NATIONAL CONSULTATIVE MEET

1

• NATIONAL CONSULTATIVE MEET
• on National Innovation
  Systems
• Policy Support Mechanism V.
  Chandrasekaran,
• Executive Director, SIDBI

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Presentation Outline

• Innovative Systems Issues
• Policy Support Mechanism
• Framework for New Enterprises
• SIDBIs Intervention
• Technology Support
• Financial Support for Innovation
• Environment Management
• Agenda for Future

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Addressing Gap in Innovations - Issues

• Create awareness about innovative projects.
• Disseminate information about potential projects.
  
• Create a network for exchange of ideas and
  thoughts
• Work towards creating demonstration projects in
  financing of projects.
• Sensitise bank officials at all levels about
  benefits of such projects.

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Innovation Systems - Issues

• Need to promote innovation in various sectors
  through
• Process innovation
• Product innovation
• Manufacturing Technology
• Energy Efficiency
• Level of technological sophistication rather low
  in SME.
• Information gaps exist which act as barrier for
  SMEs to adopt new technology or understand their
  benefits.
• Environment friendly and innovations projects
  directly contribute to improving the status of
  society.

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Providers of Finance Specialised Support
Services

• Finance
• Apex
• SIDBI
• Banks
• Commercial Banks
• Co-op Banks
• RRBs
• State Level
• SFCs
• SIDCs
• SIICs
• SSIDCs
• Others
• NABARD
• EXIM BANK
• NSIC

• Technology Upgradation
• CSIR
• SIDO
• SISIs
• NSIC
• TCOs

• Industrial Inputs
• NSIC
• SSIDCs
• DICs

• Industrial Infrastructure
• SIICs
• SIDCs
• HUDCO

SSIs

• Marketing
• SIDO
• NSIC
• SSIDCs
• SISIs
• EPCs

• Entrepreneurship Development
• NISIET
• NIESBUD
• EDII / IEDs
• SISIs
• TCOs

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Conceptualisation of Project Idea

• Possible indicators
• Survey of raw materials
• Local skills
• Demand and price trend
• Government Policy
• Capacity utilisation of existing units
• Understanding consumer taste
• Commercialising inventions
• Converting waste into wealth

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Opportunity Identification
Entrepreneurial Opportunity
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Opportunity Selection Framework

• Investment possibility
• Technology sophistication desired
• Managerial / Organisational Demands
• Market Competition
• Government Intervention / Dependence
• Implementation Time
• Profitability
• Degree of Risk and its form
• Location

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SIDBIs Interventions

• Linkages with Energy Efficiency Projects -
  Existing Programmes of SIDBI.
• Cluster Development Programme focusses on
  reducing energy intensity and other resources.
• Common Effluent Treatment Plants, Pollution
  Control and Waste disposal projects
• Entreprenuership Development Programmes for first
  generation entrepren.
• Prototype Development
• Marketing Assistance Programme

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Technology Support

• India SME Technology Services Ltd
• Established in 1995 as TBSE as collaboration
  between United Nations-Asia Pacific Centre for
  Transfer of Technology
• Help SSIs to attain international competitiveness
  through transfer of latest technology
• Coversion to a Technology Bank- India SME
  Technology Services Ltd created in 2006.
• Provide services like tech transfer, jvs,
  business collaboration, finance syndication.
• Linkages with top academic institutions/RD
• Relationship with active Chambers of
  Commerce/Industry

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Financial support for Innovation

• Support extended through different windows
• Venture Capital Funding
• Equity Support
• Soft Assistance
• Quasi equity

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Financial support for Innovation

• Venture Capital
• existing funds of SIDBI and other Banks.
• Credit Linked Capital Subsidy Scheme
• National equity Fund/MUN- Equity/Soft loan
  support schemes
• Credit Guarantee Fund Trust for Small Industries
• Operates the Credit Guarantee Scheme to help
  Small scale/tiny units in accessing institutional
  credit. Operates the Credit Guarantee Scheme to
  help Small scale/tiny units in accessing
  institutional credit
• Involvement of Specialised agencies Biotech,
  IT service providers, Renewable Energy
• for technological backup and support services.

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Venture Capital

• Support for innovation ideas having potential
  for high growth with inherent uncertainties
• Blend of risk financing and hand holding
  expecting high return on Investment
• Provide holistic support covering finance,
  networking, management and marketing
• More suitable for knowledge and technology based
  enterprises
• Process consists of four stages idea generation,
  start-up, growth ramp up and exit

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Venture Capital Instruments

• Investment by way of equity or equity linked
  instruments in privately held companies
• In small enterprises with limited exit options,
  convertible or conditional debt with payment of
  royalty on sales selectively considered
• Low cash flows in initial years and delays in
  project commissioning does not make convertible
  or conditional debt attractive

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SVCL

• SIDBI Venture Capital Ltd set up by SIDBI.
• Manages
• SME Growth Fund
• National Venture Fund for Software and
  Information Technology Industry.
• Investments cover a wide range of activities such
  as engineering, information/ communication
  technology, biotech, food processing pharma. etc.

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Environment Management

• Adoption of eco-friendly manufacturing processes.
• Support for Common Effluent Treatment Plants.
• Encouraging cleaner technologies for SMEs.
• Support for Pollution Control.
• Work with pro-active Industry associations and
  voluntary sector/agencies

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Environment Management-Some Interventions

• Direct intervention as developmental activities
• Contracted special KfW Environmental Credit Line
  for facilitating the adoption of cleaner
  production technologies by the SMEs at a cost
  effective rate.
• ultimate objective is to enhance the awareness
  towards the environmental protection among the
  SME units and reducing the waste.
• finance innovative greenfield projects.

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Specific Examples

• Bangalore - for recycling the electronic waste
  in a scientific manner. The electronic waste in
  Bangalore has been one of the major problems for
  the environmentalist.
• Tirupur - textile dyeing units financed softflow
  HT/HP Machines for reducing the water waste and
  enhancing the overall production and
  profitability of the units.
• CETP plants at Bangalore and Tirupur at
  relatively lower rate of interest.
• Kolkata - Kolkata Leather Complex, an integrated
  leather complex for tannery units. The heart of
  the project is the CETP.

• Engaged in direct interventions
• Contracted a special KfW Environmental Credit
  Line aggregating Euro 15.23 mio
• facilitating the adoption of cleaner production
  technologies by the SMEs at a cost effective rate
• ultimate objective is to enhance the awareness
  towards the environmental protection among the
  SME units and reducing the waste.
• innovative greenfield projects financed.
• One such unit is E-Parisara Pvt. Ltd., at
  Bangalore which recycles the electronic waste in
  a scientific manner. The electronic waste in
  Bangalore has been one of the major problems for
  the environmentalist. This is the first unit of
  its kind in India. SIDBI is looking forward to
  finance more such facilities in other parts of
  the country at a cost effective rate to
  facilitate the improvement in overall
  environment.
• SIDBI under the scheme has financed a couple of
  textile dyeing units in Tirupur by way of
  financing the softflow HT/HP Machines that has
  reduced the water waste substantially and
  enhanced the overall production and profitability
  of the units.
• SSI units in particular are financially not so
  sound to install their own effluent treatment
  plant. However, they have to comply with the
  Pollution Control Board norms. In order to help
  SSIs in complying these norms, SIDBI has financed
  a couple of CETP plants at Bangalore and Tirupur
  at relatively lower rate of interest. SIDBI is
  keen to finance more such plants in other
  industrial locations at a cost effective rate.
  Tirupur (Textile Park)
• Bangalore
• Kolkata (Kolkata leather Complex)

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Agenda for Future Few Suggestions

• Support SMEs with innovative business ideas.
• Innovation needs to be perceived at an
  incremental level as against something which is
  big bang in nature.
• Promote channels for equity investments in SMEs.
• Encourage commercialisation thro first
  demonstration projects.
• Focus on domestic and international networking.
• Market India as a major RD destination
• Encourage technology oriented joint ventures.

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Thank You