Q. In your opinion, what are the growth prospects for the auto components and textile SMEs in Faridabad?

A. The long-term prospects are very good for auto component and textile SMEs. Faridabad is a hub for auto components players; large automobile players like Maruti, Hero Honda, Honda Siel Cars, Suzuki Motorcycles and Yamaha Motorcycles buy components from the two-wheelers and four-wheelers auto part players spread around the city. Approximately 60% of the companies in Faridabad operate in auto components, light engineering and textile industries. There are many export houses, other job work units, fabrication units, and binding and printing units in the city and its nearby areas.

Q. What support does Faridabad Small Industry Association provide to the SMEs in Faridabad?

A. The biggest service that the association provides to its SME members is that it informs them and addresses their queries. The SMEs usually need information about areas of credit, infrastructure, power connection, central excise, customs, service tax. Besides, some SMEs have queries that are technical in nature or are related to government laws. Nonetheless, the association keeps the SMEs informed of all changes on a day-to-day basis. Moreover, the association represents the SMEs before the government, the policymakers, the institutions, so that their problems are heard and addressed. The association runs cluster development programmes with the assistance of some agencies; it helps to train people and gets faculty at subsidised rates; it tries to run a testing facility for them, and also motivates them. To further assist the SMEs, the association has recently signed a MoU with SIDBI.

Q. Can you throw some light on the adoption of enterprise IT applications among SMEs in Faridabad?

A. Currently IT implementation is low in the SME segment because there are few users; however, the potential is huge. Even though SMEs have grown over the years, their management systems continue to be traditional; thus, it is the responsibility of ERP suppliers to tap the market. The ERP suppliers need to adopt affordable prices for the SMEs. Most ERP programmes are designed for larger players, which render it useless for SMEs; therefore IT companies need to manufacture products that are suitable for small businesses. These ERP programmes also need to be user-friendly for the SME units.

Q. What issues confront SMEs and among these issues, which issues need to be addressed by the government on an urgent basis?

A. The problems that SMEs face are both external and internal. External problems are beyond the control of SMEs and associations; infrastructure and power problems being examples of such factors. To elaborate further, the SME units have difficulty in procuring land at the right price and at the right place, same is the case with power. SME units do not get power connections on time. Credit is another external factor that affects SMEs. After all they need money to buy land, to buy technology and to set up a unit. Taxes are also an area of concern for the SME units.

Q. What are the initiatives taken by Faridabad Small Industry Association to overcome the financing problems of SMEs?

A. Faridabad Small Industry Association educates SME players about ways and means to strengthen their balance sheet. The association educates the SMEs about the importance of obtaining rating certifications and quality certifications, as these certifications increase the SME units’ access to banks and enable them to get better rates from banks.

The Faridabad Small Industry Association has started a credit counseling cell for SMEs that includes hired professionals to counsel SME players in matters of credit. SMEs can not only get their balance sheets and loan portfolios assessed by these experts but also obtain advice from them. SMEs are also helped to swap high-interest value loans for softer loans by the experts. Besides, SMEs are also advised on how to obtain loans at right interest rates.

As mentioned earlier, Faridabad Small Industry Association has signed a MoU with SIDBI to provide a credit limit to SMEs for purchasing capital goods or fixed assets. As a part of this MoU, SIDBI offers the Faridabad Small Industry Association’s members collateral-free credit up to Rs 50 lakh for purchasing capital goods. The association also plans to enter similar memorandums with the Bank of India or the Indian Overseas Bank or perhaps Syndicate Bank because these banks provide the right rate of interests to SMEs.

Q. What are the initiatives taken by the association for cluster development?

A. Cluster development can be divided into two parts; namely region-wise cluster development and product-wise cluster development. The association has undertaken a number of cluster development programmes; for instance, the association hires consultants and counselors to guide the SME entrepreneurs. The association does a programme adopted from ILO called the Factory Improvement Programme, which is funded by the Swiss Government. The programme, now called Score, has been launched in six countries across the world following its success in Faridabad. We also undertook a programme with the help of German Technical Corporation, to project the company’s cluster in Faridabad for one year.

Q. How many SMEs are members in your associations?

A. Directly and in-directly the association has access to 1,800 member units but almost 60% of our members represent the light engineering and auto companies.