fbpx 54367-001: Strengthening MSME Cluster Ecosystem Through Institutional Network of Enterprise Development Centers | Asian Development Bank

India: Strengthening MSME Cluster Ecosystem Through Institutional Network of Enterprise Development Centers

Sovereign (Public) Project | 54367-001 Status: Proposed

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

Project Officer
Karan, Navendu South Asia Department Request for information
Country
  • India
Sector
  • Finance
 
Project Name Strengthening MSME Cluster Ecosystem Through Institutional Network of Enterprise Development Centers
Project Number 54367-001
Country India
Project Status Proposed
Project Type / Modality of Assistance Loan
Technical Assistance
Source of Funding / Amount
Loan: Strengthening MSME Cluster Ecosystem Through Institutional Network of Enterprise Development Centers
Ordinary capital resources US$ 250.00 million
TA: Strengthening MSME Ecosystem Development
Technical Assistance Special Fund US$ 1.00 million
Strategic Agendas Inclusive economic growth
Regional integration
Drivers of Change Gender Equity and Mainstreaming
Governance and capacity development
Private sector development
Sector / Subsector

Finance / Finance sector development

Gender Equity and Mainstreaming Some gender elements
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.
Impact Economic output and employment generation by micro, small, and medium-sized enterprises increased (Strategic Action Plan of the Ministry of MSME)
Outcome Competitiveness of selected MSME clusters enhanced
Outputs

EDC/NRCE network established

MSMEs' access to enterprise development services enhanced

Strategic cluster development promoted

Geographical Location Nation-wide
Safeguard Categories
Environment B
Involuntary Resettlement C
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation
Business Opportunities
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 Karan, Navendu
Responsible ADB Department South Asia Department
Responsible ADB Division Public Management, Financial Sector and Trade Division, SARD
Timetable
Concept Clearance 19 Oct 2020
Fact Finding 25 Sep 2020 to 25 Nov 2020
MRM 20 Nov 2020
Approval -
Last Review Mission -
Last PDS Update 09 Nov 2020

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Tenders

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Procurement Plan

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