MSME INDEPENDENCE DAY 2009

NSIC-PROMOTION AND DEVELOPMENT OF MSMEs

Dr. H. P. Kumar*

National Small Industries Corporation Ltd.(NSIC), since its establishment in 1955, has
been working to fulfil its mission for promoting, aiding and fostering the growth of micro and
small enterprises in the country. Over a period of five decades of transition, growth and
development, NSIC has proved its strength within the country and abroad by promoting
modernization, upgradation of technology, quality consciousness, strengthening linkages with
large enterprises and enhancing exports projects and products from small enterprises sector.
NSIC operates through nine Zonal Offices, 39 Branch Offices, 12 Sub Offices, 23 NSIC
Business Development Extension Offices, five Technical Services Centres, three Extension
Centres and two Software Technology Parks supported by a team of professionals spread
across the country. To manage operations in African countries, NSIC operates from its office in
Johannesburg. NSIC continues its journey of growth and further firmed up the same during
2008-09. The Corporation earned a net profit of Rs. 4.27 crore during the year 2008-09 as
against Rs. 4.06 crores during the previous year.
To enhance the competitiveness of micro, small and medium enterprises NSIC provides
integrated support services under Marketing, Technology, finance and other support services.

Marketing
Marketing, a strategic tool for business development is critical to the growth and
survival of small enterprises in today’s intensify competitive market. NSIC acts as a facilitator to
promote the products of micro & small enterprises and has devised a number of schemes to
support micro and small enterprises in their marketing efforts, both in and outside the country.

Schemes

Raw Material Distribution

NSIC has made arrangements with bulk manufacturers like Steel Authority of India Ltd,
(SAIL), Rashtriya Ispat Nigam Ltd. (RNIL), National Aluminium Company Ltd, (NALCO) and
Sterlite group for procuring raw materials like Steel, Aluminium, Zinc, Copper etc. These
arrangements are aimed to provide the raw material along with financial assistance as per the
requirements of small enterprises. The distribution of raw materials like steel, aluminium, zinc,
copper, parafin wax etc to MSMEs increased from Rs. 2894 crores to Rs. 3297 crores, registering
a growth of 32% in terms of the quantity.
NSIC has also opened godowns at Tarapur, New Delhi, Faridabad and Silvassa to
facilitate the small enterprises making available the required material at ease, to bring down their
inventory cost and also by arranging to provide them raw material closer to their work.

Consortia and Tender Marketing

Micro and Small enterprises in their individual capacity face problems to procure and
execute large orders which restrict their growth. NSIC accordingly adopts consortia approach
and forms consortia of units manufacturing the same products, their by easing out marketing
problems of these enterprises. The Corporation explores the market and secures orders for bulk
quantities. These orders are then distributed to small enterprises in tune with their production
capacity. During the year 2008-09 marketing assistance of Rs. 49.31 crores was provided to
micro and small enterprises against the assistance of Rs. 22.85 crores provided in the previous
year.

Single Point Registration Scheme for Government Purchase

NSIC operates a single point registration scheme under the Government Purchase
Programme, wherein the registered MSMEs get price preference exemption from payment of
earnest money deposit, etc. The MSMEs registered under the scheme get facilities of Issue of
Tender Set free of cost; Advance intimation of Tenders issued by DGS&D; Exemption from
payment of earnest money; Waiver of Security Deposit upto the monetary limit for which the
enterprise is registered and Issue of Competency Certificate in case the value of an order
exceeds the monetary limit, after due verification.
During the year 2008-09, 2677 units were registered under the scheme as against 2345
units in the year 2007-08

Buyer-Seller Meets
Bulk and departmental buyers such as Railways, Defence, Communication Departments
and large companies are invited to participated in buyer seller meets to enrich MSMEs knowledge
regarding terms and conditions, quality standards etc., required by the buyers. These
programmes are aimed at vendor development from MSMEs for the bulk manufacturers.

Seminars and Intensive Campaign

Intensive campaign and seminar are organised all over the country to disseminate/
propagate about the various schemes for the benefit of the MSMEs and to enrich the knowledge
of MSMEs regarding latest developments, quality standards etc.
Exhibition and Technology Fair
To showcase the competencies of Indian MSMEs and to capture market opportunities,
NSIC participates in select International and National Exhibition and Trade Fair every year. NSIC
facilitates the participations of MSMEs by providing concession in stall rental, airfare, freight etc.
The participation in these events exposes MSMEs to International practices and enhances their
business prowess. During the year 2008-09 NSIC organized and participated in 98 exhibitions
cum buyer-seller meets against 97 such events in the previous year.

Technology Support
Technology is the key to enhancing a company’s competitive advantage in todays
dynamic information age. MSMEs need to develop and implement a technology strategy in
addition to financial, marketing and operational strategies and adopt the one that helps integrate
their operations with their environment, customers and suppliers. NSIC offers the following
support services through its technical service centres and extensions center: Advising on
application on new techniques; Material Testing facilities through accredited labotaries; Product
designing including CAD; Common facilities support in machining, EDM,CNC, etc.; Energy and
environment services at selected centers and Practical training for skill Upgradation.
A total of 6013 units were served under common facility services during the year 2008-
09 as compared to 5743 units served during the year 2007-08.
Financing Schemes
One of the major challenges faced by MSMEs is inadequate access to finance due to
lack of financial information and non-formal business practices. To meet this challenge, NSIC has
launched a new scheme, for sanction of loans for MSMEs from Commercial banks. NSIC has tie-
up with several banks like Union Bank of India, United Bank of India, UCO Bank, Oriental Bank
of Commerce, Central Bank of India, Bank of Maharashtra, Yes Bank, Axis Bank, HSBC and
Karur Vyasa Bank for sanction of term loan and working capital facilities to the MSMEs as per
their requirement. Such arrangements has facilitated smooth credit flow to MSMEs.
NSIC also facilitates raw material requirement of the SMEs by making arrangement with
bulk manufacturers for procuring the materials and supplying the same. In case any credit
support is needed, NSIC provides financial support for raw material procurement by making the
payment to the suppliers. NSIC facilitates financing for marketing activities such as internal
marketing, exports and bill discounting to MSMEs. Under this scheme, NSIC provided credit
facilitation to small and medium enterprises to the tune of Rs. 663.59 crores during 2008-09 as
against Rs. 448.87 crores during the previous year.
On behalf of the Ministry of Micro, Small and Medium Enterprises, NSIC is implementing
“ Performance and Credit Rating Scheme” for micro and small enterprises and is operating the
scheme through seven accredited rating agencies i.e CARE, CRISIL, D&B, FITCH, ICRA,
ONICRA and SMERA. The fee to be paid by the MSEs for the rating, is subsidised by the
Government to the extent of 75% upto a maximum of Rs. 40,000/-. The scheme has become
quite popular and is receiving good response.
During the year 2008-09 a total of 4900 units have been rated under the scheme as
against 3850 units during the year 2007-08. The rating serves as a trusted third party opinion on
the units’ capabilities and credit worthiness. A good rating enhances the acceptability of the rated
unit in the market and also makes it access to credit quicker and cheaper and thus helping in
economizing the cost of credit.

Infomediary Services
Information plays a vital role in the success of any business. However, MSMEs have
limitations in accessing such information. NSIC provides infomediary services to MSMEs. Beside
hosting a website (www.nsic.co.in), NSIC hosts sector specific portals for focussed information
dissemination. Under this scheme, MSMEs can become members and avail a number of value
added services like Supplier data base, Market intelligence, Technology providers, Information
providers, Linkages with relevant institutions, E to E services, E to B services and Value
additions like directories of machine makers, component makers, spare capacity bulletin boards,
discussion forums, vitual exhibition etc. A total of 2808 units were registered under the scheme
during 2008-09 as against 2754 units registered during 2007-08.

International Co-Operation Activities

NSIC during the last five decades, has acquired various skill sets for the development
of small enterprises. These skill sets are intended to be shared with developing countries
through consultancy services offered in diverse areas namely:- Policy and Institutional
Framework; Business Development Services and capacity building of institutions engaged in
MSME development.

New Initiatives
Enterprise development is one of the thrust areas for nurturing the development and
growth of micro and small enterprises in the country which is being facilitated by providing
handholding support to micro and small enterprises in every field of business--incubator is one
of the tools to achieve this as it provides necessary facilities for prospective/potential
entrepreneurs and start-up companies to learn product manufacturing processes coupled with
technology development under one roof.
There is a huge requirement of such incubators all over the country. NSIC launched a
scheme of NSIC Training–Cum–Incubation Centre (NSIC-TIC) under PPP mode. With such
leveraging, 20 NSIC-TICs have been set up so far.
Another significant initiative of NSIC is launching of International SME Development
Web Portal to facilitate MSMEs exchange their information in respect of technologies, investment
opportunities and marketing of products and services with other partner institutions with which
NSIC has signed MOUs.
NSIC has also set up an Info-Call Centre to enhance its service delivery to the
existing customers and further enlarge its reach to the potential MSMEs. The Centre will play
significant role in spreading the awareness of various schemes and programmes among the
micro & small enterprises in the country and attend to their queries with regard to such schemes
and programmes. The Centre will also help in providing required information about the
vendors and technology suppliers to the potential first generation entrepreneurs and existing
small enterprises as and when required by them. (PIB Features)

*Chairman-cum-Managing Director, National Small Industries Corporation (NSIC)

RTS/VN
SS-78/SF-78/10.08.2009