Feb 24, 2011 05:52 PM IST | Source: CNBC-TV18

SME sector: Opportunities, challenges in Coimbatore

A very illustrious panel discuss the challenges faced and the opportunities available to the SME sector in Coimbatore.

Coimbatore is one of the few big industrial towns of Tamil Nadu. The city is well connected to its region by road, rail and air. The thousands of small and tiny industries including ancillaries and jobbing units have helped Coimbatore to be recognised as a signature of South India. The industries in Coimbatore are producing a variety of engineering products and components accessories to cater to the needs of the country.  The primary capital income of Tamil Nadu comes from the output of these industries.

Popularly known as the Manchester of South India, Coimbatore is house to the textile industries, to automotive part components, technical institutes and a lot of entrepreneurs. Is Coimbatore poised to become a global manufacturing hub?

A very illustrious panel including Satya Prasad, Head, SMEAG, South, ICICI Bank, K Elango, Joint Managing Director, RSM Autocars Limited, S Ravi, MD, Craftsman Automation, Dr PK Ananta Narayanan, member, ASMU, member, central manufacturing technology institute Bangalore and P Thiruvengadam, Senior Director Management Consultancy Services Deloitte Touche and a representative of our feature SME, discuss the challenges faced and the opportunities available to the SME sector in Coimbatore.

Below is a verbatim transcript of the exclusive interview on CNBC-TV18. Also watch the accompanying videos.

Q: What is it about Coimbatore as a cluster that has led to the flourishing of your company?

Ravi: Looking at what has happened in the last 25 years, Coimbatore was in much better position compared to its other peers in the other regions. If you look at the North, Delhi was not an industry area. We had Rajkot, we had Ludhiana and Jalandhar making economical products, good entrepreneurs. So, looking back, I would say Coimbatore is the best possible area to be in at that particular point of time.

We had a world class textile machinery manufacturing company with technology from Europe, infact Swiss. We had a very enterprising group of entrepreneurs who were controlling almost 80% of the market share in the pump industry. Then we have the spinning sector. So, may be the opportunities what was there for the people in Chennai or in Bangalore, Bangalore was full of public sector companies like ISRO, HMT, you name the type of public sector, it was available there. You had lot of auto clusters available in Chennai. The entrepreneurship of Coimbatore brought Coimbatore not only map of India, but also to global map. So, the spirit was here, the fundamentals were here. So, I think Coimbatore was the right location for me at that particular point of time.

Q: Whenever we talk about engineering, foundry, we cannot but help compare it with China. Now, we know that China pretty much rules the market. They have got electricity, whereas we have to pay through our noses for power and water. At the same time, we are not completely export oriented. So does it gives us a cushion or does it completely isolate us?

Prasad: The comparison has always been very regular in terms of China and India. In the manufacturing sector how China has made rapid strides, particularly becoming the manufacturing base for the entire world. So that is one side of it. But at the same time the advantages of the engineering side, particularly on the high technology side or on the high end engineering are much better here or in terms of customisation and flexibility are required, rather than a mass scale production etc.

I think India stands out as better positioned in terms of being able to meet the customer's requirements and in terms of developing products jointly. Also, India takes an advantage because of its own inherent, engineering capabilities, and the English language advantage that it brings to the table.

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Q: Do you agree with that?

Elango: I do agree. But one thing, which is very important to understand, is that coming from your question, India as a consumer base, which has a strong consumer base, has always kept a little isolated and a little contended within. Having said this, that itself is a good foundation for a future launch. In fact on our comparative note, China has such a weak foundation on that totally depending on exports. It is a fabulous manufacturing centre, let us give it to them, but at the same time the kind of foundation which we have can put us into the next orbit in a very quick pace.

Q: When we talk about the glory of India, it is associated with IT. India shines in IT, so IT is the high point. The low point seems to be infrastructure. What is it that can be done to take India to that global level where we can build a brand India?

Thiruvengadam: You take one of the one of the key business segments in Coimbatore examples, there you can almost say the raw material is power. And power availability and the cost of this availability of power is a big question. And that impacts a very large numbers of entrepreneurs who are willing to push ahead and want to create more capacity. So, you take the entire question of power in a cluster like this I think that

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