A major reason for this crunch is the political instability in Middle East and African countries. They are major export destinations for Rajkot’s diesel engine manufacturers. But during the span of last two years things changed. Rajkot’s diesel engine manufacturers now are forced to take up other businesses and move out from the cluster.

Submersible pump is giving tough competition to diesel engine users. The reason is electricity is available in most part of the country and so the pumps are being used for agricultural purposes too. This has certainly reduced the demand as well as supply of diesel engines.

The illustrations of the crunch are many. For example, ‘Power Engineering’ reduced its production from 3,500 engines to 2,000 engines every month in the span of last two years. Prem Engineering Pvt. Ltd also witnessed its international business to be down by 50 percent last year. There is no expectation of good business or recovery in near future days to come. The pump business has taken over and there is little hope for diesel based engine manufacturers. Besides, Rajkot is also seeing auto-parts industry booming. Every year 30-50 new players enter this sector. This has certainly turned off the mood of diesel engine manufacturing.

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Small and medium Enterprise sector of India employs 26 million people and contributes to 45% of manufacturing output and 40% of total exports. Sharma also requested for better collaboration in the field of generics from Germany. In this regard, he had a meeting with Philipp Roessler, German Federal Minister of Economics & Technology.

The German pharmaceutical industry has seen tremendous growth and Generics constitutes one-fifth of that growth. Germany has developed affordable generic medicines and now collaboration with India will make them available to Indian SMEs.

This Indo-German collaboration is a mutual investment and encompasses 600 Indo-German joint ventures and 1600 Indo-German collaborations. Indian corporate entities so far invested US$ 6 billion in Germany. Industry leaders like Tata Motors, Suzlon , Bharat Forge, Mahindras group, Infosys and Wipro have established their base in Germany. The country has seen 215 Indian companies employing 24,000 people.

Trade between both countries reached US$ 23.64 billion. It has doubled during the span of last five years. A target of Euro 20 billion is aimed at by 2012. The ongoing ‘German Year in India’ itself is a success story. Launched in September 2011, the program will continue till November 2011.

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Parliamentary Standing Committee on Commerce demanded the extension of interest rate subsidy up-to 2 percent for the handicraft, handloom, carpet and SME sector. The Committee opines that Department of Commerce should be willing to take up the matter with Ministry of Finance/RBI to ensure that interest subvention scheme for MSMEs continues.

Investment limit in plant and machinery of MSME units need be increased from Rs 10 crore to Rs 25 crore. The reason is that export units shall then be able to increase competitiveness in global market. MSME sector of India has a substantial share of 40 percent in exports but the sector suffers due to poor infrastructure, technology and marketing strategies. It is just a robust MSME sector that can really help in exports.

MSME ministry provides assistance to micro, small and medium enterprises in activities like Deputation of MSME delegations to other countries, facilitating joint ventures, exploring new technology up-gradation, foreign collaboration, and improvisation of MSME market.

There are long term agreements, Memorandum of Understanding (MoU) with foreign countries, in-order, to promote co-operation in the field. During the course of last three years, the ministry entered in agreement with Republic of Botswana, Republic of Mozambique, Arab Republic of Egypt, Republic of Korea, and Republic of Indonesia.

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For Indian small and medium enterprises, there will also be trade shows, online training sessions and conferences to help SMEs learn the techniques of marketing and building social media presence. This is of real relevance following FICCIs increased focus on SME innovation and growth.

Currently, India has 6400 industrial clusters out of which 6000 are “low tech” ones. Adoption of poor technology is a major reason for substandard operation and lower competitiveness in the MSME sector. So, Facebook and FCCI are striving to make technology a driving factor to enhance global competitiveness of Indian SMEs.

In order to strengthen Indian SMEs, ‘Innovation’ is the key theme. SMEs have recently strived to highlight innovative practices that are prevalent in the entire world and adapt them in the Indian context. Facebook has been of immense help to make entrepreneurs understand global markets and simultaneously identify new markets in India.

Currently, in India there are 46 million Facebook users and they finds significant possibilities of growth similar to what is possible in Europe. Social media creates new jobs, propels growth, and redefines business prospects. This partnership of FICCI and Facebook will now bring the same experience to India.

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Tamil Nadu (TN) based MSMEs are very large in proportion as there are 700,000 registered units in the state itself providing 5,000,000 jobs. The State government’s estimate says that SMEs made investments worth Rs 32,000 crore in the State.

A ‘Vision 2023 document’ has been released by Tamil Nadu Government that encompasses details about access to finance, regulatory environment, access to technology, market access and infrastructure availability.

The TN minister of Finance has said that the government is going to revive all District Industries Centres so as to provide better infrastructure at a marginal cost of say Rs 50 crore. The TN government is also planning to promote clusters in new areas and is going to form industrial estates in regions where MSMEs are scattered.

There has also been an announcement in budget 2012-13, that the state government will implement a new scheme ‘New Entrepreneur-cum-Enterprise Development Scheme’ (NEEDS) in 2012-13. This scheme is going to start training sessions for educated youth, assist in business plans and enhance tie-ups with financial institutions to start new business ventures. The entrepreneurs will be given assistance to avail loans from banks up-to Rs 25 lakh. Training will be given to 1,000 entrepreneurs every year out of which 50 percent will be women.

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This initiative is going to be a boon for people living with HIV. People in Manipur acquired the virus through intravenous drug use. So, the Government is willing to help and now, with microloans, they can start weaving business, small embroidery or a grocery store business.

However, there is a concern that since people in Manipur are drug users, they may misuse the loan money to buy more drugs. So, there has to be a monitoring system to look into the situation. It is also crucial to find out how long banks take in implementing this loan scheme throughout India. The reason is India’s total HIV burden is much greater than the state of Manipur.

The financial stress on people of Manipur due to HIV is too great. The disease crippled people as 43 percent of HIV households either borrowed or liquidated assets to overcome financial overburden. The micro-loans are a respite for households facing serious constraints.

Micro-loan initiative of India will see ‘United Bank of India’ and ‘State Bank of India’ offer loans up-to 500,000 to people who meet eligibility criteria. Indian Nationals having a valid work plan and who are HIV patients can apply for this loan grant. The micro-loan is going to support entrepreneurship as people in Manipur are found to be skilled and versed in traditional handicrafts, crafts, et cetera, and so on.

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The industry has not seen up-gradation of technology over years and so manufacturing activity has declined. State run institutes provide obsolete technology to entrepreneurs. So, the manufacturers are seeing more profitability in importing products from China and trading on them. In-fact, nearly 400 units have turned into traders from manufacturers.

Manufacturing of scientific instruments is very low now in Ambala. It is because businessmen cannot buy new technology and so they are resorting to inferior-technology devices. The industry has lost its competitive edge in global market. Now, the Ambala Manufacturing Units are left as a small-scale manufacturing player. Though the industry has potential to generate Rs10,000 crore revenue but currently it is able to do business of only Rs 1,000 crore. The export destinations of Ambala units are places like Africa, Far East and the Middle East. Larger players also cater to markets of United States and Europe.

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The rehabilitation fund will be available to all MSMEs that are not doing well. RBI has found that there has been a 16 % rise in sick MSME units from 77,723 in March 2010 to 90,141 units in March 2011.

K C Chakrabarty, Deputy Governor RBI, opines that banks have been directed to draft their MSE loan policy, rehabilitation policy and non-discretionary settlement scheme. RBI will work on the policies as credit availability to MSME sector continues to remain a major issue. A corporate governance code and corporate governance framework are also necessary to take MSMEs of India to higher growth levels.

There is also a need to provide venture capital to startup SMEs. In-fact, there is a proposal in 2012-13 budget for setting up Rs 5,000 crore ‘India Opportunities Venture Fund’ with SIDBI. Currently, there is negligible flow of equity capital in SME sector. The setting up of MSMEs exchange will eventually help SMEs raise funds from capital markets.

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It is part of India’s decision as trade normalization process to allow FDI from Pakistan. Currently, trade between the two countries is at some $2.5 billion per year. The Indo-Pak trade agreement is a big pie for companies on both sides. It is a win-win situation for small businesses too.

Companies on both sides are scouting opportunities. Pakistan based businesses have already started to contemplate on how they are going to make an entry in Indian market – whether as a franchise, a distribution model or something else. The mood is upbeat as there is the realization that there can be benefits on both sides.

Procedural requirements for FDI are underway. Talks are also being held for allowing banks to open branches in India and Pak. RBI and State Bank of Pakistan have expressed interest to start branches in India. Banking services will help in boosting small business loans to entrepreneurs.

Trade of goods has been liberalized so far. Now, Pakistani industries and banks are showing keen interest in setting up business in India. This is possible with a policy decision on cross-border FDI. India-Pakistan Business Council will also start soon and there will be a formal agreement on multiple entry business visas.

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U.K Sinha, the SEBI chairman, says that SEBI has taken steps to list regional companies on BSE and NSE platforms too. Its aim is to make private equity and venture capital available to the SME sector. SEBI also intends to bring liquidity in secondary market.

The BSE SME exchange serves a separate platform for the growth of SME sector. This is apart from the role that Private equity and Venture capitalists play in growth of SME sector.

The first company to be listed on small and medium enterprises (SMEs) exchange platform is BCB Finance. The company is operational and many more similar companies are queued up for being listed in future too.

This article was submitted by Raj Tulshan, Director of Business Development of Biz2Credit. Biz2Credit is a small business marketplace that connects entrepreneurs with financing options and advice to grow their business. Send all questions to info@biz2credit.in