ET Make in India SME Regional Summits: How IDBI Bank is powering Punjab's MSMEs

The textile mills of Punjab have been humming for decades, their looms weaving not just literal fabric, but the economic fabric of the region itself. From the cotton fields to synthetic yarn factories, from the workshops of Jalandhar's sports goods manufacturers to the pharmaceutical units dotting the landscape, micro, small, and medium enterprises (MSMEs) form the backbone of this industrial heartland.

But in an era of rapid digitisation, these businesses face a critical question: how do you modernise without losing your footing?

Nagaraj Garla, Executive Director of IDBI Bank, believes the answer lies in a blend of financial innovation, technology adoption, and strategic partnerships. Speaking at the ET Make in India SME Regional Summit in Chandigarh on August 7, he outlined how the bank is helping MSMEs in the region thrive in a complex business environment. Garla headlined the fireside chat, ‘Catalysing 'Make in India' Growth: IDBI Bank's Strategic Imperatives for Empowering MSMEs’.


This edition of the ET SME Summit had IDBI as banking and lending partner, and Canon as tech enabler.

The modernisation imperative
IDBI Bank has deep roots in the textile sector. "We've been associated with textile companies virtually from their inception," he stated, pointing to long-standing relationships with industry giants such as Raymond and Arvind. But it's the smaller players who need the most support in their journey from traditional to modern operations.

The bank's Technology Upgradation Fund offers a lifeline to these businesses, providing 10-year term loans coupled with capital subsidies and concessional interest rates. It's not just about upgrading machinery, but also about transforming entire business models to meet both domestic demand and global export requirements.

"The challenge isn't just about having better looms," Garla added. "It's about creating a complete ecosystem that can compete internationally while maintaining cost efficiency."

Compliance burdens
Perhaps nowhere is this challenge more acute than in the pharmaceutical sector. For large corporations, compliance with stringent regulatory requirements is manageable through dedicated teams and substantial resources. But for MSMEs, the costs are prohibitive.

Garla's solution is simple yet powerful: collaborative clusters. "MSMEs can pool resources to create shared infrastructure and handle compliance collectively," he said, citing successful examples from Faridabad and Tirupur, where common facilities coordinate with overseas regulators for product approvals.

This cluster approach reduces costs but also levels the playing field, allowing smaller companies to access the same regulatory expertise and infrastructure that their larger competitors take for granted.

The export equation
The sports goods manufacturers of Jalandhar know the global market well, but navigating international supply chains requires more than just quality products. It demands financial sophistication that many MSMEs struggle to develop in-house.

IDBI Bank's response is offering term loans for capacity expansion, pre-shipment credit, and post-shipment finance, all at concessional rates. But perhaps more importantly, the bank provides dedicated currency risk management services, a critical need in an era of volatile exchange rates.

"While large firms have in-house teams for currency management, MSMEs can rely on our experts for both RBI compliance and effective risk management," Garla explained at the ET SME Summit. Such specialised support that can make the difference between a successful export venture and a costly lesson in global economics.

Digital transformation
The most dramatic change, however, comes from the bank's embrace of digital lending technologies. Credit decisions that once took 45-60 days now happen in under an hour, sometimes within a single day. This is fundamentally changing how MSMEs access capital.

The bank's IMSME Express platform, combined with active participation in invoice discounting through TReDS and the government's GeM portal, creates a seamless financial ecosystem. For enterprises supplying to large corporations or government entities, this means immediate liquidity instead of waiting weeks or months for payments.

"Financial discipline and management are critical for MSME success," emphasised Garla. The bank's digital tools don't just provide faster credit; they help businesses better manage their cash flows and financial planning.

The innovation gap
Perhaps the most sobering statistic Garla shared is about innovation: globally, the innovation rate is around 36%, while in India, it's merely 4%. This gap, he argued, is what keeps many MSMEs at the lower end of the value chain, competing primarily on cost rather than value.

"If MSMEs focus on niche product specialisation, innovation, and global market access, we can greatly enhance competitiveness," he said. "This is key to achieving India’s $5 trillion economy goal by 2047."

Practical wisdom
As his conversation at the ET Make in India SME Regional Summit - Chandigarh came to an end, Garla shared three pillars of success that reflect years of working with businesses across sectors and scales:

• Financial discipline: Avoid over-leveraging, maintain adequate equity, and most critically, match loan tenures with asset life. "Don't use short-term funds for long-term purposes," he warned. "It creates cash flow mismatches that can sink even promising businesses."
• Industry 4.0 integration: This isn't about following trends, but about survival. Digital technologies need to be woven into the core business operations, not treated as add-ons.
• Robust networks: Success increasingly depends on partnerships, both domestic and global. No business, however innovative, can thrive in isolation.

Summing up
As Punjab's MSMEs stand at the crossroads of tradition and transformation, banks like IDBI are doing more than just providing capital. They're creating the financial infrastructure for the next phase of India's economic growth.

The state’s textile mills may still hum with the same industrial rhythm, but the businesses they house are increasingly sophisticated, globally-connected, and digitally-enabled. Whether this transformation will be enough to realise India's economic goals remains to be seen, but the blueprint, as outlined at the ET SME Summit, is clear.

In Garla's vision, success won't just be measured in rupees and exports, but in the ability of India's MSMEs to innovate, adapt, and compete on the global stage. The question isn't whether these businesses can modernise, but how quickly they can embrace the future while staying true to their entrepreneurial roots.

The ET Make in India SME Regional Summits, ET MSME Day, and ET MSME Awards are flagship initiatives to celebrate the versatility and success of India’s MSME sector. If you lead or are part of a micro, small, or medium enterprise, register for the ET MSME Awards 2025 before August 31, 2025.