DARE - Because Entrepreneurs Do

In recent years, there has been a spurt of interest in developing and encouraging the growth of the micro, small and medium enterprises (MSME) sector in Northeast India.

The sector had been in a dismal state of stultification because of low levels of industrialisation in the region and lack of government support. The immense opportunities offered by the region remained underutilised. But now, say the entrepreneurs here, the conditions are improving. They point to the vigorous entrepreneurial activities taking place all around to illustrate their point.

These entrepreneurial activities are given a hefty boost by the vast support system that has been set up by the Ministry of Micro, Small and Medium Enterprises. Let’s take a look at some of these bodies that are changing the industrial map of the eight states that make up Northeast India.

“We have encouraging schemes for entrepreneurs under which they can avail 75 per cent reimbursement on the total cost of acquiring ISO certificates or getting barcodes” — S R Payeng Deputy Director, MSME-DI

The Micro, Small and Medium Enterprises Development Institute (MSME-DI) is one of the statutory bodies set up in Guwahati by the Ministry of Micro, Small and Medium Enterprises. The MSME-DI is involved in identifying prospective entrepreneurs and training them to set up micro and small enterprises. It has a total of six branches in Assam, Arunachal Pradesh and Meghalaya.

To encourage entrepreneurship in the region, the MSMEDI has come up with a number of schemes among which there’s one that helps existing industries acquire ISO certificates and the other assists in barcoding an entrepreneur’s products. “This is a very encouraging scheme for entrepreneurs under which they can avail 75 per cent reimbursement on the total cost of acquiring ISO certificates or getting barcodes,” says S R Payeng, Deputy Director, MSME-DI. The institute provides tool rooms, training centres, project management services and even residential accommodation to its trainee/ students.

As part of its marketing development programme, the MSME-DI is encouraging entrepreneurs to showcase their products in foreign markets. Last year, 15 entrepreneurs were sent to Japan and Korea to showcase their products. The results were very encouraging and the entrepreneurs received a healthy number of orders for their products from both countries.
A scheme called the Prime Minister’s Employment Generation Programme (PMEGP) has been started to redress the issue of unemployment in the region. Under the PMEGP, loans of up to Rs 25 lakh are provided to unemployed youth and existing entrepreneurs to help them in their business ventures.

The Northeast is still hampered by problems such as its geographical location and poor infrastructure facilities. “If the government takes up the Look East policy, then development will definitely follow. They are trying — the ministry has formed the Development of North East Region (DONER) for this,” says Mr Payeng. As of now, the DONER focuses on skill development programmes, which are being conducted in association with some private institutions. It is also seeking to create awareness among entrepreneurs in rural areas about how to conduct their business.

“NEED was started to basically help first generation entrepreneurs with their projects. Our mandate was to develop local entrepreneurship” — Olee Bora Deputy General Manager, NEDFi

The Indian Institute of Entrepreneurship (IIE) was established in Guwahati to undertake training, research and consultancy activities for micro and small enterprises, thereby playing an effective role in enterprise development. The IIE has tried to change its modus operandi by deviating from the kind of schemes it used to adopt earlier.

“I found that the IIE was doing a programme called the Rural Industries Programme with SIDBI, however, in a limited way. I was not very happy with it,” says K. Ahmed, Director, IIE. The Rural Industries Programme was started in collaboration with the Small Industries Development Bank of India (SIDBI) and helped in promoting 89 rural enterprises in Nagaon district of Assam. It then sought to go beyond just training entrepreneurs and began taking up area approach programmes which are more beneficial for entrepreneurs.

“So, we got a programme called STED (Science and Technology Entrepreneurship Development) under the Ministry of Science and Technology, in which it is mandatory that we have a two member team that will constantly interact with potential entrepreneurs, counsel them, offer them training programmes, take them to banks, provide them linkages and help them set up their units,” explains Ahmed. More emphasis was placed on developing entrepreneurship in science and technology in the small industries sector.

While the MSME-DI and the IIE focus on the small and micro enterprises sector, the National Bank for Agriculture and Rural Development (NABARD) provides funds solely to medium scale enterprises. Disbursement of credit to the micro and small enterprise sectors is negligible or almost nil. In the small enterprises sector, NABARD is involved only in the Cluster Development Programmes.

NABARD tries to focus on capacity building and training programmes. It provides grants to a few clusters in Assam. Its main aim is to identify appropriate banks for these clusters, where they can approach for credit. “We want to strengthen them so that they can serve as a model for clusters in other areas on a similar line with bank loans,” says R.M. Talukdar, Assistant General Manager, NABARD, Guwahati branch.

The North Eastern Development Finance Corporation Ltd (NEDFi) offers term loans to entrepreneurs in the sectors of infrastructure, animal husbandry, agri-horticulture and medicinal plantations, sericulture, aquaculture, and poultry and dairy.

“The North East Enterprises Development (NEED) scheme was started to basically help first generation entrepreneurs with their projects. Our mandate was to develop local entrepreneurship,” says Olee Bora, Deputy General Manager, NEDFi. When NEDFi was set up in 1995, it was on the lookout for projects in which costs were a minimum of Rs 40 lakh. At that time, there were very few first generation entrepreneurs and even fewer entrepreneurs who met their requirements. So, NEDFi initiated NEED for projects in which the costs went up to a maximum of Rs 25 lakh.

“The promoters have to bring in only 15 per cent. We are giving 25 per cent as equity, which is mostly interest free in the sense that we charge only a service charge of about 1 per cent. They can get the remaining 60 per cent as a normal loan. Thus, the promoter’s contribution is less and the effective interest comes down as well. They get a huge advantage,” says Bora.

NEDFi has also come up with the Woman Enterprises Development Scheme for projects with a maximum cost of Rs 5 lakh. There is no bar on the kind of activity taken up. “There are a number of women entrepreneurs in Meghalaya and there is a separate woman entrepreneurs’ market in Manipur,” says Bora. This organisation also has schemes that focus only on jute enterprises such as the Jute Enterprises Development Scheme.

The Assam Industrial Infrastructure Development Corporation (AIIDC) focuses on infrastructure development in Assam with an industrial perspective. It was formed with the purpose of securing and assisting in the rapid and orderly establishment of organisations and industries in industrial areas, industrial estates and growth centres and in the establishment of commercial estates for the growth of industries in Assam.

“Our vision is to establish best quality industrial infrastructure that will cater to the needs of investors not only from Assam and the Northeast, but also from other parts of India and the neighbouring Southeast Asian and South Asian countries,” says Er. Dilip Kumar Barua, Deputy General Manager, AIIDC.

There are many more organisations and schemes that cater to the needs of the entrepreneurial community in the Northeastern region of India. Ideally, they need to focus on industries that have been identified as thrust areas. Hotel and tourism related industries find place high up on the priority lists of almost all the states. These industries offer huge potential for foreign investments. Tea in Assam, spices in Meghalaya and bamboo in Nagaland are some more examples of such thrust areas.

However, the ground realities haven’t changed. People still migrate to other states after they finish school. Although the level of literacy in the region is high, the quality of education is considered low. Only those who are not fluent in either English or Hindi look for local jobs. For most people, entrepreneurship is just setting up a small store or outsourcing some items or re-selling products to make a living. Banking and financial services are still at a nascent stage. Banks such as the State Bank of India and United Bank of India have a presence, but only in the major cities. Unstable government policies pose an additional problem in some places. Extortion by local hooligans and militant insurgency also discourage many people from setting up new enterprises.

These are some problems the government agencies should take up on an urgent basis, adopting a holistic approach to take both developmental and corrective measures.