Line of Credit by World Bank for USD 120 Million.   

• Reached 927 MSMEs in 13 locations.
• Utilized in 18 months compared to target of 36 months.

Additional Line of Credit by World Bank for USD 400 Million in June 2009.

• Already utilized (overall)USD 323 million by March 2011. Reaching about 2326  MSMEs in 45 Locations on Pan India Basis including underserved regions like North East and UP, MP etc.
• Utilized  ~ USD 58 million till  March 2011 by extending 4500 loans through refinance ( Bank and NBFCs)

Line of credit from KfW for Euro 43.5 million – Fully utilized.

• Reached 367 MSMEs in 11 states.
• Utilized in 15 months compared to target of 36 months

• MoUs with 8 MLIs--SIDBI, UBI, BoB, PNB, Canara Bank. United Bank, SBI
• 64 cases (spread over 14 states /UT) covered – An amt of Rs 47 crore
• In view of satisfactory progress of pilot scheme, GOI has enhanced the coverage of CGTMSE guarantee scheme from Rs 50 lakh to Rs 100 lakh.
  
• To scale up RSF , support has been enhanced by WB from USD 5 million to USD 10 million. A feasibility study to assess the potential and contours of  scaled up version is in finalization stage.

• • Project has  supported various thematic workshops/ conferences and seminars. SIDBI also participates in the deliberations providing critical inputs. Few of the important initiatives include:
  • Developing a Modern Insolvency and Bankruptcy Regime for MSMEs.
  • Risk Capital for MSMEs
  • Change Management workshop for FIs
  • Regional workshop on Environment and Social Risk framework , CSR and GRI reporting was organized for bankers. Ths was followed by a National conference on non financial risk assessment & reporting.
• About 2000 + MSMEs, Bankers, Policy Makers, BMOs etc. participated in workshops on Risk Capital for MSMEs & Insolvency and Bankruptcy regime for MSMEs.

• Apart from bridging information gap through its websites (www.MSMEFDP.net) project regularly conducts policy aligned studies for the benefit of MSMEs. A knowledge pool has been created on the project (as also SIDBI website), where all the publications are freely accessible to the users. Few important ones include:
  • Walk-in-Kit for Corporatization of MSMEs (facilitating conversion to corporate entities)
  • Risk Capital for MSMEs in India (enabling framework for Risk Capital)
  • Series of Booklet on Energy Efficiency in Custers (Fruit and Vegetable Processing, Ceramics, Foundry and Engineering )
  • Factoring for MSMEs
  • MSME Bi-monthly Digest- OPTIMiSM (4 editions already released on the following themes:
    • Skill Development
    • Corporate Social Responsibility
    • Environment
  • MSME Database (single source information data)
  • Model CSR policy for MSME support institutions
  • MSME Report,2010
  • Global Best Banking Practices in MSME Financing and Development (documented successful, tried and tested global best practices on 10 identified themes).
• Studies in Finalization/ underway
  • International policies and experiences towards MSME support framework
  • Technology Vision for Indian MSMEs 2020 
  • Skill Development in MSME Sector (through skill gap study)
  • MSME Infokit (a web based interactive tool to bridge informational gaps and enhance information optimality of the Indian MSMEs)
• Study on Risk Sharing Facility

 In line with international best practices, MSMEFDP has setup a “Challenge Fund for Advocacy in MSME Sector (ACF)” which aims to promote ownership through involvement of beneficiaries/stakeholders

Support to five agencies has been extended under Advocacy Challenge Fund (ACF) with 4  projects under implementation.

1. Achievements under MSMEs Solutions Centre (pilot intervention) and MSME Confidence Index
   MSME Solutions Centre

    

   MSME Solutions Center established under ACF to provide BDS on Low Cost and no Cost basis. More than 1500 MSMEs/BDS providers benefited directly/indirectly through MSME Solutions Centre.

   Under the pilot ACF, so far 8 (+5 events) workshops have been conducted, more than 459 queries received, database of 350 MSMEs and 30 BDS providers created and 58 matchmaking interventions have been made.



MSME Confidence Index

The project was structured to develop a sustainable framework /model on capturing MSMEs performance and expectation on real time basis. Being one of its kind having quarterly & web based system reporting, the project was aimed to create systems and processes to capture and monitor micro level perception of MSMEs through periodical (quarterly) surveys, database creation and report extraction for dissemination of output in order to establish an ongoing service for the future. The index provide information on MSME performance & future expectation viz. business confidence, trends on employment, business growth, profitability, Credit Growth, emerging issues of relevance etc. It is worth to be mentioned that though the support under Advocacy Challenge Fund was extended for two quarters results, the implementing agency from its own resources has now released the results for Q3 (Apr – Jun, 2011).

2. Other initiatives are
   Green Dhaba Project

   Promotion of Eco friendly, energy efficient and hygienic Ddhabas in UIttarakhand.

   Establishing Green Dhabas based on promoting reliance on local resources, adopting green commitment, adoption of energy efficiency measures, use of renewal energy etc. and developed as environmentally and socially responsible and sustainable ventures.

• Key Outcomes:
  • A hygienic and environment friendly chain of restaurant serving quality food
  • A framework for expanding the chain to other areas of the country
  • Integration of financial and non-financial assistance viz. linking MSMEs with Banking Institutions.
3. Developing Model CSR Framework for MSMEs
   • CSR Cluster twinning between an Indian textile cluster and a Chinese textile cluster.
   • Key Outcomes:
     • Framework of CSR measures followed by Chinese textile industry
     • Benchmarking the CSR practices
     • Showcasing it in few MSMEs
     • Report for replicating the above in other similar textile cluster India
4. Procurement (It is being Implemented by Ace Global, Delhi)
   • Leveraging IT platform as a potential marketing access tool for e-procurement for MSMEs and "tapping markets and customers in the most cost-effective manner" is intended. It shall address one of the principal and perennial challenges faced by MSMEs. The uniqueness of the proposal lies in enabling assorted micro and small entrepreneurs to access and widen to newer arena both in terms of market and procurement by using simple IT through their mobiles and also internet.

• Members increased from 37 to 133 in four 5 years (from May 06 to Jul 2011)
• CIBIL has database of around 7.1 million as on Jul 31, 2011 and out this approximately 85% is MSME database. It may be mentioned that the database has increased more than 15 times from 0.45 million in January 2006.

 Jun 2011

• Increase in rating from 169 in July 2006 to 11734 till Jun  2011
• Launched MFI Rating, Green Rating. Green Field Ratings etc. ( SMERA has already carried out 36 Green ratings)
• SMERA has got the registration of SEBI to operate as registered Credit Rating Agency under the SEBI (Credit Rating Agencies) Regulations, 1999. With this they can diversify and offer varied rating products.

SMERA has since been empanelled by the Ministry of Renewable Energy for Rating of Solar entities in the country under the Jawaharlal Nehru Mission.  

CART (Credit Appraisal and Rating tool)  a software based processing tool (which is used from appraisal till documentation) has been supported for validation of models / developing variants and Capacity building of bank officials.

267 credit officials ((SIDBI and other Banks Officers / SFCs) have been trained on operations of the Tool  

In the three years of Project intervention, the project has scaled up from 3 to 18 MSME clusters with the objective of scaling up Business Development Services (BDS). In these three years, the Project has through long term and short term interventions reached out to more than 20000 23500 stakeholders, including MSMEs, BDSPs through more than 960 1400 specialised interventions/ activities.

‘Making Market for MSMEs’- BDS Market Development in Clusters
Business Development services are wide range of services used by entrepreneurs to help them operate efficiently and grow their businesses. It includes training consultancy & advisory services, marketing assistance, information, technology development and transfer, and business link promotion as also financial services. The BDS field focuses on promoting access to and use of these services by MSMEs Overall goal of SIDBI Cluster Development Programme through MSMEFDP - BDS Project is to scale up MSMEs by increasing their access to improve private and public benefit business development services.

1. Identification of both demand & supply side issues in the select clusters through diagnostic study.
2. Stimulation/creation of demand for business development services from MSMEs
3. Strengthening the capabilities of supply side (BDS providers)
4. facilitating a sustainable demand-supply nexus of BDS providers and MSMEs

Project focused on demand side issues through awareness creation / sensitization. On supply side, issues such as capacity building and handholding of BDS providers in the cluster were taken up. For demand – supply nexus or match making (i.e. making market work) innovative instruments such as voucher support were supported. Virtual market place through a unique cluster portal apart from trying other initiatives like BDS on wheels, BDS clinics, BDS Bazaar were tried out.

The BDS market development believes in the theory that once BDS are capacitated and are acceptable to market they will kindle appetite of MSMEs and once profitability of service provider and receipeint goesup the value chain imbibes functionality. 

Thematic Approach - A number of initiatives were undertaken on various themes.

Energy is one of the flagship area in the clusters under which project has conducted around 108 walk-through audits and 25 detailed audits. As a result of this not only market corrections enabled fee benchmarking ( from a high of  Rs. 1,20,000/- , this came down to Rs. 40,000/-). Energy Efficiency booklets on four different sectors have been published in English, Hindi and regional languages. The project has also published Energy Efficiency tip sheets & Posters which provides common and easy ways of energy savings by adopting household measures. These have attended to information asymmetry. Now in clusters Energy Auditors are available and providing their services to MSMEs in the cluster.

In most of the clusters Technology was another area diagnosed at the beginning of the project as a critical area for intervention. One key achievement was recorded in Coimbatore where the upgradation of Cupola to maximize the use of coal resulted in an estimated saving of approximately Rs. 11.2 million per annum

Similarly, in Ganjam, under Cashew processing, shifting from ‘Roasting’ technique to ‘Boiling’ technique decreases the wastage by 30% (which leads to saving of approximately Rs. 99 million per year for 36 firms).

Same has been the case in Alleppey where shift to small mechanized interventions, introducing economical semi mechanized looms are being tested which will not only reduce human drudgery (for example the women had to walk 10-12 kms but now can sit and do retting)  but also enhance efficiency.

Similarly Quality /Productivity enhancement initiatives including Lean Manufacturing (conducted awareness programmes which helped in leveraging NMCP programme/ other similar schemes)

Skill upgradation was another area that needed attention. Since there is always a need of skilled workforce and retaining them (for enhancement of productivity in the clusters) project has made significant contributions from supply side. Initiatives in Kanpur, Ludhiana, Bhadohi, Kolkata and Chandigarh involved BMOs, SPVs, local BDS( individual/ institutional) to sustainably attend to this mandate . A total 95 BDSPs were linked in this area and trained over 10000 people who were successfully absorbed by industry. The project has also assisted in establishment of 12 Skill Development centers and 21 were linked up / institutionalized.

Market Access -Project not only handholded BDS providers to fetch initial transactions but also supported / facilitated transactions on pilot basis to demonstrate the initial success. Over 390 BDS providers got directly linked up with the MSMEs under the project.

Capacities building of Business Member Organisations (say industry associations)  Project targeted BMOs in the cluster to evolve them as natural FAs in the clusters. Project built the capacity of these BMOs and handhold them to emerge as link between the BDS providers and MSMEs. etc. 

National Level Mentoring to MSMEs – An online portal www.msmementor.in for availability of right Professionals / service providers has been supported.

Rural entrepreneurship- Taking the agenda of Rural enterprise forward, the project has supported Rural Industrialization Programme (RIP) in 2 pilot locations in underserved states of Rajasthan and Orissa.

Micro Enterprises Business Information Counselors (MEBIC) - In order to foster entrepreneurship within micro enterprises of underserved regions, the Project took an initiative for developing a cadre of BDS providers for counselling, initial handholding and development of micro enterprises in North-Eastern region as Micro Enterprise Business Information Counselors (MEBIC). More than 1200 prospective entrepreneurs have been provided counseling services till date

Policy Advocacy – For attending to information asymmetry and contribute to enabling policy environment, project has created a robust knowledge bank (www.msmefdp.net).  Several policy papers/ publications like Factoring ( taking shape of new legislation), corporatization, risk capital,  Global Best Banking Practices in MSME Financing and Development have been widely appreciated. For the first time in India , project has launched, , the Advocacy Challenge Fund for Enterprise development under which support  has been extended for MSME Solution Centre (a facilitation point for BDS and MSMEs), Green Dhabha (making 60 plus road side eateries adopt green agenda) MSME Confidence Index (periodical assessment of MSMEs expectations), E Procurement and Indo- China Textile CSR benchmarking initiatives. 

in the overall development of MSMEs in the clusters. Few more initiatives have acted as catalysts. FSIA in Faridabad has been supported and has slowly built its capacity to leverage social capital for enabling MSMEs to access finance easily. Few have been helped to form their SPVs to leverage common procurement as also marketing.

Enhancing Livelihihoods and reducing poverty- MSMEFDP aims to attend to poverty reduction through enterprise development. Through the various initiatives project has attempted to enhance the livelihood of the people . Few examples of such attempts are as below:

Skill development is a pressure point in most clusters. Areas of intervention include up-scaling availability of existing skill as well as promotion of new skills required due to introduction of new technology or machinery or product. Approximately 40 institutions have been strengthened/come up in this process as BDS providers in this field.

Kanpur is one of the best examples to see the enhancement of livelihood in the cluster where a number of people were mobilized from villages and got trained. The project created Socio-Economic Impact by reaching out to over 1000 poor women workers thereby contributing significantly to these socially excluded segments of the society. The income levels of these poor women (from one product to over 14 products) has increased from around Rs 1 to 2 per product and about Rs 10 - 15 daily to around Rs 100 to 150 per day.  This has improved their quality of life significantly. They have fetched orders of more than 1400 bags worth Rs 2.5 Lakh of various designs have been generated in around 8 – 10 different exhibitions. 80 women have received Artisan Cards which provide them a gateway for accessing various State-funded benefits, including major discounts on health insurance schemes as well as access to credit at preferential rates. This has been an enabler for social and financial inclusion.

 One of the examples may be taken as enhanced livelihood of the labour in the cluster is training of jail inmates of the Ludhiana State Jail as workers for the industry. The agreement for this exercise was reached with the joint effort of the Project and a training institution. Here while the units get assured supply, the jail inmates get a livelihood option both through savings as inmates and a likely livelihood for the future. The Jail authority acts as the service provider of coordinating the activity within the jail premises. The project supported the training of 60 inmates. 6 factories have taken benefit of this system. Looking at the success, the Ludhiana Central Jail has taken keen interest in this process for replication.

In Ganjam- Gajpati (F&V processing cluster) steps like encouraging employees to opt for PF policies, taking safety measures, maintaining books of accounts enabled micro MSMEs to be part of inclusive growth.

Thus skill development is one of the best way of cluster Development which focuses on bottom up approach and directly benefited the poor.

Innovative Tools-  Who Does Who Pays Matrix (map the players in clusters), Voucher ( to instill participative approach project supports initiatives on tapering business), Cluster Coordination Committee ( for overall monitoring and to provide guidance to cluster initiatives),BDS clinic (place for msme and bds for solutions), BDS Bazaar(offering matchmaking) , BDS on Wheel ( reaching out to door step of beneficiary), BDS consortium( pooling BDS for enabling swift outreach to MSMEs as one stop shoppe)  , Exposure visits( for learnings from successes), developing a pool of FAs ( 7 with more than 110 personnel in team), cross learning workshops, skill development models( MFI involved, BMO led, corporate houses, academia-industry partnership), BDS Panel ( Benchmarking of costs leads to reduction in fee)

Impact
The initiative has led to market functionality now visible in these clusters, which is a systemic change as against earlier transaction led actions. By June 2011 through over 1000 activities, cumulative outreach (since inception in 2006-07) has been to over 23500, plus beneficiaries.

MSMEFDP has won two international awards for the cluster initiative. Even though the project ends in October, major impact is visible currently in the clusters. Already request for replications have been emanating from various quarters.

The project so far has introduced over 450 Business Development Service Providers (BDSPs) in various domains and linked up around 1900 firms with BDSPs.

Over 88 BDSPs were introduced and linked in skill development in different clusters who have in turn trained over 5500 people and got them placed in the industry.
Under the project over 12 Skill Development centers were directly established and another 21 were linked up / institutionalized with replication effect.

Some cluster specific examples

• Kanpur - Skill development centres on PPP mode, establishment of SPVs for infrastructure development in the cluster.
• Alleppey - Technological development to increase the efficiency and market access, improvement in productivity
• Pune - Setup of BDS market in the cluster. Institutionalisation of BDS market.
• Hyderabad - Promotion of BDS providers in developmental areas like energy efficiency, cGMP etc. Compliance rate got increased in the cluster which led to more international buyers and in turn profitability in the cluster.
• Dehradun  - Promotion of institutional BDS providers,
• Ganjam - Technology updation and process improvement lead to over 30% increase in efficiency in production. Financial linkages were facilitated for underserved MSMEs in the cluster
• Coimbatore    A simple technology change lead to estimated saving of over Rs. 11.2 Million per annum. 
• Rourkela - Institutional linkages were established for MSMEs for market access.
• Ludhiana - Skill development programme in jail lead to not only increase in availability of skilled manpower in the cluster but also fulfil of corporate social responsibility agenda in the cluster.
• Tirupur- The cluster network was established. New BDS were introduced in the cluster lead to increase in export
• Panipat- Financial linkages, technology upgrdation and new design development lead to increase in production efficiency of MSMEs
• Bhadhoi- An institutional network for promotion of BDS in the cluster has been established.
• Kolkata -Product development (industrial gloves to fancy gloves) lead to improvement in the price realisation for the MSMEs
• Rajkot            -Upgradation of cupola and BEE star labelling lead acceptance of  energy saving and in turn increase in profitability of the MSMEs in the cluster
• MPC - Skill development, technology upgradation and institutionalisation of BDS providers lead to availability of training institute in the cluster in long run
• Faridabad- CB of BMOs led to channelization of larger credit flow to MSME members. Till date Rs. 17 crore has been sanctioned and Rs. 12 crore has been disbursed to around 50 MSMEs members.
• Others - BDS in underserved regions / clusters – Modified RIP - Pilot phase was launched in 2 states Nayagarh, Orissa and Sawai Madhopur, Rajasthan in initial stage, the initiative is proposed to expand in 18 locations with SIDBI assistance
• Project implementation has been started and initial trust building exercise has been completed. Now the implementation is going on in its full swing. 

Some examples of institutionalisation

• Capacity has been built for NAFARI to emerge as an umbrella BDS provider/Meso organisation  -  Vision document for NAFARI has been prepared as a part of exit strategy in the cluster.
• Micro Enterprises Business Information Counselors (MEBIC)- 
  1. Project has setup a counseling centre  in collaboration with Rashtriya Gramin Vikas Nidhi (RGVN)
  2. Around 1100 prospective entrepreneurs have been provided counseling services till date
• Support to Faridabad Small Industries Associations to channelise larger credit flow to MSME members. Till date Rs. 17 crore has been sanctioned and Rs. 12 crore has been disbursed to around 50 MSMEs members. Lead to creation of a new model for credit delivery by levarging social capital – has been replicated in Ahmedabad.
• Energy Efficiency booklets on four sectors have been published in English, Hindi and regional languages. The project has also published Energy Efficiency tip sheets & Posters which provides  common and easy ways of energy savings. To institutionalize energy efficiency initiatives in the clusters.

1. Capacity building of Jamnagar Brass Cluster- more than 10000 samples from about 990 MSME units have   been tested till date 2. Business Development Centre- Coir Shippers Council - The grant support from the project has helped to leverage support under Industrial Infrastructure Up gradation (IIUF) scheme of GOI. The first phase of the project has been completed which is self sustainable
   • Prime database - A national level database of BDS provider was developed to cater the needs of MSMEs through web based tool.
   • The database is well taken by professionals and over 8000 professionals and 1600 MSMEs are registered on the portal.

•  Supported capacity building of about  1324  officials of different Banks / FIs

• Andhra Pradesh State Financial Corporation (APSFC)
  1. Sanctioned support for Capacity Building of APSFC.
  2. APSFC has conducted 55  Training Programmes benefitting 694 officials
• Electronica Finance Limited -
  
• CB support to enhance their MSME -retail lending capacity,
• 32 officials trained on productivity enhancement