Policy & Support Mechanism: V. Chandrasekaran, Executive Director, SIDBI

NATIONAL CONSULTATIVE MEET
on
National Innovation Systems
Policy & Support Mechanism

V. Chandrasekaran,
Executive Director, SIDBI
Presentation Outline
• Innovative Systems – Issues
• Policy & Support Mechanism
• Framework for New Enterprises
• SIDBI’s Intervention
• Technology Support
• Financial Support for Innovation
• Environment Management
• Agenda for Future
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.
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.
Providers of Finance & Specialised Support
Services
Finance Technology Upgradation Industrial Inputs
Apex 1. CSIR 1. NSIC
SIDBI 2. SIDO 2. SSIDCs
Banks 3. SISIs 3. DICs
1. Commercial 4. NSIC
Banks 5. TCOs
Industrial Infrastructure
2. Co-op Banks
1. SIICs
3. RRBs SSIs
2. SIDCs
State Level
Marketing 3. HUDCO
1. SFCs
2. SIDCs 1. SIDO Entrepreneurship Development
3. SIICs 2. NSIC 1. NISIET
4. SSIDCs 3. SSIDCs 2. NIESBUD
Others 4. SISIs 3. EDII / IEDs
1. NABARD 5. EPCs 4. SISIs
2. EXIM BANK 5. TCOs
3. NSIC
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
Opportunity Identification
Need of the Resources

Society Available
Entrepreneurial
Opportunity
Capability of the
Entrepreneur
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
SIDBI’s 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
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/R&D
• Relationship with active Chambers of
Commerce/Industry
Financial support for Innovation
• Support extended through different
windows:
– Venture Capital Funding
– Equity Support
– Soft Assistance
– Quasi equity
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.
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
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
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.
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
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.
Specific Examples
• Bangalore - for recycling the electronic waste in a
• scientific
Engaged manner. The electronic waste in Bangalore
in direct interventions
• has
Contracted been
a special KfWone Environmentalof Creditthe majorEuroproblems
Line aggregating 15.23 mio
– facilitating the adoption of cleaner production technologies by the SMEs at a cost effective rate
for the
environmentalist.
– ultimate objective is to enhance the awareness towards the environmental protection among the SME units and
reducing the waste.
• Tirupur
– - textile
innovative greenfield dyeing units financed softflow HT/HP
projects financed.
– One such unit is E-Parisara Pvt. Ltd., at Bangalore which recycles the electronic waste in a scientific manner. The
Machines for hasreducing
electronic waste in Bangalore the for thewater
been one of the major problems environmentalist. waste and
This is the first unit of its
enhancing
rate to facilitate the the overall
improvement production and profitability of
kind in India. SIDBI is looking forward to finance more such facilities in other parts of the country at a cost effective
in overall environment.
• theunder
SIDBI units.the scheme has financed a couple of textile dyeing units in Tirupur by way of financing the
• production
CETP andplants profitability at
of theBangalore and Tirupur at relatively
softflow HT/HP Machines that has reduced the water waste substantially and enhanced the overall
units.
lower rate of interest.
– SSI units in particular are financially not so sound to install their own effluent treatment plant. However, they have to
• Kolkata
couple of CETP-plantsKolkata Leather Complex,
at relatively lower an
rate of interest. SIDBI is keenintegrated
comply with the Pollution Control Board norms. In order to help SSIs in complying these norms, SIDBI has financed a
at Bangalore and Tirupur to finance more such
leather complex for tannery units. The heart of the
plants in other industrial locations at a cost effective rate.
Tirupur (Textile Park)
project
– Bangalore
is the CETP.
– Kolkata (Kolkata leather Complex)
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 R&D destination
• Encourage technology oriented joint ventures.
Thank You

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NATIONAL CONSULTATIVE MEET

Policy & Support Mechanism

• Level of technological sophistication rather low in SME.

• Information gaps exist which act as barrier for SMEs to adopt

• Environment friendly and innovations projects directly

Need of the Resources

• Credit Linked Capital Subsidy Scheme

• Adoption of eco-friendly manufacturing

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