Exim Bank and SIDBI jointly plan to set up an Alternative Investment Fund (AIF) to provide equity and loan advance to small and medium enterprises (SMEs), which could arise as a rising star in the export firmament. The AIF is being floated to offer impact to a scheme, declared in FY21 Union Budget, to be jointly anchored by the previously mentioned government-owned financial institutions to stretch out help to SMEs in areas, for example, pharmaceuticals, auto parts, and others for innovative technology upgradation, research and development, and business strategy, among others. This will help to generate employment opportunities and higher economic activity as well as boost India’s exports.
The plan (Ubharte Sitaare) is focused on recognizing Indian enterprises with their potential advantages in technology, processes, or production, alongside with export potential, yet has been failing to meet expectations or unable tap their dormant potential to develop. The bank is searching for a combination of loans, grants, equity, and consultancy services to assist small and medium enterprises. David Rasquinha, Managing Director, Exim Bank said that years ago, this scheme has been successfully done in Germany under the ‘Hidden Champions’ program. Korea did it with reasonable success, so the bank is trying to do it under Ubharte Sitaare scheme.
Exim Bank and SIDBI will quickly get it off the ground, after the registration of the fund is completed. According to the Budget, Rs.50 crores each will be contributed by both financial institutions to the scheme (fund). Further, Rs. 900 crores will be available from the bank for debt funding.
Rasquinha emphasized that the SME advertisers don’t need to stress over losing control if they raise equity from the fund as both Exim Bank and SIDBI are not occupied in the business of running organizations. The institutions are willing to help and support. The bank will begin in a small manner. They need to do it as a sort of proof of idea to start with and demonstrate achievement and afterward scale it up. The bank will take a look at getting different financial investors in the fund also.
