Credit to SSIs is a continuing problem

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: on fixed assets, as the latter are considered illiquid and uncertain in value. But, there is hardly any work on collateral substitutes in India.

The role and impact of NBFCs can be significant in facilitating SMEs’ access to finance for technology upgradation and meeting short-term finance through leasing, hire-purchase and equipment finance.

The closure of the NBFC route has been a negative factor here. Add to this the fact that there are very low rewards for officers to take risk. The banks lack a ‘profit centre approach,’ a crucial requisite in a competitive world.

The capacity of SMEs for absorbing funds is very high. As the second generation reforms take root and anomalies in the fiscal regime are eliminated, SMEs would outgrow the rest of the sector and will obviously need much larger investments.

We have a small unit for producing castings. We hear that there is good potential for exports. Kindly guide us on how to enter the export market.

— T Vijay Kumar, Coimbatore

India has, indeed, become a global ‘sourcing base’ for castings and forgings. However, the dynamics of the international market are changing in this product category. Before 1998, Brazil, Korea and Mexico used to be the largest importers of castings from developing countries. Increasingly, the demand is in the developed markets of EU and the US.

You may approach the markets in two ways. One, you may get in touch with the Indo-German Chamber of Commerce, Chennai. They have market studies on castings and foundry, which would help you enter the German and European markets.

Two, try the Center for Promotion of Imports from Developing Countries, Netherlands. They have done several product-specific promotion programmes in castings & forgings. You may visit: http://www.cbi.nl.

Three, try Exim Bank, India (chenexim@vsnl.com) and get their publication ‘Castings and forgings: a sector study.

Finally, try the Engineering Export Promotion Council.

Also, for quicker results, you may participate in international trade fairs, preferably in the US and EU. Choose a product-specific fair, where your casting is used in the final product. It is also an expensive proposition. You may, however, take advantage of MDA assistance if you are a registered SSI unit.

— Anil Bhardwaj is former secretary-general, Fisme.