SIDBI Announced 1000 Cr ‘Make in India’ Fund for MSMEs
The Small Industries Development Bank of India (SIDBI) has set up a Rs 1000 crore ‘Make in India’ fund for the MSMEs with the view to make them world class manufacturing hub.
Under the fund, concessional finance will be provided to the identified MSME sectors, SIDBI said while holding its seventeenth AGM on June 22, 2015 at its head-office in Lucknow.
SIDBI has completed 25 years of services to the MSME sector in addressing various credit and developmental gaps in the MSME eco-system.
The bank shared that in order to promote energy efficiency in the MSME sector, it has signed an agreement with World Bank for “Partial Risk Sharing Facility for Energy Efficiency (PRSF) Projects” with a total outlay of USD 43 million, consisting of a Guarantee fund of USD 37 million and technical assistance of a total of USD 6 million.
Make in India is Skill-ing India
A couple of days back , PM Shri Narendra Modiji launched this scheme
Some 20 odd Central Government Ministries / Departments are engaged in this effort
Many State Governments are joining forces to impart Skills Training to millions of Indian Youth
As to the number of youth planned to be trained , following figures are reported :
> 400 million by 2022
> Creation of a pool of 500 million skilled youth by 2022
> Exportable surplus of 40/50 million skilled youths
Major burden for this Herculean effort will be borne by some 11,500 ITIs ( Industrial Training Institutes ) , with a combined intake capacity of 1.6 million students per year ( most have 2 / 3 year courses )
An intake of barely 140 students per ITI per year !
But Skill India program is talking of imparting skills to some 60 million youth every year , for the next 7 years !
That would require some 4,40,000 ITIs , altogether !
Now , assuming that setting up a full-fledged ITI , would require an investment of Rs 1 Crore , we are talking of a fund of Rs 4.4 lakh*crores !
Governments ( Central + States ) don’t have that kind of money
Nor will banks lend that kind of money to anyone to set up an ITI , without assurance of adequate returns ! Banks are already bleeding with NPAs amounting to Rs 4 lakh*crores and begging the Central Government for re-capitalization !
There are two sources from where this kind of money can come from
These are :
> 100 % FDI in ITIs
> Black Money Channelizing in ITIs
To encourage Black Money to flow into this most productive and beneficial use , we must come out with an Amnesty Scheme for such investments thru SPVs.
And , whether the investment came through 100 % FDI or thru Amnesty Scheme , the income from operating an ITI , should be made tax-free for 20 years
Nothing short of an ” Out of Box ” thinking will help !
If this suggestion is implemented , I see following consequences :
> FDI INFLOW IN SERVICE SECTOR
There will be a huge inflow of FDI from Foreign Investors , who , today
earn 2 % from their bank deposits . Their investment in an Indian ITI ,
can earn them , may be , 10 % – and tax-free !
> UPGRADING OF TECHNOLOGY
Instead of finding ( in our present ITIs ) , a 20 year old lathe , we will
see most modern machines / technologies in these new ITIs
This will tremendously raise the Skill Level of graduating students – the
kind of skills which will enable students to find jobs abroad
> JOB CREATION
We should , simultaneously amend the Apprentice Act – 1951
Under the amended Act , every factory will be required to take fresh
Apprentices in the ratio of 1 : 3 ( one trainee for three permanent
employees , in each trade ) , instead of current prescribed ratio of 1:7
This will create a huge demand for ITI trained students
> COST REDUCTION
Since ITI trained apprentices are paid a stipend ( generally 20 % of the
wages paid to regular / permanent / skilled workers ) , this will sharply
reduce the manpower costs of manufacturing units
This will lead to India becoming a ” Low Cost Economy ” and increase the
competitiveness of our products , in the international markets , thereby
boosting our exports ( currently , a meager 1.7 % of World Trade ! )
This is the major reason why Foxcon ( Taiwan ) wants to put up 10
factories in India , at an investment of $ 20 billion
> ADVANTAGE , MSME
Under amended Apprentice Act , permit MSME to retain ITI trained skilled
workers , on a stipend-basis , for 4 years ( instead of current 2 years )
This lowering of wages will make MSME very competitive in their cost.
In turn , this will encourage large organized factories to outsource /
sub-contract more components to MSME , instead of manufacturing
in-house
This will result in a robust ” Supply Chain Eco-System ”
It is such an Eco-System in China , which compels Apple to have 331
Component-Suppliers in China as against ONE supplier from India !
> PRODUCT QUALITY
Product quality depends upon quality of skilled manpower coming out of
ITIs
When lakhs of ITIs are competing with one another for attracting
students , each will try to raise the quality of its training
When such highly trained students enter work force , quality of ” Make
in India ” products , is bound to rise
> PERCENTAGE OF SKILLED WORKERS
Of the total work force , percentage of skilled workers in India today , is
meager 3.5 % , as against 96 % in South Korea !
If my suggestion gets implemented , we should be able to raise this
figure to at least 50 % in next 10 years !
> DEMAND FOR TEACHERS
There will be a huge surge in demand for Highly Skilled persons to act as
teachers / trainers in 4.4 lakh ITIs
> SELF EMPLOYMENT
MUDRA bank will provide loans to ITI trained skilled workers to set up
themselves as local area Carpenters / Electricians / Plumbers / Welders /
Masons / Repairers etc
Thousands of ITI trained workers will tend to become Self Employed
You will be justified in asking :
” How do we know that your suggestion will transform India’s Unskilled
Youth into a Demographic Dividend ? ”
All I can say is :
” Luck happens when preparedness meets opportunity . If we prepare
ourselves , opportunity will arrive , sooner than later ”
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hemen parekh
18 July 2015
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