If one organization truly believes in the motto ‘Small is big’ it is the National Small Industries Corporation (NSIC). NSIC has worked untiringly towards making a success story of the small and medium enterprises. The ‘Mini-Ratna’ public sector enterprise under the Micro, Small and Medium Enterprises (MSME) ministry has found new energy and drive in its endeavor with the NDA government being committed to harness the true potential of the sector. NSIC Chairman & Managing Director, Ravindra Nath, has his task cut. He has got his strategy right and now awaits the big Budget push to the sector. In a freewheeling interview with SMEpost.com Editor K R Sudhaman, Nath shares his vision for a bright tomorrow for the MSME sector.

Q: What does NSIC expect from this coming budget for the development of MSME and how would NSIC take it forward?

A: NSIC has been doing a lot of innovative work for the MSMEs and even creation of new enterprises. This is where we believe the new budget should have a lot of things for the MSME sector. It should have something for the start-ups in terms of tax concessions, encouragement for investments in plant and machineries as well as availability of funds by creation of more efficacious Venture Capital Funds.

I even look forward to a bigger budget from my Ministry because I believe a lot of good work has been done under the leadership of MSME Minister Kalraj Mishra and there is a lot what can be done all across the country in terms of various areas, be it Common Facility Centers, Technological and R&D facilities, and something concrete for the start-ups.

Budget Sync for ‘Make in India’

The budget has to be in sync to what the Prime Minister (Narendra Modi) says when he talks of ‘Make in India’, ‘Digital India’ and ‘Skill India’. The budget should positively reflect the sentiments of the Prime Minister.

Q: Prime Minister Narendra Modi is going to launch ‘Start-Up India, Stand-Up India’ action plan on January 16. How do you think NSIC could collaborate with the government in promoting start-ups in the country?

A: NSIC is already into creation of enterprises by way of a scheme called ‘Rapid Incubation for Entrepreneurship Development’ which has been absorbed in the scheme of ‘ASPIRE’ by the Ministry of MSME where we have two components, Livelihood Business Incubation Centres as well as Innovation Centres.

Both these are primarily to have new enterprises off the ground. People who have ideas can go into the innovation part and people who want to learn and become entrepreneurs of tomorrow can come under the ‘Livelihood Incubation Scheme’.

Incubation Mantra

For setting up of Livelihood Business Incubation Centre, where these trainings and skills can be imparted, government has a scheme whereby plant and machinery of up to Rs 1 crore can be provided. The centre has to be set-up by any agency or any department of the Central Government or the State Government or any academic institution which is affiliated with Central or State Government.

The government needs to create more enterprises that would have the potential to create jobs. That’s where our Minister also mentions it’s from unemployment to self employment and I believe the start-ups are also moving in that direction.

Q: How can NSIC collaborate with Government of India to promote MSMEs in Africa and also to the benefit of India?

A: I always believe that for India, Africa is the best ally. We can share whatever we have learnt and experienced over these years and as a result of that even this model of Rapid Incubation Entrepreneurship was something which Ministry of External Affairs took upon and asked NSIC, under IFS-1, to set-up incubation centres in 10 different African countries.

Africa Template

We have already set it up in Ethiopia and Rwanda, and we are in the process of setting up in Zimbabwe and Egypt this year. Several other countries will follow.

Even during this recently concluded Indo-African Summit, several Heads of State of African countries participated. The ministers of Congo and certain other African countries visited us. When they found NSIC’s model of Incubation Entrepreneurship Development working, they wanted us to replicate the same in their country.

Congo has already given us the opportunity for carrying out the feasibility study which has since been carried out and provided to them. We are waiting for the execution of the setting up of Incubation centres.

All these come because of our experience when we did it with South Africa, so I believe there is a lot that can be done.

Q: Prime Minister Narendra Modi is very keen on promoting ‘Skill India’ and I believe there is some problem in getting properly trained persons for the job that is required. How do you think this problem could be dealt with, particularly in rural areas? How do you think NSIC could collaborate to make this programme successful so that proper skilled workers are available for MSMEs?

A: One of the things that the Prime Minister talks about is India’s demographic dividend. India is going to be the youngest country in the world by 2020 but that will also throw upon us a big challenge as to  how do we harness the youth.

We find there is huge skill gap. There is no sync between what the industry requires and what courses are being run by the institutions. Once you have sync with that, it can always be very fruitful to get people trained whatever be the institution.

NSIC, through its technical centres, has been engaged in imparting training. We have learnt that we should be in-tune with the times.

Partnering Industry

When I say that, the song becomes more melodious when you have the industry as well as NSIC and the trainee being on the same wavelength, that is what we started doing and today we have 60 companies coming to my Okhla centre alone for Campus recruitment.

The courses which we run are more in sync with what the industry requires. We have also started bringing industry, like recently we had Escorts collaborating with NSIC for providing training on the cranes, JCBs and similar machines. A huge boost of construction industry is going on and we don’t find people who are trained enough to run all those equipment, we thought why not collaborate with some such things.

We are in tie-up with certain other companies like ABB, Schneider, the discussion I am sure will be very fruitful and we will be having trainings imparted, which are required by industry.

We are also in similar discussions at our other centres where we do hold job melas and industry comes and picks up the trainees who learn at our centres. That is what is needed at other places also and once that happens I am sure the skill gap which the country faces shall be addressed.

Q: Funding is a major problem and MSMEs do not get money when they require. Also, they invariably depend on informal institutions for money. That means the cost of loan is very high and despite that they survive. How do you think this problem could be solved?

A: You rightly said that small enterprises depend largely on their own resources.  Despite having all the RBI priority sector guidelines in place, we still find that the MSMEs do not get what they need or what they deserve.

 I hold the reason of a trust deficit to be the major cause that both sides do not come together. There is a huge fear always lurking at the minds of a banker that if this party defaults, I would not have anything to fall back upon.

There is another scheme by which the MSME Ministry has tried to create an environment of that trust deficit getting eliminated. The scheme is called ‘Performance and Credit Rating Scheme’ where  MSMEs shall be rated by the leading rating companies like CRISIL, ICRA, CARE, Fitch, SMERA, and they can have one time subsidy on that, up to 75% of the fee , or of  Rs. 40,000.

As many as 32 banks, I believe, have tied up with various rating companies. If their clients get rated under the companies, they would definitely be considering them for interest rate concessions and I find that upto 1% interest rate concession have been offered by these banks.

Some of the recent findings by CRISIL have also said that the interest rate concessions, which are being offered by the bankers to these rating companies, are far in excess of what the subsidy that has been provided by the government on getting these units rated.

Mitigating Funding Woes

That is one method. Second method could be letting the industry associations come and play the peer pressure on their units who are defaulting and build that confidence between the banks and the units that in case of any wrong happenings they will be there to take care of that.

I think if you put in place these two things and every bank is asked to implement what the RBI has already said we will see a lot of improvement.