Make In India

Make in India has been launched with the major objective to focus on 25 sectors of the economy for job creation and skill enhancement. The initiative also aims at high quality standards and hopes to attract capital and technological investment in India.

But I have one fundamental question – and that is - Is Make in India just an initiative or do we mean to foster through it, a culture and spirit of entrepreneurship in our youth?

A culture that we hope will be a part of our permanent psyche. A culture that will hopefully make us the preferred designers, and manufacturers of globally competitive products, sought after for their insightful design, exemplary workmanship, uncompromising quality, competitive prices and finally delivered with a high degree of professional integrity….. A tall order…

So undoubtedly, my emphasis is on the youth rather than existing business houses. Because today’s startups will be tomorrows entrepreneurs. And remember, we are talking about creating a culture of entrepreneurship.

So to start with I think we should be introducing small courses on entrepreneurship in every vocational / every graduate level course in our colleges. Though there are almost 33 colleges offering them as a full fledges course but shouldn’t it be broken up into a smaller affordable module and disseminated all throughout the educational system? Tell them what it takes to start an enterprise, how to explore marketable ideas, how to plan for funding, how the government can help through various schemes, their paperwork, work ethic and culture, laws applicable to labor, taxation and environment and much more.

And then, what about the small entrepreneur? Whatever I have heard so far lists heavily towards the big business houses – FDI, Labor reforms, cheaper technology transfer, land acquisition for Public Partnership, etc. But in my opinion it’s also the small business enterprises that we need to look at - because it’s the individual entrepreneur who is left short-charged. Rarely does he receive good guidance and as such the startup ecosystem has long been criticized for lack of support and opportunities.

Small business operation in India has to be seen to be believed. Its carried out in ramshackle tin sheds, by lanes and alleys by a motley group of enterprising individuals, against all odds of unauthorized constructions, illegal electric connections, employing child labor / casual labor with no technical training, in filthy and inhospitable operating conditions but ironically providing livelihood to millions of people who come over from the villages in search of a living. These setups cater to the low fringes of the overall business, that is too small or uneconomical, or too specialized, for larger business houses and can include simple industries such as screen printing and chrome plating to complex industries such as die making which utilize state of the art CNC machines !!! Their products are used by the smallest manufacturing units in the country to the topmost multinationals. ( Yes, the fancy chrome plated knobs on your washing machines come from an alley in Jogeshwari in Mumbai.). And finally, their transactions are usually in cash, compliance and adherence to various laws of the land - minimal and managerial bandwidth nonexistent. They are fortunate to last a generation.

Their turnover or contribution to the Indian economy, their employment potential, and most importantly, their crucial support to our low cost structure has never been accurately measured and perhaps will never be. Yet, they form and important and integral part of our manufacturing ecosystem of the business pipeline.*

·         It is estimated that they contribute approximately 40 per cent of India's domestic production, almost 50 per cent of total exports and 45  per cent of industrial employment. More importantly, they are the second largest employers of manpower, after agriculture.

So to start with, imagine if they had access to reasonable funding, formal recognition and access to government subsidy and incentives, legal access to reasonably priced power, and access to reasonably skilled manpower, and most importantly, a formal connection with the industry so as to make them visible to the industrial world, how much it would help their cause?     

Let’s take another scenario where an educated aspiring person wishes to set up a unit.

To start with, his start-up needs precise and clear information as to what is the regulatory framework applicable to him and his business venture, what all licenses, permits, approvals, and certifications are necessary for him – along with the time frame for obtaining the above. Sadly these are quite ambiguous or widely spread out / not consolidated.

Subsidies and incentives schemes applicable from the state or central government are not prominently visible in the public domain.
So what does he do? He engages the services of some agents thriving about in the labyrinths of the ministerial corridors.

So - can we have this so called single window operation real fast? A strong network local counselor can do the job. They can be the single window operators armed with all the information, forms and procedures and can even charge a nominal fee. 

Large corporations enjoy various finance options and liberal credit terms on account of their scale, networks, and extreme leverage. The young start up on the other hand enjoys a higher interest rate on account of low bargaining power, negligible or limited access to collateral and his being perceived as a high risk.   

Can we have interest rates at some subsidized levels for giving the required boost to this lowest tier of the countries’ industries and moreover a credit policy for SME that is uniform across all lenders rather than restricted to just a few government agencies? With limited or no support from families, this would be the single most important motivator to the youth who wishes to spread his wings.

Power constitutes to almost 12 to 20% of the cost of a part. Availability of uninterrupted and reasonably priced power is the backbone for the survival of any industrial venture and also for their competitiveness. Sadly this is an area of neglect and again, the startups are at a disadvantage when compared to large corporations, who have guaranteed access the local grid or in some cases to captive power where ever permitted. And why are we forgetting the immense potential for entrepreneurship in rural India for Agricultural industries? The power situation is dismissal in rural India with over 300 million Indian citizens - one third of India's rural population - having no access to frequent electricity or intermittent and unreliable availability. 400 million Indians lose electricity access during blackouts. In short just 52.5% of rural households have access to electricity. How can the youths of our villages even dream of setting up any unit if there is no power? 

So - can we have an attractive tariff structure and guarantee uninterrupted and quality power supply all 365 days of the year?

Escalating realty rates in city hubs are driving business to the fringes of all cities. Private developers are buying up tracts of land and building industrial parks. What is the legal sanctity of these units?

So - can some governmental agency certify them for the purpose they are being sold? It would go a long way in instilling confidence in the buyers.

These new areas being developed on the fringes suffer from one another major drawback. Affordable transport connectivity – which in India is the last to catch up.

Can we have some amount of planned development for our expanding industrial hubs which takes in to account this critical factor.

Startups are unknown to the business ecosystem. Name and goodwill, so critical for repeat business is nonexistent.  Budgets are scarce for marketing and awareness creating activities. They undoubtedly need a helping hand. They need business to survive.

Can the Government help? Can the industry itself help? The various trade associations need to play an important part in nurturing startups. Or can companies help aspiring employees who show entrepreneurial ambitions, to start their own setups by introducing them as direct vendors or tier two / three vendors? Imagine the goodwill and loyalty such young employees would command.

So how do we drive, foster and sustain a culture of entrepreneurship in the youths of the country rather than resort to just an initiative limited to slogans, speeches, brand endorsements and advertisement campaigns - is something that we need to think fast and implement even faster. The youth is simply waiting.