Govt is making sincere efforts to promote MSMEs through programmes like SIDBI Make in India Soft Loan Fund for Micro Small and Medium Enterprises (SMILE), says G Sampath Kumar, General Manager, SIDBI
By Sai Nikesh D
In line with government’s focus over small-scale enterprises and promoting start-ups, Global Start-up Workshop (GSW) is being held in Hyderabad between March 21-23, 2016.
The event is being organized under the prime aegis of the Ministry of Micro Small and Medium Enterprises (MSMEs) with public sector units like National Small Industries Corporation (NSIC), State Bank of India (SBI) and T-Hub, being key partners.
The second day of the workshop on Tuesday witnessed brain-storming sessions on turning research into products, enabling financial and infrastructure requirements for setting up and running of SMEs and promoting role of start-ups in defence innovation, among others.
Stating that the ecosystem for operation of MSMEs is very concerning, P. Uday Kumar, Director (P&M), NSIC, urged on the need to promote digital platforms across multiple verticals to do away with hectic license procedures requiring more number of documents.
To a moderator query on whether there is a need for private license-facilitation centres for MSMEs, Uday said that 166 government facilitation centres and more than 100 agencies from various Ministries are under efforts to facilitate ways for MSMEs and address the challenges of 60 million Indian SME population.
“Given the fact that 60% of Indian entrepreneurs are first-time entrepreneurs, we are working with state governments to create a start-up portal and government is also likely to come up with a compliance portal for start-ups,” said Ashok Madaravally, Deputy Director at NASSCOM.
In his address, N. K. Chari, Deputy Managing Director (COO), SBI, said that there is a need to revive the Entrepreneurial Development Committee that was conceived during 1970s to promote MSMEs. He said that SBI has been trying to gain control over cash flows in case of large firms.
“Control of cash flows is an important thing for any company,” said Chari, as he informed that ‘SBI has been making efforts to bring in control in cash flows in case of large firms’. “Straight-away financing for start-ups without a proper business model will not happen in near future,” he said over a query on fund support to SMEs.
If the idea is on experimental basis, the fund has to be venture capital fund,” he added. In his address, G Sampath Kumar, General Manager, Small Industries Development Bank of India (SIDBI), informed that Knowledge Partners like retired banking experts and various senior SIDBI officials are taking sincere efforts to provide credit facilitation, debt counseling, to spread awareness among MSMEs over governmental policies for MSMEs etc.
He also indicated that SIDBI has developed a website http://www.smallb.in to handhold and guide new entrepreneurs on how to set up a business, access to finance, avail benefits under government schemes, etc.
He also indicated the various facilities offered by SIDBI such as Refinance to Banks, SFCs etc, Direct Finance, Bill Finance, Microfinance and Promotional and Developmental activities. He touched upon the roles played by various subsidiaries/associate institutions promoted by SIDBI such as SIDBI Venture Capital Ltd. (SVCL), Micro Units Development and Refinancing Agency LTD (MUDRA), Credit Guarantee Trust for Micro and Small Enterprises (CGTMSE), SME Rating Agency of India Ltd. (SMERA), India SME Technology Services Ltd (ISTSL) and India SME Asset Reconstruction Ltd. (ISARC).
To a moderator query on fund distribution of Start Up India Scheme of the Government to seekers, he said ‘fund distribution will be project-based’.
Responding to a query as to what extent are the governmental schemes promoting the growth of MSMEs, Sampath Kumar said, “Govt is making sincere efforts to promote MSMEs through programmes like SIDBI Make in India Soft Loan Fund for Micro Small and Medium Enterprises (SMILE) and Start-up India programme. The objective of SMILE is to help MSMEs spearhead the “Make in India” programme and to provide soft loan, in the nature of quasi-equity, and term loan on relatively soft terms to MSMEs to meet the required debt-equity ratio for establishment of an MSME as also for pursuing opportunities for growth for existing MSMEs. The soft loan is offered at an interest rate of 9.35% p.a. and the term loan is offered at an interest rate of 9.45% p.a. to 9.95% p.a for the first 3 years, subject to eligible rating grades.”
“A budget allocation of Rs.10,000 crore has been allotted for the Start-up India program for SC/ST and women entrepreneurs and a Rs.10,000 crore fund has already been given to SIDBI under SIDBI Make in India Soft Loan Fund for Micro Small and Medium Enterprises (SMILE) to promote MSMEs. To ensure easier financial access, the government has also made it mandatory for each and every banking branch to deal with at least one project proposal under Start-up India program,” he added.
To a query on export slowdown and SME contribution to exports, the SIDBI officer said that there is an ultimate need to promote exports from MSMEs, in view of their contribution (40%) to country’s product output across various sectors.
“Global slowdown coupled with severe decline in global commodity prices are the prime reasons that have been affecting the growth of MSMEs in terms of exports. Export bodies have to take a forward step in this regard to create the needed awareness among them on governmental schemes, thus pushing ahead the country’s trade basket,” Sampath added.
Meanwhile, speaking on need to promote Indian companies in defence, Ashok Atluri, Zen Technologies, raised concern over lack of preference to Indian companies in the defence sector. On start-ups, he urged companies with better R&D capabilities to come forward to cater to the needs of the country’s defence industry.
“Inclination towards imported products have been hindering the growth of domestic industry. However, it’s appreciable that ‘Make in India’ is making efforts to promote defence manufacturing in the country. In this process, defence PSUs like DRDO are always ready to work with SMEs and start-ups too,” says S. Radha Krishnan, Director, Industry Interface & Technology Management, DRDO HQ, Ministry of Defence.
This was published in The Dollar Business on March 22, 2016