Needed: A Modified industrial policy
A big cause of concern for the country is the continuous deceleration in industrial production, with manufacturing being in bad shape. Manufacturing, which is highly job-intensive, has shown a de-growth of 3.5 per cent and the overall trend of industrial production for April-November 2014 remaining negative, according to EEPC India Chairman Anupam Shah. However, thanks to some positive developments, the export sector in general and engineering exports in particular, have managed to buck the trend. While partial recovery in the US and Europe and a strong growth in other parts of the world such as Africa and Latin America have helped exports, the situation needs to be still watched with rather cautious optimism, he said.
‘Engineering exports remain the number one/two item of goods exports from India and EEPC did about $56.7 billion in 2013 despite it not being a good year. This fiscal, we hope to do much better. For April-December period of fiscal 2013-14, we have achieved $44.35 billion. The competition for the top slot is only with the petroleum products.’ He said it was a matter of great satisfaction that the Indian engineering exports have come a long way from being low at the global supply chain to mid-segment and still high on the value chain.
‘Today we are shipping some of mission critical items like aerospace and nuclear components etc.,’ he said, while pointing out that it was in this component that EEPC India, with support of Commerce Ministry, had organized the third edition of the India Engineering Outsourcing Show (IESS )in January this year. Top global firms including Swiss giant ABB, US powerhouse Cummins and Pentair, Denmark-based Danfoss, Toshiba and Kubota of Japan, Claas and Inverto of Germany, were among the 50 international companies which converged at the IESS show to explore further avenues for outsourcing their critical businesses to Indian engineering firms capable of delivering world class technology products. The show also showcased the sunrise industry of Robotics, where industrial Robots from German major Kukka and household robots of India’s home-grown Milagrow displayed their prowess.
Besides CEOs and top representatives of the front-ranking global firms and about 300 Indian companies coming together on a common platform at this Show, business inquiries worth $500 million was expected to be generated at the event held in the Bombay Exhibition Centre in North Mumbai. While manufacturing is the key to engineering exports by accounting for almost 40 per cent of exports, these exports witnessed growth of 15 per cent in December 2013 and the IESS provided a major platform not only for Indian manufacturing exports, but also global companies to explore possibilities of further integrating their value chain by tying up with vendors from across the world including Africa, ASEAN, Latin America, Gulf Cooperation Council.
With Africa being seen as the new growth engine of the world, the Indian engineering exporters are building strong networks with some of the influential organizations in the continent. COMESA — Africa’s largest economic community — was the partner region at IESS 2014 by fielding a strong sourcing team of over 100 members. Over 500 buyers from various countries in Africa, LAC, ASEAN, Gulf Cooperation Council, Europe and North America had also confirmed their participation in the Show which witnessed the presence of well known corporations like ABB — the engineering and energy equipment giant — which brought a large delegation of 87 members.
Shah said the good thing about India’s engineering exports — despite having a low base — was that an impressive expansion of business was being witnessed in some of the high tech and mission-critical items such as aircraft and spacecraft parts. ‘It sends a very positive signal about India’s capabilities to deliver mission-critical engineering materials all over the world. Though the scale is still provided by the mass items such as iron ore, non-ferrous metals, transport equipment, auto components, we are moving up the global manufacturing value chain. What is even more pleasing is the fact that engineering exports are still dominated by small and medium enterprises that are also seen on the learning curve.’
To drive home the point that India can deliver some high-tech solutions to the best of the organizations in the world, the state-owned Nuclear Power Corporation and the Army also made their strong presence felt at the Show. Several states seeking speedy industrialization — particularly among the SMEs — also fielded their delegations and these included Bihar, Madhya Pradesh, Karnataka, Tamil Nadu, Punjab and Jharkand.
He said exports for ships and boats grew by 485 per cent, while it was 678 per cent higher for critical consignment in October 2013. The spacecraft category exports shot up to $536 million in October 2013, compared to mere $92 in the previous corresponding year. The ships and boats exports saw an increase from $38 million to $295 million.
Noting that while engineering exports have done well and there is no room for complacency, Shah appealed to the Government to extend support to the EEPC by way of efficient clearances at the ports. Besides a huge amount of duty drawback pending with the Government, the engineering sector’s drawback claims alone worth Rs 2,000 crores were pending, he said while urging the Finance Ministry to restore payment of legitimate refund claims. He also appealed to the RBI and the Finance Ministry to again look at the EEPC’s demand for lower interest rates and extension of exports benefits to more sectors. Since the sector is dominated by SMEs, the loans advanced to it should be treated as priority sector, he added.
Appealing to the Government for reducing transaction costs and clearances at airports, 40 to 45 per cent exports are from SMEs who cannot afford to keep their money locked in this manner, Shah said, adding that the EEPC is targeting Green Energy, machine tools, technology upgradation since automation is the need of the hour. ‘We are competing with China in low volumes, price disadvantage and large scale production. What Government did in Textiles, it must do also in technology through the Technology Upgradation Fund, duty drawbacks. Even in downturn, SMEs exports are growing but SMEs are in big trouble and we have been requesting the Government to fast-tracking our appeals,” he said.
Shah lamented that the Skills Development Fund has not taken off and nobody knows why. Marginal inducement may not convince businesses to send their workers for skills upgradation training, he said adding that majority of engineering graduates want to join Fortune 500 companies — and not SMEs — which is a “white collar” environment where they don’t have to get their hands dirty.
Meanwhile, with the Common Market for Eastern and Southern Africa (COMESA) region being a partner in India’s largest engineering sourcing show, Indian manufacturers gained a rare opportunity to access this huge market. The COMESA region comprises 19 member states with over 450 million population, an annual import bill of $32 billion and export bill of $82 billion. It thus forms a major marketplace for both internal and external trading. In 2011, the bilateral trade between India and Africa stood at US$ 62 billion and Indian and African leaders had agreed to vastly increase bilateral trade to $90 billion by 2015. India’s total trade with COMESA region rose more than threefold from $2.55 billion in 2004-05 to $8.48 billion in 2009-10.
According to a study conducted by EXIM Bank in 2009-10, the COMESA accounted for 38.2 per cent of India’s total exports to Africa, while the region’s share in the country’s total imports from Africa stood at 13.1 per cent.
The ultimate secret to enhancing employability: All-round skill development
Education, vocational training and lifelong learning are central pillars of employability, employment of workers and sustainable enterprise development, which contribute in achieving the Millennium Development Goals to reduce poverty. Skills development is crucial for stimulating a sustainable development process and can make a contribution to facilitate the transition from the informal to the formal economy. The principles and values of decent work provide guidance for the design and delivery of skills development and are an effective way of efficiently managing socially just transitions.
The Indian Government has set a target of skilling 500 million people by 2022. The National Policy on Skill Development is aimed towards empowering all individuals through improved skills, knowledge and nationally and internationally recognized qualifications to gain access to decent employment and ensure India’s competitiveness in the global market. To be able to deliver this goal, a structured approach involving all stakeholders is imperative, but have we built adequate safeguards to ensure that manipulators and profiteers do not mould this initiative to their advantage?
In the pre-Independence era, skill was usually transferred from a father to son. However, the traditional skill sets are becoming scarcer nowadays because the earlier practice of skill transfer from father to son is dwindling. In India, a large chunk of educated and uneducated job seekers in rural and urban areas have no skills. By 2020, it is expected that 220 million students will pass out from school — out of which 150 million students will not enroll for college education. Are we doing enough to ensure that adequate opportunities are made available to them?
Since Independence India has witnessed a large number of committees and commissions to tackle this issue, which includes the efforts of the previous Government to merge the Prime Minister’s National Council on Skill Development; National Skill Development Coordination Board; and Office of Advisor to PM on Skill Development into an autonomous body called the National Skill Development Agency, which is expected to define the roadmap for Skill Development initiatives with focus on priority areas such as auto, organised retail, textiles, IT/ ITeS etc.
The ballpark figure of skilling 500 million Indians by 2022 includes skill development of 150 million by the National Skill Development Corporation (NSDC); 100 million by the Ministry of Labor; 50 million by MHRD and the rest 230 million by 21 ministries, departments and various other organisations. As they say that “the proof of the pudding is in its eating”, the ambitious policies vis-à-vis the reality on the ground called for a fact-check. The Indian IT/ ITES industry has been one of the great success stories of modern India. The Department of Electronics and Information Technology (DeitY) has put in place many schemes for capacity building and development of skills in IT and electronics and these schemes are primarily being implemented by autonomous societies under the administrative control of the Departments, such as NIELIT and C-DAC. It was heartening to note that the National Institute of Electronics and Information Technology, or NIELIT as it is popularly known, is performing yeoman service for proliferation of e-Literacy among the masses and capacity building in the area of skill development in IT and Electronics.
This organization, which was earlier known as ‘DOEACC’, has wide presence in the country, specially in the rural areas, through a network of 30 offices. NIELIT offers courses both in the formal and the non-formal sectors of education and is also one of the national examination bodies which accredit training institutions for the conduct of courses in the non-formal sector. Besides a network of own centres, NIELIT is well represented in the country through its 850+ strong network of accredited training partners and about 5000+ CCC/BCC facilitation centres. It is also undertaking the implementation of many Government projects, besides the conduct of recruitment examinations on behalf of DeitY and its attached offices like STQC Dte, CeRT-IN, NIC etc.
The vibrancy of activities in NIELIT prompted us to dig deeper. We realized that the organization has not only created an institutionalized model for the conduct of nation-wide examinations, both in the Online and the conventional modes, but has also made deep inroads to take skill development initiatives to the nook and corner of the country through synergy with other departments.
NIELIT recently diversified by introducing courses in new technologies such as Electronic System design and Manufacturing (ESDM), Geographical Information System (GIS), Cyber Security, IPR, Cloud Computing, e-Governance etc. Through the successful implementation of the PPP model, it has further extended its reach and the number of accredited training partners has increased from 500 to 850 in just a year.