Welcome Guest

Businessex.Com

Strict Standards: Only variables should be passed by reference in /home/franchis/public_html/entrepreneur/entrepreneur/templates/InterviewDetail_tpl.php on line 7
Home Interviews Think Tanks  Supporting Organisations  Current definition does not encourage MSMEs to move up the value chain: Yaduvendra Mathur, CMD, EXIM Bank

Current definition does not encourage MSMEs to move up the value chain: Yaduvendra Mathur, CMD, EXIM Bank

Mathur, Chairman and Managing Director, Export-Import Bank of India (EXIM Bank), in an exclusive interaction with Entrepreneur talks about the need of revising the MSME definition and how the bank is meeting the funding requirement of small players.

Tags: exim bank, sme, msme, small and medium enterprises, finance, china, india

BY Namrata Hazarika Kath | December 17, 2014 | COMMENTS ( 0 ) |

Current definition does not encourage MSMEs to move up the value chain: Yaduvendra Mathur, CMD, EXIM Bank
Yaduvendra Mathur CMD, EXIM Bank

The small and medium entrepreneurs (SMEs) are facing hurdles in accessing bank finance under the existing MSME definition. Yaduvendra Mathur, Chairman and Managing Director, Export-Import Bank of India (EXIM Bank), in an exclusive interaction with Entrepreneur talks about the need of revising the MSME definition and how the bank is meeting the funding requirement of small players:

The bank recently stated that the present MSME definition is outdated. What is your opinion on the MSME Development Act 2006?

Comparing the developmental strategies for the MSME sector adopted in various countries with that of India’s, it can be observed that the cap on plant and machinery for the purpose of classifying the units as MSMEs does not encourage Indian MSMEs to move up the value chain. In India, within the manufacturing sector, micro enterprises are classified as those with the investment in plant and machinery not exceeding Rs 25 lakh.

While the investment in plant and machinery for a small enterprise has been kept in the range between Rs 25 lakh and Rs 5 crore, a medium enterprise is defined with the investment in plant and machinery in the range between Rs 5-10 crore.

With such low level of investment ceiling, Indian MSMEs are either expanding laterally or engaging themselves in low-tech or low-value products. Since the manufacturing operations are capital intensive, investment ceiling for the treatment of MSMEs may be raised at least in the capital intensive sectors, benchmarking with such ceiling on investment in other countries.

How are India’s competitors defining SMEs?

A research study by EXIM Bank notes that China defines SMEs as those having investment ceiling of 300 million Yuan (approximately $65 million); Thailand has defined SMEs with a ceiling on investment capital of up to 200 million Thai Bahts (approximately $6.5 million); Singapore has defined SMEs with a ceiling on investment capital of up to $15 million (approximately $12 million); and EU defines medium enterprises as those of having asset size of Euro 43 million (approximately $56 million).

These countries (especially EU and China) have set the ceiling on the investment for  medium enterprises at high level, encouraging capital intensiveness, technology upgradation, quality improvement, export orientation and employment generation.

Considering the above, it is suggested that the ceiling on capital investment for medium enterprises in India may be increased, at least to the extent of $10-12 million. The hike in investment ceiling for medium enterprises will attract more investment in technology, quality upgradation and export.

How does EXIM Bank help the MSME sector in funding?

An important financing mechanism of the bank includes the ‘Cluster Financing Programme‘ initiated in association with ILFS Clusters & Cluster Pulse. This aims to make credit available for infrastructure development in cluster projects of SMEs, while creating a workable credit mechanism for the cluster projects.

Through the programme one can meet both individual banking and trade finance requirements in different cluster-based projects. EXIM’s recent cluster financing support include Handicrafts Cluster in Moradabad; Textile Cluster in Ludhiana; Mega Food Park in Raipur; and a cluster for Indian traditional medicines in Sriperumpudur, Tamil Nadu.

The bank also has in place the Technology & Innovation Enhancement and Infrastructure Development Fund, which caters to the foreign currency requirements of SMEs and augments their export competitiveness and internationalisation efforts.The bank plans to set up a Project Development Company (PDC) in Africa that will essentially look to bring infrastructure projects in Africa to a bankable stage and facilitate exports from India to Africa.

What is the current status of this?

EXIM Bank is at the final leg of setting up the PDC in Africa with the participation of an Indian commercial bank, IL&FS and African Development Bank. The company will essentially look to bring infrastructure projects in Africa to a bankable stage and facilitate exports from India to Africa. The PDC will look at large projects that will be built across two to three countries in Africa.

Tell us your expansion and growth plan for the next three years.

Now, we want to be the go-to institution for any company which is engaged or aspires to be engaged in foreign trade. This will also help the nation’s interests. We will be aligning our priorities with the government directions as we continue to focus on aiding manufacturing exports with a special attention on the EPC (engineering, procurement and construction) sector. 

Please add your comment

Rating  
Not readable? Change text.

Enter the characters as seen on the image (case insensitive)
  Notify me of followup comments via e-mail   Subscribe for daily newsletter

Related Interviews

We have been able to attract potential MSMEs under CGTMSE: RK Gupta, Bank of Maharashtra

RK Gupta, Executive Director,Bank of Maharashtra

How is BoM meeting the credit requirement of the MSME sector? We are using different schemes, which are helping the bank in meeting...

Gujarat set to emerge as the next Silicon Valley of India: Kaushal Chokshi of Scaale Group

Kaushal Chokshi, Founder & Chairman, Scaale Group

Hailing from a simple family in Baroda, Kaushal Chokshi always dreamt of becoming an entrepreneur right from a very young age. It is this...

Joining start-ups is becoming more attractive: Dr Ajay Kela, President & CEO, Wadhwani Foundation

Dr Ajay Kela, President and CEO, Wadhwani Foundation

Wadhwani Foundation has pledged $100 million to help create and fulfil 25 million jobs by 2020  with assistance from government and...

SMEs need to have an efficient financial management systems: Saru Kaushal, American Express

Saru Kaushal, Country Business Head (Global Corporate Payments), American Express

One of the key challenges that mid-sized corporations face is managing expenses effectively. Financial discipline can help companies...

Ratings are a significant step towards empowering SMEs: V. Srinivasan, CRISIL

V. Srinivasan, Business Head, CRISIL Ratings- SME

CRISIL is a global analytical company providing ratings, research, and risk and policy advisory services. CRISIL is majorly owned by...

Simplification of tax structure is the need of the hour: Manguirish Pai Raiker, Co-chairman, ASSOCHAM

Manguirish Pai Raiker, Co-chairman, ASSOCHAM

 Tax reforms are essential for the growth of overall economy and especially the MSME sector. Manguirish Pai Raiker, Co-chairman,...

Need to ink FTAs with EU to boost apparel exports: Virendra Uppal, Chairman, AEPC

Virendra Uppal, Chairman, AEPC

Although India’s apparel industry is expecting a growth in the current financial year, the euro zone’s crisis along with the...

We aim to encourage entrepreneurs: Ashwani Kumar, Dena Bank

Ashwani Kumar, Chairman & MD, Dena Bank

With an aim to encourage entrepreneurs, Dena Bank is giving a thrust to the growth of SMEs. In an exclusive chat with Entrepreneur,...

All you need to know about brand building for small businesses

Willem Woudenberg, CEO, Brand Dialogue

Brand building has become the catalyst for a company to be a long-term player in this competitive world. As companies try to win more...

How Mahindra Samriddhi is making farmers a self-reliant entrepreneur

Ashok Sharma, CEO - Agri & Allied Businesses, M&M

In an interaction with EntrepreneurIndia.com, Ashok Sharma, CEO - Agri & Allied Businesses, Mahindra and Mahindra, talks about...

Education has no role in entrepreneurship: Murali Bukkapatnam, President, TiE Hyderabad

Murali Bukkapatnam, President, TiE Hyderabad

In an interaction with EntrepreneurIndia.com, Murali Bukkapatnam, President, TiE Hyderabad, shares his thoughts about fostering...

MSME sector can be looked at as 'maximum skillers major employers': Sarbananda Sonowal

Sarbananda Sonowal, Minister of State for Skill Development

The mandate of the Modi government to make India a highly skilled economy and an entrepreneurial powerhouse, led to the creation of a new...

Indian entrepreneurs more open to challenges: Kalantri

Vijay Kalantri, President, All India Association of Industries (AIAI)

There are many hurdles that deprive Indian start-ups and SMEs to sustain in today’s competitive world. In an interaction with...

Excerpts of the Interview of Dr. H.P Kumar

Dr. H.P Kumar, Chairman-cum-Managing Director National Small Industries Corporation, New Delhi

National Small Industries Corporation Ltd. (NSIC), an ISO 9001 certified company, since its establishment in 1955, has been working to...

"SMEs need reliable power"

Montek Singh Ahluwalia, Deputy Chairman Planning Commission

The enormous variety of entrepreneurs in the country presents a tremendous challenge before the government to devise support strategies...

Dinesh Rai: The challenge of implementation

Dinesh Rai, Secretary, Ministry of MSME, GoI

The union budget and the Prime Minister’s Task Force has outlined several policy recommendations for the development of the MSME...

Entrepreneurial Training

Mr. Ajay Dixit, Head, The Centre for Social Entrepreneurship & CSR, EDI.

A recognised national resource institution, EDI is committed to entrepreneurship education, training and research. EDI has been...

Emerging sector important for developing nations

Michael Spence, 2001 Nobel Prize winner for economic sciences

Michael Spence, 2001 Nobel Prize winner for economic sciences, who did pioneering work on dynamics of information flow and market...

Learn to go the business way

Radha Iyer, Faculty Entrepreneurship & Human Resource Development, K.J. Somaiya Institute of Management Studies and Research

With entrepreneurship becoming the most sought after career option these days, academic institutions have also taken it up as a subject...

Govt boost to MSMEs

Madhav Lal, Addl Secy & Development Commissioner, Ministry of MSME, Government of India

In an interview with Taslima Khan, Madhav Lal, Additional Secretary and Development Commissioner, Ministry of MSME, Government of India...

Social Enterpreneurs

Ms Samapti Guha, Dean, Centre for Social Entrepreneurship, TISS

Tata Institute of Social Sciences (TISS) has always strived for excellence in higher education that continually responds to the changing...

Fostering Technical Entrepreneurship

Sushanto Mitra, Chief Executive Officer (CEO), Society for Innovation & Entrepreneurship (SINE), IIT Bombay

Society for Innovation and Entrepreneurship, at IIT Bombay, is an umbrella for promotion of technical entrepreneurship. SINE aims at...

Purposeful Entrepreneurship

Dr Krishna Tanuku, Executive Director, Wadhwani Centre for Entrepreneurship Development, ISB

Wadhwani Centre for Entrepreneurship Development at ISB (India School of Business) began last year with the view to empower and encourage...

Incubating Innovation

Mr. Pranay Gupta, Jt CEO, Centre for innovation, Incubation & Entrepreneurship (CIIE), IIM-A

IIM Ahmedabad has always fulfilled its responsibilities of being the premier management institute and so in the field of innovation and...