UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION Project number: 160072 Development and adoption of appropriate technologies for Project title: enhancing productivity in the Indian bicycle and bicycle parts sector. Relationship to N/A integrated programme Thematic area code GC21 Starting date: 13 June 2016 Duration: 21 months Project site: Republic of India Government Department of Industrial Policy and Promotion, Government of Co-ordinating agency: India Research and Development Centre for Bicycle and Sewing Machines (RDCBSM) Counterpart: All India Cycle Manufacturers Association (AICMA), United Cycle & Parts Manufactures Association (UCPMA) Executing agency/ UNIDO cooperating agency: Project Inputs: - UNIDO inputs: - Support costs (13%): 211,965 - Counterpart inputs: 1,630,500 - Grand Total: 1,842,465 Brief description: The bicycle industry in India has been in existence since 1931 and has made a significant contribution to the Indian economy in terms of employment generation and GDP. Recent figures indicate that the sector employs around 1 million people1. According to recent data, 3,773 small units concentrated in Ludhiana, Punjab, are responsible for approximately 60% of bicycles and over 80% of requisite parts and components production. India produces 10% of the global production of bicycles, but the majority share of this is in terms of low value models. The Indian bicycle and bicycle parts sector is going through a difficult situation due to an increase in steel prices2 and the fact that progressively, more leading global manufacturers are turning to China for parts. Traditionally, the industry has concentrated its efforts on conventional indigenously developed technologies. These have limited production processes, with products being mainly the traditional types of bicycles for domestic and export market. In order to try and compete with countries such as China, which holds approximately 67 percent of the global share, and become a significant global supplier of bicycles (and high-quality parts), the sector needs a concerted intervention to invest in technology upgrading and skills development which will increase their productivity performance and 1 AICMA (All India Cycle Manufacturers Association), (2014) Cycling Report: Peddling towards a greener India, A report on promoting cycling in the country. 2 Economic Times, (2015), [http://articles.economictimes.indiatimes.com/keyword/bicycle-industry] Accessed Wed 16th September, 2015. 1 hence international competitiveness. In order to address this challenge, the project envisages upgrading of All India Cycle Manufacturers Association (AICMA), United Cycle and Parts Manufactures Association (UCPMA) and Research and Development Centre for Bicycle and Sewing Machines (RDCBSM). Bettering the technological capabilities through the transfer of relatively advanced technologies, enhancing institutional capacity through exposure to the latest management practices, skills development and building the knowledge- base. In turn, this will enable strengthened institutional support to firms. Approved: Signature: Date: Name and title: On behalf of DIPP: ___________________ __________ Ms. Ravneet Kaur, Joint Secretary, DIPP, GoI On behalf of UNIDO: ___________________ __________ Mr. Li Yong, Director General 2 Contents A. CONTEXT............................................................................................................................ 4 A.1 PROJECT ORIGIN ...................................................................................................... 4 A.2 BACKGROUND ............................................................................................................ 4 A.3 TARGET BENEFICIARIES ......................................................................................... 6 A.4 COUNTRY LEVEL COHERENCE ............................................................................ 7 B. REASONS FOR UNIDO ASSISTANCE ......................................................................... 8 C. THE PROJECT.................................................................................................................. 8 C.1. OBJECTIVE OF THE PROJECT ............................................................................. 8 C.2. THE UNIDO APPROACH.......................................................................................... 8 C.3. RBM CODE AND THEMATIC AREA CODE ........................................................ 11 C.4. EXPECTED OUTCOMES ....................................................................................... 11 C.5. OUTPUTS AND ACTIVITIES.................................................................................. 11 C.6. TIMELINE OF THE ACTIVITIES ............................................................................ 14 D. INPUTS ............................................................................................................................. 17 D.1. COUNTERPART INPUTS ....................................................................................... 17 E. BUDGET ............................................................................................................................ 19 F. COORDINATION, MONITORING, REPORTING AND EVALUATION.................... 20 G. PRIOR OBLIGATIONS AND PREREQUISITES ........................................................ 22 H. LEGAL CONTEXT ........................................................................................................... 22 Annex 1: REQUEST LETTER ............................................................................................ 23 Annex 2: PROFILE OF THOSE TO BE TRAINED .......................................................... 24 Annex 3: LOG FRAME ......................................................................................................... 25 Annex 4: COUNTERPART PROFILE ................................................................................ 27 Annex 5: POTENTIAL DESTINATION OF STUDY TOURS .......................................... 30 Annex 6: PROCUREMENT TO BE UNDERTAKEN WITHIN THE SCOPE OF THE PROJECT ............................................................................................................................... 31 Annex 7: PROCUREMENT OF RETROREFLECTIVITIYTEST EQUIPMENT FOR REFLECTORS TO BE UNDERTAKEN WITHIN THE SCOPE OF THE PROJECT .. 32 Annex 8: EQUIPMENT ALREADY PROCURED BY RDCBSM IN CONSULTATION WITH DIPP ............................................................................................................................. 33 3 A. CONTEXT A.1 PROJECT ORIGIN The project has been developed in response to a request from the State Government of Punjab to Department of Industrial Policy and Promotion (DIPP) for project intervention by UNIDO (See Annex 1). A.2 BACKGROUND The bicycle industry in India has been in existence since 1931 and has contributed significantly to the Indian economy in terms of employment generation and GDP. Recent figures indicate that the sector employs around 1 million people. According to recent data, 3,773 small units concentrated in Ludhiana, Punjab, are responsible for approximately 60% of bicycles and over 80% of requisite parts and components production. India produces 10% of the global production of bicycles, but the majority share of this is in terms of low value models. However, in recent years the Indian bicycle and bicycle parts sector has been going through a difficult situation due to an increase in steel prices3 and the fact that, progressively, more leading global manufacturers are turning to China for parts. Traditionally, the industry has concentrated its efforts on conventional indigenously developed technologies. These have limited production processes, with products being mainly the “traditional” (i.e., not racer or mountain bikes) types of bicycles for domestic and export market. Current technologies in use are inefficient leading to excessive wastage and poor quality. Table 1. Share of countries in global supply and demand Global bicycle supply Global bicycle demand China – 67% China – 30% India – 10% Europe – 20% Taiwan Province of China – 4% America – 117% Brazil – 4% India – 10% Germany – 2% Japan – 9% Japan – 1% Taiwan Province of China – 1% Others – 12% Others – 13% Source: AICMA (All India Cycle Manufacturers Association, Cycling Report, 2014) With the distinction of being the second largest bicycle producing industry after China (see Table 1), the 1.5 billion USD Indian bicycle industry produces nearly 15.5 million bicycles in 2012–13, i.e., 10% of the total bicycles manufactured globally and employs about 1 million people in the country. In India, complete bicycles are generally produced by about half a dozen medium and large scale industrial enterprises. Punjab holds an 80% share in India’s production of bicycle parts, of which Ludhiana is the hub. It is estimated that Ludhiana alone invests Rs.1,229.6 million in the bicycle sector and produces Rs.20,042.4 million annually. There are about 3,500 to 4,000 micro, small and medium sized enterprises (MSMEs) in the city that make bicycle components and provide employment to about 0.5 million people. Bicycle and parts manufacturing is also found in Mumbai, Chennai and around the Delhi region. Primarily small units supply components to original equipment manufacturers as well as to the replacement market. Figure 1 below provides a general indication of the type of product, in value terms, produced in India. 3 Economic Times, (2015), [http://articles.economictimes.indiatimes.com/keyword/bicycle-industry]