Dr P.M.Mathew, Director, Institute of Small Enterprises and Development (ISED), has been honoured with the prestigious Chevening Fellowship of the Foreign and Commonwealth Office of the British Government.   The Fellowship enables the awardees to interact with high-level policy experts, diplomats, U.K government departments, and major international companies. Dr Mathew returned recently after his three months-long programme in the UK, under which he could visit the premier institutions of the Country, as also could exchange ideas with senior personnel at the government, academic institutions and business.

Chevening aims to bring high-calibre policy experts from around the world to the U.K and facilitate their studies and research activities.

Mathew?s Fellowship was based at the international Centre for Corporate Social Responsibility (ICCSR), Nottingham University Business School, attending a high-level international Programme on Responsible Business and Economic Governance. The research component of the programme was based in London, looking into the social capital experience in Britain,and its implications for developing countries. This part of the programme was performed at ECT Ltd, Acton, West London, Ealing City Council, Institute of Development Studies, Sussex, and at the British Consultancy Services Ltd.

While Mathew represented India in this Programme, the other countries to get the honour were, Indonesia, China, Turkey, Egypt, Cameroon, Ecuador, Columbia, and Iran.

Institute of Small Enterprises and Development entered into an international collaboration agreement with the International University of Business, Agriculture and Technology, Dhaka, Bangladesh, in August 2006. The Memorandum of Understanding is signed by Prof.Alimullah Miyan, Vice-chancellor of the University, on the one hand, and Dr.P.M. Mathew, Director ISED, on the other, agrees to co-operate for the purpose of furthering educational and research experience, and thus deepening the friendship between both the institutions, as also the two countries they represent. The major objective of the collaboration, is to promote research and training, with special focus on the experience and imperatives of several Asian countries. The co-operation will include, exchange of teaching staff, researchers, and administrative officials, exchange of students, exchange of joint research, academic seminars and other exchange activities mutually agreed upon.

Both ISED and the International University share academic interests in the areas of industrial development, renewable energy, and human resource development in the development sector.

Malcolm Harper, former Director of Cranfield Business School, UK, and Guru of enterprise development models , visited  ISED on December 5, 2005.Malcolm, jointly with P.M.Mathew and P.P.Pillai, conceptualised ?Enterprise Village?, which appears in the paper,? Finance for the Poor: From an Ideal, to Economic Sense?. (Mathew, Harper, Pillai, 2005).

Malcolm at ISED

Malcolm on field research

Project Locations
Bangladesh and India
Period
April 2004 ? May 2005
Lead Organization
Institute of Small Enterprises and
Development (ISED)
Director: Dr PM Mathew
Co-Director: Dr JMI Sait
 
Background
Development of commercial markets is vital for the sustainable development of the renewable energy sub-sector. First-generation entrepreneurship has an important role to play in this regard. No country can evolve a strategy of entrepreneurship development based on prefixed models. But an understanding of best practices in countries of similar historical and cultural backgrounds can be useful for evolving more meaningful strategies.
Since India and Bangladesh have common historical and cultural backgrounds, which are similar to most other countries of South Asia, a study of the comparative experience was planned.
Objective
The specific objectives of the study were to:
? Analyze the industrial status of non-conventional energy in India and Bangladesh, in terms of key economic variables of performance;
?  Analyze the creation and constraints of first generation entrepreneurship in this sub-sector,;
? Assess the perceptions of promotional agencies, including government departments, as they deal with non-conventional energy as an industry;
? Outline an action plan on the development of first-generation entrepreneurship in the renewable energy sector of the two countries; and _ Conduct a regional workshop to share and disseminate findings.
Project Details
The per capita distribution of renewable energy installations was derived and ranked, in order to select one state/region in each country for the detailed study, as per the following criteria::
? A state/region having a high prevalence rate;
and
? A state/region having a low prevalence rate, but with significant potential.
Based on the ranking and the findings of previous studies, the Kerala/Canannore and Karnataka/ Bangalore regions were selected. The rationale was that the market demand for renewable energy (RE) products and services, which is the driving force of entrepreneurial activities, gives an indication of the present state as well as the potential.
In India, Karnataka has a strong manufacturing base of renewable energy hardware and software, but the prevalence rate is relatively low. Kerala has a high prevalence rate, but its hardware base is much lower, as also well as the industrial application of renewable energy.
In Bangladesh also, the data problems as indicated were common. However, available literature showed that both the prevalence and potential of the RE sector were not confined to any particular region. Therefore, the field study was confined to the Dhaka district.
The sample of respondents (total = 1,000) was selected, with 20% in Bangladesh and the remaining in India.
Some key findings of the field results were as follows:
? A sizable portion of the rural population was deprived of conventional energy resources due to uneconomic leads or unapproachable terrain. However, these communities are unaware of efforts by the government and other agencies in bringing alternate sources of energy to them.
? Most respondents, who were aware of the availability of solar and biomass energy, were unwilling to accept them as they were afraid of unaffordable costs.
? Even gobar gas plants, which were installed in large numbers in many villages, went into disuse with a fall in direct incentives, such as subsidies.
? Availability of hydro electric and thermal power at comparatively low prices also acted as disincentives. The situation pointed to a lack of coordinated and well-constructed energy policy supported by adequate strategies to create effective awareness among potential consumers regarding the emerging need.
? Nepal and Sri Lanka have successfully incorporated RE programs in their Five-Year Plans. Bangladesh has attempted to institutionalize renewable energy into the decentralization process by establishing rural energy departments and similar agencies to deal with the requirements of remote areas. Though not directly induced by these actions, entrepreneurship development in RE in these countries has already shown some positive tendencies. Other countries in the area can emulate these examples.
? Entrepreneurship development in renewable energy has no specific policy ingredient or associated strategies, nor do the energy development programs give adequate emphasis on sub-sectoral peculiarities.
? It is important that sub-sectors with renewable energy developmental potential be critically examined in terms of their potential for organizations in cluster modes.
Extensive participation is the only solution for the development of this sub-sector. Creating suitable infrastructure in terms of business support initiatives can ensure participation. Besides worker training in each renewable energy development activity, it is important to undertake entrepreneurship development and business development programs specifically addressed to the sub-sector. Appropriate modeling of interventions should focus on:
? Business start-ups or mentoring aspirants into renewable energy businesses; and
? Improvement of performance of existing businesses.
The models should also be integrated properly with Business Development Services, both operational and strategic.
Information services play a crucial role in this area. Entrepreneurs should be supported by adequate information.
A Workshop on ?Entrepreneurship Development in the Renewable Energy Sub-sector in Asia? was organized by ISED from 19-20 April 2005 at Cochin, to deliberate on the opportunities in livelihoods and entrepreneurship in the renewable energy sector, and share experiences. Participants included entrepreneurs, business associations, UN agencies, donors, technocrats, academics, financial institutions, government departments and promotional agencies, representing India, Bangladesh, Nepal, Sri Lanka, and the US.
Some suggestions at the workshop were as follows:
? Renewable energy should be recognized as an industry sub-sector requiring special treatment. Such recognition will lead to relevant official programs and schemes, and private sector investment.
? The governments, at various levels, should develop strategy papers in order to provide for private initiative development. UNIDO should initiate this process. Bringing together buyers and sellers under a Renewable Energy Sub- Contract Exchange can stimulate such linkages, keeping in view local economic development leads.
? Strategies should provide for adapting and learning from the experiences of other South Asian countries, and where relevant, from other similarly placed countries.
? Donor programs, instead of repeating the mistakes of the past, should attempt at integrating the RE programs with the more integrated development programs. The LED Program of ILO is an example.
? Asian countries should integrate renewable energy into their decentralized planning. The Ministries and the public promotional agencies should use local advisory bodies, such as District Level Advisory Committees in India, as crucial instruments for program development.
? A ?Renewable Energy Business Observatory?, implemented by an independent institution, could mobilize information and expertise under a single umbrella.
? Setting up a ?Business Development Services Unit? by a specialized Business Development institution, can play a significant positive role. Such a unit will provide the rationale and need for entrepreneurship development interventions such as entrepreneur development programs.
Looking Ahead
The message emerging from the study is: The track of renewable energy development we are used to needs a ?U? turn, especially for addressing new challenges under globalization. Unleashing renewable energy entrepreneurship rather than promoting renewable energy per se holds the key for sustainable development of this sub-sector. But this requires, apart from the present programs being implemented through government agencies, a gearing up of initiatives by professional institutions. Support extended by donors is vital in this regard.
 

Are Craftsmen Entrepreneurships or can they be potentially Entrepreneurial?
In the traditional ?livelihoods approach?, this question has not been properly addressed. In a livelihoods approach, the question of capabilities do not appear prominently It is this neglected aspect which need to be addressed in any  programme of sustainable enterprise development. The resource- poor are generally considered, as at the receiving end of the programs, and therefore, their capabilities do not appear as an issue of debates.
Based on its research in the past, jointly with SIDBI and the Asian Productivity Organisation,Tokyo, the Institute evolved a development model for the Bamboo and Rattan subsector, with two  of its key dimensions ,i.e., technical skills and entrepreneurial skills. The Ministry of Textiles, Government of India, focus on technical skills upgradation, leaving the issue of employing the technical trained hands, an open end.The ISED? Craft- based Entrepreneurship Clinics? are meant to build a synergy of the two. Twelve such  Clinics were organised by the Institute, jointly with the Ministry of Textiles, in various partsof Kerala during the 1998. 

Bamboo Village Network:ISED Bags Oshikawa International Award
The conventional approach to development of traditional industries are focused  on extensive external support, either by the donors or the government.Here, the focus of intervention is on  imparting technical skills. In this approach, the question of sustainability has often been compromised  with other short-term goals.Sustainable development demands the creation of capabilities. In the case of the resource-poor communities, the individual craftsman or producer is significantly debilitated by the extent of the market, and the constraints of the organization. Therefore, in an intervention strategy, collective efficiency has to be prefered for individual efficiency. This corresponds with the logic of a ?flexible production?  and organisation of production, which has been gaining prominence  for over the past one decade..
Modeling of such a strategy, which is acceptable to the traditional craft communities is a difficult task. On the one hand, they are used to a subsidy regime, which cannot undergo change easily. At the other end, they need new skills in organisation.
The Institute experimentally and initiatives in the area during the past thee years, caught the attention of the Asian Productivity Organisation, Tokyo. The Institute was honoured with the prestigious ? Oshikawa  ? International Award in 1997.,for its pioneering model of? Bamboo Village Network?
Evaluation of a Cooperative Development Network, Madurai,Tamil Nadu.
While the traditional concept of cooperatives has several rigidities, they need to undergo major changes, from the point of view of exploitation of the vast potential of cooperation itself. The Canadian Co operative  Association (CCA)looks at the potential of the cooperatives from this angle. The CCA supported a few cooperative initiatives on similar lines in India .ISED was requested by CCA  to evaluate the performance of the cooperative network initiated by Institute of Self-Management,Madurai , Tamil Nadu.
National Seminar on Flow of Credit to  the SME Sector.
The flow of credit to small- scale industry in India is a thorny issue which has been considered by several expert committees. The Reserve Bank of India has taken active interest in this issue from time to time. ISED, with the active encouragement Reserve Bank of India, organised a  national seminar in Cochin. The participants involved a variety of stakeholders, such as entrepreneurs, financial intuitions , public promotional agencies  Reserve Bank of India,Union Ministry of industry,planning Commission etc. The event was inaugurated by Dr. A.Vasudeven, Executive Director, Reserve Bank of India.
Seminar on Data Base of the Kerala Economy.
Planning and policy formulation in a country like India ,require a strong support by relevant database of a high quality. Kerala is a state having one of the best statistical systems in the country. However, the relevance and adequacy of data for the requirements of shaping the development policy of the State, is something which has been doubted from time to time. This event was organized jointly by the State Planning Board and ISED, with participants from several institutions and interests. The deliberations of the Seminar led to concrete suggestions relating to data strategies for the particular sectors of the economy. The event was formally inaugurated  Mr. C.M.Dinesh Moni ,Mayor of Cochin.
Programe on Globalisation and SMEs (PROG- SME)
The experience and imperatives of globalisation diverge in relation to different sectors and sub sectors of the economy. Such divergence also differ from country to country.However,to capture their specificities is crucial for evolving appropriate development strategies.
This  flagship program of ISED tried to capture the various dimensions of this subject and explore strategic options. The Programmed, which was inaugurated in January 2003,lasted for a period of 3 years, during the tenure of which, several  initiatives were taken up by the Institute. This included a series of multi-stake holder Regional Workshops in various parts of the country. Two nternational events, and three National Conferences, in addition to several Discussion Groups and  Consultations, within the country and abroad,were held. The broad conclusions emerging from these several initiatives, are being documented, and will be brought out as a comprehensive volume shortly.
Enterprenurship Awareness Clinics.
While  grooming of  entrepreneurs through Entrepreneurship Development Programs(EDPs) has emerged as a strategy in the early 1970s, there are several misconceptions relating to the coverage and usefulness of such programmed. EDPs cannot be considered stand- alone in their impact. The real impact lies in their contribution to the entrepreneurial resources of the country. Therefore, even creating enterprise  awareness is a crucial contribution to the state of enterprise development in thecountry. The Entrepreneurship Awareness Clinics for the Campuses, is a programme of the Govt. of Kerala. As a member of the Consultative Committee on Entrepreneurship Development for the State Government, the Institute played a key role in organising and monitoring  several such programme in various parts of the state
Dr S.P. Gupta Committee on Development of Small Enterprises.
While development of small enterprises is a major thrust area of planning in the country, since India entered the Planning era, the Planning Commission has not directly involved into a comprehensive analysis of the track record and strategies until the Tenth Plan.However,considering the threats an opportunities thrown up by globalization, the Planning Commission, vide OM No.VSI/8(10)/99,dated May 20,1999, set up a Committee of Experts under  the Chairmanship of noted economist and Member of the Commission, to study the constraints of the sector and to formulate appropriate policy changes to strengthen it.
Institute of Small Enterprises and Development was inducted as the expert member of the committee.The Institute was  represented by Dr P.M.Mathew. The committee submitted its final report to the Prime Minister in March 2001.. Most of the  recommendations of the Committee where subsequently implemented.
 
Pravin Visaria Committee on Unorganised       Manufacturing.    
The Fifty-sixth Round of the National Sample  Survey , was specifically devoted to Unorganised Manufacturing. A Working Group was constituted under the late Dr. Pravin Visaria, noted economist,as its Chairman.ISED was represented in this Committee by Dr P.M.Mathew Consultative Group on the Unorganised Sector.

A Consultative Group on the Unorganised Sector was set up in the Prime Minister?s Office, with Dr. Pradeepto Ghosh as its Chairman and ISED as one of the expert members . The objective of the Committee was to study the recent developments in  the unorganized sector,especially in the context of globalization,and to make recommendation.The Group submitted its report in May 2002.
National Focus  Group on Basic Law for the SME Sector
A basic law  for the SME  sector has been a demand from several quarters, especially from the SSI associations, such a recommendation has also been maid by Dr. Husine in his expert committee report in 1987. The process of drafting such a basic law was initiative in 1999, under the chairman ship of Dr. B. Veram Reg, Prof , Administrate Staff College of India. A national focus group was constituted to guide the process and to make suggestions. The seven member group included state Governments, interests associates union Government and SME experts .ISED as a expert member was represented by Dr. P.M.Mathew.
 
National Workshop on Basic Law for the SME Sector, Hyderabad
While initiatives towards drafting a Basic Law for the SME sector was started in 1999, the implications of such a Law was not properly discussed in the country. ISED took the initiative to organise such a brain storming at Hyderabad. Jointly with the
National Institute of Small Industry Extension Training(NISIET)  and Institute of Public Enterprise(IPE) , a two-day  Workshopwas organised on  Nov 10 and 11, 2001.
ISED-ILO International Workshop on Enterprise Development for the Returning Migrants
Return migration  is a phenomenon involving costs and benefits to the host country.. How to make their skills  and experience useful to the native economy , is a key concern,both for ISED and the ILO. While this is an extremely important item in the agenda of  the International Labour Organisation, ISED and its ILO joined together to develop a programmed for return migration in India, with possible replicability in the context of South Asia as a whole. A study was initiated jointly by ISED and ILO, and findings of which where deliberated in this international Workshop.
ISED Director Honoured with the  Birla National Fellowship
ISED Director, Dr.P.M.Mathew was honoured with the prestigious Birla National Fellowship in Economics, according to press release by the Birla Foundation, New Delhi. The Fellowship is meant for outstanding scholars working on public policy issues.
Mathew will utilize the Fellowship for a comparative analysis of Small and Medium Enterprise Policy in India and U.K.
Conference on  SME Development in Kerala
ISED, jointly   with the Planning Commission, organized a Conference on Small and Medium Enterprise Agenda in Kerala?s Development. The Conference was inaugurated by Dr. S.P.Gupta, Member,  Planning Commission.Dr Gupta also formally released the  ISED  document,?Approach Paper on Development of Small Enterprises in Kerala?

Capacity Building for Rural Entrepreneurs: Cane and Bamboo Craft Development Programmes.
As a continuation of the Institute?s series of activities relating to craft- based entrepreneurship development,an Alternative Craft Development Programmed was initiated . The Institute?s initiative was supported by the Ministry of Textiles , Government of India ,with a Craft Development Centre at Kanjoor in Ernakulam District.This six months? long program was meant for 20 participants, selected through a vigorous selection process.
KVIC Special Employment Programme and ISED.
ISED was requested by the KVIC, Mumbai,  for the development of District Level Projects, under the Special Employment Program being implemented in 21 districts of the country. The ISED team visited the states of Tamilnadu, Karnataka, Andhra Pradesh,Orissa and Maharashtra, and developed  Projects in identified Districts.
Ninth Five Year Plan and ISED.
ISED has been invited by the State Planning Board  of Kerala, as a member of the Working Group on Modern Small -scale Industries. The Institute conceptualized  a ?Small Enterprise Commission?, which was included in the final recommendations of the Working Group.
Rural Entrepreneurship Development Programme Series.
The Institute organized a series of Rural Entrepreneurship Develop Programmes in vatious parts of South India, jointly with SIDBI,NABARD, and the Entrepreneurship develops Institute of India. These programmes were successful in achieving an average retention rate  of seventy  per cent.
Urban Micro Enterprise Development Programme.
ISED, joined  the DFID, and the  City Corporation of Cochin, in order to model the Urban Micro Enterprise Development Programme (UMEDP). The Institute also organized the Pilot Programe for wider implementation.The modeling was done under the Economic Support component of the Cochin Urban povery Reduction Project.
ISED in the SDC Mission
Institute of Small Enterprises and Development was invited by the Swiss Agency for Development and Co operation, as a member of the SDC Mission on Micro and Small Enterprises Sector
International Conference on Renewable Energy Entrepreneurship.
As a part of the international programme on Renewable Energy Entrepreneurship, which is a joint initiative of USAID and ISED, an International Conference on the subject was organized at Cochin. The event, with participants from several South Asian countries, was inaugurated by Prof. Alimullah Miyan, Vice- Chancellor of the International University of Business Agriculture  and Technology, Dhaka  International; Training Programme on Entrepreneurship Development, Edinbugh, UK.
The Institute was invited by the British Council to participate in the International Research Workshop on Entrepreneurship at  Ediburgh U.K
SME Newsletter.
ISED-US Consultate Public Lecture by Zoltan Acs
ISED and US Consultate, Chennai, joined together to organize a Public Lecture on ?Small and Medium Enterprise Under the
Emerging Trade Regime?. The Lecture was delivered by Prof. Zoltan Acs, former Chief Advisor to the US Small Business
Administration and Director of the Merrick School of Business.

ISED Annual Small Enterprise Lecture Series Begins
The Series is meant to bring issues relating to SME development, to the limelight. The Series was formally inaugurated by Mr. K.Madhavan Kutty, Editor, Indian Express. The first Lecture on?Innovation in the SME Sector?, was delivered by Prof Mein Peiter van Dijk, of the Free University of Amsterdam
Friends of ISED Meet
On the occasion of being honoured as the Global Leader in Small Business Promotion, a meeting of the ?Friends of ISED ? was held at Hotel The Renaissance,Cochin,on November 8,2005.Several luminaries  shared their experiences and fond memories with the ISED.ISED Director Dr P.M.Mathew thanked the participants.
INSLED Formation Meeting
Following the Cochin Declaration,which was passed by the International Conference on SMEs in Local Economic Development on January 10-11,2005,ISED organized a meeting of like ?minded people 0n November 8,2005.The Meeting resolved to form the Indian constituent of the proposed INSLED.ISED Chairman Dr K.N.Kabra,was elected as Chairman of the newly formed INSLED-India.
BESO Conference, Kathmandu
BESO,UK is an international Volunteering organization,which actively promotes non-commercial Business Development
Services.ISED ,through its active links with BESO,channelises non-commercial BDS to Indian SMEs.ISED Director Dr P.M.mathew attended the Regional Consultative Meeting of BESO which was held at Kathmandu on September 5,2002.
 

As a prelude to the World Mayors? Conference which was held at Cochin, the Institute organized the International Conference on SMEs and Local Economic Development on January 18,19, 2005. The Conference, with participants from all the  continents, was a joint initiative of the International Labour Organization and the Institute . While the Globalisation report of the ILO  has highlighted proactive policies by national governments to foster local economic development, the reality remains that SMEs are the engine of such a development pattern. The ILO support to the Conference was instrumental in ensuring the participation of deli gates from  Mozambique and Sri Lanka , where LED programmes have been implemented. The Conference resolved on setting up an International Network called the International Network on SMEs in Local Economic Development, with counterpart networks in member countries.

International Convention on Micro Finance and Sustainable Enterprise DevelopmentThe first and the eighth items in the Millennium Development Goals (MDGs) urge the UN member countries to initiate programmes which help to unleash the entrepreneurial potential latent among the poorer sections of society, in such a way that they contribute to the overall process of private sector development, and economic development as a whole. The Report of the ?Commission on Private Sector and Development?, by the Office of the Secretary General of the United Nations, highlight the enhanced alienation of the poor from the process of development, and advocates a strategy in which, ?business is tuned to work for the poor?.   The ILO initiatives are tuned to develop and introduce micro-finance tools to prevent marginal families from being taken into unfree  labour for debt repayment, as a result of an urgent and unforeseen financial need. The micro-finance products include, marriage saving schemes, health insurance programmes, funeral saving plans and related services, besides financial support for the economic and income generating activities. Finance for the poorer sections of society was practically unavailable, until the micro finance movement took roots in the early 1990s.  The movement has helped to empower the poor in three major ways: 1) satisfying the rural credit needs; 2) contribution to social organization at the local level; and 3) capacity building. 
The micro finance movement has already reached its second phase.  The spread of the movement in most developing countries is commendable.  The challenge in the second phase is to make the movement a major instrument of enterprise development, and subsequently to integrate these micro enterprises into the mainstream.  It is this process which will ensure a process of enterprise development of a sustainable nature.The experience emerging from many developing countries is not very encouraging.  Micro finance institutions have grown in terms of numbers, size and strength.  The financial institutions have identified this sub-sector as a prime area for their lending operations with a potential to bring down the magnitude of non-performing assets (NPAs).  However, the economy- wide impact of micro finance, as well on the enterprise front, is still a matter of serious concern.  Not only that enterprises should come up, they should also contribute to backward and forward linkages in the economy.  Such a linkage effect alone will trigger the process of development and a multiplier effect on credit off-take.
The objective of the Convention was, therefore, to bring to light the challenges and imperatives of micro finance from the point of view of development of enterprises, and pro-poor financial products.  It focused on micro finance as a crucial instrument for enhancing the credit-deposit ratio of financial institutions. It deliberated with the various stake-holders viz. government agencies, financial institutions, public and private sector organizations, as well as with civil society organizations. The Convention had a close reflection of best practices from the financial and developmental sectors around the world.
The two-day event held on Decmber 12-13,2005, was inaugurated by Prof. Mercy Williams, Mayor of Cochin.

ISED Participates in the International Bamboo Congress,Bali,Indonesia
Considering its rich contributions to the Bamboo sub- sector,ISED was invited to participate in the International Bamboo Congress held at Bali,Indonesia,on August18-21,1997.Dr P.M.Mathew presented a paper on ?Towards a Bamboo Production ?to- Consumption System Model for India?.The event was inaugurated by Primer Minister Mr Suhartho.

National Conference on Financial Inclusion and Beyond: Issues and Opportunities for India
?Financial Inclusion , the latest in the terminology of development literature, is replacing ?Micro Finance?. But Financial  Inclusion is not an end in itself. Most people having a bank account, or an insurance coverage, ipso facto ,do not mean an enhancement in their economic position. On the other hand, it acts as a facilitator. On the one hand, it should help, in some way, the process of economic development. Besides, it should lead to a change in the existing pattern of income distribution.
Poverty is a well-known problem in most developing countries. But what is needed is to develop mechanisms which ensure that poverty is not exacerbated by lack of access to financial services.  People need information and advice in their day-to-day economic activities.  Such information and guidance can best be delivered by appropriate mechanisms, which, in turn, help to enhance credit delivery.But then, the wider question still remains. Does being a part of a  banking net help the person enhance his well being? If so, in what sense, and in what degree? What are the lessons from the point of view of monetary policy? The theory and practice of financial inclusion thus should be examined in the Indian context. The Objective of this Conference is to deliberate on the imperatives and experience of financial inclusion in India, and to explore the opportunities they throw up in terms of reducing the  extent of poverty and enhancing income levels of the poor people.
The issues in this area need to be discussed in terms of the following aspects:
? The reach and coverage of financial services.
? Financial inclusiveness ? Policy perspectives and practice
? Economics of banking in India : Opportunities and constraints
? Technology as a means of inclusion
? Financial inclusion and insurance
? Cottage and small-scale industries: Perspectives on inclusive   polices
? Agriculture and allied activities : Perspectives on inclusive policies
? Institutionalization of financial inclusion
? Financial inclusion : International perspectives.
The Conference, held on September 19-20,2006, was inaugurated by Mr. V.S.Das,Executive Director, Reserve bank of India

National Conference on SMEs in the Eleventh Five Year Plan India is heading towards  a commendable 10% economic growth. In order to sustain this growth rate, public policy  has to focus  increasingly on innovation and competitiveness in  industry, and more specifically in the SME sector. At the other end of the spectrum , the phenomenon of ?jobless growth?, which started in the mid 1990?s , still poses  a significant threat . Therefore, there is the imperative of  targeting  employment as the crucial aspect of  public policy. ?It is in this context  that the Prime Minister  announced the year 2006 as  the ?Year of Employment Generation?. This essentially means an integrated development of small, medium and micro enterprise sectors as the kingpin of local economic development. While the  Approach Paper for the Eleventh Plan was formalized, it was necessary to discuss some of the key developments in the economy. While the importance of micro and small enterprises has been repeatedly highlighted in documents of the Five Year Plans, the development of appropriate strategies still remain a complex task.  Such complexity arises out of the need for developing a synergic relationship between the imperatives of development of viable enterprises, as also of local economic development.   The message given by the  Export-Import Policy for the year 2006-2007, as also by the Union Budget this year, is very clear : that there should be a clear enterprise policy and strategies, which are properly tailored to the context of local economic development.   
The objective of this Conference was to highlight the stakeholder perspectives relating to  the Eleventh Five Year Plan , with special reference to development of  SMEs and livelihoods. This exercise is expected to help  and inform the Planning Commission, Ministry of Small Scale Industries and Agro and Rural  Industries, and other stake holders in their Plan exercises.
The Theme areas of the Conference , held at Trivandrum on November27-28,2006
●The SME scene: International Developments  and Lessons for India
●SMEs and Livelihoods in the Eleventh Plan Approach Paper.
● New Economy,  the emerging Trade Regime and SMEs.
? Technology, Innovation, and Employment Opportunities
● Investment Promotion and Entrepreneurship Development
● Decentralization and Advocacy for the SME sector
● Regional Experience: Lessons and Imperatives  
●Towards an agenda for the Eleventh Plan
The event,organized jointly with the Planning Commission,New Delhi,was inaugurated by Dr M.K.Ramachandran Nair,Vice Chancellor,University of Kerala.

Director Mathew Visits Satya Wacana University, Central Java, Indonesia
ISED Director Dr P.M.Mathew visited the Department of Economics, Satya Wacana University ,on November 4,5,-1996, and gave a  Lecture on ?Recent Trends in SME policy in Developing Countries?. Dr. Mathew was received by Dr. Sam Harris, Vice Chancellor of the University. Dr. Mathew also participated in the International Conference on SME Development, organized by the University, jointly with the Free University of Amsterdam. He presented a paper on the ?Indian Experience on SME Promotion Lessons for the International Community?.ISED Director visits Tilburg Chamber of Commerce
Dr. Mathew visited the Tilburg Chamber of Commerce,South Netherlands ,on October 5, 2002. He was received by, Mr. Peter Havers, Secretary General of the Chamber. Dr Mathew had detailed discussions on the role of the Tilburg Chamber in delivering demand -driven services to its members.ISED Director Visits EIM, Zotermeer, Netherlands Dr. Mathew visited EIM, Europe?s think-tank on SME policy .EIM is also Co-coordinator of the European Observatory of SMEs.
Handbook of Small Enterprises Released
A?Handbook of Small Enterprises in Kerala ? was formally released on             at a public function organized by the Institute. The first publications of its kind in Kerala, the Handbook was released by Mr. C.M.Dinesh Moni, Mayor of Cochin .Mr. George Joseph, Director of Economics and Statistics , Government of Kerala, received the copy.
ISED Director visits    UK Department of Trade and Industry
Dr. Mathew visited the Department of Trade and Industry in London on March 20, 2007 and had detailed discussion s, with its senior officials .Dr.Mathew also had discussions the flow of FDI, from  India to the U.K., and the implications of the same for Indo-British  economic relations.

Little Rome Exhibition
An exhibition  of rural craft was organized by a Crafts men Association at North Paravoor, near Cochin, on January 11, 2005.A Team of foreign delegates, whose visit to the exhibition was facilitated by the Institute, showed active interest in these crafts, and explore opportunities of trade and exchange of skills.
 National Conference on Renewable Energy Entrepreneurship
The National Conference on Renewable Energy Entrepreneurship  was organized by the Institute, jointly with the Ministry of Non-Conventional Energy Sources ,and the Khadi and Village Industries Commission. There was active participation by various stake holders.The Conference came out with  a monograph on ?Renewable Energy Entrepreneurship?, which has been widely circulated.
Medicinal Biotechnology and the New Trade Regime: Mudurai Seminar
A study on ?Medicinal Biotechnology Sub Sector and its Challenges and Opportunities in the Context of Globalization? was commissioned by the United nations Industrial Development Organization (UNIDO)  The Institute completed the study in August 2007 in September-2001 .The findings of this study were formally presented and  deliberated in the National Seminar on Biotechnology held at Madurai. The various stakeholders, such as ,Industry ,Government, Financial Institutions, Technical experts and promotion agencies participated in the event.
Public Lecture on ?Privatisation in South Asia?
 ISED organized a Public Lecture on Privatisation in South Asia was organized under the public lecture series of the Institute . The Lecture was delivered by Mr. Gopal Joshi, Senior Enterprise Specialist, International Labour Organisation. The  Lecture, has since been brought out as a Monograph.

Mark Holmstrom Visits ISED
Mark Holmstrom , anthropologist and Professor at the School of Development Studies, University of East Anglia, visited the Institute on December 12, 2004. Prof. Mark is an expert, on ?flexible specialization?  and new  industrial organization. His recent research on industrial clustering, has brought to light some neglected social aspects of industrial organization. Mark held discussions  with ISED Faculty. During the second week of December, he organized field research in Kottayam and Thrissur Districts.
Marina Murat visits ISED
Prof. Marina Murat  of the University of Modena, Italy, visited the Institute on January 20, 2005. Marina is a specialist on Industrial Clusters. Prof. Sergo Paba, of the University also accompanied her.

Mathew visits Overseas Development Institute
Dr. Mathew visited Overseas Development Institute, London, on September, 24, 1999, and gave a presentation on, ?Challenges o Indian SMEs in the Context of Globalization?. He also held discussions with Dr. Sheila Page and her colleagues.
Sait visits IUBAT
Dr. J.M.I.Sait visited the International University of Business, Agriculture and Technology (IUBAT), Dhaka, on September 15, 2003. He gave a lecture at the International School of Business on Regional Trade Agreements and their Implications for Development of the SAARC Region.
ISED Collaborates with Philippines Institute of Small-Scale Industries
Institute of Small-scale Industries in the Philippines University, and ISED entered into a collaboration agreement on November 8, 1998. As per this agreement the two Institutions will cooperate in research and exchange of scholars. An exclusive SME publication, ?Asia Pacific New Letter?, has been jointly initiated. The Publication will be  brought out from Quezon City ,Philippines.
Mathew visits Local Governments in Netherlands
P.M. Mathew visited, the City Corporations of Tilburg, and Amsterdam, and held discussions with senior officials of their Economic Development Division. The local government in Netherlands provided support to local economic development, as also Infrastructure support to SMEs.
Mathew visits IDS, Sussex
Dr. Mathew visited the Institute of Development Studies, Sussex, UK, on February 28, 2007.  He held detailed discussions with Dr. John Hailey, Director, on areas of common academic interest.
Mozam Hussein visits ISED
Prof. Mozam Hussein, University of Griffith,Australia, visited the Institute on December 4, 2005, Prof. Hussein is a expert on Micro Finance.
Mathew  visits Institute of Social Studies,The Hague
Dr.Mathew visited the Institute of Social Studies at The Hague on September 10, 2004. He delivered a Lecture on ?India?s experience in Local Economic Development?. Mathew held discussions with, scholars like Peter Knorringa, on issues of mutual academic interest.
Dr. Sait Visits United Nations, Dhaka
Dr. Sait, Senior Fellow of ISED, who is also former Country Director of UNIDO  in Dhaka, visited, UNDP, Dhaka on August 10,2003. He held discussions with the Resident Representative, and other senior officials.

Mathew Visits Local Governments in UK
As a part of the Chevening Programme, Dr. Mathew visited the Ealing City Corporation, as also the Corporations of Cardiff and Birmingham. He held detailed discussions on the Local Regeneration  Programme in these cities.
Mathew Visits Commonwealth Secretariat
Dr. Mathew visited the Commonwealth Secretariat in London, on March 12, 2007. He had detailed discussions with Mr. George Saibal, Director, Special Advisory Services Division, as also with Mr. Ram Venuprasad, and other senior officials.

ISED in the Eleventh Plan Panel
The Plan Committee, which is the supreme body responsible for designing the Five Year Plan in Kerala State, has been constituted under the chairmanship of Dr. C.P.Chandrasekhar, Professor, Jawaharlal Nehru University, New Delhi. ISED is a member of the Plan Committee for Small and Medium Industries.

ISED in the Eleventh Plan Working Group
The Working Group on Small and Medium Industries for the 11th Plan of Kerala, has been constituted under the Chairmanship of Dr. P.M. Mathew, Director, ISED and with Dr. P.Mohanan Pillai, Fellow,Centre fro Development Studies,Trivandrum, as Co -chairman. The following are the members of the committee:
      1.  P.V.Unnikrishnan,
           Member,
           State Planning Board,
           Trivandrum.
      2.  K.T.Thomson 
           Reader,
          Cochin University of Science & Technology,
          Cochin.
      3.  T.O.Suraj,
           Director,
           Directorate of Industries & Commerce,
           Govt.of Kerala,
           Trivandrum.
       4.  P.L.Beena 
           Research Associate,      
           Centre for Development Studies,
           Trivandrum.
       5.  S.Muralidharan,
           Prof.of Economics,
           Maharaja?s College,
           Ernakulam.
       6.  Damodar Avanoor,
           Managing Director, 
           Chetana Pharmacecuticals,
           Perinthalmanna.
       9.  Xavier Thomas Kondody, 
           Managing Director,
           Cybx Cable (P) Ltd.,
           Kottayam.
      10. Navas Meeran,
           Chairman-Kerala State Council      
           Kerala State Council,
           Confederation of Indian Industry (CII),
           Cochin
      11. R.Harikumar, 
           Chief Executive Officer      
           ADFIK, Trivandrum.
      12. J.M.I.Sait, 
           Senior Fellow,
           Institute of Small Enterprises and Development,
           Cochin.

Tenth Plan Task  Force on Modern Small- scale Industries Constituted
The State Planning Board, Kerala has constituted the Tenth Five Year  Plan Task Force for modern small-scale sector,with ,with Dr P.Mohanan Pillai as Chairman,andthe following as members:
1. Dr.P.M.Mathew,
   Director,
   Institute of Small Enterprises Development,
   Kochi-695 010
2. Shri.C. Balagopal
    Managing Director,
    Peninsula Polymers Ltd.
    Thiruvanathapuram ? 695 010
3. Shri.M.R. Narayanan,
    Transmatric Systems Ltd,
    Golf Links Lane,
    Thiruvanathapuram.
4.  Shri.G. Vijaya Raghavan,
    Chief Executive Officer,
    Technopark,Thiruvanathapuram
6.  Smt. Beena P.L.,
     Research Scholar,
     School of Social Sciences,
     Jawaharlal Nehru University,
     New Delhi.
7.  Shri. George mathai Tharakan,
     Regional director,?
     Institute of Management in government,
     Kochi
8.  Dr. V.Nanda Mohan,
     Head of the Department of Futures Studies,
     University of Kerala,
     Thiruvanathapuram.
9.  Dr. K.J.Joseph,
     Centre for Development Studies,
     Thiruvanthapuram.

RBI Standing Advisory Committee Being Re-Constituted
Reserve Bank of India has re constituted the Standing Advisory Committee on SSI Credit. The Committee has the responsibility of deliberating on issues relating to flow of finance to small industry, and to make recommendations from time to time .ISED Director Dr. Mathew participated  in the first meeting of the committee at RBI, Bombay, on September 5, 2005.

ISED Inducted in the State Level Bankers? Committee, Kerala
ISED has been inducted in the State Level Bankers? Committee for the State of Kerala, with effect from July 5, 1994. SLBC is a statutory body of a national pattern, including bankers and various Government Departments, and is meant for deliberating in issues relating to credit delivery, from time to time. ISED represents the small industry constituency.
ISED-ZDH Programme on Public- Private Partnership in Tamilnadu
ISED and the ZDH. Germany, joined together in  a programme on Public- Private Partnership for SME Promotion. A joint Seminar was organized at Taj Coramandel, Chennai ,on December 5, 1998.National SME Biotechnology Programme Launched The Development Commissioner (SSI), Government of India ,formally unveiled the National Program of Biotechnology in the SME sector at New Delhi today . The Program is based on a national research on the subject, initiated by the UNIDO and carried out by ISED.
Peter Braithwaite visits ISED
Peter Braithwaite of the Institute of Development Studies,Sussex,UK, visited the Institute on January 15,2005.
 

The Analysis and the Message

Crisis is a natural corollary of economic growth.  India has a particular economic history and business geography, where the ?top of the pyramid? is more visible than the ?bottom of the pyramid?.  The enterprise structure in the country is characterized by the hegemony of the corporate sector.  During normal times, everybody talks about the stock market and of the performance of blue chip companies.  However, in exceptional cases, as we have today, when the top of the pyramid crumbles, throwing large number of people out of employment, opportunities at the bottom of the pyramid, ie. the smaller enterprises and income opportunities, become an area of active interest.

In most parts of the world, and especially in countries like USA, smaller enterprises, just as in India, have a significant role in terms of numbers, as also the employment opportunities they provide.  However, India?s industrial structure is unique.  Unlike in other countries, India has a relatively strong manufacturing sector, in which the role and linkages of small scale units are decisive.  Even when the large companies come out with substantial figures of production and export, the actual production takes place, in a large number of smaller companies.

 

This production structure has significant implications in a crisis situation.  The implications are two fold:  1) the smaller enterprises, just like ants and flies, can foresee tremors and economic calamities in the economy;  2) the smaller units, though much less visible and articulative, can salvage the top of the pyramid, (ie the corporate sector) during times of crisis.  The reason is that, they are not simply service providers for the corporate sector, but are vital links in the manufacturing chain as well.

This is not an over-generalization on the powers of SMEs.  The SMEs are generally powerless and invisible in the policy platforms, as also in the eyes of the media.  But they have a potential to salvage an economy in crisis.  But, in order to play such an instrumental role, however, it need to get adequate public policy support. 

The praxis, however, is not that sweet.  Public policy is often hostile; so also, the attitude of the corporate sector.  But, there are occasions when history turns around.  It is now in the interest of the corporate sector itself to salvage and support SMEs.  Or else, the economy will be in trouble.  This imperative has been increasingly realized by the corporate sector.  But, it is doubtful whether public policy has realized it properly.

ISED predicted this crisis an year back, through India Micro, Small and Medium Enterprises Report -2007.  It has now come true.  

 

?????..Despite a commendable growth rate, and the associated structural changes that are taking place in the MSME sector of India, the impending tendency towards a world recession, triggered by such tendencies in the US economy, pose threats to this sector.  This points at the need for acquiring a significant internal resilience which this sector should necessarily acquire.?

(India Micro Small and Medium Enterprises Report 2007, Page No. 87)

 

The rationale built up on by MSMER-2007, was based on a comparative analysis of the global scene, and calculations on SME performance in the country over the last two decades.  Going by the lessons from economic history, a major crisis was due in U.S. and Europe, even by 2002.  Such a crisis was managed or postponed through the conversion of the external sector of some of these countries into war economies.  The financing of war was managed through the gains accrued through export of defence equipments, as also through the gains of finance capital.  But, finance capital turned out to be the key harbinger of crisis as well.

By normal logic, SMEs are resilient.   As at the fag end of 2008, we see a major economic crisis engulfing the world, under which, the future course of SMEs are also increasingly called into question.  However, the report gives the message that SMEs are relatively resilient than the corporate sector, and therefore, they will evolve appropriate survival strategies. 

This report of 260 pages provides a detailed analysis of India?s SME sector, its strengths, weaknesses, challenges, and overall position in the economy.  India?s experience and the future direction of SME sector in the country are built upon the global experience, which has been discussed, in relation to major countries and geographical blocks in the North and the South.

 

The analysis of the report and further discussions have been arranged around three key themes, which are the leads of this year?s report:  1) the economic crisis and small enterprises;  2) the Obama Effect and its implications on SME development in the developing countries, and especially in India;  3) the financial inclusion drive in India and its implications for SME development, in the more specific context of the economic crisis.

1)  Economic Crisis

The economic crisis of 2008, is rather different from the previous experiences of 1930s.  The course of this crisis poses significant threats for many developing countries of the world, as also for the developed capitalist countries.  However, India?s experience stands out.  While, the growth of the SME sector is a major development experience throughout the world during the past three decades, in most industrialized countries, this growth was a spill over of the particular type of capitalist development, where outsourcing of services became a major trend.  Therefore, even when more than 90% of the firms are SMEs, the bulk of them are involved in services.   On the other hand, in India, we have a hybrid manufacturing sector where, the role of manufacturing SMEs are much larger than elsewhere.  The Report has identified thirteen sub-sectors which are seriously affected by recession.  It examines the impact of the global slow down at five levels:  1) macro level; 2) cross-sectoral level; 3) spatial level; 4) sub sectoral level; and 5) firm level.  The Report?s analysis at these various levels indicates a significant slow down of activity.  Even then India?s position, given its significant capabilities, is not that precarious.  We will have a mixed experience where many units will die, but many new firms will also come up.   The SME sector, however requires immediate policy intervention, targeted at confidence building.  Confidence building is the mantra of the Report, the initiative for which, has to come from the government itself.

2)  The Obama Effect

While the SME sector in India will have to suffer a lot under the present global crisis, it visualizes a resurgence of the sector, from the ashes of the crisis.  The global crisis will lead to a non-confidence in the older paradigm of development, driven by finance capital.  Naturally, other experiments of business organization will emerge, where SMEs will have a significant role to play.  New enterprise solution will emerge.  Mergers and acquisitions, which were characteristic of corporate capital, will gradually spread to the SME sector as well.  In such a situation, India, given its larger capabilities, will be a country to benefit most, as we have a better manufacturing base.  Moreover, in the agenda of donor assistance program for enterprise development, India is likely to have a decisive role.

3)  Financial Inclusion and Beyond

Finance is going to be a big problem for SMEs, because of the drying up of external commercial borrowings (ECBs), as also because of the enhanced trade-off between SME financing and other forms of financing by the banks.  In a recessionary situation, and given the prevailing prudential norms, applicable to banks, directives of the RBI relating to priority sector lending, are not likely to yield significant results.

Innovations in banking are likely to take a back seat.  Public sector banks, who have ?salvaged? the economy, are likely to turn into a new financial aristocracy.   Will it lead to a major set-back to SMEs?  Logically yes.  But one need to study the trend at the grass root level.

Another critical area is micro finance.  This is the time for the micro finance movement to reinvent itself.  If not, the legacy of the past one decade is not likely to continue.

Recommendations of the Report

The Report comes out with some concrete recommendations.  On the economic crisis, the Report makes recommendations for action at the above five levels.  On the Obama effect, it perceives significant opportunities for India.  On financial inclusion, and credit flow to the SME sector, the Report foresees a difficult path ahead.

The Report identifies the government?s proactive role as a key agent of confidence building under the present crisis.  It also envisage the potential of utilizing new opportunities for SMEs, under the present crisis situation.

A key suggestion of the Report is the setting up of SME Intelligence and surveillance units at the national and state level, which should help to mobilize the expertise of various stake holders and experts to collect field level feed back on a war footing and to initiate action urgently.

The Report which makes concrete suggestions on what to do under recession, provides a direction for various stake holders.  But there is much more to be done in terms of very concrete action points at all these levels.    

The Report also advocates a redefinition of the role of the voluntary sector and its enhanced involvement in public enterprise development programmes.

Dr. Jose Maurel, Director, Special Advisory Services Division, Commonwealth Secretariat, London,  applauded the India Micro Small and Medium Enterprises Report 2007 for its content and intent. ?Invisibility syndrome, the key constraint of MSMEs, as identified by the ISED Small Enterprise Observatory, which brings out this annual Series, need to be addressed with the help of visibility-enhancing initiatives. The MSMER Series stands out in this regard?, he said. ?It is a well researched document, written in a comparative international perspective. As such, it provides food for thought, not only to Indian policy makers and practitioners, but to the international community as well?, he added.

The Commonwealth Secretariat Chief received the first copy of the Report from Mr.A.C.Jose, Chairman, Coir Board, the Chief Guest of the Commonwealth ? India Small Business Competitiveness Conference, on December 5, 2007.

In MSMER 2008 has identified 13 key sub sectors, that have been seriously affected by the recent economic crisis. The crisis in these subsectors have serious employment consequences, as also problems relating to Local Economic Development.

National Policy Conference on

Learning from Recession- Saving an Economy:
Towards an MSME Agenda
 

1.0.   Introduction

The global economic crisis presents a grim picture of the state of economies around the world, as also of particular economic sectors. While, the experiences vary from country to country, the general perception is that the Micro, Small and Medium Enterprises (MSME) would be the worst victims of this crisis. Such an argument, of course, goes along with a layman?s view of the economy, where the ?survival of the fittest? is the rule of the game. However, the resilience of the otherwise weakest players in the economy, in a context of a serious economic crisis, depends not only on their natural individual strengths, but also of the objective environment in which they work.

The objective reality in India is much different from what we see elsewhere in the world. While, the predominance of SMEs in the economies of countries is a global reality, the structure of these enterprises, matters a lot for their own resilience, and of their potential. as a class, to play an instrumental role during times of a serious economic meltdown. While in many countries, the SMEs belong largely to the tertiary sector, they constitute a major layer of the manufacturing system and they mostly graduate from the micro enterprise category in India. Therefore, they have significant potential of diffusing major economic shocks. Besides, SMEs in India have peculiar cultural practices, which equip them to remain more resilient than the corporates. Seen from the angle of public policy, and from the point of view of developing an anti recessionary agenda, these factors, undoubtedly, are crucial. In short, the inclusive development agenda envisaged by the Eleventh Five Year Plan, and the anti-recessionary agenda, which is more of a contingency plan, are sides of the same coin.


2.0.   Problem

While, there is lot of popular literature which project gloomy days for MSMEs in India, there have not been much concrete perceptions on what is actually going to happen to them. Such an understanding is crucial from the point of view of developing a crisis mitigating agenda for the sector.

3.0.   Objectives

The objective of the Conference is to evolve an agenda where promotional agencies are clear on their strategy relating MSME development. It is also necessary to build confidence among the MSMEs, on the one hand, and the promotional agencies that cater to them on the other.

4.0.   Theme Areas

a)       Economic Crisis and the Opportunities: Macro Perspectives

b)        Regional Perspectives on SMEs under the Crisis

c)       Exports: A Relook at the Stalled Engine

d)       Technology, Innovation, and Domestic Market

e)       The Way Forward

5.0.   Participants

The expected participants are, entrepreneurs, financial institutions,academics, MSME and livelihood promotion agencies and departments, Reserve Bank of India, Development Banks, micro finance institutions.

6.0.   Output

The take-away expected from the Conference are the following:

a)       Government and Promotional Agencies: These agencies get clarity on the specific nature of the crisis as it relates to MSMEs, and the challenges emerging from the point of view of promotional activities.

b)       Small and Medium Enterprises: These enterprises need to have clarity on how the policy regime acts in a context of economic crisis.

c)       Financial Institutions: There is a renewed interest among the financial institutions, relating to the potential of MSMEs. But their risk perception also is going up. The Conference is expected to help the financial institutions and the SLBCs to take informed decisions.

d)       General Public: The economic crisis has created a scare among the general public. Such scare has a destructive potential of aggravating the crisis further. The Conference seeks to ameliorate this scare on the basis of a concrete assessment of the situation in a macro setting, as also to evolve appropriate methodologies for such assessment.

e)       Academics: This is the first learning opportunity in India on the dynamics of  recession,as it relates to the MSME sector.

 

7.0. Location and Date

The event will be held at Cochin on June 4, 2009.

8.0. Organisers

The proposed event is conceived and designed by Institute of Small Enterprises and Development (ISED), Cochin.(visit www.isedonline.org), organised jointly with the International Network on SMEs in Local Economic Development- India (INSLED-India), it will be coordinated by Dr P.M. Mathew, jointly with Prof Yerram Raju.

Dr. B. Yerram Raju, an expert on SMEs and finance .Visiting Professor at ISED, and formerly Senior Faculty and Dean of Studies of the Administrative Staff College of India, Hyderabad, Prof. Raju piloted the National Project on SSI Law, which was the forerunner of the MSME Act 2006. Prof Raju started his career as a banker, and has worked with the State Bank of India for 30 years.  He has published ten books and numerous articles in leading financial dailies, national and international journals.  He was member of the Jury of Asia-Pacific Bankers? Congress, Manila for the years 2004 and 2005 on the SME performance of global banks.

Dr P.M. Mathew, Director, Institute of small Enterprises and Development, is Senior Chevening Fellow (UK), and Birla National Fellow in Economics. He is a practicing Development Economist, and has adorned significant advisory positions in the Prime Minister?s Office, Planning Commission and the Reserve Bank of India.

, December 5-6, 2008)

 

Having deliberated on the twin roles of SMEs, as wealth generators and socially responsible economic entities, we, at the International Conference on ?SME Social Responsibility and Opportunities at the Bottom of the Pyramid? resolves the following road map and action points, based broadly on the global experience, but more specifically in a context of the global crisis and the related imperatives of developing countries:

• The visibility of the SME sector in the policy platforms, despite public pronouncements on its role and relevance, is much limited.  The experience of the economic crisis offers a logical ground for articulating the case for enhanced visibility for this sector.  Visibility need to be translated in terms of: 1) separate nodal Ministries; 2) maintenance of dedicated Funds; 3) effective advocacy mechanisms; 4) State of the Sector Reports; and 5) periodic reporting to the Parliament. Some countries have made significant achievement relating to a few of these points. However, scaling up of these achievements and sharing of experience among countries, has much greater significance during these times of global economic crisis.

• The articulation of the case for the SME sector has improved during the past one decade.  However, the thrust on key streams, such as, micro finance, entrepreneurship development and technology development have not led to a significant synergies, leading to more concrete action.  These key functional areas of   intervention, need to be developed meticulously and with focus on linkages, in order to ensure tangible results.

• SME promotion need to get increasing focus in the CSR agenda of the corporate sector.  Appropriate amendments to the Income Tax laws of countries may help to influence corporate strategies. Besides, the business for an SME-focused CSR need to be properly articulated, in order to attract the corporates to this vital area.

• There are several cases of success stories in community enterprise in the developing countries.  This demands development of an appropriate theoretical framework and relevant social enterprise models to the context of developing countries.  This obviously should be based on in-depth research on the ground level experience of these countries.

• Cleaner production models in the SME sector can make a significant social impact.  However, there are not many SME specific public programmes in this area.   The priority given to global warming as a key global concern, provides a conducive environment for the development of entrepreneurship which is sensitive to cleaner production lines. The present state of technology in  individual plants and  industrial clusters can be improved on these lines, preferably on a public-private partnership mode.

• There is also a significant scope for developing a cleaner production agenda around MSME .They should be encouraged to focus on waste management, environment friendly production processes, thereby enabling them to contribute in a drive towards reducing social costs, and ensuring sustainable development.  Policy environment should be fine tuned to enthuse the SMEs and social enterprises to enter this new area.

• Despite the presence of several responsible entrepreneurship models in developing countries, their contribution often does not get reflected in the National Accounts Statistics.  The initiatives in India of the Central Statistical Organisation (CSO) , to capture the economic contribution of the voluntary sector and their activities  is commendable.  However, such an exercise need to be more focused. The UNDP, which was instrumental in this project, need to play the lead role in disseminating the Indian experience in other countries as well.

• The general threat perception on the SME sector, in the context of the global economic crisis, is something which needs close examination.  A proactive interventionist role of the government in this context is crucial. The key action points identified by the India Micro, Small and Medium Enterprises Report 2008 (MSMER- 2008), in this regard deserve active consideration. MSMER 2008 advocates a massive infrastructure progamme which is closely targeted to SMEs.

• While entrepreneurship development is often used as a catchword, its benefits and modalities are not properly communicated among various stake holders.  Mainstreaming and strengthening entrepreneurship education, with significant focus on appropriate curriculum development and research, should get priority.

• Kick-starting entrepreneurial activities at the bottom of the pyramid is a vitality in the context of the present economic crisis.  We feel that a new culture of SME development will emerge from the ashes of the economic crisis. This Conference perceives the emergence of a new world economic order emerging from the present economic crisis where, SMEs play a much greater role and influence than what we have today. This message should be properly understood by all stakeholders. This message should also be properly disseminated as part of a confidence-building exercise.

• Responsible business is not a concept bereft of political economy connotations.  This connotation should be clearly understood and strategies need to be evolved for the specific context of each country.  However, ideological predilections should not stand in the way of debates in this area.  Academicians and policy experts have a key role to play.  This Conference recommends that, helping the SME sector to thrive over the present economic crisis, should be the prime goal of economic policy in developing countries.  This is vital for salvaging these economies as such.

• This Conference recommends the setting up of a Surveillance and Intelligence System for the SME sector at national and sub-national levels.  At the international level, the lead role in this context has to be shouldered by the ILO, the international organization having Local Economic Development (LED) as its key thrust. 

• The SME economy should be declared as a powerful instrument for maintaining effective demand and thereby mitigating the present global crisis.  This message should go down from the ILO and national governments.  While recommending this, we also admit that SMEs will be seriously affected by the crisis.  The mediatory role in this case should come from the governments. The governments should come forward with a massive SME Regeneration Programme.

• The fact that the majority of the units in Special Economic Zones and Industrial Parks in India and in many other Countries are SMEs, demands a special policy preference and package for these units. This may also provide an opportunity to channelise remittances of non-resident Indians under the present economic crisis (Action in India: Ministry of Commerce and Industry, State Governments)

• The initiatives of the Global Compact, as also the thrust given by the EU Charter, indicate that, the SME social responsibility agenda will be mainstreamed in the near future.  Anticipating such changes, voluntary business codes focusing on the principle of ?triple bottom line? should be introduced by the Government of India.  Such a code should be developed, taking into consideration, the specific circumstances and imperatives of each country. Such an agenda should be dovtailed into the International Cooperation programmes of these countries.

• The so-called ?invisibility syndrome? is a key constraint on the SMEs in most countries.  Showcasing best practices, by the various state and non-state actors can be a first step in disseminating best practices. Initiatives, such as ?State of the Sector? Reports and ?SME Observatory?, as initiated by the ISED, should get public policy support and patronage by governments.

• Entrepreneurial initiatives by members of socially marginal groups such as tribals and craftsmen is a new area that require detailed examination.  Modeling of such ?transitional entrepreneurship? can be a major step in experimenting better models of inclusive development. This has also implications for reforms in the microfinance movement, which has not yet been much successful in initiating an entrepreneurship momentum.

• Backward and forward linkages of SME sub-sectors and clusters need closer examination and policy support. Such support, in turn, can lead to a priming for local economic development, and pump priming effect during times of recession.

• While the MSME Act-2006 has provided significant support to public policy regime, there still exists several constraints relating to strategy. Distinction between micro, SSE and ME, while treating all three under a single Act leads to much confusion on the strategy front. Probably three Directorates can be set up under the ministry of MSME.

• Abolition of child labour is an area of significant international attention today. However, the experience of countries like India is that children at work also earn significant skills. The blanket abolition of child labour will only lead to starvation, and the opportunities of skill generation will be lost.

• Despite banking reforms (over 40 years) fund flow to SMEs is limited. Micro finance provides a new platform. However, micro enterprises within the  micro-finance sector is only about 10%, this need to go up to around 40%.

• Branding of MSME products need to be encouraged Cluster level collective marketing endeavors should be promoted. Promoting  quality consciousness, and a world-of-mouth branding can be more relevant in the case of many local/rural products.

• BDS in clusters, livelihood finance, and handholding for very small units for upgradation of technological and living condition of entrepreneurs, are areas which need experimentation and support.

• A new vision of SME development need to emerge under the present context of global crisis. MSME development is not for the entrepreneurs alone;it is for the benefit of the  world at large. This, in fact, means social responsibility of the SME sector.

• Enterprise promotion and monitoring of promotional initiatives at the State and District level need to be professionalized. The State Level and District Level Banking Committees (SLBCs and DLBCs) are now completely official bodies, where only the bankers and government departments participate. Infusing professionalism into these bodies can go a long way in using them as powerful instruments to enhance credit flow and to chalk out meaningful credit policies. The RBI should revise the guidelines relating to the Constitution of SLBCs and should include professional and specialized institutions as its members.