Developing Hard and Soft Infrastructure in MSME Clusters RCM Reddy Managing Director, IL&FS Clusters 22nd July 2010, New Delhi
Hard Cluster Common Infrastructure
Soft Infrastructure Prerequisite to sustainable hard infrastructure Strengthened institutional structures Robust implementation frameworks Mutual trust amongst cluster stakeholders Achieved through capacity building, sensitisation and awareness programmes
Approach to Infrastructure Development Graduation to Commercial Sustainability Not for profit Commercial Critical Infrastructure Soft Inputs Marketing, Credit Association SPV (Company)
Infrastructure Development Lack of Sustainable partnerships Funds through Central / State Govt Schemes and programmes Policy environment Government Bank finance/ loans Private equity Venture capital Other developmental programmes Need Willingness Banks/FIs/ Other Institutions MSMEs
Infrastructure Development Strong management support to bridge the missing link Funds through Central / State Govt Schemes and programmes Policy environment Government Bank finance/ loans Private equity Venture capital Other developmental programmes Banks/FIs/ Other Institutions Programme Management Support/ PPP models Need Willingness MSMEs
IL&FS Models for Infrastructure Development Interventions across value chain Setting up of Greenfield/ induced clusters Setting up Common Facilities in existing clusters Upgradation of infrastructure in existing clusters
Interventions across Value Chain Tripura Bamboo Mission: Case of Micro enterprise cluster A State wide initiative for Integrated Development of Bamboo Sector in Tripura Objective: Scale up the turnover from Rs 28 cr to Rs 76 cr in 4 years and double livelihoods Address entire value chain - Farm to Market Interventions covering all aspects: infrastructure, skill training, design support, market linkages, O&M support. Programme management by a professional agency and unique PPCP frameworks ensuring sustainability of initiatives
Tripura Bamboo Mission: Visuals Technology Induction Skill Training Production Infrastructure Capacity Building Market Development Institution Building
Setting up of Induced Clusters: leveraging the competitive advantages of ecosystem Industrial parks in the vicinity of existing cluster Reasonably self-sufficient clusters Product specific with units covering the value chain Need based supporting infrastructure Public-private partnership-spv owned by entrepreneurs Making the MSMEs bankable Providing critical mass for customization of services Capacity building of entrepreneurs to create social capital Handholding from concept to commissioning 10
Setting up of Induced Clusters: Palladam Hi tech Weaving Park: A case of scheme supported Infrastructure creation Location Palladam, Tamil Nadu Name of SPV Palladam Hitech Weaving Park Area Activities 65 Acres Manufacture of cotton cloth on shuttleless looms, pre-weaving, weaving, post-weaving, made-ups and garmenting units 90 Units Rs 55.42 crores ( Rs. 22.17Cr as grant from SITP of GoI and rest 60% as SPVs contribution through debt and equity). Units Project Cost Expected Employment Expected Investment Expected Turnover Direct: 2500, Indirect: 3500 Rs. 160 crores Rs. 300 crores per annum The Park was inaugurated in April 2008 Handholding of the project from concept to commissioning ensured successful execution
Site Visuals Park Entrance Training Centre Main Road Training Centre
Site Visuals Garmenting unit Weaving Unit Hostel Block
Setting up Common Facilities in existing clusters kanpur BDS programme: leveraging soft support for hard interventions
Setting up Common Facilities in existing clusters kanpur BDS programme: leveraging soft support for hard interventions From Industry Association to Formation of Project Development SPV (KLC) with UP Leather Industries as a stakeholder From soft interventions as training and skill development to hard infrastructure related interventions as CETP, testing lab etc
Upgradation of Industrial Infrastructure Vatva Industrial Estate Upgradation: Case of unique project structuring The Project Upgradation of infrastructure such as Road & SWD, Solid Waste Treatment Facility, CETP Renovation, Center of Excellence Promoters Vatva Industries Association though an SPV - Vatva Industrial Estate Infrastructure Development Limited (VEL) Financing plan ( Project cost ~ 108 Cr) IIUS Grant from DIPP CIPS Grant from State Government (back ended) Property tax collection during implementation Loans from Banks against escrow of Property tax Beneficiaries 2200 Chemical and Engineering SMEs providing employment to 100000 Unique financing structure where bank provided collateral free loan against escrow of receivables
Vatva Industrial Estate Visuals: Before and after
Key Factors for Successful Interventions Sustainable partnerships involving community Robust institutional frameworks Strong delivery mechanisms Holistic and Professional management support Government acting as facilitator
Thank you For more info visit www.ilfsclusters.com or email contact@ilfsclusters.com