Satyaprakash TL Director, Industries

Trends in economy 1. More than 56% workforce is in agriculture 2. Approximately 94% of the enterprises in informal sector. 3. Quality and intensity of urbanisation is less than satisfactory as compared to China

Why SMEs are not amenable for any interventions? power Informal Sector(94%) Formal Sector(6%) skill Technology Credit Not amenable to any interventions

Case Illustration: Yamunanagar Plywood cluster Yamunanagar Plywood Cluster. 300 plywood units: Majority of them small enterprises: Plywood, Ply board and door frames. Turnover : Rs. 700 Crores. Exports negligible.

Process Map: Plywood Manufacturing

Manufacturing Process I

Manufacturing Process II

Intervention Mapping: Scope of Value Enhancement Hard Intervention: Soft intervention:  Technology:  Moisture testing  Sun drying v/s furnace drying  Mechanical pressing  Raw material bank: Leverage scale  90% from Burma  Skill development  Lean manufacturing/ six sigma/ kaizen etc.  Common branding & marketing: SME V/S Large industry. Regulatory issues:Miscellaneous  Use of subsidised urea.  Poor labour practices.  Pollution related issues.  Forest produce Certification.  Energy audit  Branding and marketing/ pricing( Rs. 35 v/s Rs. 50)  Captive power  Energy efficiency.

Customized Solutions Forging cluster : Huge working capital: raw materials Microscopes : Supply chain Finance Plywood : 160 days of credit availability: surplus credit Printing cluster : low volume of credit on daily basis. Need for customised solutions

Removing Structural Barriers Land is available but unviable for manufacturing Capital is available but bankers won’t find the books attractive Manpower is available sans skills Polytechnics have programmes but won’t have business models These problems can be addressed in a logical sequel.

Positioning of Solutions CSIR can develop technologies but how will it facilitate adoption? SIDBI can develop a structured financial product, but how will it disburse? NTPC can produce power but who will ensure that SMEs will get it at reasonable prices? NPCB can device a regulatory framework but who will ensure the compliance? One stop solution is Cluster platform.

Approaching a governance issue Understanding the nature of problem Quantifyi ng the problem Create institutional platform Devising models & processes Desired outcomes PeopleModelsProcessesInstitution Options State government? Backbone organisation? Management specialists, scientists, policy makers, engineers, consultants, designers : all working in different directions.

Common Facility Centre as a magnate for SMEs power Informal Sector(94%) Formal Sector(6%) skill Technology Credit Not amenable to any interventions CFC Incoherent interventions

Cluster Platform Cluster platform: Common facility centre Driven by business model: PPP framework Operated by professional management Both physical and virtual platform SME Procurement support Allows several groups, sub- groups and interest groups to interact Possibility of regulatory role to Common Facility Centre Answers complex problems related to skill development

Grant Thornton India, All Rights Reserved Road Map

What have we done- Haryana Government We have removed the barriers to human potential by building clusters We have done away with all individual subsidies Infrastructure oriented growth: MSME CDP programme as strategic engine Engaged with 20+ clusters and intend to commission 50 CFCs by Dec 2015 with Professional Inputs from Grant Thornton Design centres, testing centres, tool rooms, prototype design centres, R&D centres, incubators etc. are being commissioned It will be the single largest SME sector intervention by 2015