase in the Defence Budget.

In 2009–10, Paramilitary forces were allocated USD 4.3 Billion as against USD3.4 billion in 2008–09.

Additional amount of USD 100 Million is being proposed for modernization of police forces in the current year.

Additional amount of USD 500 Million is being provided for construction of fences, roads etc. on the international borders.

Delhi Police was allocated USD 1.5 Billion for Commonwealth Games Delhi 2010 security requirements.

India’s homeland security agencies received a substantial 25% y-o-y increase in their budgetspending for 2009–10 vs only Approx 3% increase in the Defence Budget.

In 2009–10, Paramilitary forces were allocated USD 4.3 Billion as against USD3.4 billion in 2008–09.

Additional amount of USD 100 Million is being proposed for modernization of police forces in the current year.

Additional amount of USD 500 Million is being provided for construction of fences, roads etc. on the international borders.

Delhi Police was allocated USD 1.5 Billion for Commonwealth Games Delhi 2010 security requirements.

Internal and External Threats

Terrorism

Infiltration

Naxalsim / Insurgency

Money Laundering

Human Trafficking

Cyber

Attacks / Crime

Rest

rain

ts

Budgetary Constraint

s

Manpower intensive security measures

Prosecution

Increased threatperception across all threat domains

Liberalisation and opening up of

Market to Private Players

Growth of Indian Economy

Dri

vers

The CISF has close to 100 pending requests for security cover. It has recently received approval from the MHA to raise additional manpower to the tune of 400,000.

India has emerged as the largest and most

preferred Outsourcing location. NASSCOM had carried out an extensive survey on the IT Security requirements for Outsourcing facilities. However only 5% of the centers in India have actually implemented the same.

Nearly 10% of the Private Firms evaluate the IT Security of their 3rd Party Vendors.

INFOSYS Technologies became the first private company to receive CISF cover in November 2009, for its Bangalore facility alone it is spending US$0.6 million/annum.

The Reliance group has begun operations of India’s first Privately run Metro rail service- Delhi Airport Express line.

The Security market is growing at the rate of 23% CAGR and could potentially hit 40% by 2016. In 2009, the spending reached a level

of US$ 1B

Consumers

ISRO / BRAHMOS IN THE PROCESS OF DEVELOPING TECHNOLOGIES/EQUIPMENTS FOR SOLAR MISSIONS TECHNOLOGY AND EQUIPMENTS DEVELOPMENT ARE UNDER PROTO TYPE STAGE. PLANNED TO EXPLORE AND EXTRACT MINERALS AND RESOURCES FROM OTHER PLANETS BY 2030-50VENDOR DEVELOPMENT /ANCILLARIES TO BE DEVELOPED THRO’ SMEsEXTRACTION OF MENERALS AND SEA BED METHANE USING ADVANCED TECHNOLOGIES WHICH NEED VENDORS.R&D ACTIVITIES ,TECHNOLOGY TRANSFERS /BANKS TO BE CREATED

India has been consistently ranked among the top five countries (globally) in terms of its market potential for renewable energy.

The Renewable Energy (RE) industry is expected to grow at a high rate in the Twelfth Five Year Plan period (2012 – 2017).

With power generation from renewable sources on the rise in India, share of renewable energy in country’s total energy mix increased from 7.8% in financial year 2008 to 12.1% in financial year 2012.

India had around 26 GW of installed renewable energy capacity as on August 31, 2012 and plans to more than triple its renewable energy capacity in the next 10 years, driven mainly by wind and solar energy.

Allocation of Rs. 100 Crore to set up the Technology Development Fund to Public and private companies include SMEs to support and develop the Defence sector and cutting-edge technologies is going to help the core MSMEs in accessing global technologies and make them compete at a global scale.Thrust on Manufacturing and improving the Ease of Doing Business index to 50 from 142

Rs. 10000 Crore venture capital fund to be set up for MSME sector.

Definition of MSME to be revised for high capital ceiling.Increase of FDI to 49 % in Defence and FDI in Railways Simplification of FDI investments in Infra Projects

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