VZCZCXRO5635
RR RUEHHM RUEHLN RUEHMA RUEHPB RUEHPOD
DE RUEHNE #3436/01 2110852
ZNR UUUUU ZZH
R 300852Z JUL 07
FM AMEMBASSY NEW DELHI
TO RUEHC/SECSTATE WASHDC 7191
INFO RUEHCI/AMCONSUL KOLKATA 0522
RUEHCG/AMCONSUL CHENNAI 1014
RUEHBI/AMCONSUL MUMBAI 0190
RUEHKP/AMCONSUL KARACHI 7978
RUEHLH/AMCONSUL LAHORE 4063
RUEHCN/AMCONSUL CHENGDU 0257
RUEHGZ/AMCONSUL GUANGZHOU 0494
RUEHHK/AMCONSUL HONG KONG 4819
RUEHGH/AMCONSUL SHANGHAI 0180
RUEHSH/AMCONSUL SHENYANG 0270
RHEBAAA/DEPT OF ENERGY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHZN/ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE

UNCLAS SECTION 01 OF 02 NEW DELHI 003436 
 
SIPDIS 
 
SENSITIVE BUT UNCLASSIFIED 
SIPDIS 
 
 
E.O. 12958: N/A 
TAGS: SENV ECON ENRG TSPL TRGY BEXP IN
SUBJECT:  INDIA: SME'S HOLD KEY TO APP SUCCESS 
 
REF A:  NEW DELHI 3262 
 
NEW DELHI 00003436  001.2 OF 002 
 
 
¶1.  (SBU) Summary:  Indian Small and Medium Enterprises (SMEs), 
which make up the bulk of Indian industry, do not understand the 
goals and processes of the Asia Pacific Partnership (APP).  Reaching 
this segment of industry through better publicity, engagement, and a 
revised proposal process will reap lasting rewards in promoting 
clean technology and reducing emissions.  End Summary. 
 
Current APP publicity has been lost on SMEs 
------------------------------------------- 
 
¶2.  (SBU) While road shows and workshops have successfully 
publicized the APP to key Government of India (GOI) officials, APP 
task force participants, and large scale enterprises, Indian firms, 
especially SMEs, which represent 60% of Indian GDP, 35% of all 
exports, and 80% of total employment, lack awareness of the APP's 
goals and processes.  Many are unfamiliar with the purpose of the 
APP and confuse it with the Clean Development Mechanism of the Kyoto 
Protocol according to both K.P. Nyati, Head of the Environment 
Policy Division at the Confederation of Indian Industry (CII), and 
Rita Choudhury, Team Leader of the Environment Division at the 
Federation of Indian Chambers of Commerce and Industry (FICCI).  In 
addition, K. Mukherjee, Deputy Director at the Associated Chambers 
of Commerce and Industry of India (ASSOCHAM), stated many Indian 
firms believe APP is a cost-sharing initiative whereby 50% of clean 
technology-related project costs would be covered by government 
agencies, in particular the USG.  Ironically, these are the only 
conduits to reach the Indian business community at large, including 
SME's.  ESTHOffs believe these issues led to the fact the majority 
of the 181 APP project proposals for India originated from U.S. 
entities such as NGOs, consultants, and academia.  Those that did 
come from India were from large, well known NGOs, industry groups 
and large corporations.  Clearly, there has been an information 
bottleneck, namely the industry bodies, in the effort to engage the 
whole of the Indian business community. 
 
Enormous Potential for Emissions Reduction among SMEs 
--------------------------------------------- -------- 
 
¶3.  (SBU) The majority of Indian businesses, particularly SMEs, 
operate on outdated technology that is both harmful to the 
environment and operationally inefficient.  While environmental 
impact could be reduced by incorporating end-of-pipe clean 
technologies, which aim at removing or transforming wastes emitted 
from the production process, these technologies do not improve 
operational efficiency and therefore add to manufacturing costs. 
Cost-effective retrofits, however, could reduce the country's energy 
use today by at least 25% and advanced technologies could reduce 
energy use growth projected through 2030 by at least 10%, according 
to Robert Taylor, a World Bank Lead Energy Specialist.  Examples of 
these energy retrofits include high efficiency lighting, air 
conditioners, boilers and waste heat recovery systems for commercial 
and public buildings, industrial plants and other facilities.  In 
May 2007, The GOI's Bureau of Energy Efficiency, in cooperation with 
the Ministry of Power and USAID, announced Energy Conservation 
Building Codes for India that set minimum guidelines for energy 
efficiency in commercial buildings.  The great number of SMEs, 
typically inefficient, provide a burgeoning market for these 
technologies while the APP could serve as a potential technology 
transfer catalyst. 
 
APP Needs Greater Publicity 
--------------------------- 
 
¶4.  (SBU) In the absence of market drivers for clean technology (Ref 
A), the APP will struggle to garner interest among Indian SMEs and 
will need improved information dissemination and outreach efforts. 
Increasing participation will first involve a mechanism that will 
provide accurate information to SMEs as well as to large 
corporations.  In addition to providing industry bodies such as CII, 
FICCI, and ASSOCHAM with the proper APP literature - in both Hindi 
and English - that stresses the increased profitability and 
efficiency gains of clean technologies, a delineated, 
action-oriented communication strategy must be developed and 
tracked.  Instead of relying on business conferences and summits in 
major cities, the usual approach of the industry bodies which seem 
to attract the same multinational corporations and senior GOI crowds 
 
NEW DELHI 00003436  002.2 OF 002 
 
 
each time, a grassroots effort directed at SMEs, smaller industry 
groups, and trade cooperatives is needed.  In addition, links to the 
APP website should be created on GOI hosted websites such as the 
Right to Information Act site as well as those of the Ministries of 
Environment and Forests, New and Renewable Energy, and 
Non-Conventional Energy Sources.  According to K. Mukherjee, these 
sites are often visited by SMEs looking for answers to their 
policy-related questions.  The APP could also be advertised in trade 
journals as well as national newspapers.  While the APP will have to 
devise a way to raise funding for this strategy, developing an 
effective method to engage the SME community will enable future 
trade and technology transfer initiatives to tap into this viable 
customer base. 
 
Increasing APP Response via the Proposal Process 
--------------------------------------------- --- 
 
¶5.  (SBU) The proposal process itself, which was thought to be 
cumbersome by several potential applicants, could be simplified to 
capture the SME market which is not accustomed to English grant 
writing or may lack access to the internet.  The APP could provide 
for regional contacts that can answer applicants' questions and in 
addition, applicants could be given the option to mail their 
proposals rather than applying online.  Nyati stated that several 
firms had expressed their frustration with the lengthy online 
application process, which, at times, would crash due to local 
connectivity issues as well as website technical problems that would 
require them to begin the application anew.  In addition, a Hindi 
version of the APP website would bring in a much broader audience. 
 
 
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