National Innovation Council to launch funds for SMEs soon

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Saurabh Gupta | 21 Nov, 2013
The National Innovation Council is in the final stages of launching the India Inclusive Innovation Fund (IIIF) for welfare of the Indian micro, small and medium enterprises (MSMEs), informed the third annual 'Report to the People' of the National Innovation Council Wednesday.

The National Innovation Council's Report to the People 2013 was presented to the President of India, Pranab Mukherjee on Wednesday in New Delhi.

After receiving the report, President Mukherjee also said, "The Council is in the final stages of launching the India Inclusive Innovation Fund (IIIF), in collaboration with the Ministry of Micro, Small and Medium Enterprises."

"This fund is the first of its kind in the world, that will back creative new solutions to developmental challenges - projects that improve quality of life for the poor. Many innovative ideas suffer due to lack of funding options. This fund, through appropriate structure, will ensure that this does not happen in India any more," said Mukherjee in his address.

A key proposal emerging from National Innovation Council deliberations: is the proposal to establish the India Inclusive Innovation Fund. This Council effort seeks to establish a Fund that will drive and catalyse the creation of an ecosystem of enterprise, entrepreneurship, and venture capital, targeted at innovative solutions for the bottom of the pyramid.

According to report, the Inclusive Innovation Fund is built on the principle that innovative enterprise can profitably, scalably, and competitively engage citizens at the bottom of the economic pyramid: and, in doing so, provide goods and services that will transform their lives for the better.

The Fund proposes to invest in a new generation of Indian entrepreneurs who will build - and are in the process of building - world class enterprises that focus on the problems of the poor, without compromising on economic success. In doing so, the Fund will help create a new Indian model of innovation: one that bridges growth and equitability.

The Fund will focus on providing risk capital funding to enterprises that create and deliver technologies and solutions aimed at enhancing the quality of life at the Bottom of the Pyramid; and - subject to applicable law - work with other funds with objectives similar to its own.

The Fund will support investment at different stages of the enterprise development cycle - from early stages, through later phases of scaling-up of potentially successful solutions and business models.

The Fund proposes to seek capital from a range of sources: seed fund contributions from the government and its agencies; contributions from various Indian public sector enterprises, banks, and so forth; and contributions from private investors, corporates and investment firms.

Crucially, the Fund will also explore the possibility of establishing 'soft' incubation capacity and resources - expertise and programmes that will support individual investee entrepreneurs and companies, in successful enterprise development and performance.

This effort will address social impact objectives, by kick-starting an ecosystem of capacity-building around BOP-focused enterprises and entrepreneurship; and economic return objectives, by providing entrepreneurial teams with the capacities needed to successfully deliver on their ideas, informed the website of National Innovation Council.

The best entrepreneurial and technological talent, across the world, has tended to focus on the problems of the rich. The Inclusive Innovation Fund will break this convention, investing in a new generation of Indian entrepreneurial talent, capable of innovating in products, processes, and business models: successfully combining profitability and business excellence, with transformational socioeconomic impact, it added.

Mukherjee in his address said, India has an estimated 5,000 small and medium scale regional industry clusters and 85,000 MSME units which are employing over 10 lakh people. "These units are not functioning at the optimal level. I am told that the National Innovation Council has been working towards the creation of an ecosystem for seeding innovations in these small and medium enterprises, by facilitating the creation of Innovation Clusters to drive job creation and productivity," said the President.

"I am happy to learn that National Innovation Council has piloted the Innovation Cluster models in 7 Micro, Small and Medium Enterprise (MSME) clusters in the past 24 months. By successfully demonstrating 10 new products, 12 new processes and 2 new centers, the MSME cluster pilots have opened the doors for positive impact in these units benefiting over a million employees."

"This initiative opens up a new window of opportunity for Small and Medium Enterprises to compete and grow using the low cost solutions," Mukherjee added.