India: Strengthening Micro, Small, and Medium Enterprises Cluster Ecosystem Through Institutional Network of Enterprise Development Centers Program
In India, there are an estimated 63.4 million MSMEs, contributing about 30% to the country's gross domestic product, 40% of exports and employing 111 million persons. Government of India is targeting to increase MSME output contribution to 50%, export contribution to 75% and employment to 150 million by 2024, in line with the target to make India a $5 trillion economy. The government has prioritized MSME promotion as part of NITI Aayog's Strategy for New [email protected], with particular emphasis on (i) easing credit availability; (ii) supporting firms to adopt Industry 4.0 practices, especially technological upgradation to enhance productivity; (iii) facilitating integration of MSMEs with apprenticeship schemes; and (iv) supporting MSME clusters with common facilities to reduce costs and improve quality.
Project Details
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Project Officer
Hoshino, Takuya
South Asia Department
Request for information -
Country/Economy
India -
Sector
- Industry and trade
Related Projects
| Project Name | Strengthening Micro, Small, and Medium Enterprises Cluster Ecosystem Through Institutional Network of Enterprise Development Centers Program | ||||
| Project Number | 54367-001 | ||||
| Country / Economy | India |
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| Project Status | Proposed | ||||
| Project Type / Modality of Assistance | Loan |
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| Source of Funding / Amount |
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| Strategic Agendas | Environmentally sustainable growth Inclusive economic growth Regional integration |
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| Drivers of Change | Gender Equity and Mainstreaming Governance and capacity development Partnerships Private sector development |
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| Sector / Subsector | Industry and trade / Small and medium enterprise development |
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| Gender Equity and Mainstreaming | Gender equity | ||||
| Description | In India, there are an estimated 63.4 million MSMEs, contributing about 30% to the country's gross domestic product, 40% of exports and employing 111 million persons. Government of India is targeting to increase MSME output contribution to 50%, export contribution to 75% and employment to 150 million by 2024, in line with the target to make India a $5 trillion economy. The government has prioritized MSME promotion as part of NITI Aayog's Strategy for New [email protected], with particular emphasis on (i) easing credit availability; (ii) supporting firms to adopt Industry 4.0 practices, especially technological upgradation to enhance productivity; (iii) facilitating integration of MSMEs with apprenticeship schemes; and (iv) supporting MSME clusters with common facilities to reduce costs and improve quality. The government's vision for MSMEs' transformation is constrained by the fact that the MSME sector in India is dominated by informal microbusinesses who lack the scale, experience, and resources to adopt latest technologies and professional business management tools for operational efficiency, and integrate with global value chains. Also, burdensome regulatory processes and insufficient institutional support for MSMEs' statutory compliances and capacity development exacerbate the operational environment for MSMEs. | ||||
| Project Rationale and Linkage to Country/Regional Strategy | MSMEs have been more severely impacted due to their (i) lack of negotiation power with large business partners, (ii) limited access to financial and managerial resources, and (iii) dependence on regular operations for survival. It is reported that nearly 50% of MSMEs had witnessed a 20%50% decline in their earnings and faced severe financial constraint in May 2020. COVID-19 pandemic has induced urgency in the government initiatives given that economic revival is contingent on MSME sector recovery. To respond to MSMEs' support needs and promote economic recovery through MSME development, the government announced Atmanibhar Bharat Abhiyaan (Self-Reliant India Mission) in May 2020. Under the Mission, a number of measures have been announced for liquidity support to MSMEs, including a 3 trillion ($40 billion) credit guarantee facility. These financial support need to be efficiently channeled to MSMEs and thereafter effectively utilized for improving their business practices to seize opportunities under a 'new normal post-COVID-19. |
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| Impact | Economic output and employment generation by micro, small, and medium-sized enterprises increased (Strategic Action Plan of the Ministry of MSME) |
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| Outcome | Competitiveness of selected MSME clusters enhanced |
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| Outputs | EDC/NRCE network established MSMEs' access to enterprise development services enhanced Strategic cluster development promoted |
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| Geographical Location | Nation-wide | ||||
| Safeguard Categories | |
|---|---|
| Environment | B |
| Involuntary Resettlement | C |
| Indigenous Peoples | B |
| Summary of Environmental and Social Aspects | |
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| Environmental Aspects | |
| Involuntary Resettlement | |
| Indigenous Peoples | |
| Stakeholder Communication, Participation, and Consultation | |
| During Project Design | |
| During Project Implementation | |
| Business Opportunities | |
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| Consulting Services | A consulting firm will be engaged using the quality and cost-based selection method with a standard quality cost ratio of 90:10. All consultants will be recruited in line with ADB's Procurement Policy (2017, as amended from time to time). |
| Procurement | The RBL program will exclude activities that involve high-value procurement contracts based on the procurement principles of the new ADB Procurement Policy (2017, as amended from time to time). |
| Responsible ADB Officer | Hoshino, Takuya |
| Responsible ADB Department | South Asia Department |
| Responsible ADB Division | Public Management, Financial Sector and Trade Division, SARD |
| Executing Agencies |
Ministry of Micro, Small and Medium Enterprises |
| Timetable | |
|---|---|
| Concept Clearance | 19 Oct 2020 |
| Fact Finding | 24 Sep 2020 to 15 Feb 2021 |
| MRM | 27 Apr 2021 |
| Approval | - |
| Last Review Mission | - |
| Last PDS Update | 20 Dec 2022 |
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Safeguard Documents See also: Safeguards
Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.
| Title | Document Type | Document Date |
|---|---|---|
| Strengthening MSME Cluster Ecosystem Through Institutional Network of Enterprise Development Centers: Draft Program Safeguard Systems Assessment | Program Safeguard Systems Assessments | Apr 2021 |
Evaluation Documents See also: Independent Evaluation
None currently available.
Related Publications
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Tenders
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Procurement Plan
None currently available.