Given the economic distress worldwide, a sector which provides maximum employment cannot be left to fend for itself without a major transformation led by the entrepreneurs, policy makers and other support organisations. There are several innovative options that one can try at four different levels:
STIMULATING DEMAND
The demand in different group of industries will have to be stimulated using different instruments and channels. One way is by using credit to overcome the resistance for consumption among those segments that have regular income. For instance to stimulate demand in solar energy or other energy conservation products, incentives could be given to organised sector employees. However, unless market for resale is created, demand may not stimulate. Some of the ways of reducing cost are:
a. Pooling the under utilised manufacturing/fabrication capacity: Distributed manufacturing by pooling the under-utilised capacity of those whose cost is less than the lead manufacturers after taking into account the cost of logistics and transportation, offers one possibility. Commercial banks having data of such enterprises in different branches may join hands in creating knowledge network among the SSIs.
b. Dematerialising the economy: Doing an energy and material audit of the current unit to identify the redundancy, inappropriate shop floor design, sourcing and procurement procedures, waste reutilisation processes, technological bottlenecks, etc. Students of engineering colleges can be given crash course in the subject.
c. Creating industrial symbiosis: Treating clusters as ecosystems and trying to find uses of waste of one unit in another for which it becomes an input. Erkman and others had saved enormous cost in Tirupur by finding entrepreneurs to harness the heat and recycle the hot waste water after processing as input for other units.
UPGRADING TECHNOLOGY AND SKILLS
One assumes that during the economic downturn, environmental and energy concerns could not become the priority. My contention is that if competitiveness is closely tied to the conservation of energy than the true goals of competitiveness and conservation can converge.
There are about six lakh technology students who spend at least six months in their final year for doing a project. And yet, nobody knows the fate of these projects. The grassroots innovations already developed in the informal sector also do not get an opportunity for being valorised by these students. By creating a techpedia, we will solve these problems and also identify the centres of excellence among thousands of B or C level technology institutions (apart from similar hotspots in A Class institutions). Incentives and awards can be given to the students who find low-cost process and product options for the industry or add value to grassroots innovations or develop business plans to become entrepreneurs based on technologies developed by them or other students.
STIMULATING INNOVATION
Customisation offers an opportunity for small-scale shoemakers through online portals. This will help customers send a few key dimensions specified on the portal and they would get a customised shoe of the design and hues delivered to them. Customers get better comfort and the industry gets a new business opportunity. Similarly in the pharma sector, smallscale industries can easily enter into the nutraceutical business, which has enormous scope worldwide. In the process, lot of grains such as minor millets will come in demand because of higher fibre and mineral content. Some other ideas are:
a. Creating web presence for at least ten million MSMEs in twelve to fifteen months: Ministry of MSME has taken several very imaginative steps in recent past to increase the web presence. The industrial survey provides some information, which can be sanitised and offered to various portals who are willing to provide free of cost service to the SMEs for one year. It is hoped that once these units start getting orders within the country and outside, they might be able to afford the maintenance of their presence on the web. National Small Scale Industries Corporation (NSIC) has already started pooling orders and distributing the same to MSMEs.
b. Consulting, contracting and curative services in rural areas for stimulating business and growth: Way back in 1983, in a national seminar on rural credit policy chaired by then Deputy Governor, Reserve Bank, I had suggested that lot of small farmers and artisans needed services which involve tremendous transaction costs at the individual level. By pooling their demand, newer opportunities for growth could be generated. Nothing much has happened since except in the insurance sector and micro finance. The idea is that if every tractor, thresher or pump set owner has to get their machinery serviced before the season to prevent breakdowns and loss of work, the cost will be much higher. However, if service contracts can be offered through banks, which may have financed these units or otherwise, one could reduce the per-head cost drastically, improve efficiency and conserve energy.
c. Converting crisis into opportunity by utilising skills of millions of industrial workers returning to rural areas: Such an opportunity may never arise again when because of unfortunate economic depression so many trained and skilled workers would be available in rural areas but without proper use of their skills and industrial attitude. This is the time for major agro industrial and agri businesses to invest at least ten to twenty thousand crores in new small ventures. The crisis could then be overcome faster. The returnee workers could become the hub of such reconstruction efforts. Likewise, massive rural sanitation and health education campaigns can be launched on the shoulders of retrained and re-tooled workers.
CREATING NEW PARTNERSHIPS
It is ironical but true that there is no S&T (Science & Technology) policy for MSMEs focusing on their problems and emerging challenges in economically depressed times. The Ministry of MSME is seriously considering ideas about innovation and R&D promotion fund to stimulate the growth in the sector. We need several urgent interventions for revitalising MSMEs:
a. Technology audit by formal R&D institutions: All the major labs of CSIR, DST, DBT, petroleum, coal and other sectors including ICAR should be asked to take up technology audit of the MSMEs in their command areas by constituting special teams comprising retired scientists. This will not disrupt their ongoing research programmes and at the same time, life long wisdom of the senior scientists and technologists would be available to the MSMEs.
b. National Innovation and R&D Fund for MSMEs: Specific research projects emerging from such audits should be supported within a month of submission through a dedicated fund called as National Innovation and R&D Fund for MSMEs earmarked for the purpose. This Innovation Fund should also support the technologies developed in MSMEs and at grassroots level.
c. Awards for Innovations by/for MSMEs: Karnataka Council for Science and Technology and Indian Institute of Science, Bangalore has one of the most outstanding programmes for mentoring promising student projects. Every year, a large number of IISc professors personally scrutinise the best projects supported under the scheme and give awards. There is a need to replicate this programme in every state with a sharper focus on industrial and rural applications.
d. Dedicated R&D Centres for various industrial clusters: There is a need for focused R&D centres, say for ceramics, herbal drugs, auto parts, etc., devoted to address MSME problems. Additionally, existing facilities in public, private and civil society sectors should be expanded to provide time bound dedicated support.
There are a large number of other ideas that need to be tried in close consultation with MSME Associations and knowledge networks. At times like these, we have to start imperfectly and improve the ideas through constant feedback and learning as we go along. India should also consider the difficulties of other developing countries and not use protective policies to prevent small-scale industries in those countries to be adversely affected. In the process, we would have taken the leadership that many western countries through protective policies are unwilling to take. It will also make our MSMEs more efficient and globally integrated. A G2G (Grassroots to Global) perspective developed by the Honey Bee Network can provide a viable platform for linking creativity and innovation in the unorganised sector as well as MSMEs with the global markets. The experience of National Innovation Foundation (NIF) can be drawn upon and synergy can be built among different sub-systems of innovation in the near term.
I hope that MSME associations will see the writing on wall, and trigger cooperative, collaborative, creative, and compassionate innovations for their own survival but also for better conservation of environment and improved life of workers either laid off or under the threat of the same. At stake is social peace and stability.
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