The Hindu Business Line : Plan to introduce IT among SMEs

The Ministry of Small Scale Industries (SSI) is planning a public-private initiative in association with the Confederation of Indian Industry (CII) and Microsoft to expose small and medium enterprises to information technology. With an outlay of Rs 100 crore, the project is billed as one that would change the face of the Indian SMEs.

"We have identified various clusters in different belts and plan to start with 10 units per cluster which would be gradually scaled up to 80 SMEs in a cluster, making a total of 800 SMEs, who would be the beneficiaries of this project. The proposed cost is about Rs 100 crore for the next five years. This would involve educating the enterprise owners, providing them with the relevant software and understanding the specific needs applicable to different industries," the Development Commisioner for SSI, Mr Jawahar Sircar, told Business Line. The draft has been prepared and will be sent to the Ministry for approval, he added.

It has been found that many SMEs are hamstrung by limited access to markets, especially overseas markets. Providing them the means to access world markets, through IT, would eliminate a major barrier and empower them to transact directly with their customers.

Programme plans

The programme, therefore, envisages intervention at four different levels — providing the units with IT infrastructure, enabling them to use different kinds of software, connecting the SMEs to the supply chain and getting them to use ERP solutions which could be at par with international practices.

In the initial stages, the programme is intended to be launched in a cluster of auto companies in Pune, a textile cluster in Tirupur, a bicycle manufacturing cluster in Ludhiana, a leather cluster in Shantiniketan and a ready-made garments cluster in Delhi amongst others.

According to Mr Sircar, the project has the objective of helping SMEs reduce their inventory costs, create value addition, increase indirect labour productivity by 10 per cent and also generate additional employment.

Local intervention

Microsoft and CII will be working with the Ministry for the project by intervening in the clusters at various levels over the next four to five years.

Policy makers feel that two factors limit SME access to skilled personnel — geographical clustering and inability to attract quality talent. Therefore, there is need to upgrade the skills of management and their existing employees to enable informed decision-making and reduce dependence on external agencies. More importantly, skills need to be locally developed and made available to clusters, in a continuous manner, through engagement with local Industrial Training Institutes (ITIs) and polytechnic training institutes.

Ms Sarita Nagpal of CII, who is associated with the project as a facilitator, said: "1600 SMEs have been identified by the Ministry of SSI of which 110 clusters have been prioritised which contributes 40-50 per cent of the total volume output and 60 per cent turnover of the entire small scale sector. The proposal for providing training to the SMEs will also be extended to the ITIs," she added.

In December 2005, Microsoft had signed an MOU with the National Manufacturing Competitiveness Council to improve the manufacturing base in the country. Microsoft has already commenced project Vikas with an investment plan of about $15 million for a period of five years in order to enhance the global competitiveness of SMEs. This would be done through a multi-pronged strategy, encompassing skill and capacity building, knowledge creation and dissemination and establishing linkages in the cluster ecosystem. Microsoft would also provide suitable hardware and software for this to the SMEs. Microsoft's involvement in the new programme would be through an extension of project Vikas.

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