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General

GTZ works hand in hand with Indian SMEs

Jan 2009

The Deutsche Gesellschaft fur Technische Zusammenarbeit (GTZ) is an international cooperation enterprise for sustainable development, operating worldwide. GTZ was established in 1975, organized as a private company owned by the German Federal Government.

GTZ works on a public benefit basis, using surplus funds exclusively for international cooperation projects. Its main client is German Federal Ministry for Economic Cooperation and Development (BMZ). Other clients are German Ministries, partner country governments and international private enterprises. Currently GTZ is implementing 2,300 development programmes in 126 countries.

India a Priority Partner:

India has been a priority partner country of German Development Cooperation for more than 40 years. GTZ has been active in India on behalf of the German Federal Ministry for economic cooperation and development (BMZ).

To address India's development priorities of sustainable and inclusive growth, GTZ's joint efforts with the partners in India currently focus on three priority sectors:

• GTZ assists Indian partners in the simultaneous improvement of both the quality and quantity of energy supply and in a most resource efficient manner.

• GTZ supports Indian efforts in addressing environmental challenges in urban, industrial and rural areas. It also supports implementation of global environmental conventions like the United Nations Frame work Convention on Climate Change (UNFCCC).

• GTZ also cooperates in financial sector reforms, in promoting SMEs and providing technical support for capacity building.

GTZ's Contribution to Indian SMEs:

The SME sector in India generates the largest number of jobs, next only to agriculture. Due to their capital intensive and high labour absorption nature, SMEs can significantly contribute towards accelerating employment generation, industrial growth and a general improvement in the economic condition of the poor.

However the enormous potential of the SME sector remains under utilized due to snags in the bureaucratic, administrative and legal frameworks which do not foster entrepreneurial initiative and the competitive capacity in the SME sector. SMEs are underserved by the banking sector which is largely composed of state banks. As per reports, the share of loans granted to SMEs by commercial banks actually declined from 15% to 11% of the total loans. As is the status quo SMEs do not have access to adequate financial services in order to modernise, make product improvements and to improve their productivity.

The agency's present objective with regard to SMEs is to strengthen growth and competitiveness of SMEs in India with benefits for business starters as well as employees and job seekers in this sector.

In order to meet its objectives, GTZ forges active relationship and communication with the Indian SME promotional system, proprietors and founders of SMEs, banks and non-bank financial institutions, SME providers, chambers and associations connected with SMEs.

In order to implement its development plans for SMEs, GTZ partners with Small Industries Development Bank of India (SIDBI), State Bank of India(SBI), Industrial Development Bank of India(IDBI), ICICI Bank Limited, SME associations and Business Development Services(BDS) Providers and Facilitators.

GTZ's promotional programmes in India are spread over different regions, addressing the concerns of different clusters. These include Pharma and Textile clusters in Hyderabad; Leather Toys, Auto Components, Pharma and Readymade Garments clusters in Indore; Ready Made Garments and Auto Component clusters in NCR and Ayurveda and Auto Components clusters in Uttarakhand.

Building the competitiveness of Hyderabad Clusters:

Pharma Industry:

The Hyderabad pharma industry with 500 units is a mammoth enterprise. It is ranked No.1 in India in terms of bulk drugs manufacturing and No.3 in formulations. The turnover of the pharma industry stands at a whopping Rs.10, 000 crore. The total investment in the industry is Rs.1500 crore providing employment to more than 1 lakh people.

“We have rendered valuable business development services to the industry in order to build the competitiveness of the pharma SMEs. This has been made possible by promoting credit linkages of SME Units with banks and FIs and enabling them to achieve quality certifications such as GMP, USFDA, Schedule M etc,” says N. Gurumurthy, Sr. Technical Specialist GTZ-SME Financing and Development Programme SMEs also receive inputs to leverage technology for enhancing their competitiveness and building up export markets.”

Textile Industry:

GTZ has provided active assistance to the textile clusters in Hyderabad to enable credit linkages of the SME units with Banks and FIs and Design Development. It also assists the units in export market facilitation, arranging buyer-seller meets and building Research and Development Centres.

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