MINISTRY OF MICRO, SMALL AND MEDIUM ENTERPRISES (MSMEs), GOVERNMENT OF INDIA CLUSTER APPROACH FOR THE DEVELOPMENT OF MSMEs IN INDIA Office of Development Commissioner (MSME) 01.12.2010

Micro, Small & Medium Enterprises As per quick results of Fourth Census, Employ 59.72 million People in 26 million MSMEs Give 45% of Manufacturing Output Account for 40%+ of Exports Contribute 8% to GDP Industrial Growth Rate MSMEs: 10.8%; Overall: 7.7% 2

Definition of MSMEs Manufacturing Enterprises: Micro Enterprises - investment up to Rs.25 lakh Small Enterprises - investment above Rs.25 lakh & up to Rs. 5 cr. Medium Enterprises - investment above Rs.5 cr. & up to Rs.10 cr. Service Enterprises: Micro Enterprises – investment up to Rs.10 lakh Small Enterprises – investment above Rs.10 lakh & up to Rs. 2 cr. Medium Enterprises – investment above Rs.2 cr. & up to Rs.5 cr.

DC (MSME): Major Schemes Credit Guarantee Scheme Micro Finance Scheme Skill Development Programmes Credit Linked Capital Subsidy Scheme Cluster Development Programme National Manufacturing Competitiveness Programme 4 4

MICRO & SMALL ENTERPRISES – CLUSTER DEVELOPMENT PROGRAMME (MSE-CDP) Office of DC(MSME) Ministry of MSME Government of India

What is Cluster Group of enterprises located within an identifiable contiguous area & producing same/similar products/services. Essential characteristics: Similarity or complementarity in the methods of production, quality control and testing, energy consumption, pollution control, etc Similar level of technology and marketing strategies/practices Common challenges and opportunities.

Objectives of Cluster Development To support sustainability and growth of MSEs by addressing common issues such as improvement of technology, skills and quality, market access, access to capital, etc. To build capacity of MSEs for common supportive action through formation of self help groups, consortia, upgradation of associations, etc. To create/upgrade infrastructural facilities in the new/existing industrial areas/ clusters of MSEs. To set up common facility centres (for testing, training centre, raw material depot, effluent treatment, complementing production processes, etc).

Strategy and Approach Given the diverse nature of the MSEs, the MSE-CDP scheme aims at addressing the needs of the industries, through well defined clusters and geographical areas. This enables in Achieving the economies of scale in terms of deployment of resources Focusing on the specific needs of similar industries. Capacity building of associations Setting up of special purpose vehicles (SPVs), consortia, etc. Leveraging the resources

Scope of the Scheme Overall improvement of MSE clusters by : Diagnostic Study Soft Interventions Setting up of Common Facility Centres (CFCs) Creation and upgradation of Infrastructure in industrial estates/ clusters Development of land, Provision of water supply, drainage, Power distribution, non- conventional sources of Energy for common captive use Construction of roads, Common facilities such as First Aid Centre, Canteen, etc

Project Cost and GoI Support Intervention Cost (Rs. in lakh) GoI in % Normal cluster # DSR  2.50 *1.00 100 DPR for i) CFC  ii) Infra dev 5.00 Soft interventions **25.00 75 90 Hard Interventions 1500.00 70 Infra Dev 1000.00 60 80 *For MSME-DI,  50% released after the approval, 50% after acceptance of report. ** Moderated as per size/ turnover of the cluster. Max Rs 25.00 lakh per cluster # NE & Hill States, Clusters with more than 50% (a) micro/ village (b) women owned (c) SC/ST units

National Manufacturing Competitiveness Programme (NMCP) for MSME Sector Objective Focus on increasing competitiveness of MSME sector Key for survival in domestic / international markets Challenges Mainly supply side initiative Fear of disclosing data to others / Govt. Hesitant in giving Private contribution

National Manufacturing Competitiveness Programme (NMCP) Summary (Rs National Manufacturing Competitiveness Programme (NMCP) Summary (Rs. crore) S. No. Approval Date Name of the Scheme Scheme GOI Contr. Total cost 1. April - 07 Marketing Support / Assistance to SMEs (Bar Coding) 1.50 2. May – 08 Enabling Implementation of Quality Management Standards and Quality Technology Tools (QMS/QTT) for SMEs 41.10 50.00 3. April – 08 Entrepreneurial & Management development of SMEs through Incubators 66.50 79.45 4. Aug – 08 National Campaign for awareness in Intellectual Property Rights 55.00 5. Setting up Mini-Tool Rooms on PPP Mode 135.00 210.00 6. July - 09 Application of Lean Manufacturing 25.87 30.57 7. Jan – 10 Design Clinic Scheme 49.08 73.58 8. Technology & Quality Up gradation support for MSMEs 65.73 140.98 9. Feb – 10 Marketing Assistance & Technology Upgradation for MSMEs 18.61 23.00 10. Aug – 10 Promotion of ICT in Manufacturing sector 47.70 105.00 Total 501.09 769.08

Quality Mgt. Systems/Tools (QMS/QTT) MSMED - INDIAN SCENARIO Quality Mgt. Systems/Tools (QMS/QTT) Scheme to support knowhow & implementation of Quality Systems Tools in MSME sector Conforming to International Standards, 5S, S-sigma, TQM, TPM ISO 9000, ISO 14000, ISO18000, ISO 22000 etc. Major activities to propagate Quality Management in MSMEs are: Compulsory Courses in 1800 ITIs / Polytechnics Awareness Programmes in Clusters on QMS / QTT Implement Quality Mgt Techniques among MSMEs Special Studies for Threatened Products Assist International Study Missions for SME groups 13 13 13

Incubators 14 14 Objective: Assist Incubation of Innovative Ideas MSMED - INDIAN SCENARIO Incubators Objective: Assist Incubation of Innovative Ideas Promote Emerging Technological & Knowledge-based Innovative Ventures Encourage Ideas to Become MSMEs 100 BIs to be Located in engineering colleges, management institutions and R&D Institutes @ 25 p.a in 4 yrs. Govt. Grant (Max. 85%) = Rs.4 - 8 lakh per Idea Each BI to Assist 10 Ideas / Units – Max. Rs.62.5 lakh BIs to support and Nurture ideas for commercialization in a year 14 14 14

IPR Campaign 15 IPR Tools : MSMED - INDIAN SCENARIO IPR Campaign IPR Tools :  Patents  Trademark  Indl. Design  Copyrights  G.I.  Trade Secret Most MSMEs are unaware of IPR Benefits / Norms Focused Activities Awareness & Sensitization Programmes Pilot Study Interactive Seminars / Workshops Short / Long Term Training IP Facilitation Centre Assistance for Grant on Patent / GI Registration 15 15

Lean Manufacturing Scheme Lean Manufacturing (LM) is Better Production of Goods by Eliminating Non-value Added Activities / Wastes Helping to Produce More with Same Resources LM is very important of Quality and Cost Management tools Scheme is under operation on pilot basis for 100 mini clusters NPC is working as monitoring & Implementing Nodal Agency Initially cluster units to be made aware regarding lean techniques ‘Mini Clusters’ of 10 units (appx.) to be created SPV to be formed by ‘Mini Cluster’. GOI : Private Share – 80:20 (1st year only) 16 16

SRIVARI INDUSTRIES Before After

SA INDUSTRIES Before After

AASHISH AUTO COMPONENTS BEFORE AFTER

SHIVAKRISHNA INDUSTRIES BEFORE AFTER

Design Clinics Scheme Bring the industrial design fraternity closure to the MSME sector Increase the competitiveness of local products and services through design Develop an institutional base for the industry’s design requirement Major activities : Setting up of design clinic centre - HQ Regional Centres – 4 Nos. Awareness seminars and workshops – 200 Clusters. Design projects for individual MSME or a group of MSMEs Students Projects Orientation Programme for Designers NID to work as a nodal agency 21 21

Technology and Quality Upgradation Support MSMED - INDIAN SCENARIO Technology and Quality Upgradation Support Objective: Focuses on Energy Conservation, CDM and Product Certification Activities Proposed: Capacity Building of 30 Clusters in Energy Efficient Technology Credit Linked subsidy for EET Projects Cluster level CDM initiatives Encourage MSMEs through subsidy to acquire National as well as International Certification of Products 22 22

Marketing Assistance and Technology Upgradation Scheme for MSMEs Major activities: Technology upgradation in packaging Skill upgradation /development for Modern marketing techniques Special component for NER clusters State/District level local exhibitions Corporate governance practices Marketing hubs for B2B meets Reimbursement to ISO 18000/22000/27000 certification 23 23

Promotion of ICT in SMEs Demonstrative Programme for 100 clusters Implementation in following areas: Components of scheme : ICT Awareness, through IT Cos. Preparation of Cluster DPRs on ICT interventions E-readiness centres Cluster based local ICT Solutions E-Marketing – through E-Catalogues / cluster websites Skill Development of Workforce on IT application for MSMEs Setting up national portal for integration 24 24

Thank You 25 25