NATIONAL CONSULTATIVE MEET on National Innovation Systems

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

2. 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

3. 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.

4. 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.

5. Providers of Finance & Specialised Support Services • Finance • Apex • SIDBI • Banks • Commercial Banks • Co-op Banks • RRBs • State Level • SFCs • SIDCs • SIICs • SSIDCs • Others • NABARD • EXIM BANK • NSIC • Technology Upgradation • CSIR • SIDO • SISIs • NSIC • TCOs • Industrial Inputs • NSIC • SSIDCs • DICs • Industrial Infrastructure • SIICs • SIDCs • HUDCO SSIs • Marketing • SIDO • NSIC • SSIDCs • SISIs • EPCs • Entrepreneurship Development • NISIET • NIESBUD • EDII / IEDs • SISIs • TCOs

6. 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

7. Opportunity Identification Entrepreneurial Opportunity

8. 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

9. 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

10. 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

11. Financial support for Innovation • Support extended through different windows: • Venture Capital Funding • Equity Support • Soft Assistance • Quasi equity

12. 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.

13. 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

14. 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

15. 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.

16. 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

17. 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.

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

19. 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.

20. Thank You