How should NSIC expand over next 10 years ?


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National Small Industries Corporation Limited (NSIC) is engaged in providing support
for the growth and development of Micro, Small and Medium Enterprises (MSMEs) in the
country. As it plans to expand its reach and coverage of its schemes and programs, we come up with a balanced strategy for NSIC that shall be best-suited under
current market scenario as well as in the years to come.

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How should NSIC expand over next 10 years ?

  2. 2. CONTENTSEXECUTIVE SUMMARYPART I: Kanpur Leather Cluster Cluster Profile Problems Associated with cluster Rapid Market Assessment Operating plan for NSIC Financial Aspects ANNEXURES & DIAGRAMSPART II: Ahmedabad Dyes and Chemical Cluster Cluster Profile Current Pressure Points/Problems with the Market Rapid Market Assessment Operating Plan for NSIC Financial Planning ANNEXURES & DIAGRAMS
  3. 3. PART III: Rural Agriculture: Contract FarmingPART IV: Support Businesses for Extraction and Exploration of Shale Gas Introduction Role of NSICCONCLUDING REMARKS
  4. 4. EXECUTIVE SUMMARYNational Small Industries Corporation Limited (NSIC) is engaged in providing supportfor the growth and development of Micro, Small and Medium Enterprises (MSMEs) in thecountry. As it plans to expand its reach and coverage of its schemes and programs, AAASolutions comes up with a balanced strategy for NSIC that shall be best-suited undercurrent market scenario as well as in the years to come.As NSIC aims at profit making and focuses on self sustained growth, it is important forNSIC to identify certain sectors which will be a huge market for its Business DevelopmentServices. NSIC, thus, needs to develop the best distribution systems in these particularsectors apart from its current priority sectors.In this report, we highlight such sectors and suggest proper distribution systems in theserespective sectors. This approach requires proper identification of various clusters ofMSME’s in India. We suggest following two such untapped clusters in India which havehuge potential: 1. Kanpur: A prominent cluster of leather artisans and MSME’s. 2. Ahmedabad: A vital cluster of SME’s of Dye’s, Chemicals sector.The global trade of leather & leather products (including non – leather footwear) was 97billion US dollar in 2004 up from meagre 4 billion US dollar in 1971. About 60-65 percent of total Indian production of leather and leather products and substantial portion ofexports (Rs 9004 crore in 2001) is accounted for by artisans, microenterprises and small-scale industries. There are about 1600 units engaged in production of leather & leatherproducts in Kanpur clustre and total volume of business of this cluster is about Rs 2900crore (17 percent of total exports from the country). As rising costs, tough competition,inadequate capacity, supply of raw material, meagre flow of investment, poorinfrastructure & supply logistics, compliance to environmental norms and dearth ofmanpower are the major problems of this clustre, this provides NSIC a huge untappedmarket which needs to be looked upon. Also, NSIC is already aware of various aspects
  5. 5. of leather industry because of its operations in Chennai leather cluster and hence isthe best bet.The condition for Dyes and Chemicals industry is also similar to leather industry apartfrom some small structural differences. This industry, which mainly comprises of MSMEs,is believed to grow at unprecedented rates in coming years. But, the dyestuff industry hasbeen facing difficulties in recent times. Low profitability and demand growth combinedwith increasing importance for environmental protection have resulted in the exit of manysmall producers. Currently, there is an over capacity situation in the domestic market thathas forced the industry to look at exports for growth.The distribution of smaller units of this industry is skewed towards the western region withnearly 80% of the total capacity is in the state of Gujarat. As of now, more than 1200Chemical and 1000 dyestuff units exist in Ahemdabad clustre itself, of which, mostproduce same products. This reduces the scope of product differentiation and increases thevitality of presence of organization like NSIC. Also absence of good businessdevelopment services provides a huge potential for NSIC which can be tapped profitablyif utilized on a larger scale.Till now, we basically suggested the sectors/ industry which will generate huge economicimpact on a certain section of people and huge revenues for NSIC too. Apart from theeconomic aspect, we believe, that an organization like NSIC has a huge socialresponsibility too. Thus, we would like to give a human touch to the profitable businessstrategy of NSIC for coming years.As the rural market is being considered as a major economic powerhouse for India incoming years, we consider rural business operation for NSIC as a sustainable as well asprofitable business proposition. Though, rural market comprises of huge potential forvarious sectors like Banking, FMCG products, Insurance, Agro-products and Education,etc. but we would like NSIC to focus only on Rural Agriculture.The agriculture sector over the past few years has seen effective usage of ContractFarming as tool to cushion the decline in agricultural output, declining productivity ofsoil, etc to ensure food security of about 1.2 Billion people of India. As more and moresocial entrepreneurs, SME’s are looking to venture in Agro-markets with Contract Farming
  6. 6. as tool, we firmly believe that mentoring such enterprises will not only have highlypositive social impact but will also be pretty sustainable. Huge knowledge, infrastructureand credit deficit for these enterprises calls for an organization like NSIC to help themincrease profitability and also sustain itself. Thus, we would strategize functionaries ofNSIC to effectively use the combination of existing governmental ground works withvarious aggressive initiatives of pool of entrepreneurs to sustain itself.The two sectors we discussed above namely, Leather, Dyes and Chemicals will require 5-8years for profitable operation of NSIC whereas Contract Farming is the sector which hasbeen in business for only a marginal period and hence will keep the company in profitablecondition for a very long span.Also, there is another pretty unexplored sector which is in infancy and will be very crucialto the country in future; namely:Drilling and other support businesses for exploration and extraction of conventionaloil & gas and the shale gas.To fulfill the energy demands of energy starved fast growing nation like India, thegovernment has been focusing on unconventional gas (shale gas) which is believed to bepresent in vast amounts in India. The Oil and Gas ministry has also decided to completepolicy framework and launch the bidding process for various block by this year’s end.Considering these developments, it is important to recognize the importance ofindigenous SME’s which will be associated with the big players in shale gas explorationand extraction.Though, Indian Industry is very much untouched with this sector. This is the because of thecomplication of these jobs and the high end technological research associated with thisfield. Thus, if proper strategy is formulated and bold decisions are made by NSIC thenIndia could witness another duplication of Telecom/IT miracle in this sector in coming 20-25 years.Thus, the strategy suggested by AAA SOLUTIONS will be best suited for NSIC andwill also contribute in a balanced growth of the country.
  7. 7. BUSINESS STRATEGY PART I: KANPUR LEATHER CLUSTER A. Cluster Profile (Why this Cluster?)CLUSTER SPECIFICATIONSKanpur leather cluster in this report includes units situated in Kanpur Urban and Unnaodistricts. The erstwhile Kanpur district has now been bifurcated into Kanpur urban andKanpur rural districts and leather & leather product units are mostly situated in Kanpur(urban) district. The major concentrations of units are at Jajmau (dist: Kanpur urban),Unnao, Banthar (dist: Unnao) and Kanpur city. The cluster has diversified range ofproducts but mainly famous for processing of buffalo hides, making safety shoes, sandals& chappals and Saddlery & Harness.Among the major leather clusters in India, Kanpur occupies a prominent place as it has adiversified product range and uniqueness also. It is famous of processing of buffaloleather and only centre in India manufacturing saddlery items which are by and largeexported only. The product range includes semi finished & finished leather, safety &fashion footwear, saddlery & harness items, open footwear i.e. sandals & chappals andleather goods. Recently a few units have come up making leather garments and gloves.In all there are about 1600 units in the cluster having annual turnover of Rs 2900cr andexports of Rs 2038 cr. The exports from this cluster constitute 17 percent of total exportsfrom the country and during last 6 years it has been doubled. The export of saddlery itemsis Rs 366 cr constituting 95 % of total exports of saddlery items from India. In all morethan 300 units are doing exports from the cluster.The sub sectors comprising units making various products operate on different valuechains. Even in same sub sector, units on account of scale and stages of processing arehaving different value chains. The major sub sectors are:
  8. 8. i Tanning,ii Footwear & components (including non- leather footwear)iii Saddlery.The sub sectors comprising units making leather goods, garments and gloves havemarginal presence. In spite of varying nature of problems and opportunities beingfaced by these sub sectors there are a few issues which cut across all sub sectors as afew operations like clicking & stitching etc. are common to making of variousproducts.In tanning sub sector there are about 300 units of varying sizes and operating on differentvalue chains with an annual turnover of about Rs 1500 cr out of which products valuing Rs750 cr are being exported.There are five categories of tanning units depending upon processing capacity and stagesinvolved in process of value addition. There are 100 small integrated units havingprocessing capacity between 30-150 hides per day. 50 units are only processing raw hidesto wet blue stage which forms an intermediate stage for leather making.50 units are onlyprocessing wet blue to finishes leather. There are also 70 small units doing job workmainly in area of finishing operations.In footwear & components sub sector there are about 1100 units with an annual businessof Rs 930 cr and exports earnings to the tune of Rs 805cr. There are 50 organised unitsmaking safety and fashion footwear and their average capacity is about 1000 pairs per day.About 90 percent of production of these units is exported and 10 percent goes for domesticmarket. There are also 50 such units making shoe components but its major share ofproduction is shoe-uppers an intermediate product for shoe making and largely beingexported. There are about 1000 household units situated in Kanpur city making chappal &sandals. On account of steep rise in price of leather majority of them are makingproducts using synthetic material. These units on an average are making 50 pairs perday and work for 5 months in a year and cater to low end markets fetching a price ofRs 50 per pair. The annual turnover of these household units is about Rs 38 cr.There are 25 organized and 175 household units in Kanpur city making saddlery itemsand annual production is Rs 366 cr and entire product is being exported.
  9. 9. Also, in recent times about 30 units have come up making leather good like wallets,handbags and annual production is Rs120 cr out of which Rs 107 cr are being exported.Most of the units have been set up by existing manufacturers of finished leather and otherproducts. A summarized picture of value distribution for major cluster products:After a brief knowledge about the cluster itself let us discuss the reasons for thiscluster being a huge potential.PROBLEMS ASSOCIATED WITH THIS CLUSTERBusiness Development Services (BDS) market is very weak, unorganized and fragmentedin this cluster. Services availed by units are mostly subsidized, embedded and bundled.The category of fee based services is in areas of testing, tax & audit, ISO certification& social audit.Supply side is extremely weak and barring CAs there are hardly a few private BDSproviders. Associations are mainly engaged in advocacy work.
  10. 10. In spite of presence of large number of government institutions, linkages withindustry are very weak. Dependence of such institutes on subsidy for provision ofservices has also led to limited outreach.There is also lack of awareness about efficacy of using such services and culture ofdependency and availing subsidized and free services prevail.In the absence of detailed market assessment, precise demand of BDS has not beenquantified but assessment of services being used and its usage level and services indemand (not adequately met by existing BDS providers) have been carried out in respect ofdifferent category of units in each sub sector.In order to aggregate the demand and observing the nature of services, those have beengrouped under following broad categories:In all 30 services have been included under above categories out of which are 8 arestrategic services having direct bearing on improving the performance and competitivenessof the units. Those are being listed below: • Technical Assistance (advisory services like inventory management, human resource management, Enterprise Resource Planning and MIS systems) • Marketing linkages for Household units • Input supply to Household (HH) units • Access to finance for Household units • Technology transfer & up gradation
  11. 11. • Product development • Augmenting critical infrastructure like CETPs and warehousing • Skill up gradation & vocational training An Overview of Problems Associated with Subsector: a) Tanning:One of the major problems besetting the units, especially smaller ones, under this subsector is obsolete technology and old machines. In view of importance of this sectorDIPP carried out a “Tannery Modernization Scheme” during 9th and 10th plan period. Buttill date only 10 tanneries from Kanpur have availed assistance under this scheme.Another major problem being faced by the units is erratic supply of raw hides/skins.Though import of wet blue is allowed, but on account of small requirement and absence ofany bulk purchasing mechanism, small units are not able to avail this facility. The problemis compounded by limited access of these units to formal finance, especially workingcapital.The raw hide market has become a supplier market in view of demand for hides growingfaster than supply. The larger tanneries are able to offer advance payments to suppliersmaking it more difficult for the smaller tanners to get regular supply.The availability of raw hides will continue to be a major constraint as demand fromproduct industries grows. It is estimated that the total tanned leather requirement willdouble over the next 4-5 years making intervention to improve supply position anecessity.Non availability of skilled operators is also an area of concern of the tanners in thecluster. b) Footwear and components AND Saddlery:The constraints to growth of this sub sector are as follows: i) Production of household units is constrained due to lack of access to normal financial channels, design input and absence of dynamic marketing linkages.
  12. 12. ii) Exporters are unable to enter USA market in a major way, as their capacity is limited for large order sizes from US market. iii) Productivity of labour is low vis–s–vis main competitor China iv) High import content, which is almost 60% in case of safety shoes. v) Non-availability of skilled operators. vi) Exporting units are not able to capture high-end markets and unit value realization is hovering around 10 US$. vii) Except “RED TAPE” made by Mirza, no manufacturer has been able to create a strong brand image neither in domestic or export market viii) The safety shoe exporters are unable to meet the product safety standards of EU as there is no local lab accredited for such citifying such compliance.As we are now fully aware of the problems of this cluster, it can be easily inferred that thiscluster is completely relevant to NSIC’s aims, objectives and can be termed as very muchvital keeping in mind the delicacy of the cluster and expertise of NSIC. Spreadingservices in this cluster will not be difficult.Now, as we are done with the ground work, we must get in touch with variousorganizations already existing in this cluster and understand the effectiveness of theiractivities.This will help us focus on specific areas which need to be worked upon using the existingorganizational framework.This will also cut our financial costs and project time and will help us increase theefficiency of our services.The findings and insights of detailed market assessment conducted will be factored inoperational plans for subsequent years.
  13. 13. RAPID MARKET ASSESSMENTRapid Market Assessment covers i) assessment of present demand & supply of both lowend and strategic services; ii) identification of needed strategic services and profiling ofexisting BDS providers and nature of services being provided by them and iii) findingcritical gaps in respect of certain services and range of possible interventions. In course ofrapid assessment both low end as well as strategic services has been covered. Overview of BDS Market of this clusterDemand assessment
  14. 14. The assessment of demand of services has been made in respect of each sub sector in thecluster.For this assessment only such services have identified which are in high demand,widely used and have potential to create substantial impact on performance. Forhaving a tangible result in short time, a narrow focus has been kept in view.As there are multiple value chains even in one sub sector, assessment has been madeaccording to respective value chains in each selected sub sectors.Table below gives demand assessment and also level of usages of different services.
  15. 15. Supply Side AssessmentBDS services in the cluster are being provided by three categories of providers i.e. i)government support institutions, ii) industries associations and iii) privateagencies/individuals. There are very few fee based services and mostly are subsidized orembedded/bundled services.
  16. 16. (I) Government support institutionsThere is plethora of government support institutions providing free/subsidized services:; Where the name of Institutions is as follows:
  17. 17. (A) Council of Leather Exports (CLE): CLE is an outfit of Ministry of Commerce & Industry, GoI having regional office at Kanpur. The membership fee is being charged on the basis of export turnover.(B) Central Leather Research Institute (CLRI) CLRI has set up one testing laboratory at Jajmau. It has provision of testing of major chemical properties of leather & leather products only.(C) UP Industrial Consultancy Organisation (UPICO) This is a consultancy organization set up by all India financial institutions, banks and support institutions of Govt. of U.P. It is mandated to provide fee based services for conducting feasibility studies, preparing project reports and also giving micro consultancy to SMEs. (D) IIT, Kanpur It has a separate consultancy department catering to needs of SMEs created for providing services in following areas: � Energy conservation methods � Marketing & finance � Innovative product design � Packaging � IT applications � Application of multimedia Level of usage among SMEs due to lack of awareness is marginal.
  18. 18. (E) International Institute of Saddlery Technology & Export Management (IISTEM) IISTEM conducts short term courses for operators catering to needs of footwear and saddlery sub sectors. All courses are fee based and IISTEM is getting no grants from the government. At present in a year about 71 HH and small units are availing services of CFC and the earning of the institute is about Rs 4 lakh.(E) National Productivity Council (NPC) NPC provides consultancy in major areas like productivity improvement, energy savings and human resources development. Due to reluctance of SMEs to pay fees, they are not targeting SMEs and also their presence in leather sector is marginal.(F) Government Leather Institute It is an oldest institute of Government of UP and presently running 3 yrs diploma courses in leather technology and footwear manufacturing and annual intake is 30 students for each course. They also run a few short term courses of 6 months duration. Their linkages with industries are very weak.(G) Harcourt Butler Technological Institute (HBTI) This is one of oldest technical institutions in the country and has got a separate department of leather technology and runs a B.Tech course in leather technology. It has got physical and chemical laboratories for testing of leather & leather products. Presently its linkage with industries is very weak.(H) District Industries Centre (DIC) It is a nodal agency of the state government in the district for promotion of industries. It plays an important role as facilitator for Govt. sponsored schemes like
  19. 19. Jawahar Rojgar Yojna etc. It is designated agency for issuance of provisional and final registration certificates in respect of SSI units.(I) Small Industries Service Institute (SISI) It is an outfit of the ministry of small industries, GoI created to provide micro consultancy to SSI units. Its services are free but usage by units is marginal. Recently they are also implementing cluster development programme of the ministry of SSI, GoI but to date no cluster in respect of leather sector has been adopted by them.(J) Footwear Design & Development Institute, Noida It is an institution under Ministry of Commerce & Industry, GoI and conducts courses in Footwear technology & Management and also provides testing facilities.(II) Industries AssociationsThe most active association at Kanpur is U.P. Leather Industries Association and its role isconfined to advocacy and redressal of grievances of its members. It has about 50 memberswhich are mostly exporting units. It also keeps its members informed about policy &procedures changes. No other services are being provided by the association.There is one Jajmau Tanners Association having 250 members mainly engaged inadvocacy work. There is another Small Tanners Association at Jajmau having 100members but active only in grievance settlement of its members with Govt. departments.There is also one association of Chappal/sandal makers in unorganized sector but by andlarge dysfunctional.
  20. 20. (III)Private BDS providers � In Kanpur there are about 70 CAs providing limited range of services to SMEs in area of audit, tax and loan syndication. Out of CAs, 12-15 are having association with SMEs in leather & leather products sector and their services are being utilized by 100 units. These units are availing their services for audit and taxation and their annual earning is about Rs 60 lakh.. � There is a management consulting company by the name - WIZMIN. They provide consultancy in areas of general management, marketing and social sector. At present they are mostly involved in monitoring of schemes of the ministry of rural development, GoI. � Leading suppliers of chemicals, mostly situated at Jajmau, about 10 in number supply free but embedded services to about 100 tanneries and cost of embedded services is about Rs 8 -9 Cr. Suppliers of sophisticated and imported machines provide free training to operators though its cost might be added upfront while finalizing deals for sell of machines. � There are a few persons who are providing services related to maintenance and repairs of machines on commercial basis. � There are 8-10 buyers who provide bundled services to about 100 units in areas of compliance, product improvement and design. � Indian Footwear Component Manufacturers Association (IFCOMA) normally every second year organizes a buyers and sellers meet at Kanpur. The last edition of the met was attended by about 600 footwear and other leather product manufacturers where information about products and latest development are disseminated to leather product manufacturers was displayed by component manufacturers.
  21. 21. Outreach of Existing BDS providers
  22. 22. Status of Subsidization in Respect of services
  23. 23. OPERATING PLAN FOR NSICIn order to sustain the growth of units in the leather cluster of Kanpur and enhance theircompetitiveness the operation will mainly pursue intervention in developing market byNSIC in the areas identified for growth of the cluster in CLUSTER PROFILE.Keeping in view the project time frame and resources, the activities to be undertaken havebeen identified in respect of sub sectors which are drivers of growth in the cluster, theirpotential for value addition, coverage and likely impact on attaining desired results.Only those sub sectors have been selected for interventions, which contributesignificantly to volume of business in the cluster and have maximum numbers of unitsfor appreciable impact. Even for these sub sectors, such areas have been identified whichare critical for competitiveness and for which the stakeholders have articulated demandduring diagnostic study. For such services, broadly, commercial and institutionalServices need to be identified and their capacity assessment must be undertaken.However, barring about 100 enterprises, majority of cluster enterprises are micro andhome based units. Such units have limited resources to pay for commercial BDS andtheir poor positioning in the value chain prevents them from using embedded services. Thefragmented nature of such units also makes it financially less attractive for BDSproviders to cater to them. Majority of tanneries, saddlery items and footwear units fall inthis category.To ensure sustainability of these micro units NSIC will need to pursue interventionsfor capacity building, especially organizing these micro units as networks andstrengthening their backward and forward linkages for better delivery of embeddedservices.The networks can be providers of services like input supply, market access, etc. andat the same time such consolidation makes them attractive clients for NSIC.The main objective of NSIC must be to strengthen supply and outreach of services thatenhance competitiveness of SMEs.
  24. 24. NSIC should try to facilitate enabling conditions for a natural business relationshipbetween users and itself leading to sustainability and attainment of overarching goal ofincreased competitiveness of SMEs and employment generation in cluster.The sub sectors and their respective operations are detailed below;Footwear Sub sector:The trend and potential for growth in footwear sector is evident as is its potential to createthousands of jobs. During last 5 years, India’s overall footwear export has been growing at12 percent per annum. In view of burgeoning middle class and continued increase in theirpurchasing power, the demand of footwear is likely to increase propelled by increasedconsumption of per capita footwear consumption from 2 pairs per annum (including hawaichapels). Over and above that Kanpur is famous production centre for open footwear i.esandal and chappals. There is a critical mass of about 1000 HH units having repository ofskills but not able to increase their market share and presently operating at very lowcapacity.Operations for Footwear Sub sector:The most articulated need of this sub sector expressed by the constituents is non-availability of skilled manpower. In order to sustain even present level of growth, theindustry has estimated that requirement of operators would be about 10000 in near future.The capacity of existing service providers is inadequate to meet this demand making itnecessary to build their capacity. The other area of concern is low labour productivitywhich is about 2.5 times below of Chinese manufacturers.In both these areas of skill development and productivity related technical assistanceservices, public Services providers are present in the cluster. NSIC here needs to identifythe critical gaps between services provided by institutes like IISTEM, GLI and ITIs forskill development and NPC for productivity related services which do not include operatorlevel training (most critical for the industry). Interaction with industry which is marginal,fresh inputs for trainees and low motivation to change must be changed by NSIC.
  25. 25. While the organized firms face capacity concerns, the unorganized household units don’teven work at 50% capacity mainly due to fragmented structure and limited access toformal finance.NSIC will need to look at its current association with financial institutions in thiscluster to address this problem.Tannery Sub Sector:The tannery sub sector is the most critical link in the value chain of Kanpur leathercluster. To meet the growing demand of raw material for footwear and saddlery subsectors, the tannery segment needs to add capacity of hide processing and meetenvironmental standards for sustainability.Operations for Tannery Sub sector:The capacity utilization of small tanners is low mainly on account of lack of access tofinance (working capital) and need of modernization. Input supply services in the formof bulk purchase of raw hides by industry associations are a necessity.Equally critical is compliance to environmental standards for effluent treatment.Recent cases where units who do not even have a CETP or whose CETP needsaugmentation have been asked to close down due to non –compliance is an issue that needsto be addressed by NSIC.The NSIC must help these units in effluent treatment infrastructure up gradation to meetzero discharge norms as none of the CETPs have initiated work in this regard.Infrastructure development services in PPP mode is a critical service identified to bepursued by NSICIn view of complexity the process may go beyond project time but headway needs tobe made on account of its criticality and profitably.
  26. 26. Operations for Saddlery Sub sector:Saddlery sub sector has shown consistent double digit growth and has created a niche forthe product in the international market. Though, about 200 tiny units are making saddleryand harness items but on account of their size are unable to increase share in theinternational market.In spite of the fact that there is abundance of skill and availability of proper leather locally,the share of saddlery items is only 25 percent in EU markets as compared to China’s sharein EU is 29% already.BDS for Saddlery SubsectorNSIC needs to provide those services to these units which may help them in formation ofexport consortia with formal access to finance. The resultant would be increasedproduction, employment generation and exports.The activities leading to availability of business services in the areas of skilldevelopment, access to finance, productivity and forging of transactional relationshipbetween organized and unorganized segments would substantially improve theperformance as well as competitiveness of the sector.
  27. 27. Scope of Operations of NSIC
  28. 28. Assumptions:The following assumptions need to be taken into account for Kanpur Leather Cluster.
  29. 29. � Regulatory compliances related to environmental compliances would not undergo major changes thereby investments in compliances make the industry non-competitive.� Appreciation of Indian currency against US$ does not adversely impact the competitiveness of industry, since, significant number of units within the cluster are export oriented.�The religious sentiments do not inhibit enterprises in accessing credit from the bank.�The policy support and thrust on leather sector by GoI during 11th plan continues.�The market maintains its present growth rate.Risk Assessment:�The risk in Saddlery and footwear segments is limited to foreign exchange fluctuations thus, can be considered as low risk segments� Tannery can also be considered a medium risk segment taking into account the need of tanneries in Jajmau area (which contribute about 30% of leather processing) for immediate up gradation of effluent management systems.Up gradation of environment management infrastructure and awareness on tools likehedging will be facilitated for risk mitigation.In short, the strategy would be to facilitate market development and not to provide servicesdirectly. As the Service provider market is very weak in the cluster and there is culture ofgetting subsidized services from government support institutions, there would be need ofdevelopmental efforts and also subsidizing the cost of certain services for limited periodfor ensuring functioning of the market in the long run.FINANCIAL ASPECTS:NSIC is already aware of various aspects of leather industry because of its operations inChennai leather cluster and hence the price mechanism can be duplicated from Chennai.As Kanpur cluster is very sensitive for UP government there are various credible publicorganizations with the help of which various services could be channelized at very lowcosts. Also, various organizations’ reports and RAPID MARKET ASSESSMENT sectionof our strategy could be used for formulation of suitable fees for suitable group.
  30. 30. PART II: AHMEDABAD DYE’S AND CHEMICAL CLUSTER A. Cluster Profile (Why this Cluster?) Cluster Specifications:Ahmedabad is the commercial capital of the State of Gujarat and a hub of majorbusiness/manufacturing activities in the western part of India. It has the requiredinfrastructure facilities.The Ahmedabad Dyes/Chemicals (Including packaging) cluster is located within theMunicipal Corporation limits of the City of Ahmedabad in the central region of Gujarat.There are more than 1000 different dyestuffs (colouring matters) derived from a vastvariety of chemicals. The chemicals have a wide range from organic to inorganicsubstances. The plastic manufacturing in this cluster is incorporated to the packaging of thedyestuff and chemicals. The size of cluster is from amongst the units producingdyestuffs and chemicals to the tune of more than 1200 units in the geographicalboundaries of the location.Product categories of the cluster:(a) Dyes sector:The cluster comprises of Dyes/Chemicals (including packaging material). Dyestuff is abroad term which includes dyes and pigments. A dye is a coloured substance or an organiccompound, which when applied in a solution to a fabric, imparts a colour resistant towashing. They are largely used by the textiles, paper and leather industry, with textilesaccounting for over 80% in India.This links the dyestuff industrys fortunes to that of the textile industry.
  31. 31. Dyestuff classification(b) Chemical sector:The important chemicals manufactured in the Ahmedabad city are predominantly asfollow:1. Organic compounds such as H Acid, Vinyl Sulfone, J Acid etc2. Metal Salts such as ferrous sulphate, cuprous chloride3. Textile Auxiliaries such as softening agents etc.
  32. 32. (c ) Packaging sector:Plastics packaging products are largely in three categories, based on the mode ofoperations used in the manufacture of the product. Viz., Extrusion, Blow molding, &injection mouldings. , items, such as Drums, Carboys, Liner Bags etc .We have mentionedthese since these constitute major production of packaging material; there are other plasticpackaging materials with a wide range of applications as listed below.
  33. 33. Plastic has other innumerable uses, which makes it a very large cluster with an unmatchedsize and scale of operations. Even though MOST of the units in Plastic manufacturingcluster fall under the SMEs, still the range of produce plastic industry offers is unmatchedto any other manufacturing activity. Spare parts in many industries, bottles, constructionwork, proposed road building is few to name amongst them. We have therefore restrictedour scope only to the plastic packaging material used extensively in dyestuff andchemicals, which is sold in bulk. The table depicts concentration of various sub sectors
  35. 35. The dyes and chemical industry in recent times is facing a lot of challenges in the changingscenario of global economy. The extremely competitive market, reduced margin, lackof innovation, pressure from multinationals, global slowdown and last butnot the least, increasing pressure from regulatory and voluntary agencies formaintaining environment free from pollutants, all are indicative of tough days for thecluster.A modern management study and skills, co-existence, utilizing skills from competentOrganization like NSIC, will help the cluster to overcome, the challenges it is facing today.Let us now see the distribution of units in this cluster on the basis of Investment,Turnover and Employment.
  36. 36. CURRENT PRESSURE POINTS/ PROBLEMS IN MARKET:The major Pressure points in dyes, chemicals and packaging market are given as follows:Environmental issue:The primary treatment has to be carried out by the units in order to meet inlet normsdescribe by the CETPs and CETPs have to meet the norms set up by GPCB. Majority ofthe units are not matching these CETPs Inlet norms or units’ outlet norms. Their primarytreatment is not up to the mark to attain these CETPs norms and also their productionprocess is faulty. As a result, GPCB has pressurized CETPs to attain these norms or close
  37. 37. down the units which are more polluting the environment. By providing knowledge aboutbetter production processes and good primary treatment process, this environmental issuecan be reduced and solved in near future.Cleaner Production:Most of the units are not getting proper yield out of their processes and there is highwastage of raw material. This is because lack of technical specialty, experts and knowledgefor the production process. It has been proven that organizations can actually protect theenvironment and save money. One of the main drivers for improving environmentalperformance has been that organizations can no longer afford to simply treat and disposesoff their waste; the focus has shifted to reducing waste at source. Cleaner production oftenfocuses on raw material, waste and energy but it is not just an environmental imitative – itis a combined environmental and business strategy.Energy Utilisation:It has been studied by the Bureau of Energy Efficiency (BEE), most of the units areconsuming extra energy and there is lot of scope to reduce energy utilization. About 60 %of the organisations in this cluster are consuming 40000 units per annum. There is wastageof energy both at works and at offices. As per value chain analysis, energy consumption isaround 8 % of the cost of Material.Raw Material Procurement:There is stiff competition in the domestic as well as International market. In dyes andchemicals, 75-80% cost is of Raw material and plays a significant role for the final costing.Quality raw material at cheaper price will help to compete in the market and reduceeffluent load. For solution of this issue, one consortia or society has to be formed underwhich bulk buying facility is provide.
  38. 38. Quality Registration:European Regulation introduces REACH to ensure a high level of protection from the risksthat chemical may pose to human health and the environment, through the generation anddissemination of information on chemicals, in particular safety information. Ideals with theRegistration, Evaluation, Authorization and Restriction of Chemical substances.As majority of the export is to the European Market most of the firms are not aware aboutthe procedure and norms for the REACH, to compete in the European market they have tobe REACH compliance.Training to workers and supervisorsProductivity and Quality improvement can reduce the cost effectively. By providing propertraining to the workers and supervisors can improve the process. Also there should beadoption of best practices to improve efficiency and effectiveness.MarketingAll micro and small companies are facing difficulty in direct marketing; they are doingindirect export through traders. They also have problem of Bulk order. This can be solvedby forming and all cluster members can sell together in bulk and get proper price for theirmaterial.RAPID MARKET ASSESSMENTOur aim is to increase NSIC’s involvement in this cluster, to provide need based servicesto SMEs engaged in the manufacture of products as already mentioned.We have identified considerable scope for various services required, utilized and ignoredby the SMEs.
  39. 39. The services ignored by them are of great importance for the healthy conditioning;however they are not sought after due to certain compulsions on the part of member unitsof the cluster.Hence, it is necessary to understand the services, areas of operation and financialaspects of the current BDS providers in order to come with an outstanding OperatingPlan. Services can be mainly classified in following areasPRODUCT BASED DISTRIBUTION: Service providers for Dyes and Chemicals
  40. 40. Service Providers for Plastics (Including Packaging Material)
  41. 41. PRICING CRITERIA USED BY SERVICE PROVIDERSService providing units in general discuss about the pricing by the time devoted infulfilling the task on hand. More a challenging job, more the time and vice versa.No one in particular associated with the volume of business of client, which is apositive note in such transactions.
  42. 42. SERVICE PROVIDERS MARKET STUCTUREThe Services market predominantly consists of three segments, Public BDS, Private BDSand Business management organizations. Apart from these there also exist an “informalBDS” which is offered by the peer group of the entrepreneurs without any fee 1. Public BDS:These are Government organizations or organizations supported by the Government thatprovide free or subsidized services.Ahmedabad Textile Industrys Research Association (ATIRA)ATIRA is an autonomous non-profit association for textile research. It is the largest of itskind in India for textile and allied industries. It has a membership base of 101 units spreadall over India and abroad. Amongst this, 64 units are involved in Ginning, Spinning,Weaving and Processing, 37 units are engaged in manufacturing fibres, dyes, chemicals,instruments, equipments and machinery.Central Institute of Plastics Engineering & Technology (CIPET)Technology Support Services (TSS) is an integral part of the activities of CIPET.Project consultancy, technology consulting and assessment in the field of Plastics are theimportant service portfolio of TSS. CIPET has created complete infrastructure under oneroof from testing stage to validation through testing.Indo German Tool Room (IGTR)IGTR-Ahmedabad is equipped with state of the art machinery & imported equipmentsfrom Europe. The Machines are made by trained manpower developed by German experts.The Tool room is ISO 9001:2000 certified organization & working with sound system andis managed professionally.
  43. 43. Gujarat Industrial & Technical Consultancy Organization Limited (GITCO)GITCO – a premier Technical Consultancy Organization (TCO) – provides consultingservices to accelerate the growth of industrial and services economy of Gujarat.Industrial Training Institute (ITI)The Institute imparts training in 31 National level courses under the aegis of NationalCouncil Of Vocational Training (NCVT). Institute has 10 State Level Courses withseating capacity of 352 under Gujarat Council of Vocational Training (GCVT). Mainly tomeet local demand, apart from regular courses the Institute conducts the short term coursesfor weaker section of society, School drop outs, for informal sector and tailor made coursesas per requirement of industry.Commercial Banks:All types of banking services present in the cluster area. 2. Private BDS – Organised:A major player as a support unit for the clusters, the Business ManagementOrganisations (BMO) has a greater role to play in the betterment of member units in thecluster. A critical analysis of the performance of the body of associations however isindicative of many more functions that the member units expect from them.These are associations formed within a sub-sector for joint development and advocacy.Such associations are mostly membership based.There are insignificant differences in the nature of services provided by BMOs.However considering the requirements of MSMEs & their growth potential, it is importantthat these local BMOs become more proactive and cater to the changing requirements ofthe MSME sector.
  44. 44. Gujarat Dyestuff Manufacturers Association (GDMA)It is an Apex organization of Dyestuff Industry of Gujarat consisting of about 80% of thetotal units and contributing to 60% of the total export of dyestuff from the country.Gujarat Chemical Association (GCA)Gujarat Chemical Association has six decades of experience in playing a proactive role inleading the Chemical Industry in Gujarat. Over the years GCA has been voicing theconcerns of the Chemical and Allied Products manufacturers and Traders.Gujarat State Plastic Manufacturers Association (GSPMA)Established in 1970, the Gujarat State Plastic Manufacturers Association (GSPMA) is oneof the leading plastic manufacturers associations in the country, representing PlasticIndustry at State as well as Central level.Vatva Industrial Association - VIAVatva Industrial Estate, Ahmedabad, was set-up when GIDC initialized the industrialRevolution of young Gujarat State. It is one of the oldest and largest estates in the state 3. Private BDS – Un-organized:These are private service providers specializing in different fields by virtue of theirknowledge and experience. They are catering to the requirements of the MSME sector indifferent areas.
  45. 45. In the following section an attempt was made to assess the (business development) servicemarket from the demand and supply perspective and they have been evaluated as ‘high’,‘medium’, and ‘low’.
  46. 46. The nature of problems faced by micro, small and medium enterprises in the clusteris more or less same. However, the approach to address the problems would ob willobviously vary due to the cost, capability and other factors. The interventionaryapproach of addressing these problems (Pressure Points) has been discussed below;
  47. 47. * Non Utilized – Indicative of availability of this service amongst the BDS providers,however the units not utilizing this service.* Utilized – Indicates that the units make full use of these services* Limited Utilization – Indicates that the service is utilised only by units who are aware ofthe benefits* Non-existent – Indicates that there is an absence of service providers for this skill,despite of demand from units. This may be due to a lack of awareness on part of BDSproviders, or the potentiality is not being considered.* In House – Medium Enterprises by their scale of operations are able to make use ofemployed personnel for the utilization of these services which otherwise are required to behired on as and when require basis.
  48. 48. OPERATING PLAN FOR NSICAll business enterprise need assistance to improve functioning and grow such servicesknown as Business Development Services (BDS).The vision of developing markets forBDS has grown out of an emerging new paradigm in the field of MSME promotion. Thereis growing emphasis on sustainable market development and to attain this BDS marketdevelopment is the right way. BDS market development leads to employment generation,poverty alleviation and ultimately leads to Local Economy Development (LED). MSMEscan be benefited by BDS in the form of cost reduction, improved efficiency, Market,development, increased sales and better productivity. There are three types of BDSnamely:Generic – These services are available easily and also availed in large numbers.Services like that of CAs and tax consultants that are transactional in nature fall under thiscategory.Strategic – Services that are strategic in nature like marketing, testing, financial linkage,project preparation fall in this category.Embedded – Such services come bundled with some products or services. Services likemaintenance of machines, technical support etc. for which the user does not have to payanything extra come in this category.Characteristics that NSIC needs to keep in mind for this cluster· Focus on markets· View clients as customers· Market transaction relationship· Greater potential for sustain ability – more limited use of subsidies· Goal of sustainable markets· Work with many – preferably private providers· Roles: distinction between market facilitator and NSIC
  49. 49. · Clear exit strategy· Interventions focus on addressing market constraintThe development process must have a clear focus on the BDS market. Theinterventions should be such that a fee based transaction mechanism developsbetween the stakeholders. This helps in reduction of use of subsidies and thusdevelops a framework that has more capability to sustain on its own.The difference between market facilitation and Services provisioning is that NSIC need notdirectly provide services to the market but rather facilitate the provisioning of servicesthrough NSIC itself.While we look at the segment of dyes & chemicals over the international scenario, itreveals that the operating and utilization size of the units in this segment is very small incomparison with their Chinese counterpart. With the help of NSIC there is a wide scopeto reduce the cost of value addition.Another point that highlights is that in order to counter the difference in the scale ofoperations, the cluster needs to put up combined marketing platform to strengthen unitcost by removing duplication of operational cost in the value chain and quote suitablyto win large international orders. A formation of consortia without disturbing theindividual identity of the units, will lead to a combined effort in the marketing andovercome hurdles of smaller size for units.Guidance from NSIC in this segment will help decide the cluster member’s furtheroutlay of such consortia.NSICs role in Procurement:An active role must be undertaken by NSIC in helping formation of such canalizingagency, with a broad outlook for capacity building of MSME units. Public institutes likeGITCO, financial supporters like SIDBI, banks and BMOs will play a very important andactive role here.
  50. 50. NSICs role in Production:Technology Related: When we refer to the technology, we always look in the productresearch for taking up the manufacturing activity. For a product where technology isalready available and easily made into the practice, there is nothing to search about.However, for a new product research, MSME units have no easy resource available. Thereanother aspect of modification of technology for effectively reduction in the cost. A thirdangle related to effective process control, which helps optimum utilization of raw materialsand skills. In order to have advantage of technological development and enhanced margin,industries need this service. Our findings are indicative of an absence of such exchange oftechnology between the BDS and MSME units. So, here is the role of NSIC. There arevarious reasons associated for this vacuum, the most important being absence to fair fareknowledge sharing between the technical support service providers and MSME units.
  51. 51. NSICs role in Quality Analysis:Industry needs a lot of support role while establishing the standards of the productmanufactured. It needs establishing quality approvals. A quality certification for the rawmaterial used and finished product offered for marketing, is very important and so ismonitoring of process controls. There is a vacuum from supply side, in majority of theissues except for quality testing. So NSIC needs to check the supply side of the services bybecoming a canalizing channel between existing organizations.
  52. 52. NSICs role in Marketing:NSIC needs to identify here a very effective role of MSME and Ministry of commerce,with an active participation of the BMO’s. The public participation in terms of fundingsuch marketing events will boost up desire by participating units.Again NSIC needs to be canalizing agency to bring the units and buyers together. Aregular domestic buyer-seller meet, trade fairs inviting foreign buyers and a directinteraction of the units with the consuming units is essential to be provided in form ofa service.
  53. 53. NSICs role in Certification and Registration:There is a wider recognition required for the product by way of registration of features,constitution, and patenting process. NSIC needs to address issues like obtainingconsents from different regulators, international quality approvers, seeking availingfuels at cheaper rates by way of obtaining registration under government quota asalso energy audits for effectively reducing cost by engaging in technical matters. Amixed presence in these segments needs a lot of attention. It also needs to generateawareness programs.
  54. 54. NSIC s role in HR and Training:Under this, NSIC needs to assist the SMEs and needs to organize exposure visit by thecluster members to other identified clusters located in distant places which will impart a lotof knowledge sharing. NSIC needs to relate with Ministry of labour welfare and BMO’sfor monitoring large scale funding activity
  55. 55. Other operations that NSIC needs to take care of are:1. Create awareness amongst the enterprises.2. Environment related issues for the ETPs and correlation with regulators.3. Obtain quality registrations such as REACH to compete in the international Markets4. Need education for cleaner production amongst SME’s.5. Ensuring cost reduction in achieving model value chain by energy savings.
  56. 56. 6. Automation to be in Industry to avoid human errors7. Affordability of services needs lot of education/persuasion8. A detailed study on man-power management,9. Creation of a raw material bank,10. Creation of a co-operative society for marketing,11. Incorporation of a separate company for marketing the products,12. Creation of Bi-product chain and marketing there of13. A Single Window service should be availedFINANCIAL PLANNINGFinancial nuances can be calculated or derived by taking idea from costs and margins ofalready existing Services Providers. Financial benefits will also be greater for NSICbecause: 1. It is a public sector enterprise which can operate on a very large scale. Hence even if margins from single MSME is less but on the larger scale benefits will be more. 2. Another aspect is that expenditure on research and development as well as initial capital providing would be very less. 3. Expenditure will only incur due to development of cost cutting techniques and organization of awareness generating programs. 4. It won’t be difficult for NSIC to arrange formal finance from Banks under a proposed model due to feasibility of the project. Also to aid this very cause there is an already existence of SIDBI, etc. NSIC just needs to formulate a policy to bridge the critical gaps and thus increase effectiveness of similar organization.To formulate the fees NSIC must use weight age model in which weightage is given todifferent aspects of services and is accordingly charged:
  57. 57. On the Expenditure a proper method may be developed after looking at the costmanagement of other BDSsFor this purpose let us have a look at Who does, Who pays Matrix which will give us anidea of expenditure management.
  58. 58. This data gives us an idea of profitability of operating in this cluster. However,detailed analysis is not possible at this stage.
  59. 59. ANNEXURE I
  60. 60. ANNEXURE II
  61. 61. PART III: RURAL AGRICULTURE-CONTRACT FARMINGWhat does Contract Farming Do?A plain vanilla contract farming arrangement is a commitment by a farmer or a group offarmers to grow and deliver to the buyer agreed quantities of a commodity at apredetermined price. The buyer (trader or a corporate), as always, has the additionaloptions of either buying the commodity from the market or growing it himself on own orleased land.The following is a schematic representation:Therefore, at its simplest, contract farming is the creation of an additional linkingmechanism through another channel of disposal of the crop. It is thus a part of theoverall supply chain, which acts parallel to the standard market mechanism.
  62. 62. When does Contract Farming Work?Contract farming is an effective device for introductng unknown crops or farmtechnologiesLarge-scale cultivation of tomatoes was unknown in Punjab at the beginning of the 1990s.The accepted wisdom had it that the growing season was too short to be attractive to thefarmer. Hardly any markets existed for the farm purchase (since there was no productionworth the while of traders) of this otherwise popular constituent of the home kitchenvegetable basket.Thus, with the help of CONTRACT FARMING tomatoes in Punjab were new cropenterprises for the farmer, with attendant uncertainties of production and meant that thefarmer would be subject to risk. Large corporate entities backing the new crop venturethrough contracts and supplies helped improve the risk perception and persuaded thefarmer to accept the new crop.Contract farming helps when markets do not exist or are underdeveloped; conversely,contracts diminish in importance with development of competitive markets.Both these efforts also entailed considerable market risk (maximum in the case of poplars),since there were no other known buyers. Purchase contracts helped overcome the marketrisk as well. Conversely, when good, competitive markets developed for both thesecommodities within a decade of introduction of contracts, farmers and buyers no longerneeded the support of contracts. Markets became the effective and key constituents ofthe supply chain.Contract farming works when specie quality requirements need to be observed.Contracts are effective when there is no zero-sum game (one partys gain at the expenseof the other). They are ideal for a win-win situation, since they represent a naturalmutual dependency.
  63. 63. Contracts succeed when they contain demonstrably fair risk transfer or coveragemeasures and trust relationships built over long periods.Contracts succeed when they are critical to the continued operations of the buyerorganization. They are deficient when their contribution to the buyer is minor.Contracting organizations should pay far greater attention to the structure of contracts andput in far greater effort to ensure that they work only when their own main activity wasdependent on the successful performance of the contract.Strong, self-regulatory social systems and pressures help improve contract performance.The farmers working in a group helps in reducing the cost of transactions, as the buyerneeds to deliver his contributions - supplies, extension, etc - within a relatively compactarea and could reasonably expect group members to learn from each other.Creation of education and health facilities, infrastructure and other such activities havehelped build up the community spirit and add to the social pressure to adhere to contractprovisions.The most important factor in determining whether contracts would work or not is theselection of the crops in the first place. They can be classified on the basis of the risksinvolved, both in production (secondary, in economic parlance) and in marketing(primary). Completely unknown crops are high in both these risks, whereas newer varietiesof existing crops or crops with stringent quality specifications have high production risks,even when buyers guarantee prices. Crops with relatively price-sensitive demands, such asvegetables have high market risks, even as the farmer is well familiar with the productiontechnology. Finally, subsistence crops are the least risky on both parameters. The
  64. 64. Following diagram illustrates this:What Role for NSIC and it’s advantages?The highly publicized large scale scheme (a variant of contract farming covering foodcrops) mostly aims to shield the farmer from the market. It has some major disquietingfeatures.It provides inputs, mostly purchased from others, offers extension at a price (which farmersincreasingly question) and sells the crop to the eventual buyer after adding on its owncommission. The unintended consequence is that there is now an additional link withits own cost in the supply chain, which lengthens it instead of shortening and leads toadditional intermediate retentions instead of reducing the difference betweenconsumer expenditure and farmer receipts.
  65. 65. Hence if NSIC is mentoring an SME in this field it will help both the farmers and thecorporate by shortening supply chains and ensuring that Contract Farming works(by keeping a check on issues discussed in previous section).These Business Development Services will help in implementing of high end Technologiesin agriculture by reducing the risk capital and encouraging more small scale groups to enterin contract farming based Social Entrepreneurship.Not only this, presence of an organization like NSIC may facilitate checking of groupsharassing farmers for self motive and thus will help in protection of rights of weak farmers.NSIC’s involvement will help in pinning up of defaults which are difficult under currentscenario.Also involvement of NSIC as a Business Developer will further help in following ways: • Reform-linked central assistance to MSMEs for development of marketing infrastructure, common facilities for aggregation & value addition of produce and grading/ packaging/ quality certification facilities • Schemes to set up modern terminal markets under NHM for perishable agricultural produce with suitable backward & forward linkages. • Help MSME’s with Development of post-harvest/ cold chain infrastructure, CA storage facilities, refrigerated transportation by road/ rail, perishable cargo centres at air & sea ports under NHM • Develop an Action Plan for selection of Food Processing Industries including setting up of Mega Food ParksUnder NSIC’s guidance inexperienced MSME’s will use contract farming as well-planned,precisely targeted tool of limited impact and not as a powerful weapon of massachievement.Its presence will help contract farming be used for the evolution of competitive marketingand not as a permanent substitute. Last but not the least; it will help in making contractfarming even more attractive for increasing credit flow to agriculture.
  67. 67. PART IV: SUPPORT BUSINESSES FOR EXTRACTION AND EXPLORATION OF OIL & SHALE GASINTRODUCTION:Oil and Gas Industry in India is a 110 billion USD industry (as in March 2007). The Indiaoil & gas demand ranks it sixth in the world. Nearly 70% of the petroleum oil requirementsof India are met by the imports. This is a matter of concern for the Indian Government as itmight lead to oil crisis in India. To tackle this, large-scale oil and gas exploration anddrilling is being undertaken.In India, the oil and gas industry jobs attract huge labor force. With the inset of biggerplayers into the oil & gas sector in India engaging in mass oil & gas production there is arapid increase in the demand of oil & gas exploration and drilling equipment andservices.Despite of new finds in oil & gas wells, increase in the drilling operations,advancement in oil extraction methods, pumps and machine and other equipmentsand technology, the costs have not come down.An analysis report of the oil & gas industry in India shows the stagnation in the current oilproduction and extraction processes diverting towards deepwater offshore drilling forfinding newer oil & gas reserves where the drawback is lack of technical expertise inIndia. Also theres an acute shortage of skilled labor force, latest drilling equipments andmachines.Unfortunately, the solutions to these problems have come in the form of foreigncollaborations for better technology especially in deepwater drilling. The story ofextraction processes of shale gas will also be the same. Special training institutes need tobe set-up for providing skilled labor for technical exploration services of conventional oiland gas as well as shale gas. Foreign collaborations and introduction of BusinessDevelopment Service providers like NSIC will bring the necessary finance to suchprojects.
  68. 68. ROLE OF NSIC:As there is no participation of Indian industries in the Oil & Gas support sector, NSIC willfirst need to do a lot of ground work along with Government of India, Ministry ofPetroleum, Indian PSU’s and Oil majors like Reliance. This will include: 1. Recognition of specific areas for initiating the process of Research and Development 2. International Co-Operation Activities: NSIC must collaborate with foreign institutes and companies and set up various incubators in top most colleges/universities in this particular field. Also, it needs to promote innovative ways and assist it in preliminary stages. 3. Exhibition and Technology Fair: Organize Exhibitions and encourage participation. 4. Technology Support: Technology is the pre-requisite for sustaining in this sector for any MSMEs. Hence, NSIC needs to implement a technology strategy in addition to financial, marketing and operational strategies and adopt the one that helps in building a strong foundation for this sectorAs these foundations are strengthened proper Business Development strategy must beoutlined by NSIC for support of entrepreneurship that inculcate as a result of these efforts.This sector will strengthen and ensure continuous catering business development servicesfor NSIC over the next 2-3 decades.
  69. 69. CONCLUDING REMARKS:The objective of the strategies provided by AAA solutions is to ensure continuous growthof Business activity of NSIC over the span of next 2-3 decades.Keeping in mind the operational span of a sector, selection of 4 target sectors were made.Engaging in operations discussed in this Business Strategy will also benefit society and thecountry by ensuring balanced growth.All operations suggested have been included in this plan keeping in mind that it would bemuch easier for NSIC (due to its expertise) to operate with other government institutionsthan any other organization.
  70. 70. REFERENCES:UNDP Report on Business Development ServicesUS Department of EnergyMinistry of Small Scale Industries Report 2007-08Ministry of Small Scale Industries Report 2008-09Report of Entrepreneurship Development Institute AhmedabadReport of IL&FS Cluster Development Initiative Ltd on Kanpur Cluster-2006WikipediaReport by Ministry of Petroleum India, 2009-10Bloomberg and Financial Times, 2010Occasional Paper- Department of Economic Analysis and Research, NABARD, Mumbai,2005