Officers of Directorate General of Foreign Trade will invest time and knowledge so as to mentor interested candidates who want to do business in the international arena. It is expected that a class of entrepreneurs will be founded to carry out the international business ethically.

Entrepreneurs will be assisted under this new scheme to export products and services and also support SMEs. Globalization during last decade has opened new opportunities for SMEs to do business internationally. Developing countries have this opportunity now but then there are also problems – legal, financial risks, socio-political risks and so on. ‘Niryat Bandhu’ is for sorting out all these issues and for providing accurate information so that SMEs can protect themselves from potential risks in international markets. ‘Niryat Bandhu’ is also going to help starters find quality leads and contacts in different geographies.

FDI in retail can be a good initiative to mobilize the Indian economy and also benefit the supply chain infrastructure as a whole. Extinction of the Kirana stores and several Small and Medium Sized Enterprises (SMEs) have been cause of deep concern for the government. It is being anticipated that retail giants in long run can abuse SMEs for they will become stronger and hold dominant positions.

With the advent of big foreign retail stores in cities, Kirana stores will face increased competition. But this does not necessarily mean that small businesses would also be wiped off from cities. After-all, big retails depend on them for raw materials and finished products. You can’t expect a big retail giant like ‘Walmart’ to gain the same margin advantage from a big supplier like ‘Colgate’. It has to depend on SMEs to keep profitability intact.

Again there is the concern that big retailers that often play on volumes can approach large suppliers. Also big retailers have a tendency of having large credit cycle that means they pay to suppliers slowly. This is not congenial to SMEs as their cost of borrowing is much higher.

Keeping these factors into consideration, the Government has made it mandatory for big retailers to source 30% of goods from SMEs in India. But then the asset limit of small enterprises set by government is 50 m, which means many big suppliers will get listed. This is why the concern of SMEs is not being addressed. Small industry experts feel that they should have been consulted for better framing of laws.

Inadequate access to finance has remained a limiting factor to MSMEs for years. Lack of financial information is also hindering for SMEs as they have to depend on promoters’ capital. Also bank finance access is limited which leads to lack of new job creation by SMEs. Access to venture capital (VC) funds is also thin in India despite the fact that ‘Private Equity’ and VC markets have grown considerably in this country.

In this light, the NMP proposals is a welcome step as it is going to help large number of SMEs to raise equity and invest in manufacturing sector apart from boosting employment. Specific measures are also highlighted in NMP that includes setting up stock exchange and implementation of SEBI’s framework for supervising stock exchange platforms for SMEs.

Concessions to the SME exchanges are available so that small units get listed on the exchange. In-fact, the STT exemption is one such measure and consensus among stake-holders is reached on this issue. Nullifying the STT for SME exchange will help in increasing the transaction volume. STT is considered to be a disincentive by investors for trade in equities and it provokes investors to move out to material markets where such taxes are absent.

As the SMEs face difficulty in raising capital, so the finance ministry is planning to build a consensus for bringing down the trading size to Rs 50,000 from the previous figure of Rs. 1 lakh. Out of the total 26 million SMEs in India, one million are good enough of being listed on this exchange. Many Foreign Institutional Investors (FIIs) have also started to take interest in SME sector of the country.

Manufacturers have started to make improved designs and have further added on ace colour and wool quality. Machinery has also been imported for the purpose. Majority of the units of this 1,000 crore industry are SMEs. Amritsar’s woolen industry employs 60,000 people and the city currently houses nearly 150-200 units. It employs both directly and indirectly.

According to the secretary of Shawl Club (India) Amritsar, Piara Lal Seth, Good monsoon, early winter and economic growth have proved to be an impetus for the increase in demand for shawls and stoles in both domestic and international markets. Indian Shawls are ‘international style statements’ now and this has led to unexpected boost in exports from Punjab. Growth in business in this current year is expected to be 15-20 per cent.

Shawl exports from places like Kullu, Srinagar, Amritsar, and Ludhiana have boosted. Foreign customers have also been drawn in as a result of presence of big departmental stores overseas. Younger generation in foreign countries finds stoles very attractive.

Amritsar alone is focusing on places like Europe, Australia, Japan, the US markets and the Middle East. Amritsar is estimated to export Rs 150-200 crore of shawls and stoles. This is a lion share of the total Rs 500-600 crore exports in this segment.

The Industry made a modest beginning with two shuttles-less looms and currently has 300 looms. There are also 1,500 traditional looms. Italian made shuttle-less electronic Jacquard looms are also present costing Rs 50-55 lakh each. This has helped to revolutionize work quality. Fabric made out of shuttle-less looms are of superior quality than that of traditional looms. Traditional looms costing around Rs 100,000 are still being used in large numbers.

Many units are planning expansion so as to meet the increasing demand. Many wish to import the new looms but it is the high customs duty of 19.75 per cent on shuttle-less looms that is hampering the growth. Moreover, fresh fund sanctions under Technology Up gradation Fund Scheme (TUFS) have been stalled till June 29th this year. Increase in price of raw materials like cotton, acrylic, polyester and viscose is also blurring bottom-line of shawl manufacturers.

It is the surging prospects in domestic demand and not just exports that has stimulated SME’s optimism according to the survey. The other reasons for the optimism are slow economic recovery in western countries and impressive value of rupee against US dollar.

There is considerable improvement in credit availability for SMEs according to the survey. But then it also cautions that interest rate increase may adversely affect the capacity expansion of the SME sector.

SME sector currently employs 60 million people and each year creates 10 lakh jobs. The micro, small and medium enterprise (MSMEs) sector adds 8 percent to GDP, 45 percent to manufactured output and 40 percent to exports.

Industries will gain a lot from sharing of knowledge and the participants will always remain the beneficiaries. What we are facing today is lack of adequate skills. This skill gap reflects upon the inadequacy of high quality education availability in India. The interaction between the industry and university will be of mutual benefit. This on one hand shall open the practical realities of industry to students and on the other hand will provide the industry an opportunity to grow their business having received the academic inputs and consultancy.

The varsities and other technical institutes shall also find the right partner to take the research work to the market and bring changes in curriculum. Hence, the scope of R & D shall be improved. Students and academicians then will also receive better training and placements.

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In Uttarakhand, total 226,513 units are found in working condition. Out of these, 23,767 are registered and 202,746 are unregistered. The registered category has 13,439 units in manufacturing and the remaining units are in service sector. The unregistered category has 170,466 units in service sector and the remaining are in manufacturing. The registered category has 35 medium-sized enterprises, 384 small and 23,348 micro enterprises. The Gross output of registered units is Rs 11,839 crore.

Self financing is also found prevalent. The registered units have 17,814 self-financed enterprises and the unregistered category has 192,321 self financed units. It is also found that 10 per cent (or 2,434) are run by women entrepreneurs in the registered category.

The MSMEs are found to directly employ 400,000 people. The registered category employs 115,629 people out of which 62,915 are in manufacturing and 19,706 in service sector. The unregistered category employs 201,486 people in the service sector. Six to seven percent of women are employed by the MSMEs.

Lot of factors goes into the closing down of 7,485 units in Uttarakhand. Problems like power shortage, lack of working capital, labour and market problems, non-availability of raw material are factors that led to the closing down of units.

Non- agriculture enterprises has been surveyed in Uttarakhand with 337 villages and 13 towns taken as samples. Industrialization found its momentum during the last three to five years. The last census registered 30,000 MSMEs in the State. The main objective of such census is to create a database of MSMEs sector-statistics so as to maintain a record of health and employment of MSME sector in the state.

Mr. Mukerjee said, “Though there is some tightening of monetary policy by the RBI we do not expect banks to raise the lending rates. The banks are aware of the actual liquidity position. They (banks) seem to have adjusted their lending plans accordingly.”

In the recent monetary policy unveiled by RBI on July 27, it is found that for commercial banks short-term borrowing and lending rates (repo rate and reverse repo rate) have been heightened. This is done to adjust the excess liquidity in the money market. With such hikes there is apprehension that banks will raise lending rates as cost of borrowing has increased. Lending rates of PSU banks such as Punjab National Bank and Union Bank of India have increased. SBI so far did not make hikes in lending or deposit rates.

O P Bhatt, SBI Chairman, present in the meeting, said, “RBI is always sensitive enough to see that liquidity level is always maintained at reasonable level to meet the fund requirements of banks.” When asked what could be the possible hike in rates, Bhatt said, “It will differ from bank to bank depending on individual bank’s business strategy. But we think if at all there will be any hike it will be marginal—much less than 75 basis points.”

Reviewing the performance of PSU banks, Mukherjee appealed to banks to step up credit disbursements to sectors of the economy like agriculture and industry especially the job oriented SMEs. The minister also urged banks for issuance of Kissan Credit Cards (KCDs) by 20 per cent increase in the current fiscal.

The total number of PE deals signed by SMEs in 2009 stood at 81, while in 2008, it was 187, highlighting a sharp decline.  The fall in PE investments have largely been credit to slowdown, says Mr. D S Rawat, Secretary General ASSOCHAM while releasing findings of the Paper here today.

The report states that in year 2009 was a hard-hitting year for SMEs in India as they not only had to face losses, but also encountered difficulties in accessing adequate equity capital from investors.

The meltdown made PE investors wary of investing in small businesses as there is a great deal of risk involved when it comes to funding cash-strapped companies. Poor returns on investments in the midst of challenging times have forced fund managers to think twice when it comes to putting too much into the sector, added  Mr. Rawat.

Overall, PE deals in India during 2009 numbered 287 amounting to $4.43 billion as against 502 amounting to $ 11.9 billion in 2008. The total value and volume of PE deals reduced by 50% and 40% respectively as compared to 2008.

In the year 2009, 650 Private Equity and M&A deals with a total announced value of $ 26.98 billion compared to 948 deals worth $52.33 billion in the year 2008 and 858 deals.