President's Message
“MSMEs in UP feel like the abandoned and battered orphan Baby Falak as the all-powerful Chief Minister of Uttar Pradesh could not find time even once during her five year long tenure to meet representatives of the 3 million micro, small and medium enterprises in the state that provide direct employment to more than 6 million people and livelihoods to over 30 million people.”
- Mr V.K. Agarwal
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Dear Readers,
So far four issues of the Federation of Indian Micro and Small & Medium Enterprises’ (FISME) newsletter in its current avatar as The FISME Factor have seen the light of day and quite a few readers have been kind enough to send us their feedback. In this double issue, we offer you a compilation of the bouquets and brickbats that we have received so far only to remind you that your views are precious as they not only encourage us but also guide us in providing you a continuously improving product. In this issue, we also bring to you an exclusive interview with one of the most creative entrepreneurs in India – the globally renowned car designer, entrepreneur and artist at large Shri Dilip Chhabria. Our management expert Rashmi offers you a peek into his mind. In future issues, we hope to cover many more such business leaders and who knows, you could be one of them. Happy reading!
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Know more about Cloud Computing. Participate in FISME's SME Connect workshops being organised across the country. The first one is being held at hotel Crown Plaza, Gurgaon on March 2, 2012. Book your seat now to interact with senior executives having in-depth knowledge of Cloud Computing for two hours (1800-2000 hrs) followed by dinner.
 The Federation of Indian Micro and Small & Medium Enterprises will be conducting Intellectual Property Rights (IPR) Awareness Programmes as part of the National Manufacturing Competitiveness Programme of the Ministry of MSMEs, Government of India.
 The Federation of Indian Micro and Small & Medium Enterprises has been conducting Quality Management Standard (QMS) & Quality Technology Tools (QTT) Awareness Programmes as part of the National Manufacturing Competitiveness Programme of the Ministry of MSMEs, Government of India.
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Policy Polemics
Should interest rates for MSMEs be fixed at 8-10%?
The minister for MSMEs Mr Virbhadra Singh thinks so. In a recent interview to The Financial Express, he said MSMEs are not getting adequate bank financing and there is a need to fix the interest rates for the sector in the 8-10% range. The MSME ministry has already written to the finance ministry to this effect, the minister said.
HR Heuristics
A peep into the mind of a creative entrepreneur
The FISME Factor’s management expert Rashmi Datt probes takes a peep into the mind of creative entrepreneur par excellance Dilip Chhabria in an exclusive interview. The conversation throws up many insights into how to motivate people, how to manage time, how to reduce attrition and cut costs and so on. Rashmi is an independent HR consultant and works regularly with companies such as ACC, Areva, Reliance Power etc in the area of individual and organisational development and is an acclaimed author with two books to her credit. Read on for take aways on how to strengthen our own business.
Finance Fundamentals
RBI pulls up banks for laxity in SME finance
Reserve Bank of India Deputy Governor KC Chakrabarty on February 4, 2012 pulled up banks for showing laxity in financing small and medium enterprises (SMEs) in the country. “As much as 92.7 per cent of SMEs are self-financed. I don’t think all of them require finance … they require working capital. The problem is that smaller people are not getting finance,” he said while addressing the SME banking conclave here. “Your commitment should be passed on to them (branch managers and others down the line). Can any bank give me branch-wise details of MSME advances?” he said.
Marketing Mantras
The importance of PR
It has been well documented that public relations (PR) is more cost effective and measurable than advertising for promoting your brand in particular and marketing your products and services in general. Since its launch in 1906, the humble press release has come a long way and when it comes to promoting your business, there are a myriad of communication tools at your disposal: broadcast media, online forums, blogs, newswires, RSS feeds, newsletters, e-books, networking, events/awards, sponsorship, advertising and vod/podcasts and so the list goes on. The art of communication lies in using a subtle and strategic combination of all of the tools in your communications kit. Find out how.
IPR Intelligence
Legal risks of using social media
The exponential rise in popularity of social networking websites and other social media outlets such as Facebook, Twitter, LinkedIn, and individual blogs, is due in large part to their viral nature. Social networking sites are essentially self-promoting, in that users spread the word for the sites. The more quickly social networking sites grow, the more quickly they spread. The viral quality of social media makes it an appealing way for businesses to market products and services, and marketers have long recognized and tapped the potential of social media outlets. But companies utilizing the power of social media must also be cognizant of the relevant legal issues in order to protect themselves from liability risks.
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Directory of Testing Laboratories in India
Buy our one-of-a-kind guide to all industrial testing laboratories in India. Find the one most convenient for getting your products tested and certified. An invaluable compendium for all industrial units and exporters.
PP: 894, Hard Cover.
Price: Rs 900.
50% discount for members.
Handbook for Managing Export Payment Risks
If you are an exporter you simply cannot do without this unique publication which tells you how to manage payment and other risks arising from exports.
PP: 78.
Price: Rs 300.
50% discount for members.
Free Publications
Fertilizer quality control in India: Need for change
This monograph argues for a systemic change in fertiliser quality control. Essential reading for those in policy-making positions.
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FISME regularly receives monthly reports on the economies of various countries from their missions in India. These reports provide information on key economic parameters, trade related information and all news relevant for importers and exporters. In this edition you can take a look at reports on:
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FISME holds IPR awareness programme in Meerut
 Being the outreach vehicle of choice of the Ministry of MSME for implementing its various schemes, the Federation of Indian Micro and Small & Medium Enterprises (FISME) has been implementing various components of the ministry's National Manufacturing Competitiveness Programme (NMCP) over the past few years. As part of the Intellectual Property Rights (IPR) component of the NMCP, FISME in collaboration with Partapur Industrial Manufacturers’ Association (PIEMA) organized an IPR Awareness Programme in Meerut, Uttar Pradesh on January 31, 2012. The programme was attended by more than 40 entrepreneurs and manufacturers who went back immensely satisfied.
FISME to help set up IPR Desk at Nasik
 The Federation of Indian Micro and Small & Medium Enterprises (FISME), the voice of Micro, Small and Medium Enterprises (MSMEs) has decided to help the Nashik Industries & Manufacturers' Association (NIMA), Nashik to set up an Intellectual Property Rights facilitation desk at Nashik. The decision was taken at the recent IPR awareness programme that FISME has organized in association with NIMA.
FISME presents pre-budget memorandum
 The Federation of Indian Micro and Small &Medium Enterprises submitted a pre-budget memorandum to the Ministry of Finance. The memorandum focused on two key aspects- access to institutional finance and need for an enabling regime of direct and indirect taxes - to ensure the survival and growth of manufacturing MSMEs.
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FISME raps Mayawati government for neglecting MSMEs
Ahead of the Assembly elections in India’s largest state Uttar Pradesh, the Federation of Indian Micro and Small & Medium Enterprises (FISME) issued a press release sharply criticising the incumbent Mayawati government for its utter neglect of industry, especially industrial micro, small and medium enterprises (MSMEs) despite making tall promises. “We feel like the abandoned and battered orphan Baby Falak as the all-powerful Chief Minister of Uttar Pradesh could not find time even once during her five year long tenure to meet representatives of the 3 million micro, small and medium enterprises in the state that provide direct employment to more than 6 million people and livelihoods to over 30 million people,” FISME President Shri V.K. Agarwal said in the press release which got fairly wide media coverage.
FISME launches social media sites  
You can now find FISME on social media sites such as Facebook, LinkedIn and Twitter. FISME started its social media journey by posting its press release criticising the incumbent chief minister of Uttar Pradesh Mayawati for failing to meet representatives of industrial micro, small and medium enterprises even once during her five year tenure. There is now a visible capital flight from UP as more and more industries are becoming unviable due to the utter neglect of the needs of industry by the Bahujan Samaj Party government, the FISME press release has pointed out.
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The 3rd Round of India-Australia FTA negotiations will be held in New Delhi during the 3rd week of March, 2012. You are requested to give your comments (Yes [Y] or No [N] and reasons thereof) on the negative list and send it to us at newsletter@fisme.org.in.
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Activities of Member/Partner organisations
FIWE to hold 12th global meet in April
The Federation of Indian Women Entrepreneurs (FIWE) is organizing the 12th global conference on “Trade Liberalization and its Global Impact on Women Entrepreneurs” in association with IFWE (International Federation of Women Entrepreneurs) in New Delhi on April 3-5, 2012. More than 800 women entrepreneurs from around the world and representing more than eight key SME sectors are expected to participate in the event. There will also be a buyer-seller meet-cum-exhibition to enable entrepreneurs to showcase their creativity and capacity for growth. The FIWE would also confer the “Priyadarshini award” at the meet for which nominations are invited.
AIRIA to organise National Rubber Conference 2012
The All India Rubber Industries Association (AIRIA) will organise a national conference on "New Challenges and Opportunities for Rubber Industry" on March 16-17, 2012 at India Habitat Centre, New Delhi. This will be the first of a series of four such conferences covering all the four regions of the country to promote the rubber industry. The two day conference will focus on key issues such as availability of raw materials, latex, testing, machinery, processing etc.
Saket Tiku elected new president of AIIGMA
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Macro Metre
Inflation at 2-yr low fuels rate-cut hopes
Inflation dropped sharply after having remained above nine per cent for a year till November. It fell to a more than two-year low of 6.55 per cent in January, raising hopes the Reserve Bank would go for a rate cut in its March review. In December, inflation had fallen to 7.47 per cent from 9.46 per cent in the previous month.
Factory output slumps in Dec
India’s factory output growth slumped to 1.8% in December as investment demand contracted for the fourth consecutive month, reinforcing the case for the Reserve Bank of India (RBI) to start cutting interest rates. With the exception of October, when the Index of Industrial Production (IIP) contracted 4.7%, growth is the slowest since April 2009, when factory output expanded by a mere 1.1%.
India, US looking up & EU stabilising: OECD
The worst may be behind for India and it can look forward to a pick-up in economic activity, according to OECD. The composite leading indicators (CLI) for India show "signs of an upward change in growth momentum", the Paris-based think tank said in a release on Monday. "This clearly shows that the worst is behind us. What is of concern now is the magnitude of this change and incremental policy reforms are required to accelerate the process," said Shubhada Rao, chief economist, Yes Bank.
Factory PMI rebounds and grows at fastest pace in 8 months
 India’s manufacturing sector grew at its fastest pace in eight months in January as factory output surged the most on record on increased domestic and foreign demand, a business survey showed on Wednesday. The HSBC manufacturing purchasing managers’ index (PMI) , compiled by Markit, jumped to 57.5 from 54.2 in December. “Activity in the manufacturing sector rebounded again in January led by higher demand from both domestic and foreign clients, suggesting some recovery in sentiment in recent months,” said Leif Eskesen, economist at HSBC.
Why are IIP and PMI numbers diverging?
 Enough has been said about the volatility of the Index of Industrial Production (IIP). What’s worrying, though, is that the poor December number appears to contradict the improvement in the manufacturing Purchasing Managers’ Index (PMI), as well as the strength in domestic demand seen in the advance estimates of gross domestic product for the current fiscal made a few days ago.
FM opposes RBI's view to stretch priority sectors lending list
 The finance ministry is opposing a Reserve Bank of India suggestion to widen the list of sectors eligible for priority sector lending. The Reserve Bank's draft report submitted to the ministry for its comments last week has also recommended that some infrastructure segments should be classified as priority.
Hyderabad to host 45th FRO
 Franchise India is hosting 45th Franchise and Retail Opportunity (FRO) show on February 25-26, 2012 at Hyderabad Intl Convention Centre. The Franchise & Retail, Expo & Conference is presented by Franchise India and Indian Franchise Association (IFA) and supported by Ministry of Micro Small and Medium Enterprises, Government of India (MSME). The conference will provide an enlightening perspective on the business of being an entrepreneur, being enterprising, spotting and seizing opportunities. The Summit is going to be the perfect blend for entrepreneurs who are looking to jumpstart their business ideas.
MSME trainers to get innovative training from IFC
 With an objective to create well-trained and competent cadre of ‘master trainers’ for MSME sector, the National Institute for Entrepreneurship & Small Business Development (NIESBUD), an autonomous institution under the Ministry of Micro, Small & Medium Enterprises (MSMEs) has joined hands with the International Finance Corporation (IFC) , a member of the World Bank group, to conduct innovative training programme for MSME trainers.
Industry seeks total implementation of MSME Act
Majority of the industries in the Chandigarh area are micro small and medium enterprises (MSME) but there is no consideration to implement MSME Act in totality for the regulation of small and medium enterprises by the administration. “The state administration is not considering the problems of the small enterprises and are not serious about the implementation of the MSME Act for the promotion and development of all the industries in the city,” said Devi Prasad Khandelia, President, Industries Association of Chandigarh.
MSMEs to benefit from India-Botswana MoU
The partnership efforts of both India and Botswana in the field of micro, small and medium enterprises (MSMEs) will be developing excellent opportunities for the sector. RK Mathur, Secretary, Ministry of MSME, said, “The collaborative efforts of both sides will definitely create excellent opportunities to MSMEs of these two countries to form alliances and withstand global challenges together.” This statement has come while addressing the first meeting of the Joint Committee set up under the Memorandum of Understanding (MoU) between both the countries has been held here.
Rating is still a nascent concept in India
The challenge is to educate SMEs to avail themselves of credit ratings, says Mr Sachin Nigam, Director, SME Ratings, Crisil. Lack of information and corporate governance are key issues that plague the sector, he says while explaining the need for ratings for small and medium enterprises (SMEs) and the challenges that exist. He says rating is still a nascent concept in India.
RBI calls for dedicated SME verticals at banks
The Reserve Bank has asked banks to set up dedicated verticals to help small and medium businesses to deal with financial matters. "An SME-promoter knows the product, but he doesn't know finance," RBI Deputy Governor K C Chakrabarty said, speaking at an industry seminar organised by the SME Chamber of India recently.
SME exchange waiting for 'good time' to launch
The much awaited separate stock exchange for small and medium enterprises (SMEs) seems waiting for its best Muhurat, said MSME Secretary R K Mathur. "I think they (the Bombay Stock Exchange and the National Stock Exchange) are looking at a good time to launch because the stock market had not been doing so well," Secretary in the Ministry of Micro, Small and Medium Enterprises (MSME) Mathur told media recently.
MSME-Defence Expo from March 2
The MSME-Defence Expo 2012 will be held in Bangalore from March 2 to 4. Speaking at a curtain raiser press conference to announce the event, M Maheshwar Rao, Commissioner, Industries and Commerce Department, said that the defence and aerospace sector is opening up in a substantial manner and is expected to attract a large number of investors. The event is said to be supported by the National Small Industries Corporation and other industry associations in the State.
J&K govt apathetic towards SMEs
Industries in Jammu and Kashmir are showing signs of decline despite the incentives and concessions provided by the central government since 2002. Entrepreneurs and economy watchers say the state industries department has not been able to take steps it had promised to promote the sector which it had said was "the only way to development and creating jobs."
Sourcing from MSMEs will benefit investors: Sharma
Local sourcing norms from micro, small and medium enterprises (MSMEs) on the single brand retail would benefit investors, said Union Minister of Commerce, Industry & Textiles Anand Sharma recently. "Domestic sourcing norms in single brand retail is a well-considered policy decision and sourcing from MSME from within the country is matter of experience which will tell us that sourcing will be rewarding for investor," said Sharma while addressing the 9th World CEO Sustainability Summit in New Delhi.
MSME ministry seeks lower borrowing rates
The micro, small and medium enterprises (MSME) ministry has written to the finance ministry to lower the rate of interest on credit for the sector. In a pre-budget demand, MSME minister Virbhadra Singh has asked the government to look into options to reduce the cost of funds for small scale industry. ‘‘Internationally, credit is available at around 4-6% interest rate. In India, the MSMEs are paying as high as up to 16%. We have requested the finance ministry to bring it at par with international rates for MSMEs,’’said Amrendra Sinha, additional secretary, MSME ministry.
Sourcing from MSME will be rewarding to the Investors
Shri Anand Sharma the Union Minister of Commerce, Industry & Textiles addressed the 9th World CEO Sustainability Summit, centred on the theme of ‘Doing Business while protecting the Global Commons’. Shri Sharma in his address said that,” India, has made significant headway in ensuring sustainable development in the recent past, not only from the perspective of government policy but significantly, in terms of corporate leadership displayed in developing and supplying renewable energy in the country”.
High costs of logistics a setback for SMEs
A major setback for the Indian small and medium enterprises (SMEs) at present is high logistics cost, which is hurting their business growth and competitiveness globally, said an industry expert and Chairman of SCA Group of Companies, Tushar Jani. "This entire infrastructure which has been built is actually developed with such a high cost. So, SMEs' cost has gone up," Jani told SME Times recently.
Small enterprises to get a boost
The government is actively considering offering a slew of tax breaks to encourage investment in small enterprises, particularly lower tax rates for venture funds and private equity firms, to woo them to infuse capital in such enterprises. Allowing domestic and foreign investors to redeem profits that will be taxed at 15%, against the corporate income tax rate of 30% are among the proposals that the government is considering to announce in the budget for 2012-13.
FIEO wants Budget to list exports for priority sector lending
Thirteen successive increases in policy rates have made interest rates uncompetitive internationally and hit at capital formation and investment. PMIs have slumped to levels of contraction only to revive in the last couple of months. It is, therefore, suggested that: Interest rate for MSME sector be capped at 7% and for others at 9%; or subvention should be provided to all sectors of exports at-least till 31st March 2013.
MSME Ministry bats for inclusion of Khadi in MNREGA
The Ministry of Micro, Small and Medium Enterprises (MSME) has put forward a proposal to include Khadi spinning under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). The MGNREGA is the flagship employment programme of the Government of India, which aims at enhancing the livelihood security of people in rural areas by guaranteeing hundred days of wage-employment in a financial year to a rural household whose adult members volunteer to do unskilled manual work.
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Focus on Saudi Arabia
Small enterprises to create more jobs for youth
 Commerce and Industry Minister Tawfiq Al-Rabiah called for concerted efforts to formulate a national policy to promote and support small and medium enterprises (SMEs) in the Kingdom. Al-Rabiah was speaking at the Saudi SMEs Forum, which was inaugurated by Finance Minister Ibrahim Al-Assaf recently. The inaugural ceremony of the forum was also attended by Labor Minister Adel Fakeih, Economy and Planning Minister Muhammed Al-Jasser, Saudi Council of Chambers of Commerce and Industry Abdullah Al-Mobti and SAMA Gov. Fahad Al-Mubarak.
Focus on UK
£50 million worth of Olympic contracts remains unfulfilled
The Olympic Delivery Authority, which organises the infrastructure of the Games is dependent upon small suppliers and has some 1,500 small companies on its books already. More than 250 suppliers to the London Olympics who already have contracts are SME's, which accounts for nearly 70% of all suppliers, and nearly two-thirds of them are based outside the capital. Will Davies, co-founder of property management company Aspect said: "In times of financial downturn it is often small and young companies that are the most flexible to bid for new opportunities.
Focus on UAE
Dubai Becomes Hot Spot for SMEs
Since Dubai was hit by the financial crisis in late 2008, the number of small and medium enterprises (SME) has been constantly growing, as more and more lay off people found their own businesses. According to the Dubai Chamber of Commerce, the vast majority of the over 100,000 registered companies are SMEs and family businesses.
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Too many bouquets. No brickbats. Yet.
Feel free to share your comments and views with us as they will only help us to improve the quality of your newsletter. Here is a compilation of the feedback that we have received so far.
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23 new members join FISME
During the period January 1, 2012 to February 15, 2012 a total of 23 new MSMEs became members of FISME.
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