Mantra for MSMEs

By

Sridhar VGeneral Manager, SIDBI, Guwahati

Indian MSMEIndian MSMEss - Strengths - Strengths• Employ 41 Million People• Number – 26 Million MSMEs• Give 45% of Industrial Production • Account for 40%+ of Exports • Contribute 8% to GDP• Exports: Rs. 1.5 lakh cr. ($ 38 Bn)• Production: Rs. 5.9 lakh cr. ($ 140 Bn)

MSMEs in India – An Overview

A paradigm shift in the concept from SSIs to A paradigm shift in the concept from SSIs to MSMEsMSMEs

GoI passed the Micro, Small & Medium GoI passed the Micro, Small & Medium Enterprises Development (MSMED) Act in 2006.Enterprises Development (MSMED) Act in 2006.

The Act has given new impetus to development The Act has given new impetus to development of MSMEs in India.of MSMEs in India.

Micro and small enterprises fall under the Micro and small enterprises fall under the priority sector for institutional finance.priority sector for institutional finance.

MSMEs in India constitute micro, small and MSMEs in India constitute micro, small and medium enterprises defined in terms of medium enterprises defined in terms of investments in plant & machinery.investments in plant & machinery.

MSMEs - Definition

Particulars Investment in P&M

Micro Enterprises

Upto Rs 25 Lakh

Small Enterprises

Above Rs.25 Lakh upto 500 Lakh

Medium Enterprises

Above Rs.500 lakh and upto Rs.1000 lakh

Services Sector under MSMEs Services sector brought under the ambit of Services sector brought under the ambit of

MSMEs as per MSMED Act.MSMEs as per MSMED Act. Micro enterprises – investment in equipments Micro enterprises – investment in equipments

upto Rs.10 lakh.upto Rs.10 lakh. Small enterprises – investment in equipments Small enterprises – investment in equipments

above Rs.10 lakh and upto Rs.200 lakh.above Rs.10 lakh and upto Rs.200 lakh. Medium enterprises – investment in Medium enterprises – investment in

equipments above Rs.200 lakh and upto equipments above Rs.200 lakh and upto Rs.500 lakh.Rs.500 lakh.

SIDBI• Set up by an Act of Parliament • Apex financial institution for

– Promotion– Financing– Development of industries in MSME &– Coordinating the functions of other

institutions engaged similar activities

• SIDBI Act amended in 2000 and present shareholding is held by institutions / Banks

SIDBI – Empowering the MSMEsMission

To empower the micro, small and medium enterprises with a view to contributing to the process of economic growth, employment generation and balanced regional development.

VisionTo emerge as a single window for meeting the financial and developmental needs of the MSME sector to make it strong, vibrant and globally competitive, to position SIDBI Brand as preferred and customer friendly institution and for enhancement of shareholder wealth and highest corporate values through modern technology platform .

Business DomainThe entire spectrum of micro, small and medium enterprises (including service sector) constitutes the business domain of SIDBI.

Traditional Credit Products

Fund Based Non Fund Based

Term Loan WC limits INLC Guarantees

SIDBI/ BANK

WC finance LCs Guarantees

Credit Linked Capital Subsidy for Tech Upgradation of MSEs

To Facilitate Technology Up gradation of Micro and Small Scale Industries.

Specified Products /Sub-Sectors. Provides 15% Capital subsidy for Induction of Well

Established & Improved Technologies. Industry graduating from Small Scale to Medium

Scale on account of sanction of additional loan under CLCSS.

Labour intensive and or Export oriented New Units in New Sectors.

Eligibility Criteria

Capital Subsidy shall be available ONLY for projects where Term Loans have been sanctioned by eligible PLI’s on or after April 01, 2007. - [Scheduled Commercial Banks/ Co-operative Banks/RRB’s/NSIC {including Hire Purchase}/SFCs/NEDFi.]

Sole Proprietorship Partnerships Co-operative Societies Private & Public ltd.Companies (SSI’S) Priority shall be given to Women entrepreneurs

Types of Units to be CoveredTypes of Units to be Covered

Registered Existing MSE units which Upgrade with Registered Existing MSE units which Upgrade with State of the Art TechnologyState of the Art Technology

With or Without ExpansionWith or Without Expansion

New MSE Units set up with the appropriate New MSE Units set up with the appropriate eligible technology duly approved by GTAB eligible technology duly approved by GTAB (Governing & Technology Approval Board) & (Governing & Technology Approval Board) & Registered with Directorate of IndustriesRegistered with Directorate of Industries

CLCSS – Scope of the SchemeCLCSS – Scope of the Scheme

The scheme would cover the following Products/sub-sectors in the MSE : -

Bio Tech Industries Common Effluent Treatment Plant Corrugated Boxes Drugs &Pharmaceuticals Dyes & Intermediateries Medicinal & Aromatics Industries Plastic moulded & extruded products and parts

and components

CLCSS – Scope of the SchemeCLCSS – Scope of the Scheme

Rubber Processing including Cycle/Rickshaw Tyres

Food Processing (including Ice Cream Manufacturing)

Poultry Hatchery & Cattle Feed Industry Dimensional Stone Industry (excluding

quarrying and mining) Glass and Ceramic Items including Tiles; Leather and Leather Products including

Footwear and Garments Electronic equipment viz. test & measuring

Industrial process control, Analytical ….

CLCSS – Scope of the SchemeCLCSS – Scope of the Scheme

….Medical Electronic, Consumer & Communication equipments etc.

Fans & Motors Industry General Light Service (GLS) Information Technology (Hardware) Mineral Filled Sheathed Heating Element Transformer/electrical

Stampings/Laminations/Coils/Chokes including solenoid coils

Wires & Cable Industry

CLCSS – Scope of the SchemeCLCSS – Scope of the Scheme

Auto Parts and Components Bicycle Parts Combustion Devices/appliances Forging & Hand Tools Foundries – Steel and Cast Iron General Engineering Works Gold Plating and Jewellery Locks Steel Furniture Toys

CLCSS – Scope of the SchemeCLCSS – Scope of the Scheme

Non-Ferrous Foundry Sports Goods Cosmetics Readymade Garments Wooden Furniture Mineral Water Bottle Paints, Varnishes, Alkyds and Alkyd products Agricultural Implements Beneficiation of Graphite & Phosphate

CLCSS – Scope of the SchemeCLCSS – Scope of the Scheme

Khadi & Village Industries Coir & Coir Products Steel Re-rolling/Pencil Ingot making industries Zinc Sulphate Welding Electrodes Sewing Machine Industry Industrial Gases Printing Industry Machine Tools

Scheme for Food Processing Industries

• The scheme covers the following food processing industries :-

Fruits & Vegetables, Milk Products, Meat, Poultry, Fishery, cereal / other consumer food products, oil seeds products, rice milling,

Scheme for Food Processing Industries

flour milling, pulse processing Agri-horticultural sectors including food

flavours & colours, oleoresins, spices, coconuts, mushrooms and hops• Not covered : Aerated Water, packaged

drinking water and soft drinks.

Scheme for Food Processing Industries

• Element of subsidy :25% of cost of plant & machinery and technical civil works subject to a maximum of Rs.50 lakh (33% - Rs75 lakh in areas like J&K, HP, Uttarakhand, Sikkim, North East, etc)

Only new P&M eligible• Scope of technical civil works :

Technical civil works include civil works for functional purposes but exclude boundary wall, guest house, canteen, roads and office buildings

• Availment of loan not compulsory

SIDBI has Co-promoted• Factoring Companies

-Canbank Factors-SBI Factors

• North Eastern Development Finance Corporation - NEDFI

• Indian Institute of Entrepreneurship

International Development Partners• Japan Bank for International Cooperation, Japan

• World Bank

• Kreditanstalt fur Wiederaufbau (KfW), Germany

• Department for International Development (DFID), UK and

• International Fund for Agriculture Development (IFAD), Rome

• Asian Development Bank

Mantra to MSMEsMantra to MSMEs

• Upgrade Technology• Better Access to Finance• Sharpen Skills

• In Short…….Better Quality and Lower PricesTechnology is the Focus

Thank You