Untitled Document

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



Q. Tell us more about “Mahratta Chamber Of Commerce Industries & Agriculture” (MCCIA) and its role in promoting industrial and economic development in Pune?

A. Maharatta Chamber of commerce Industries and Agriculture is an Industry association in existence for last eight decades. In the very first year of its operation, the chamber took the initiative to form a Bank, “Bank of Maharashtra”, which is today one of the leading nationalized banks of the country, as well as, the lead bank for the state of Maharashtra. The Chamber has contributed immensely in the economic, infrastructural and industrial development of Pune region. The chamber has been instrumental in the development of the clusters such as Hinjewadi I.T. park, auto cluster, electronic testing, food testing laboratories, and SME industrial estates. The chamber has been instrumental in bringing to Pune certain government offices such as the passport office, office of Joint Director General of Foreign trade. The chamber even established the first stock exchange of Pune, “The Pune Stock Exchange”. Government of Maharashtra, was the first state in the country to design, develop and implement, “I.T.” policy for the state and Mahratta Chamber was responsible for the preparation of the draft for the said policy. The Chamber has also worked on the draft of state policies on agriculture, Industry etc. The chamber represents the Pune industry on different state and central platforms. The chamber was the first chamber of commerce to form a lean manufacturing cluster under the Government of India, Ministry of MSME’s pilot lean manufacturing program. The chamber added four more clusters under the same scheme.

Q. How large is the SME base in Pune. How much do they contribute to the economic growth & development of the Pune?

A. The Pune region is estimated to have about 10,000 Micro, Small and Medium enterprises. The turnover of these MSMEs may be in the range of about ` 40,000 to ` 50,000 crores. As it is not mandatory for the MSMEs to register under MSME act, and the turnover figures are not shared easily it is very difficult to estimate accurately. In the Micro segment there are a large number of units, which are totally unorganized.

Q. What do you think needs to be done for promoting SMEs in Pune?

A. Pune can definitely be considered as one of the leading SME hubs of the country. In fact the USP of Industrial Pune is the first generation technocrat promoted enterprises. There is a tremendous entrepreneurial potential in this region which surely can be exploited further by polices which are conducive for operation and growth of these units. The infrastructure needs to be strengthened further. The power quality, availability, needs to be improved. There have been steep increases in the cost of utilities such as power and water. The authorities need to consider supply of these utilities with quality and reliability at a reasonable cost. The industrial infrastructure needs further augmentation in the form of better roads, sewage and effluent treatment facilities, safety, security and medical facilities. Besides all the labor, factory legislations need standardization, rationalization, simplification. The acts are outdated, multiple and often redundant. The SMEs are subjected to duel taxation, one under the municipal or gram panchayat rules and two under MIDC service tariff.

Q. Which are the major clusters/industrial areas for automotive and IT & ITeS SMEs based in Pune? Are there any specific incentives offered to the SMEs operating within this cluster?

A. The Pimpri, Chinchwad, Bhosari, Talegaon, Chakan in Pune region, host a large auto cluster comprising units manufacturing auto components, auto ancillary, and providing general engineering services. This is the major auto cluster of the country. The I.T., ITeS, SMEs have presence in the city of Pune, Kharadi, Viman Nagar, Magarpatta, Hadapsar, besides Hinjewadi and adjoining area. There are no specific incentives available to manufacturing SMEs. As per the Maharashtra Industrial policy all the industrial areas of Pune have been considered as developed hence there are no specific incentives available to them. Though the I.T. policy of the state gives some incentives in terms of higher FSI, non commercial municipal tax rates etc. certain incentives such as exemption from Octroi etc. though they are granted under the state policy have not been offered by the local governments.

Q. What advantages does Pune offer in terms of exports to SMEs? Are there any specific export related incentives (sector-wise) for SMEs based in Pune clusters?

A. There are no specific and separate incentives for exports again specifically for SMEs. The Pune cluster engages in export and has the potential to export but there also there are some issues related to transportation, certification, inspection etc.

Q. How do you think the automotive and IT & ITeS industry performing in Pune?

A. The I.T. and ITes segment’s performance has been satisfactory. Many of the units have exhibited growth which is comparable to last year. May be around 10 %. There has been slow down in the auto segment which is around 10%, which has definitely affected the SMEs in the auto cluster. Besides higher input cost has definitely affected the profitability of these SMEs.

Q. How is Pune in terms of availability of skilled resources for sectors such as Automotive and IT & ITeS? How different is Pune in terms of quality of skilled resources and their cost as compared to other destinations such as Chennai, Bengaluru or Mumbai?

A. The availability of skilled manpower in Pune has never been a problem because of the fairly well established and old auto and engineering industrial units. Pune is an educational hub too and there are many engineering colleges, polytechnics, ITIs, and other skill development institutions which provide skilled manpower. However the supply of skilled manpower is not keeping pace with the demand from the industry, which is expanding fast. There are certain industrial skills where there is a definite shortage. Large companies like Bharat Forge, Bajaj, Tatas and even foreign companies like Volkswagen have established excellent facilities and have adopted Industrial training institutes too, which is ensuring steady supply of skilled manpower but there is a need of more such institutions. In case of I.T. segment there are many institutions which provide skilled manpower. Pune is definitely at an advantageous position as compared to Mumbai and other cities.

Q. In terms of infrastructure facilities such as power, transportation (airport, highways, and railways), communication networks and real estate, what are the benefits and challenges for SMEs based in Pune?

A. Pune has a fairly well developed real estate infrastructure. But the industrial infrastructure has real challenges. Pune has an expanding MIDC base which is constantly under acquisition and development of land. This developed infrastructure by MIDC to the SMEs is a real benefit to the SMEs. However the demand is far more than supply. And hence there is a long waiting list. SMEs have to wait for years to get the allotment of land in MIDC area. Outside the MIDC areas the infrastructure is not developed, there are problems of power, water, roads etc. Pune doesn’t have its own civil, independent airport. Pune shares the airport with Air force and hence there are many constraints. Though we have more than 300 German units and presence of many countries, there are no international flights except Frankfurt and Dubai. Even domestic connectivity is far from satisfactory. The railway station and cargo handling facilities need improvement. Even in case of rail connectivity, we need direct connection to many industrial centers in the country. The highways around Pune and through Pune are well developed and we have an excellent connectivity between Pune and Mumbai by the expressway. But expressway traffic has many safety and security issues. The problems need to be addressed to. The availability of land is becoming a problem in Pune region and with the enactment of new land acquisition law the problems are aggravating.

Q. Can you please elaborate on the extent of penetration of IT & ITeS SMEs based in Pune? What are the major factors facilitating the growth of IT adoption amongst the SMEs based in Pune and major hurdles in IT implementation?

A. The penetration of IT and ITeS in Pune SMEs is fairly well developed. Many SMEs have adopted IT for commercial functions. Even the use of new techniques like cloud technology is finding its usage in Pune SMEs. We have seen the application of ERP which is being developed by some local IT companies especially for the SMEs. The entrepreneurs of Pune are techno savvy hence they have the necessary awareness and inclination to use IT. There is scope for wider application of IT in manufacturing which definitely needs funding and the government should think in terms of making this funding available. The hurdles in the further implementation of IT could be reliable, affordable software and services developed specifically for the SMEs, by the SMEs from the IT segment.

Q. What is the level of innovation adoption by SMEs based in Pune? How are SMEs based in Pune placed in terms of sustainable innovations that produce environmental or social benefits along with economic value?

A. Innovation amongst the SMEs still needs to be nurtured. There is a definite need to create awareness and encourage innovation amongst the large number of SMEs. The process of innovation needs to be understood by the SMEs and it needs outside intervention. The SMEs are also not concentrating on Research and Development. This activity also needs to be taken up seriously by the SMEs. Off course this needs funding which can come through some tax incentive schemes from the government.