Creating competitive msm es 21_56_74

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Creating competitive msm es 21_56_74

  1. 1. Presented By: Dhariti Walia(10810021) Saryu Kamra(10810056) Yuki Jain(10810074) Creating Competitive SMEs in India
  2. 2. Agenda <ul><li>Overview of Indian MSMEs </li></ul><ul><li>Opportunities for MSMEs </li></ul><ul><li>Challenges being faced by MSMEs </li></ul><ul><li>Creating Competitive SMEs </li></ul><ul><li>Policies and Initiatives taken by Government of India </li></ul><ul><li>ICT Value Chain </li></ul><ul><li>Financing Options </li></ul><ul><li>Way Forward </li></ul>
  3. 3. Overview of the Indian MSMEs <ul><li>In accordance with the provision of Micro, Small & Medium Enterprises Development (MSMED) Act, 2006 the Micro, Small and Medium Enterprises (MSME) are classified in two Classes : </li></ul>
  4. 4. Definition of MSMEs The limit for investment in plant and machinery / equipment for manufacturing / service enterprises, as notified, vide S.O. 1642(E) dtd.29-09-2006 are as under :
  5. 5. Investment Limits for service sector
  6. 6. Some quick estimates <ul><li>The number of enterprises is estimated to be about 26 million and these provide employment to an estimated 60 million persons </li></ul><ul><li>Of the 26 million MSMEs, only 1.5 million are in the registered segment while the remaining 24.5 million (94%) are in the unregistered segment </li></ul><ul><li>The state-wise distribution of MSMEs show that more than 55% of these enterprises are in 6 States, namely, Uttar Pradesh, Maharashtra, Tamil Nadu, West Bengal, Andhra Pradesh and Karnataka. </li></ul>Source: 4th All-India Census of MSMEs, for reference year 2006-07
  7. 7. Some quick estimates (contd..) <ul><li>About 7% of MSMEs are owned by women and more than 94% of the MSMEs are proprietorships or partnerships </li></ul><ul><li>MSMEs contribute 8 per cent of the country’s GDP, 45 per cent of the manufactured output and 40 per cent of our exports </li></ul><ul><li>The labour and capital ratio in MSMEs and the overall growth in the MSMEs are much higher than in the larger industries. </li></ul>Source: 4th All-India Census of MSMEs, for reference year 2006-07
  8. 8. Opportunities for MSMEs in India <ul><li>Opportunities provided by clustering approach: </li></ul><ul><li>Tirupur Garment Cluster </li></ul><ul><li>Ahmedabad Pharmaceutical Cluster </li></ul><ul><li>Chennai Leather Cluster </li></ul><ul><li>Railways </li></ul><ul><li>Defence </li></ul>
  9. 9. Opportunities for MSMEs in India(contd..) <ul><li>Automotive </li></ul><ul><li>Metallurgy </li></ul><ul><li>Dairy machinery </li></ul><ul><li>Industrial machinery and machine tools </li></ul><ul><li>Auto and auto ancillary </li></ul>
  10. 10. Key challenges faced by Indian MSME sector <ul><li>High cost of credit </li></ul><ul><li>Collateral requirements </li></ul><ul><li>Limited access to equity capital </li></ul><ul><li>Problems in supply to government departments and agencies </li></ul><ul><li>Procurement of raw materials at a competitive cost </li></ul><ul><li>Lack of access to global markets </li></ul>
  11. 11. Key challenges faced by Indian MSME sector(contd..) <ul><li>Inadequate infrastructure facilities, including power, water, roads, etc </li></ul><ul><li>Low technology levels and lack of access to modern technology </li></ul><ul><li>Lack of skilled manpower for manufacturing, services, marketing, etc </li></ul><ul><li>Absence of a suitable mechanism </li></ul><ul><li>Branding and Marketing </li></ul>
  12. 12. Steps that can be taken to meet these challenges <ul><li>Adopting new standards in technology, quality and pricing to be able to survive in the marketplace. </li></ul><ul><li>This sector is very seriously looking for ICT enablement </li></ul><ul><ul><li>Restructuring </li></ul></ul><ul><ul><li>Building online presence as well as e-mail facilities. </li></ul></ul><ul><ul><li>E-Commerce and enterprise management solutions </li></ul></ul>
  13. 13. Creating competitive SMEs
  14. 14. Major thrust areas for increasing competitiveness of MSMEs <ul><li>Government has identified three major areas that contribute to competitiveness of MSMEs </li></ul><ul><li>Technology (including quality): ICT systems like ERP, HR & Information Systems, etc. </li></ul><ul><li>Skills development </li></ul><ul><li>Finance: MSMEs are beginning to move from a reliance on bank credit to a variety of other specialized financial services and options </li></ul>
  15. 15. Measures taken for promoting emerging Financial Resources <ul><li>Setting up of a separate trading exchange exclusively for the MSMEs </li></ul><ul><li>Provision of special incentives for encouraging larger flow of Venture Capital & Private Equity funds into the sector </li></ul><ul><li>More liberal “All-in-Cost Ceilings” for SMEs to raise low-cost funds through the External Commercial Borrowing route </li></ul><ul><li>Bringing legislation on ‘Factoring Services’. </li></ul>
  16. 16. Policy Initiatives & Measures taken by the Indian Government
  17. 17. <ul><li>‘ Udyami Helpline ’, the Call Centre of Ministry of Micro, Small and Medium Enterprises (MSME) </li></ul><ul><li>Vocational Training Centres (VTCs) in African countries under the Indo-Africa Forum Summit in 2008. </li></ul><ul><li>Proposed to link the ‘Charkhas Scheme’ of Khadi and Village Indutries Commission (KVIC) with the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). </li></ul><ul><li>Enactment of the ‘ Micro, Small and Medium Enterprises Development Act, 2006’ . </li></ul><ul><li>National Manufacturing Competitiveness Program (NMCP) </li></ul><ul><li>Task Force to reflect on the concerns & issues regarding MSMEs and formulate an agenda for action. </li></ul>
  18. 18. National Manufacturing Competitiveness Scheme (NMCP) <ul><li>Nodal programme of the Government of India to develop global competitiveness among Indian MSMEs. </li></ul><ul><li>10 components under the NMCP targeted at enhancing the entire value chain of the SME sector. </li></ul><ul><li>Programme is to be implemented through Public Private Partnership mode with close physical and financial participation of the MSME sector. </li></ul>
  19. 19. Component Schemes of NMCP <ul><li>Marketing Assistance/ Support to MSEs </li></ul><ul><li>Building Awareness on Intellectual Property Rights </li></ul><ul><li>Providing Support for Entrepreneurial and Managerial Development of MSMEs through Incubators </li></ul><ul><li>Enabling Manufacturing Sector to be Competitive through Quality Management Standards (QMS) and Quality Technology Tools (QTT) </li></ul><ul><li>Mini Tool Rooms under PPP mode </li></ul>
  20. 20. Component Schemes of NMCP contd. <ul><li>Lean Manufacturing Competitiveness Programme for MSMEs </li></ul><ul><li>Promotion of Information & Communication Tools (ICT) </li></ul><ul><li>Design Clinics Scheme for MSMEs </li></ul><ul><li>Marketing Assistance and Technology Upgradation Scheme for MSMEs </li></ul><ul><li>Technology and Quality Upgradation Support to MSMEs </li></ul>
  21. 21. Task Force for MSMEs <ul><li>It was set up by the Prime Minister in August 2009 to address the concerns and issues regarding MSMEs and formulate an agenda for action. </li></ul><ul><li>It classified the common issues into 6 major thematic areas into: </li></ul><ul><ul><li>Credit </li></ul></ul><ul><ul><li>Marketing </li></ul></ul><ul><ul><li>Labour </li></ul></ul><ul><ul><li>Rehabilitation and exit policy </li></ul></ul><ul><ul><li>Infrastructure, technology and skill development </li></ul></ul><ul><ul><li>Taxation. </li></ul></ul><ul><li>A separate Sub-Group was also constituted to look into the development of MSMEs in the North-East and Jammu & Kashmir. </li></ul>
  22. 22. Recommendations by Task-Force
  23. 23. ICT Value Chain
  24. 24. Case: Bharath Beedi <ul><li>Challenges for IT implementation </li></ul><ul><li>Simplification of highly transactional sales cycle. </li></ul><ul><li>Synchronization between production, logistics and transportation, warehousing, sales and distribution management. </li></ul><ul><li>Tracking market scenarios and easy monitoring of sales volume fluctuation </li></ul><ul><li>ROI on marketing campaign. </li></ul><ul><li>Reduction in duplication and ease communication flow across the sales and distribution network. </li></ul>
  25. 25. Phases of Implementation
  26. 26. Financing Options <ul><li>Financing through Banks </li></ul><ul><li>Working Capital </li></ul><ul><li>Risk Capital </li></ul><ul><li>Rating SMEs </li></ul><ul><li>SME Exchange </li></ul><ul><li>Micro Credit </li></ul>
  27. 27. Way forward… <ul><li>Export lines for credit </li></ul><ul><li>Hedging for MSMEs </li></ul>

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