A database for SMEs

Indian Institute of Foreign Trade (IIFT) has tied up with Tirupur Exporters Association in an attempt to develop a database of SME clusters.

K Rangarajan, head, centre for SME Studies, IIFT, said this was the first time such an attempt has been made to create a reliable database.

"We have signed an MoU with the Tirupur Exporters Association to develop a complete value chain database for SME clusters last month," he said.

IIFT has also involved the textiles committee, the statutory body under the union textile ministry in the project. The institute will make an in-depth investment and productivity analysis based on the database. It would also try to identify areas that offer optimal return on investment.

"Our main focus is to internationalise small and medium enterprises. Even under the technological upgradation fund scheme for textile and jute industries, there is difficulty in identifying areas that require investment and this is where we are stepping in," Rangarajan explained.

IIFT will collect data pertaining to the entire value chain in an SME cluster, while ensuring the confidentiality of its data.

"We willrelease only the final findings," said Rangarajan. The first set of findings from the study is likely to finalised by July, next year. The cost of the study is between Rs 25 lakh and Rs 30 lakh.

The ministry of commerce is likely to be approached to fund the project under its market access initiative scheme. Going ahead, IIFT has taken up another path- breaking initiative as it is trying to compute export compatibility index(ECI) for SME units.

Rangarajan explained that there are several rating agencies which rate a company based on its financial but this approach would encompass other major areas namely market compatibility, social compatibility and economic compatibility. It would help export oriented SME to evaluate the economic worth of any project.

"Many times, export attempt of SME units fail due to lack of proper evaluation of market requirement, relevant emerging directives and associated issues. We would look at all such areas while calculating ECI," he said. IIFT has already zeroed in on the variables that would go into the index, he said.

The project is likely to be launched sometime in November 2006. "We would be rating three to four units at our own cost. Otherwise, the cost for evaluating the index for a SME with 5-10 years of existence could be around Rs 50,000," Rangarajan said.