Mr Suresh Deora.

indiamarkets: Can you tell us briefly about your association ?
Deora: AIMO is one of the pioneering chambers of Indian industry and owes its existence to the deliberations held at the first All India Manufacturers’ Conference in March 1941. At the conference, a central committee of industrialists was appointed to frame the constitution of the new organisation and then prepare a plan to work for the rapid industrialisation of the country. The late Bharat Ratna, Dr (Sir) M Vivesvaraya, statesman, administrator, industrialist and pioneer of modern industrial planning, was the founder President of AIMO.

AIMO is recognised by the Government of India and is represented on many advisory committees and councils set up by the government at the central and state level. It is consulted on economic and policy planning matters. The AIMO is invited every year by the Finance Ministry to present a Pre-budget Memorandum.

The representatives and nominees of AIMO ventilate the grievances and collective problems of industrial and commercial houses and assist the government in evolving suitable modifications in its policies and programmes. In addition, AIMO works to develop at the Central and State levels a continuous rapport and dialogue between the men in authority and those in the industry. AIMO representatives meet officials from the State and Central governments regularly.

Today we have over  800 members across the country. Initially, 80 per cent of our members were big companies and 20 per cent were SMEs. As of today 80% of the members are SMEs. As a result, we have shifted our focus to the finding solutions to the problems facing the SME sector.

indiamarkets: According to you, what are the main challenges facing the SME sector today?
Deora: World-wide and even in India, SMEs are important contributors to economic growth. They have played an important role in the economic development of the country. They are providers of substantial employment. Big companies are more prone to go in for automation and have less labour-intensive processes. On the other hand, SMEs tend to go in for more labour-intensive work methods, thereby providing employment opportunity to millions of people. Besides,  they also contribute significantly to the export turnover of the country.

The world over, governments give substantial importance to the SME sector and provide the appropriate environment  to help SMEs grow. There are preferential policies for the SME sector. The laws governing the SMEs are different than those that are applicable to large companies.

However, in India, the industrial policies governing large and small companies are the same. A large organisation can afford to employ different persons to deal with the departments of Customs, Excise, Tax, Inspection etc. A small time entrepreneur does not have so much manpower. How can he be expected to operate in the same way as a large company?

The government has brought down duties on items to keep its commitments to the WTO right now though it had time till 2003 to do so. As a result, small-scale units have had no time to plan their strategy. Besides all the problems already being faced by these units, they now have to contend with cheaper imports.

Items that were reserved for the small-scale sector have been de-reserved, thereby allowing big companies to enter the fray. Hence these units have to compete with large companies. All these government policies are affecting the SMEs adversely.

indiamarkets: What are your association’s recommendations to the government in this regard?
Deora: The policies and procedures governing SMEs should to be simplified. We want the government to keep its promise of a single-window clearance system for this sector. Very often favourable laws are passed by the government but they are not implemented.

We are not against the WTO, we only want the government to provide a level playing field so that the SMEs can compete globally. One of the main hurdles faced by small companies is raising capital quickly and at an efficient rate. The entrepreneur has to encumber every asset he has to get a loan. In a way, the second generation is mortgaged to repay the debt. The government should provide funds to this sector at internationally competitive rates.

Further, the SMEs should be provided marketing support as they do not have the means or the ability to sell their products in the global market. In this regard the small-scale industry development boards need to play a more meaningful role. Bureaucratic hassles are hindering the functions of these Boards. I feel that more private sector involvement and removing bureaucratic hurdles will help make them more dynamic.

Poor infrastructure is another hurdle that has to be removed. Our contention to the government is simple, you don’t have to nurture the SMEs, just support them by providing a level playing field. Otherwise they will perish and this is already happening. If it continues unemployment figures will jump and this will affect the economy.

indiamarkets: Since so many industry-specific associations already exist, do you think AIMO can play a significant role in solving the problems of the SMEs?
Deora: Yes very much so. Most industry-specific associations do focus on specific problems,  but at the helm of such associations are the big companies that have many a times funded them. Hence these associations are sometimes more keen to get concessions that are more beneficial to the big companies rather than the small companies. The voice of the SMEs is lost. Hence it is important for the SME sector to rally together and put forth its problems through a common channel.

Actually, AIMO is already moving forth in this regard. As of now,  there are thousands of small associations that are working separately to solve the SMEs’ problems. In fact many industrial estates in India have their own association. There are many associations working for the good of the SME sector, but their voice is divided. AIMO is trying to bring all these interested associations under one umbrella to garner strength. This will make our voice stronger. When all associations make a joint representation we will get greater attention from the government.

This was demonstrated by the power loom sector. Once all the small units came together and made a joint representation they were able to get concessions in excise duty rate, power tariff etc. AIMO is better placed to carry out this task of consolidation because firstly it has a national presence and secondly it already has representation in government committees.

Just as associations like CII are working for the interest of the big companies, AIMO will work for the small companies. However we are not working against the interests of the bigger companies. All we want is a solution to the problems faced by the smaller companies through simplification of procedures, cheaper funds, marketing support etc.

indiamarkets: What are the activities and services of your association?
Deora: The association operates through 12 State and Regional Boards. The Central Board is based in Mumbai. Each state/ regional board charts out its own agenda depending on the needs of the members in that state/region. The Boards organise meetings and seminars, periodically on subjects of topical importance where government decision-makers, industrialists and professionals meet and share their thoughts. We organise seminars for providing training to government officials. The Central Board works on larger issues that are facing the sector as a whole.

We have a bimonthly newsletter that we send to all our members. We meet foreign delegations to explore the opportunities for development of exports, investment and joint collaborations. We provide library facilities to our members. We have books, journals, magazines and international directories available with us. We provide assistance to our members by solving their queries . We help our members solve any problems that they may face with government departments.

indiamarkets: What are AIMO’s  future plans?
Deora: We are planning to have an SME-specific exhibition by 2003, that will provide marketing support to the SMEs.  First, we want to bring as many SMEs together under one umbrella as possible. In January 2001, we are launching a bimonthly magazine called Industrial India. The Newsletter will be discontinued thereafter. This will contain articles, product listings, policy matters etc. By December 2000, we plan to launch our own website. The site will contain members’ listing, newsletters, buy/sell quotes. Initially the website will have the usual features. Later we plan to develop it further to suit the needs of SMEs.

Suresh Deora can be contacted at suresh@sachemicals.com

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