Untitled Document

Dun & Bradstreet - Oriental Bank of Commerce SME Cluster Series 2014 : Hyderabad



Q. Please share with us the objective and achievements of the MSME-Development Institute, Hyderabad since inception. A. The MSME-DI was established in 1956 as “Small Industries Service Institute (SISI)” as a field level office of the then Small Industries Development Organisation (SIDO) under the Ministry of Small Scale Industries (GoI). The objective of the Institute was predominantly promotion and development of Micro and Small Enterprises. Though medium enterprises have been brought into the ambit of our activities, even today the focus basically remains on promotion and development of micro and small enterprises.

The support rendered to the then SSI sector till 1980s was predominantly techno-managerial consultancy and entrepreneurship development. The Institute was instrumental in providing technical guidance to the existing enterprises and enabling the entrepreneurs to select a suitable venture for them for establishing an SSI unit. Promoting entrepreneurship was another focus area and through several training prorammes, a large base of prospective entrepreneurs was trained. It is no exaggeration to say that several of the leading entrepreneurs of MSME sector at Hyderabad today were once the trainees of SISI.

The focus of MSME-DI is on implementing various schemes of the Ministry of MSME and enabling the MSME sector to derive benefits of these schemes. This involves enabling the MSMEs to achieve productivity-enhancement, enhancement of competitive ability, promoting collective efficiency, skill development, management development etc. The Institute is also focusing on MSE clusters for their overall development and creation of critical infrastructure required for development of the MSE clusters.

Programmes like National Level Vendor Development Programme, State Level Vendor Development Programme for developing suitable vendor base for PSUs organised by us have helped SMEs in forging marketing linkages with PSUs. The Institute is also working in coordination with PSUs etc for achieving the objectives Public Procurement Policy- 2012, which stipulates that the Central PSUs, Central Govt Departments are to procure a minimum of 20% of their requirements from MSEs.

A Field Testing Station functioning under MSME-DI, Hyderabad caters to the testing needs of MSMEs by providing testing facility at nominal cost. This obviates setting up of costly testing equipment in MSEs thus conserving their financial resources.

Q. Please tell us about MSME-Development Institute’s efforts towards cluster development.

A. The MSME-DI is enabling viable clusters to derive advantage of the Micro & Small Enterprises Cluster Development Programme (MSE-CDP) of DC, MSME, New Delhi. Clusters having scope for development under the MSE-CDP are being sensitised, supported and guided for availing financial grant-in-aids given under the scheme for establishment of Common Facility Centres (CFCs) and undertaking soft interventions. State Government is being supported in implementing the MSE-CDP for the development of clusters and infrastructure development in select locations. There are encouraging results in this regard and agencies like APIIC, APITCO, APTPC, APPC have come forward for taking up various developmental interventions under the MSE-CDP. It is expected that there would be encouraging results in this regard in future as a reasonably suitable base has been formed for this activity.

Q. What are the future plans of the MSME-Development Institute, Hyderabad?

A. Our future plans include i) implementation of various schemes like MSE-CDP, CLCSS, component schemes of National Manufacturing Competitiveness Programme(NMCP) and other schemes 2) Liasoning with PSUs and developing MSE vendors for PSUs for effective implementation of Public Procurement Policy, organising activities and programmes in this regard. Creation of database of MSEs for supporting PSUs in their procurement needs 3) Organisational Restructuring and Liason with State Governments, banks, industry associations, MSE clusters, etc 4) Organising needbased skill development programmes, management development programmes, etc for HR development pertaining to MSME sector.

Q. What, according to you are the main challenges faced by the SMEs in Hyderabad? A. Lack of adequate and timely credit is a major challenge faced by the SMEs. Inadequate quantum of loans under credit guarantee scheme of CGTMSE (perhaps, the existing limit of ` 1 crore eligible credit needs to be enhanced). Other major challenges are non-availability and high cost of infrastructure for setting up new enterprises at Hyderabad; the high interest rates at which credit is being provided; high rate of inflation eroding margins; erratic power supply and power cuts; the general downtrend in the national economy for the last 3-4 years and international economy since 5-6 years; and the social turmoil in recent times because of agitation for separate Telangana State.

Q. Please highlight the importance of innovation in driving success of SMEs. What is the present status of technology adoption and innovation among SMEs in Hyderabad?

A. In today’s environment, innovation is essential for achieving above normal rates of growth, return and for increasing market share. The MSMEs, who focus on innovation, will survive better in today’s competitive environment and achieve higher growth. In this regard, the innovations also need to be protected by utilising various Intellectual Property Protection Provisions.

The technology adoption among SMEs in Hyderabad, in general, is good in comparison to other parts of the State. There are also a few firms who focus on innovation and derive advantages. However, the technology adoption and innovation is not widespread and limited to a few units only. Moreover, the innovations and innovative practices developed in SMEs also continue unnoticed. Further, there is very good scope for technology adoption and for innovation among SMEs located in Hyderabad.

Q. Skill gaps remain a major challenge for SMEs. How can the SMEs bridge the demand and supply gap for skilled manpower? What role can the government play in this direction?

A. There needs to be close coordination among industry associations, SME clusters, etc with academic institutions like ITIs, Polytechnics and Engineering Colleges. The course curriculum should be redesigned to meet the requirements of industry also, in addition to academic requirements. Training in industry to the students during the course duration itself needs to be considered and SME enterprises have to pro-actively come forward for making this feasible.

Government can play the role of an initiator for the above suggestion. Support for creating required infrastructure is to be extended to academic institutions. Capable NGOs and industry associations are to be involved for organising training programmes for skill- upgradation and they are to be supported for creating some minimum common infrastructure. The NGOs and industry associations are also to be sensitised and their capacities are to be built for organising skill development programmes.

Q. What has been the impact of the current economic slowdown, both domestic business and exports, on the SMEs operating in Hyderabad? Which are the main sectors hit severely?

A. The economic slowdown has resulted in reduction in profits and turnover; NPAs among the MSME enterprises have also increased. The sectors that were most affected are engineering enterprises, plastics, foundry, electronics and precision engineering components.

Q. Please throw some light on the necessary measures and policy support that will drive growth of SMEs in Hyderabad, and take them to the next level of growth.

A. Providing infrastructure at reasonable cost and on easy terms as being done in other States like Tamil Nadu, Maharashtra, Gujarat, etc; Power supply without any power cuts to the industry. Required quantum of power may be purchased from power surplus States by the State Government as per the needs of the industry; Removal of bureaucratic/Govt. procedural hurdles in clearances, release of incentives, etc; Conducive policy and encouragements for establishing of large scale enterprises so that they in turn will create demand for the existing SMEs and also will attract new SMEs; Focus on select sectors like electronics, food processing sector, bio-technology, pharmaceuticals, etc for creating a strong SME segment in these sectors; Formulation of a specific policy for development of MSE clusters with suitable incentives and grants to supplement MSE CDP, and support for allotment of land for establishment of CFCs in clusters.