New and Innovative Schemes for Technology Development of Micro, Small and Medium Enterprises in India

By Shri Uday Kumar Varma
Secretary, Ministry of Micro, Small & Medium Enterprises

New Delhi, Jan 21, 2011 (Washington Bangla Radio / PIB-India) The Micro, Small & Medium Enterprises (MSME) play a pivotal role in the overall industrial economy of the country. The MSME sector acts as a breeding ground of entrepreneurship, often driven by individual creativity and innovation. This sector contributes 8 per cent of the country’s GDP, 45 per cent of the manufactured output and 40 per cent of its exports. The MSMEs sector provides employment to about 60 million persons through 26 million enterprises. The employment potential as well as the overall growth in the MSME sector is much higher than in the large industries. Further, the sector has been consistently registering higher growth rates than the overall manufacturing sector. Keeping in view the huge contribution of the sector in Indian economy, the Ministry has been implementing various schemes and programmes for the promotion and development of the sector. The schemes cover all aspects of MSME operations including infrastructural, technological, credit and marketing support.

It is increasingly recognized that while credit, marketing etc. are essential, the critical factor that drives growth is technology. In the present economic scenario of globalised competitiveness, it is the technological edge that will determine the winners. In view of this reality, the Ministry is initiating a number of programmes and schemes for technology development of the sector. It has recently introduced 10 innovative schemes under the National Manufacturing Competitiveness Programmes (NMCP) covering entire gamut of manufacturing in the sector aim to develop global competitiveness among Indian MSMEs.

Lean Manufacturing Competitiveness Scheme

The Lean Manufacturing Competitiveness scheme, launched in 2009, aims to reduce manufacturing waste, thereby, increasing competitiveness and productivity of the MSMEs. Under Lean Manufacturing, simple techniques are applied which identify and eliminate waste and streamline the manufacturing system. The scheme is implemented under the Public Private Partnership mode. Initially, the lean manufacturing techniques have been introduced in 100 mini clusters on a pilot basis. It is expected that 1000 MSME units will be benefited for the pilot. Over 70 Special Purpose Vehicles have been formed by MSME units in various industry clusters and 42 Lean Consultants have been selected as part of the scheme implementation.

The Design Clinic Scheme

The Design Clinic Scheme brings design experts in MSMEs on a common platform to enable the MSMEs to access expert advice and cost effective solutions for their real- time design problems. The scheme introduced in the year 2010 comprises of two major parts -Design Awareness and Design Project Funding. The Design Awareness stage comprises various activities like seminars, workshops and diagnostic studies of the clusters. In Design Project Funding, projects of students, consultants/designers and consulting organizations are assisted by providing 60% of the project cost by way of Government grant. The scheme will initially be implemented in 200 MSME clusters. So far 43 seminars have been organized in 99 MSME approved clusters and 15 design projects have been approved.

Marketing Assistance and Technology Upgradation

Competitiveness in marketing is sought to be improved through the Marketing Assistance and Technology Upgradation scheme, by using latest techniques and technologies. The broad activities under the scheme include technology upgradation in packaging, development of modern marketing techniques, competition studies, State/ district exhibition, corporate governance practices, marketing hubs, etc. Under the scheme introduced last year, ten product groups have been identified for studies on packaging. Further over 140 units have been identified for participation in industry fairs and exhibitions.

Technology and Quality Upgradation

The Technology and Quality Upgradation Support for MSMEs aims to sensitize the manufacturing MSME sector in India to upgrade their technologies to reduce emissions of green-house gases, adoption of other technologies mandated as per the global standards, improve their quality and reduce cost of production etc., towards becoming globally competitive. The major activities planned under the scheme include capacity building of MSME clusters for Energy Efficiency/Clean Development Interventions, Implementation of Energy Efficient Technologies in MSME sector, Setting up of Carbon Credit Aggregation Centres and encouraging MSMEs to acquire Product Certification Licenses from National / International Bodies. Under the scheme introduced in 2010, twenty clusters have been identified for intervention.

Promotion of ICT

The Promotion of Information and Communication Tools (ICT) scheme envisages that SME clusters, which have quality production and export potential, shall be identified and encouraged and assisted in adopting ICT applications to achieve competitiveness in the national and international markets. The activities planned under the scheme includes identifying target clusters for ICT intervention, setting up of E-readiness infrastructure, developing web portals for clusters, skill development of MSME staff in ICT application, preparation of local software solution for MSMEs, construction of e-catalogue, e-commerce etc. and networking MSME cluster portal on the National level Portals in order to outreach MSMEs into global markets. The Scheme launched this year will initially be implemented in 100 clusters.

Tolling and Training Centres

The Setting up of Mini Tool Room and Training Centres scheme envisages setting up of 15 New Mini Tool Rooms under PPP Mode, during 11th Five Year Plan period for creating tooling and training facilities in private sector. Entrepreneurs and Associations would be selected through competitive bidding to setup Mini Tool Rooms. The Government support is restricted to Rs.9.00 Cr. on Viability Gap Funding basis upto 40% of the project cost. The scheme with a total cost of Rs.210.00 crores (with Government contribution of Rs.135.00 crores) was approved. The objective of the scheme is to develop more tool room facilities i.e. technological support to MSMEs, by creating capacities in the private sector for designing and manufacturing quality tools and also to provide training facilities in the related areas. The scheme will be implemented in three models in order of preference, viz. Private Partner i.e. an individual, firm, company, association, NGO or society (Central PPP Model), SPVs set up by the States in partnership with private partners (State PPP Model) and State Government or State Agencies other than NGOs (Centre-State model).

Improving Quality in Products

The Enabling manufacturing sector to be competitive through Quality Management Standards (QMS) and Quality Technology Tools (QTT) was launched in 2009 in order to improve quality in productivity in the MSE sector. The scheme is aimed at improving the quality of products in the MSE sector and inculcates the quality consciousness in this sector. The major activities under this scheme are (i) introduction of appropriate modules for technical institutions (ITI s/Polytechnics) (ii) organizing awareness campaigns for MSEs, (iii) organizing competition Watch (C-Watch), (iv)

implementation of Quality Management Standards and Quality Technology Tools in selected MSEs, (v) monitoring International Study Missions and (vi) Impact Studies of the Initiatives.

Awareness on IPR

The Building Awareness on Intellectual Property Rights (IPR) scheme has been launched to enable Indian MSMEs to attain global leadership position and to empower them in using effectively the tools of Intellectual Property Rights (IPR) of innovative projects. The main features of the scheme are: Awareness/Sensitization Programmes on IPR; Pilot Studies for Selected Clusters/Groups of Industries; Interactive seminars/Workshops; Specialised Training; Assistance for Grant on Patent/GI Registration; Setting up of IP Facilitation Centre (IPFC); and Interaction with International Agencies. These initiatives are being taken in Public-Private Partnership (PPP) mode. About 112 Awareness programme and 35 seminars have been organized along with setting up of 18 IP Facilitation Centres.

Bar Code Certification

The Marketing Assistance/ Support to MSEs scheme aims to popularise the Bar Code registration and motivate the Small and Micro-manufacturing Enterprises to adopt the Bar Code Certification on large scale and to sell their value added products worldwide and enable higher export price realization. It also helps in domestic marketing (wholesale & retail). 75% of annual fee (recurring) of Bar Code certification for the first three years are reimbursed to Micro & Small Entrepreneurs, under the Scheme. About 101 MSMEs have been benefited so far.

Nurturing Innovative Business Ideas

The Support for Entrepreneurial and Managerial Development of MSMEs through Incubators scheme aims at nurturing innovative business ideas ( new/ ingenious technology, process, products, procedures, etc) which could be commercialized in a year. Under this component various institutions like Engineering Colleges, Management Institutions, Research Laboratories, etc are provided funds up to Rs. 6.25 lakh for hand holding each new idea /entrepreneurs. The Incubators provide technology/guidance, workshop and laboratory support and linkage to other agencies for successful launching of the Business and guide the entrepreneur in establishing the enterprise. Under the scheme, 76 Business Incubators have been set up and 190 ideas approved so far.

CDP for Enhancing Productivity

The Ministry of Micro, Small and Medium Enterprises (MSME) has adopted the cluster development approach as a key strategy for enhancing the productivity and competitiveness as well as capacity building of Micro and Small Enterprises (MSEs) and their collectives in the country. The cluster development initiatives are being implemented under Micro and Small Enterprises Cluster Development Programme (MSE-CDP).

Under MSE-CDP, financial assistance is provided for preparation of Diagnostic Study Report with a maximum grant of Rs 2.50 lakh, 75% of the sanctioned amount of the maximum project cost of Rs 25.00 lakh per cluster [90% for cluster in NE & Hill States] for Soft Interventions, upto Rs.5.00 lakh for preparation of Detailed Project Report (DPR), 70% of the cost of project of maximum Rs 15.00 crore for Common Facility Centre [90% for NE & Hill States} 60% of the cost of project of Rs 10.00 crore, excluding cost of land for Infrastructure Development [80% for NE & Hill States} After launch of the cluster mode schemes, more than 470 clusters have been covered under MSE-CDP scheme. Moreover, 124 proposals have been for taken up for infrastructure development. A total of 10972 plots have been allotted to small and tiny units in these projects and employment generation of 37555 persons has been achieved. The Cluster Development approach has been very successful. The success is evident in six Handmade Safety Match Clusters in Tamil Nadu where the cluster mechanism evolved is instrumental in creating synergy among safety match clusters under community movement, scaling up their operation, creating employment opportunities. In another case of Brass and German Silver Utensils Cluster, the turnover of the cluster has increased to almost three times, cost of scrap meting has reduced and employment increased.

After certain modifications in the guidelines of the MSE-CDP and increasing awareness among various stakeholders, the scheme is poised for a big leap in the near future.

PMEGP Generating Employment

An area where MSMEs play a pivotal role is in employment generation. Keeping this in view, Prime Minister’s Employment Generation Programme (PMEGP)’ a national level credit linked subsidy scheme, was introduced in August 2008 with a total plan outlay of Rs.4485 crore towards margin money subsidy for generating an estimated Rs.37.38 lakh additional employment opportunities during the four terminal years of XI plan (2008-09 to 2011-12). Under this programme, financial assistance is provided for setting up of microenterprises each costing upto Rs.10 lakh in service sector and Rs.25 lakh in manufacturing sector. The assistance is provided in the form of subsidy upto 25 per cent (35 per cent for Special category including weaker sections) of the project cost in rural areas while it is 15 per cent (25 per cent for Special category including weaker sections) for urban areas. PMEGP is implemented by Khadi and Village Industries Commission (KVIC) as a nodal agency. Financial assistance is provided under Backward and Forward Linkages to implementing agencies of PMEGP for awareness camps, exhibitions, bankers meeting, workshops, Entrepreneurship Development Programme, physical verification of units, printing of literature and publicity, advertisement , E-tracking etc. The Ministry of MSME has taken a number of initiatives for further improving the performance under PMEGP through KVIC like implementing e-application tracking system and related data collection and its uploading in the system, relaxation in mandatory EDP stipulation etc. The Programme has elicited tremendous response from the public. During 2009-10, 3.20 lakh applications were received by the various implementing agencies of which 67473 cases have been sanctioned by banks and disbursement could be made in 39335 cases only utilising Rs.742.76 crore as margin money subsidy. The estimated employment generation is for 4.42 lakh persons. The performance of this programme is likely to be still better in the current year. (PIB Features)