Milagrow Business and Knowledge Solutions conducted a Curtain Raiser Ceremony for its upcoming World SME Conference '09.
This presentation, on the what awaits everyone at the conference and the path breaking study released jointly by Milagrow & IMT, Ghaziabad, was shared with the press that had gathered on the occasion.
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Curtain Raiser for The Milagrow World SME Conference '09
1.
2. Milagrow’s Journey……
Consulting with a Difference.
Knowledge Division.
Capacity Building.
MSME Services.
3. During the Course of our Journey we realized that we cannot just be bystanders in
National SME Affairs.
We wanted to create a truly global, bias free, forum for SMEs not just in India but for
the World
A forum which brings together all the stakeholders of this space and exposes SMEs
to global standards in people, processes and technology
And so was born…….
4. The 1st World SME Conference
Supported by The Ministry of MSME
More than 250 Delegates from around the World
60 Thought Leaders from Government, Industry,
Academia and Associations
20 Industry International Speakers Representing 12 Countries
Including 20 Partners and 40 Media Partners Promoted
the Event
Release of SME Studies and Policy Recommendations
for The Government and Large Enterprises
6. MSME Cluster Study
Involving 3000 MSMEs in 4 States
Almost 100% of all the firms outside the metros are either unaware or haven’t
benefited from any initiative of their representative apex bodies.
Over 75% of all the firms report an attrition rate of over 25%.
75 – 80% of all the firms do not have any quality certification
9. Raison d'être
Global Forum for all stakeholders in the SME Universe
with the support of the Ministry of MSME.
10. Raison d'être (contd.)
Helping Entrepreneurs and SMB Owners Explore New
Business Opportunities
Leveraging Low Cost Solutions to Empower Their
Business
Examining the Role of Government, Industry,
Associations in promoting SME Development
11. Theme
MY WAY, MY VISION: From Giant Ideas to Giant Corporations
‘My vision’ will see Government bodies, Corporate India, represented by
SME Associations and other some of the biggest corporate
stakeholders in the SME eco-system entities in the nation, will share
describing their vision for the future of success stories on how companies
SMEs in India. were built from grassroots to global
giants’ status in ‘My Way’
12. What Awaits you at the Conference….
Insightful talks from SME experts on Industry best practices
Panel discussions on Critical Issues faced by SMEs today
IT solutions for MSMEs: Lip service or real solutions
Developing an Entrepreneurial Eco-System in India
Marketing on a Shoestring
Collaborating and Competing with Foreign Partners
Innovative Sources of Funding
Opportunities During the Slowdown
14. What Awaits you at the Conference….
Release of Path Breaking Studies
An Industry Reckoner Report
Trend of efficacy of Government MSME policies in India
Comparison of MSME policies across the Indian states
Procurement provisions for MSMEs by nations across the globe
Best Practices for MSME development from Europe, North and Latin
America
15. Eminent Speakers
Will share their vision as to how MSMEs must develop
in the coming decade.
16. Eminent Speakers
Mr. Dinesh Rai Dr. H P Kumar
Secretary, Ministry of MSME CMD, NSIC
Will expand on the role of government in the
development of the MSME Space
17. Eminent Speakers
Dr. Jagdish Sheth Prof Anil Gupta
Charles H. Kellstadt Professor Executive Vice Chairman,
of Marketing, Goizueta National Innovations
Business School, USA Foundation
Will share their perspective on the growth of the Indian
& Global SME Sector
18. Mr. Harry Mr. Raman Roy Mr. Sanjeev
Brelsford CMD, Quattro BPO Bikhchandani
CEO, SMB Nation Solutions CEO, Naukri.com
Mr. Rajesh Jain Mr. Saurabh Mr. Pradeep
Founder & MD, Srivastava Gupta
NetCORE Chairman, CA India Chairman,
CyberMedia
Mr. Scott Ni Mr. Anil Mr. Vinnie
Director of Global Srinivas Mehta
Sales, Alibaba.com Head – Marketing, Executive Director,
SMB, Dell India MAIT
Would talk about IT solutions required for MSMEs and how
technology can be used as a big leveller.
19. Mr. Rajeev Mr. Suhel Seth Mr. Anurag Batra
Karwal CEO, Cousellage CEO, Exchange4Media
Founder, Milagrow
Mr. Dilip Ms. Meena Mr. Ishan Raina
Cherian Kapoor CEO, OOH
Founder Partner, CEO, Astroyogi.com
Perfect Relations
Ms. Meenakshi Mr. Harish
Madhvani Bhatia,
Managing Partner, Business Head, MY
Access Media FM
Solutions
Will introduce the gathering to “marketing on a shoestring”, digital media
solutions and effective media buying to build strong brands
20. Mr. Sameer Ms. Bala Mr. K G Alai
Kaul, Deshpande Chief General Manager
MD, Head Branch Senior Managing North, SIDBI
Banking, Global Director, NEA
Consumer Group,
Citibank
Ms. Padmaja Mrs. Ranjana
Ruparel, Kumar, Vigilance
President, Indian Commissioner,
Angels Network Central Vigilance
Commission, Formerly
Chairperson NABARD
Will explore innovative sources of funding for MSMEs in India
21. Dr. C.S. Venkat Dr. B.S. Sahay Dr. Anwar Ali
Ratnam Director, Management Director, Institute of
Director, International Development Institute Management
Management Institute Technology
Dr. Harivansh Ms. Arnavaz
Chaturvedi, 'Anu' Aga,
Director BIMTECH Former Chairperson,
Thermax
Will deliberate on training and readiness of the Indian managerial
and technical workforce
22. Spreading the Word
SMEs collectively are the powerhouse of the Indian
Economy
However for them to evolve into globally competitive
organizations they need to be exposed to global best practices
The World SME Conference is there to fulfill this goal
To truly make this endeavour a grand success we need
your help in spreading the word.
To commemorate the World SME Conference we would
like to share with you certain findings and policy
recommendations from the 1st Path Breaking Study
from Milagrow IMT Center of MSME Excellence
23.
24. Agenda
Challenges faced by Indian MSME Sector
Countries and Areas of focus
Best Practices & Recommendations for Indian
Policy Makers
25. Challenges faced by Indian MSME Sector
Inadequate financial support
Inability to promote their products & services in domestic & international
markets
Lack of support from Government organizations, large enterprises, etc.
Lack of appropriate need-based training and development programs
Lack of knowledge about low-cost brand communication solutions
Unavailability of latest news, trends and technologies
Lack of adequate networking opportunities
Poor knowledge management
27. European Countries
Finland Germany Italy
• 99.7% industries are • 99.7% industries are • Supports long-term
MSMEs, accounted for MSMEs, accounted for policies & development
61.5% employment & 70% employment in through strategic plans
52% of turnover economy for MSMEs
• Top ranked country for • Innovation driven culture • Availability of huge
supporting entrepreneurs in MSMEs supported by funding resources &
extensive R&D technological support
Spain Sweden UK
• MSMEs account for • Government is • Big role of Government
almost 80% of supportive in investing in implementing MSME
employment, 62% of huge funds in supportive policies in
sales and 50% of development of MSMEs country to develop the
exports in the economy which industry
also reflects in funding of
R&D efforts of small
business
28. North & Latin American Countries
Argentina Brazil Canada
• Private sectors plays an • Strong penetration of • MSMEs account for 45%
important role in ICT in MSMEs GDP, 60% jobs & 75% of
development of MSME net employment growth
• Important role of
• Business regulations have supporting organizations • OMSME, the supporting
been largely simplified for like Sebare & Apex organization plays an
the MSMEs accountable & not just a
responsive role
Mexico USA Venezuela
• Role of Government in • MSMEs contribute to • Important role of
Infrastructure more than 50% GDP & supportive organizations
development, training, 40% workers are skilled in the development of
technical assistance to MSMEs
MSMEs to enhance their • Policies are supportive of
workers’ productivity and funding, marketing &
welfare women entrepreneurs’
development
29. Areas of focus
Funding Structure
Technology Upgradation Assistance
MSME Policy Framework
Role of Supporting Organizations
Infrastructure Development and Marketing Assistance
Training and Skill Development Programs
31. Funding Structure: Priority Sector Lending
Best practice prevails in Current Policy in India
US Indian MSMEs contribute 40% or thereabouts to
industrial economic activity whereas their share of
credit is around 10%. Most public sector banks do
not even accomplish their MSME lending targets
Findings
Recommendations
Obama Administration wants lending to small
businesses to be reserved at a much higher levels Reserve 20% lending for MSMEs: Government
than the already existing levels. must make it mandatory that like agriculture, the
MSMEs must have atleast a 20% quota out of the
total 40% priority sector lending quota.
On an average, banks with more than $1 billion in
assets typically devote about 21% of their
commercial loan portfolios to small business loans Recognize credit rating for easier credit: The
while, community banks with less than $1 billion in commercial sector banks must recognize the
assets devote 56%. government-approved credit rating agencies and
disburse faster and cheaper credit with much lesser
documentation.
32. Funding Structure: Credit Guarantee Lending
Best practice prevails in Current Policy in India
US Italy MSMEs have to go through a lengthy process for
placing loans requests.
CGTMSE in India gives only 75% guarantee on
Findings MSME lending and charges 1.5% as the fees
Italy’s credit guarantee system takes the help of
private funds and implements a 3 layer system, Recommendations
which helps in dividing the responsibility clearly in
Disburse collateral-free credit faster: CGTMSE
different levels. The Mutual Guarantee Institution,
must work with the public & private sector banks, &
Banks & Government work together and credit
the government organs at the centre & the state, to
guarantee is as high as 80% for direct lending &
ensure that collateral free credit is disbursed faster
90% for MGI lending . The fee is minimally less at
about 0.125% Raise collateral free limit: Upto 100% collateral
free credit for highest credit-rated MSMEs and at a
In US, the Small Business Administration works in minimal fee of less than 1% upto Rs. 1 crore.
tandem with the Treasury Department and plans to
increase the maximum size of its guaranteed loans Treat CGTMSE loans differently: CGTMSE must
for small businesses from $ 2m to $5m. make the norms for declaring a loan as NPA by
Member Lending Institutions easier & transparent,
so that they are not dis-incentivized.
33. Funding Structure: Access to Bond Markets
Best practice prevails in Current Policy in India
Italy MSMEs in India have no access to international
capital-market bonds
Findings Recommendations
Government facilitates access to international Recognize credit rating: The Ministry of MSME
capital market for MSMEs and the CGTMSE must recognize the credit rating
given by the credit-rating agencies
The financial structure is rebalanced through long
maturity bonds Facilitate access to international capital
markets: CGTMSE should provide assurance
Low-cost and collateral-free credit is extended against default for issuance of international capital-
market bonds for the highest credit-rated MSMEs.
The bonds such issued will come in without any
collateral and at a much cheaper rate than the PLR
in the traditional lending system
34. Funding Structure: Reciprocal Guarantee Societies
Best practice prevails in Current Policy in India
Argentina The loans are disbursed to MSMEs as per their
existing credit ratings
Findings No organization exists which can guarantee the
improvement of credit rating of the borrower and
thereby get the loan disbursed at a lower cost
Reciprocal Guarantee Societies (RGSs) issue
certificates to improve the creditworthiness of Recommendations
MSMEs
These certificates enable the MSMEs to seek loans Assist MSMEs to improve their credit rating:
from the banks at rates applicable for better credit- Reciprocal Guarantee Societies must be set up,
rated organizations may be even through Industry Associations with
good track record
The RGSs ensure that the credit rating of the
borrowing MSME improves within stipulated time RGSs must work towards improvement of credit-
worthiness of the MSMEs, even as they ensure that
They also offer advisory and technical assistance to
they are not deprived of cheaper loans when they
MSMEs and foster their partnerships with banks
need it the most.
35. Funding Structure: Equity and Management Capital
Best practice prevails in Current Policy in India
Brazil Canada Presently, the private & state-government venture
funds as well as other organizations like SIDBI
provide equity financing only
Findings Recommendations
Canadian venture capital industry plays a major role Mentoring & hand-holding MSMEs: The
in extending not just equity but even managerial organizations like SIDBI, State Government venture
support and other resources to the MSMEs funds, etc. must not only fund the MSMEs with
equity financing but also provide sufficient hand-
Brazil has implemented a “New Ventures Program” holding and implementation help through private
along with World Resources Institute, which aims to partnerships
build competitiveness and promote long-term
sustainability by providing skill-development, social
networking and environmental benefits to the
MSMEs.
36. Technology Upgradation: Access to Foreign Technologies
Best practice prevails in Current Policy in India
Italy Indian MSMEs do not get a platform where they can
network with MSMEs from other countries and get
an access to newer and affordable technologies
Findings Recommendations
Italy is a member of PIN-SME association, which Provide opportunities for international
brings together several small technology partnerships: For the industries/ clusters, where
businesses on a single platform Indian MSMEs have an inherent competitive edge,
the Ministry of MSME should create platforms
through institutions like NSIC or even private
MSMEs in Italy benefit as they get an access to the
partnerships where they can network with MSMEs
newer technologies at affordable rates from the
from other countries.
member countries
This will not only provide an opportunity to Indian
MSMEs of member countries are also able to gain
MSMEs to gain access to latest low-cost
access to EU-funded projects
technologies, but will also enhance foreign trade
37. Technology Upgradation: Assistance from Large Firms
Best practice prevails in Current Policy in India
Italy No effort or long term strategic plan for encouraging
large enterprises to assist and mentor small
businesses
Findings Recommendations
National Strategic Framework (NSF) 2007-2013 in Involve large enterprises in development of
Italy focuses on : MSME clusters: The Ministry of MSME in India
should implement a long-term strategic plan and
facilitate MSMEs to build long-term relationship with
Instituting long term relationship between large large enterprises & research supply institutes
enterprises & MSMEs
Enhancing dialogue between the research The Ministry of MSME, through PPP model, must
sphere and the small businesses incentivize the larger organizations in adopting
clusters which are mainly into B2B/ ancillary
business, to improve their technology absorption
38. Technology Upgradation: e-Governance & e-Procurement
Best practice prevails in Current Policy in India
Brazil No e-procurement & trade data management
system available
Findings
Unavailability of online information and processes
for legal jurisdictions
e-Procurement facilities including online certification
is available Recommendations
Online alerts are sent to MSMEs whenever new e-Governance & e-Procurement, a must for
business opportunities arise easier compliance: Online mechanisms should be
provided to MSMEs to carry out all the necessary
Has a complete electronic trade data-management transactions for conducting business in domestic
system and international markets
As a part of the e-Governance initiative, all the Online access to rules and regulations, electronic
information related all policy changes, trends & new methods for registration and electronic applications
technologies is available online for government schemes, certificates, licenses and
realization of incentives should be provided to the
MSMEs
39. Technology Upgradation: Low cost ICT solutions
Best practice prevails in Current Policy in India
Brazil Lack of knowledge about low-cost Information &
Communication Solutions, which leads to loss of
opportunities
Findings Recommendations
Brazil has SME Metasys, which has the objective to Promote low-cost ICT solutions: The Ministry of
provide MSME with a complete and low cost ICT MSME in India should facilitate MSMEs in procuring
solution specially designed to improve their complete and low-cost ICT solutions to improve
efficiency. their capacity and productivity.
This robust solution, which uses open source Awareness of these tools should also be increased
software and does not require special skills for its among the MSMEs
installation and operation.
40. Technology Upgradation: Support for R&D
Best practice prevails in Current Policy in India
Italy UK No Government policy to include national
technology excellence centers for the training &
technical assistance to MSMEs
Findings Recommendations
In Italy, Science & Technology Parks, Business Create and promote an innovation and R&D
Innovation Centers, Integrated Centers for culture: The Government sector institutions at the
Entrepreneurship Development and Incubators cutting edge of research and innovation can be
support innovation and transnational technology opened up for use by MSME innovators, who
transfer with MSMEs otherwise struggle in getting funding and technology
to convert their ideas to successful product
launches.
in UK, tax relief is available to MSMEs, who invest
in research and development (R&D) under the
MSME scheme A method may be designed where the cost of such
research help can be offset by taking a percentage
of the successful projects through royalties, even as
the IP belongs to the innovator MSME.
41. MSME Policies: Cluster competitive programme
Best practice prevails in Current Policy in India
Italy No effective cluster competitiveness programme
which can focus on providing value-added end-to-
Findings end solutions.
Division of labour between the different firms within Recommendations
the same local context comprising of large number
of firms individually specialized in just one or a few Develop integrated cluster competitiveness
stages of the production process, in a reciprocal programs: The cluster competitiveness program
arrangement and at the same time competing in the should be revamped. Rather than giving the
market with finished products. authority of these clusters to associations, which
may or may not be competent, it should be given to
These reduce the cost of production due to bodies, which understand the value chain of the
standardization of components and technologies in respective industry.
the same/ similar sectors
These bodies must provide end-to-end solutions,
Extensive availability of productive resources which are benchmarked globally in terms of
(technical skills) at the local level make these competitive technology and effective training.
clusters competitive in the international market.
42. MSME Policies: Support for New Exporters
Best practice prevails in Current Policy in India
Argentina Monetary support is available for the new exporters
but nothing in terms of educating, training and
assisting MSMEs in designing the export plans
Findings
Export policies are designed to guide & encourage Recommendations
the development of sectoral partnerships.
Enable and then subsidize: Special training
Technical assistance is provided to assist in should be extended to the MSMEs, who enter the
designing and implementing export strategies. international trade to avoid any problems during the
process. Only the MSMEs which undergo these
In “Support for New Exporters” programme, the programs should be offered subsidies for foreign
MSME Under-secretariat provides advice to travel required for trade and export promotion
MSMEs located throughout the country on
launching export operations including analyzing and
diagnosing problems, training, and tutorials for
designing and implementing a strategic export plan.
43. MSME Policies: Effective Implementation of Schemes
Best practice prevails in Current Policy in India
US In the past, Ministry of MSME has launched several
policies and schemes for the benefit of the MSMEs.
However, no reports are available in the public
domain which informs about their reach and the
effectiveness.
A study conducted recently by Milagrow showed
that 70-80% MSMEs are still unaware of the
existing schemes provided by the Ministry.
Findings Recommendations
US legal framework promotes transparency in Measure the effectiveness of the policies: The
contracts, protection of intellectual property, and the Ministry of MSME should implement and measure
regulation of fraud. The U.S. Small Business the effectiveness of its various schemes at the
Administration ranks as one of the most effective ground level through third-party organizations
public sector agencies in the world for the
promotion of MSMEs.
44. MSME Policies: Offsets in Government Procurement
Best practice prevails in Current Policy in India
Germany US Canada
No offset has been provided by Indian Government
till yet. Although, a proposal in this respect has
been made
Findings Recommendations
The offsets provided by different countries to Provide reservation for procurement from the
MSMEs in government procurement MSME sector: Offsets should be provided to the
MSME sector in the procurement done by the
Canada: 43% government and public sector units
Germany: 35% To determine the exact offset that should be
provided to MSMEs, another comparative study is
being done by Milagrow to analyze the procurement
United States: 33% policies of nations across the world. The study will
be released shortly
45. MSME Policies: Encouragement for Green Businesses
Best practice prevails in Current Policy in India
Sweden No policy related to encourage MSMEs which are
involved in doing eco-friendly businesses
Findings
Recommendations
Sweden focuses on the environment driven
business development. Encourage Environmental Compliance at an
early stage: The Ministry of MSME should
The design for environment has been successful encourage those MSMEs, which are involved in
and has resulted in 13 projects through the clean and green businesses by providing enhanced
participation of 122 MSMEs subsidies than available to large business.
7% MSMEs have comprehensive systems for Stringent norms should be implemented to analyze
energy saving in Sweden as compared to 4% in EU. the working of the MSMEs and incentives should be
provided to them to develop and sustain their
operations and products
50% MSMEs apply at least simple energy saving
measures as compared to 29% for the EU
46. Role of Supporting Organizations: Effectiveness
Best practice prevails in Current Policy in India
Brazil Canada In India, the goals and targets of supporting
organizations are neither highly specific nor
monitored effectively
According to a recent study conducted by Milagrow,
“More than 97% acknowledge or choose to avoid
giving direct answer on corruption & bribery”
Findings Recommendations
In Brazil, the supporting organizations work on Government Funded Support Organizations
effectiveness measurement along with Government must have effectiveness targets measured by a
third party: The supporting organizations should
Office of Small and Medium Enterprises, in Canada, effectively work on specific targets and their working
is working within the government to ensure the should be transparent.
procurement system treats MSMEs fairly
The effectiveness of these organizations should
also be based on the feedback from the MSMEs in
the respective areas through a third party.
47. Role of Supporting Organizations: PPP Model
Best practice prevails in Current Policy in India
Brazil All the supporting organizations are mainly
controlled by government officials or the organs of
the government and the Ministry
Findings Recommendations
In Brazil, APEX & SEBRAE are two organizations Encourage PPP to develop the MSME Sector: To
which are private and have taken responsibility from enhance the performance and effectiveness of the
Government in their respective sectors through an supporting organizations in the MSME sector, the
act of law and are functioning only for MSME Ministry should establish a Public-Private
development. Partnership model
SEBRAE is a private sector non-profit organization
focusing on the SME development. It is a union of
public sector and private sector and Brazil’s main
fostering and research entities. Its been created by
law and the Govt. and the business community
have come together for common purpose.
48. Infrastructure: Incubators’ Assistance on Softer Aspects
Best practice prevails in Current Policy in India
Brazil The incubators hardly exist in India and those which
do, mainly focus on providing meager infrastructural
resources only
Findings Recommendations
With approximately 400 incubators and a well- Encourage Incubation with best in class
developed incubation ecosystem, Brazil leads one practices: The incubation centers set by the
of the most successful incubation movements in Ministry of MSME should extend support on the
Latin America, through innovation and adaptation of softer aspects, to the MSMEs beyond the
incubator models to suit indigenous needs. infrastructural resources, like networking &
management assistance, etc.
49. Marketing Assistance: Advertisement & Promotions
Best practice prevails in Current Policy in India
Brazil More focus on quality and export orientation than
promoting/ selling the products in domestic markets
Findings Recommendations
In Brazil, the supporting organization Apex assists Incentivize promotion of MSME products
the MSMEs to market their products and services. through organizations like DAVP: The Ministry of
MSME should incentivize organizations who
advertise MSME dedicated channels & programs.
Apex has also launched a portal, which is dedicated It must also use the clout of DAVP to get special
to promote MSME products only. media buying rates for MSMEs.
SEBRAE, in Brazil, has 6 channels, which are
dedicated to the MSME sector. These channels
show MSME focused programs &news and also
provide TV advertising options to MSMEs at special
rates.
50. Training & Development: Programs for Common Needs
Best practice prevails in Current Policy in India
Mexico Mainly tool-room based technical training is
provided.
Findings Some quality-development training has been
proposed but not effectively implemented yet.
Government of Mexico has implemented a program Recommendations
that provide subsidized training and technical
assistance to SMEs. Provide best in class training and have an
industry and ‘management function’ wise plan:
It starts with analyzing the constraints faced by Similar structured and need-based training
MSMEs & then come out with a comprehensive programs with constant feedback and control
package of integrated training & business support mechanisms should be implemented by Ministry of
services required. MSME to check the effectiveness
They involve best in class organizations in The Ministry should also facilitate training programs
identification of training needs, management and for newer technologies and best practices, which
then executing the training programs. are undertaken by large organizations to enhance
their productivity and competence.