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Vol III, Issue 29: March 1, 2013 Activities   News   Reader Reactions   Members   Contact     Print Version  

President on Budget

President-Mr V.K. Agarwal

Excluding MSMEs from grant of investment allowance is gross injustice

"The FM appears to have been at his doublespeak best when, in spite of his fulsome praise of the MSMEs, he ignored them while announcing grant of 15% investment allowance for new investments in manufacturing facilities and restricting the benefit to Co investing Rs100Cr and above. "

- Shri V.K. Agarwal, President FISME
Read Full Address

MSMEs rightly prophesied the Budget to be growth oriented

FISME survey

According to The FISME Factor survey, which was conducted prior to Union Budget 2013-14 being tabled, majority of MSMEs already prophesied the Budget to be growth oriented.

HR Heuristics

Is your organisation leaking people energy?

A major problem that most growing organisations face today is leakage of people energy without the senior management being aware of it. Given the talent shortage across industries, having a motivated work force and retaining them is one of the key factors that helps a fledging start-up make the transition to the next level of growth.

Finance Fundamentals

Gold loans are a new source of liquidity for SMEs

Apart from the obvious need for hard cash when starting any enterprise, there are also times when a business faces a liquidity problem. In such a scenario, securing funds in the absence of proper collateral or securities is tough. And, although there are a number of financial products that can help, negotiating the paperwork and time taken to prove your creditworthiness can be nerve-wracking.

Are angel investors getting less angelic?

Angel investors as the name indicates have been benevolent souls who bless new start-ups with their first injection of capital - their seed money.

Marketing Mantras

Do your homework before starting a new project!

OK, so we're not all Bill Gates and Zuckerburgs. But there are a lot of potential entrepreneurs out there whose innovative ideas can make it really big - provided they take the right route.

Entrepreneurship: Fear is the foe

"I would like to start a small business, but . . . ." On my Facebook page I often come across these words.

Policy Polemic

Budget 2013: Towards an able bodied manufacturing sector

No large economy can become truly developed without a robust manufacturing sector. And so, our dearest finance minister today, proposed to provide an investment allowance at the rate of 15 percent to a manufacturing company that invests more than Rs100 crore in plant and machinery.

Small Company's Big Business

Forty years ago, economist Ernst Friedrich Schumacher published in Britain his book 'Small is Beautiful' in which he argued in favour of human-scale, decentralized and appropriate technologies which small businesses could harness effectively. Closer home, socialist thinker Ram Manohar Lohia propounded 'alpa praman yantra', stressing the need to limit use of technology and exploit the potential of small industries to offer employment in large numbers.


Economic Survey 2013: Need to improve resource flow to MSMEs

Resource flow to Micro, Small and Medium Enterprises (MSMEs) needs to improve considerably along with a strong R&D push for the sector, the Economic Survey said recently. Sourcing of finance at competitive cost is a major constraint for both the organised and the unorganised MSME units and financing, other than through internal accruals, is costly and prohibitive, it said.

Economy to grow at 6.1-6.7% in 2013-14: Economic Survey

According to the Economic Survey, the Indian economy is likely to grow at 6.1-6.75 per cent in 2013-14. The government on Feb 27 tabled the Economic Survey in Parliament.

Highlights of the Budget 2013-14

• Benefits or preferences enjoyed by MSME to continue upto three years after they grow out of this category.
• Refinancing capacity of SIDBI raised to Rs 10,000 crore.
• Technology Upgradation Fund Scheme (TUFS) for textile to continue in 12th Plan with an investment target of Rs 1, 51, 000 crore.

General Budget 2013-14

Finance Minister P. Chidambaram presented one of the most highly anticipated Indian budgets of recent years on Feb 28, 2013 as the government looks to rein in a bloated fiscal deficit and restore confidence in Asia's third-largest economy.

Quotable Quotes

" No problem can be solved until it is reduced to some simple form. The changing of a vague difficulty into a specific, concrete form is a very essential element in thinking. "

JP Morgan, founder of JP Morgan & Co

Directory of Testing Laboratories in India

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.
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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.
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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.
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:

FISME organises 4th ‘Innovation Lab for MSMEs’ in Hyderabad

Emphasizing on the adoption of innovation among Micro Small and Medium Enterprises (MSME), Federation of Indian Micro and Small & Medium Enterprises (FISME) organised fourth Innovation Lab for them- helping new age MSMEs compete with innovative ideas on Feb 21, 2013 in Hyderabad. Mr David Wittenberg, the star speaker of the event and the CEO of the Innovation Workgroup made an impressive presentation on value creation through innovation in SMEs. “Innovation is a discipline, a body of knowledge you can study, master and apply to various challenges,” he said. Mr Wittenberg defined innovation as the discipline and process of applying frameworks and techniques for analysis, practices that stimulate ideation, and methods of prototyping in order to conceive and develop original solutions to problems.

FISME on Union Budget 2013-14

The business and industry community has heaved a sigh of relief for the Union Budget has not introduced yet another irritant. In spite of the political pressures of upcoming general elections, the budget seems to have held on to the prudent policy of macroeconomic stability.
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‘The Best Advice I Got’

A Challenge can be an Opportunity

- Pankaj R Patel, CMD, Zydus Cadila
Starting a new organisation brings up a host of painstaking issues which need to be addressed. One of the challenges is to leverage the large talent resource that would strengthen the organisation. “Soon after the vertical split in Cadila Laboratories, Cadila Healthcare, under the aegis of the Zydus Group, came into being, we faced many challenges,” said Pankaj R Patel, CMD, Zydus Cadila. “A large, unwieldy organisation could not be fleet-footed and give us the head start so critical for our future. That's when a piece of advice from a consultant helped us look at the entire issue in a different light. It brought to the fore the opportunity lurking in this challenge,” he added. He created a new organisational structure with eight strategic business units. Each unit operated as an autonomous, empowered business with its own senior management team and profit objective. The flatter structure helped decentralise operations, enabled faster decision-making and brought in greater accountability. The structure helped to manage the diversified portfolio more efficiently and cohesively. “The best advice helped us address the growth aspirations of our people and maximise their talents," he said.
[Adapted from the Best Advice I Ever Got, Business Today]

Macro Metre

Economy's slow growth a challenge, no reason for gloom: FM

Finance Minister P Chidambaram while presenting Union Budget 2013-14 in Parliament on Feb 28, 2013 admitted that the slow growth rate of Indian economy remains a challenge but added that he was confident that the country could bounce back. "Our economy has also slowed after 2010 and getting back to 8 per cent growth rate is a challenge for the country. Achieving high growth is not a novelty, we can do it again," said Chidambaram. Pointing that only China and Indonesia are growing at a rate faster than India, Chidamabaram added that there is no reason for gloom.

Midcap, smallcap stocks crash; regulators begin probe

Shares of a host of mid-cap and small-cap companies recently crashed in the stock market, plunging as much as 60 percent in some cases, amid panic selling on speculations of sale of pledged shares. Stock exchanges and market regulator Sebi immediately began looking into the matter to probe any possible foul play after a huge sell-off was witnessed in shares of more than a dozen companies towards noon, a senior official said.

Survey optimistic on IIP growth trend

With the spurt in factory output last October turning out to be an aberration in the wake of sharp downturns in the months after, the latest Economic Survey has sought to describe the industrial production scenario as a ‘mixed picture’ of sluggishness bottoming out as well as continuing for a little longer period. What came as a surprise to the government while India Inc. maintained a ‘we said so’ stance to clamour for easing of interest rates, was that industrial growth, as measured by the IIP (Index of Industrial Production), witnessed a smart recovery with a robust 8.3 per cent expansion in October, 2012.

Domestic Digest

Budget 2013: MSMEs non-tax benefits to continue for 3 yrs

To encourage Micro, Small and Medium Enterprises (MSME) sector, Finance Minister P Chidambaram recently proposed continuing non-tax benefits to these units for three years even after they graduate to a higher category. "To encourage them to grow, I propose that the benefits or preferences enjoyed by them will stay with them for up to three years after they grow out of the category in which they obtained the benefit," Chidambaram said while presenting the Budget for the 2013-14 fiscal in the Lok Sabha. The MSME Ministry provides a number of non-tax benefits to the sector including Market Development Assistance (MDA) scheme and Design Clinics Scheme.

SMEs to be allowed to list sans IPO

The finance minister (FM) recently said that small and medium enterprises (SME) will be permitted to list on the SME exchanges without making an initial public offering (IPO). The move will give a significant boost to the two SME exchanges—NSE's Emerge and BSE SME —who are trying to woo small companies to list on their platforms. The FM has however, said that such issues will be restricted to only informed investors. Stock exchange officials said that it's a welcome move as it will bring more facilitate listing of more companies.

‘Policy focus needed for MSME sector’

MC Dinesh, chairman of the MSME committee of the FKCCI, has said that the budgetary proposal to double the refinancing capability of SIDBI will have little impact on the sector. “The previous year’s allocation of Rs 5,000 crore has not been utilised fully. What the sector needs is a policy focus not short- term benefits,” he said. He, however, said that a delegation from the State would meet the MSME Secretary and seek more clarity on how the additional budgetary support to the SIDBI would be broken up.

SIDBI VCF to invest Rs 100 cr from its second SME fund

SIDBI Venture Capital Fund, a subsidiary of Small Industries Development Bank of India (SIDBI), is hoping to invest around Rs 100 crore by March end from its second SME-focused fund, India Opportunity Fund. "We have started evaluating businesses for investment. Around Rs 70 crore has been sanctioned and another Rs 30 crore is likely to be sanctioned by March end," Chief Executive Officer, SIDBI Venture Capital, Ananta P Sarma told PTI.

SME sourcing clause in retail FDI could change

The government will address the restrictive clause which requires foreign multi-brand retailers to compulsorily source 30% of the value of their manufactured products from small and medium enterprises (SMEs). Commerce and industry minister Anand Sharma told FE that he was aware of the problem and has taken it up with the finance minister. “...When it comes to the definition of SME, we need to have a relook. I have discussed with the finance minister and it's very clear at least in my mind that you can't have expansion and contraction. Today, if you are an SME and become integrated into the sourcing structure, you grow bigger than $1 million and then get out next year. We will address that issue and there will be greater clarity. We will resolve it like we have done in other issues,” Sharma said.

SEBI open to reviewing SME guidelines: S Ramann

Stating its openness to review guidelines concerning the SME platform, market regulator SEBI recently said it would look into the concerns of market participants to make the SME segment a more thriving marketplace. "SEBI is open to review the SME guidelines, to make it a more thriving market place and to address the concerns of different market participants, including merchant bankers, investors and issuers," SEBI's Executive Director S Ramann said at the conference organised by the National Stock Exchange in Mumbai.

Start-up units likely to get complete tax exemption

Finance minister P Chidambaram in his forthcoming budget is likely to give complete income tax (I-T) exemption for five years to Micro and Small Enterprises (MSE) units, established by first generation entrepreneurs, considering the sector’s 19% growth compared with 0.6% of the large enterprises sector. At present, no such exemption is available to encourage small entrepreneurs, except some provisions to claim exemptions under the I-T Act in some specified zones. It is expected that this exemption will be announced to encourage engineering and management graduates into entrepreneurship and self-employment.

IT Sector seeks MAT reduction to 5% in Union Budget

The IT and IT-enabled services industry has sought the reduction in minimum alternate tax (MAT) to 5% in the Budget 2013-14 for all IT companies operating in SEZs. The finance minister is slated to announce on Feb 28, 2013 the budget proposals for the next fiscal. “With the introduction of MAT for SEZ units, it has become very difficult for the IT companies in India (specifically for SME) sector to operate competitively and in a profitable manner,” ITsAP (the IT and ITES Industry Association of AP) said in a statement.

Ethiopia calls scouting for skills in textile industry

Ethiopia plans to sign agreements with some of the textile associations here to attract investments and expertise from the Indian textile industry. Sisay Gemechu Edo, State Minister in Ethiopia’s Ministry of Industry held a meeting with members of the Southern India Mills’ Association (SIMA) in Coimbatore recently. He also visited the vendor development programme organised by Coimbatore District Small Industries’ Association and the Micro, Small and Medium Enterprises Development Institute.

Forging industry may see marginal fall in output

The Rs 15,000-crore forging industry is likely to see a marginal fall in production this fiscal from last year’s level of 2.8 million tonnes, following tepid offtake from its principal customer, the automotive sector. The Association of Indian Forging Industries is not too optimistic of growth in production in the ensuing fiscal too, especially with ballooning steel and energy costs. “The industry is focussing on new sectors such as power, aerospace, Defence and heavy engineering. In the next three years, it is expected that these sectors will account for a share of 50 per cent of our production,” M. Babu Rao, president of the Association of Indian Forging Industry, told Business Line.


Bihar Clocks Highest Annual Growth during 11th Plan

In the face of sluggish domestic demand and global economic slowdown, Bihar has recorded a staggering growth rate of 11.95 per cent rate annually at constant prices during 11th Five Year Plan, the highest among states. Per capita income (NSDP at current price) of Bihar is Rs 25,653 as against Rs 60,972 for All India in 2011-12, Deputy Chief Minister Sushil Kumar Modi, who also holds Finance portfolio, told reporters after tabling the economic survey 2012-13 in the state Assembly recently. Modi said Micro, Small and Medium Enterprises (MSME) was doing very well in Bihar. Bihar has a total of 1.92 lakh registered units under MSME involving a total investment of Rs 1941 crore and employing 6.30 lakh persons in 2012, he said.


Boost to medium, small industries

Medium and small industries will receive a boost with the Union government mandating that 20% of all procurement by PSUs and other government entities should be from local vendors in the new public procurement policy, said P K Valayudhan, director, MSME-development institute. The local procurement will mean the Micro, Small and Medium Enterprises (MSME) will have to scale-up supplies 3-4 fold, he added. He was speaking at Interface, a two-day national vendor development programme cum industrial exhibition organized by MSME-development institute in association with directorate of industries, trade & commerce, Goa Chamber of Commerce and Industries, Goa State Industries Association, Goa shipyard limited, NSIC and SIDBI.

Goa plans to brand handicrafts to revive cottage industry

Goa government is mulling branding its handicrafts indigenously as part of an initiative to promote the Cottage Industry. This is being mooted in the draft of the Goa Industrial cum Investment Policy which is in the final stages of preparation. "A 'Handmade in Goa' brand can be created with a logo which will characterise all Goan handmade products," the draft says. Goa is known for its coconut and bamboo crafts among others. The policy, on which public can give suggestions, says that Goa has a rich heritage of handicrafts and village industries to create employment avenues.


Gujarat announces incentives to boost manufacturing

In an attempt to boost manufacturing sector in Gujarat, the state government recently announced five more schemes giving financial incentives which include interest subsidy scheme for MSMEs. Making the announcement in the Assembly recently, Minister of State for Industry Saurabh Patel said, "Giving more importance to the development of the manufacturing sector in the state, government has decided to amend its Industrial Policy of 2009 and have proposed five more incentives." He said that the schemes have been proposed to increase the contribution of manufacturing to the state gross domestic product from 27 per cent now to 32 per cent by year 2017.


Common facility centres in Haryana

In a bid to support the Micro, Small and Medium Enterprises (MSMEs) sector, Haryana Government has adopted a strategy for establishment of Common Facility Centres (CFCs) in Public-Private-Partnership mode under Cluster Development Scheme. A spokesman of Industries Department said that a decision to this effect was taken because the Micro, Small and Medium Enterprises constitute the backbone of the manufacturing sector with large employment potential. “The scheme would cover the areas of research and development, technology up-gradation support, standardisation of products, quality testing and marking facilities, marketing initiatives with promotion of branding of products and generate employment opportunities,” the spokesman added.


3,000 to be trained to become entrepreneurs

Minister of State for Micro, Small and Medium Enterprises (Independent Charge) KH Muniyappa has said that his Ministry has launched a national programme to impart entrepreneurship development training to 100 youngsters from each district. He urged Mr Shettar to direct the Deputy Commissioners to identify 100 potential entrepreneurs in each of their districts in three months. Mr Muniyappa was speaking after inaugurating the five-day Karnataka Coir Expo-2013 recently. The expo was organised by the Coir Board.

Tamil Nadu    

‘Match-making’ portal for the right job fit

The MSME Development Institute is launching a portal that will match skills of school and college drop-outs with requirements of industry opportunities to suggest the right candidate, a top official said recently. The portal, which is expected to go live by April end, is an entrepreneurship project and the Institute has identified Vizhupuram for the pilot phase launch, S Sivagnanam, Additional Industrial Advisor, MSME, Chennai, told reporters on the sidelines of the two-day National Vendor Development Programme in Coimbatore.

CM launches initiatives of MSME, Animal Husbandry

Tamil Nadu chief minister Jayalalithaa recently launched a series of initiatives of MSME, Animal Husbandry and Fisheries departments. She laid the foundation stone for Industrial Centres and other office buildings at a proposed Rs 39 crore in different parts of the state through video conferencing. Further, implementing her government's NEEDS (New Entrepreneur-cum-Enterprise Development Scheme), wherein government will train and encourage first generation entrepreneurs by giving them subsidised loans upto Rs 1 crore to start business, she gave away orders to seven beneficiaries, a state government press release here said.

Micro, small units face big hurdles

A good number of MSMEs were in a tight spot recently. And it is not merely because of the power situation in the State, but a host of other issues including cultural and attitudinal problems, observed S Sivagnanam, Additional Industrial Advisor, MSME, Chennai. He was in the city at the two-day National Vendor Development Programme organised jointly by the Coimbatore District Small Industries Association (Codissia) and the Ministry of Micro, Small and Medium Enterprises (MSME).

West Bengal    

Draft industrial policy focuses on MSME

The West Bengal government has prepared its draft industrial policy with emphasis on MSME (Micro Small Scale and Medium Enterprises) sector. In the context of less availability of land for industry, which the government admits openly in the report, the government’s shift in focus from big industry to MSME is understandable. The report prepared by senior Trinamool Congress (TC) leader Saugata Roy has argued in favour of MSME saying that “With 25 lakh enterprises employing over 58 lakh person, the MSME sector, including Khadi and Village industries, handicrafts and handloom is the second largest in the state after agriculture. The sector accounts for 50% of the state’s total industrial production and 40% of the export from the state.”

RBI for corporate governance of micro finance institutions

Calling for “corporate governance” of micro finance institutions (MFIs) in the country, Reserve Bank of India Deputy Governor KC Chakrabarty said recently that the move was imperative for sustainable growth of the sector and to attract and retain customers. Stating that MFIs facilitate financial inclusion by providing small loans to low-income groups, Chakrabarty pressed for a different and original approach to identify and better understand governance mechanisms to enhance MFI’s long-term survival.


Entrepreneurs team up to conquer leather world

Eleven small leather product makers have come together to form a retail brand, aiming to become a household name. "As an SME (Small- and Medium-Sized Enterprise), it is very tough to become a successful brand. We do not have that capacity and financial power to do so,” Tania Wahab, a partner of the brand. Tania partnered with BAG, Axis, Sassy, 3Tech, Muchee, Superfit, Rubai & Bushpull, SA Authentic Leather Craft, Leathereign and Duce, and formed Leather Cave in 2011. “As a team, I think we will be able to go a long way," she added.

South Africa    

South Africa hostile to Small Businesses: Study

The SME Growth Index is a multi-year research project, investigating the views and experiences of a panel of some 500 SME operators in the South African economy. These firms employ between 10 and 50 people, and are active in three sectors of the economy regarded by government as having growth potential: manufacturing, business services and tourism. The first and most comprehensive such study of its kind in the country, it allows the dynamics relating to firms' growth, survival or decline to be tracked over an extended period of time. The first round was conducted in 2011 (published in a report in that year under the title Priming the Soil, available for download on SBP's website, and the second in 2012.

United Kingdom    

Access to SME funding getting worse

The latest quarterly Small & Mid-Cap Sentiment Index also said that alongside the lack of access to capital, there is a widespread lack of knowledge about corporate bonds as an alternative source of funding. Scott Knight, partner at BDO, said, “The critical issue at present is the availability of capital. Companies have auspicious prospects but need capital to convert these into growth. “A liquid capital market is a prerequisite for the small and mid-cap sector to remain as the crucial engine for UK growth.” More than one fifth of small and mid-cap businesses did not know what the main benefit of issuing corporate bonds was, and 62% either would not be interested or could not specify if they would be interested in issuing a corporate bond as an alternative source of finance.

United States    

TraceSecurity, Qualys Release Cloud-Based GRC for SMEs

TraceSecurity and Qualys have combined their technologies to deliver to SME and SMB customers a cloud-based IT governance, risk and compliance (GRC) solution. TraceSecurity is focused on delivering cloud-based IT GRC solutions, whereas Qualys is a cloud security and compliance management solutions vendor. The two companies have teamed up and are relying on their respective technologies for this venture—specifically, TraceCSO and QualysGuard Vulnerability Management. The partnership presents an integration of the two products in a cloud-based IT GRC package.

Write and Win prize!

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Business Opportunities for India in Srilanka

There are business opportunities available for Indian companies in Srilanka. The interested MSMEs can check details.

Business Opportunities for India in Turkey

There are business opportunities available for Indian companies in Turkey. The interested MSMEs can check details.

3 New Members Join FISME

During the period February 15, 2013 to February 28, 2013 a total of 3 new MSMEs became member of FISME.

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This Newsletter is edited by the FISME Secretariat. We welcome contributions as well as comments and suggestions. Please write to

Federation of Indian Micro and Small & Medium Enterprises (FISME)
Headquarter: B – 4 / 161, Safdarjung Enclave, New Delhi – 110029
Telephone: +91 11 26187948, +91 11 26712064, +91 11 46023157   Fax: +91 – 11 – 26109470
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