Chennai: ADB sets aside $200 mn for SME finance in India

Chennai: The Asian Development Bank (ADB) has set aside certain amount of money between one and 200 million US dollars for SME finance in India this year. In Tamil Nadu it would focus on those industries which are growing faster and has the biggest potential for economic generation particularly textile, engineering, cars, leather, components and ancillary, says Jurgen Conrad, principal financial sector specialist, ADB.

 "We did a scope and study last year and found that infrastructure is strong in Tamil Nadu. So, this is something we have to worry a little bit less about. The State needs financial resources in two big areas - technology acquisition which means long-term investment in machinery and other technology to increase competitiveness and the value added products," he said on Thursday.

Speaking at a discussion on 'MSME driven economic development - integrating with regional and global value chains' held in connection with the second edition of the Global Investors Meet here, Conrad said Tamil Nadu also needs to provide working capital or short term capital because this is what many SMEs in the State require. "We can provide a broader policy research on what is necessary in terms of improving policy environment required for SMEs and we need to increase fairness and understanding for a solution to Tamil Nadu," he said.

 The state should concentrate on building regional value chain as this is "more realistic than global value chain." "The best way to integrate into global chain is to work with the regional partners," Conrad suggested.

Speaking on the ecosystem for successful and competitive SMEs, viz access to finance, the financial sector specialist said in India and many other countries too, he has come across targeted access to SME finance or rural SMEs, smaller ones, micro companies, first time borrowers, exported oriented SMEs or the combination of these distinct groups. "We can also offer how to raise access to finance for SMEs… What we did in Sri lanka last two years is to establish competition between financial institutions," he said.