MSME WATCH
While the Public Sector Undertakings fuel the Core of Indian Economy, the incredulously large number of Micro, Small and Medium Enterprises constitute the seamless source of employment for crores of Indians. These MSMEs can do wonders if the vast engineering talent pool of the country can be channelized to enhance their value propositions and thereby their competitive edge by pitching in with their know-how. This would need a major perception shift by building in a sense of a purpose & trust in the promise and potential of MSMEs for national development. This would also resolve the spectre of employing the over 10 lakh strong workforce of engineers coming out of colleges every year. This section would explore some of the most fascinating aspects of MSMEs from an engineers’ perspective. -Editor
PEOPLE OF TOTAL EXPORTS OF MANUFACTURING OUTPUT
ENTERPRISES
I strongly believe that only the MSME sector can make India a developed Nation Tell us more about Zee Emerging Business Forum? What has been its impact/influence on the SME sector? Emerging Business Forum is an on ground and on air TV series that provides a unique setting for engagement and exchange of ideas, and enables SME clusters to imbibe quality management processes and innovation for business growth. It is a platform where SMEs absorb success stories, best practices, and get mentoring by eminent entrepreneurs.
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You would be anchoring the Zee Emerging Business Forum’s third edition this year? What has been your experience with the SME leaders year on year? From these interactions of yours, what future do you see for SMEs? In last 2 years I’ve met more than 15,000 entrepreneurs across countries and it was an amazing experience. There were many entrepreneurs who touched my heart, I am deeply moved by their spirit of entrepreneurship. After meeting all these successful entrepreneurs, I have realized that money is never the obstacle to start a business. It’s the willpower which matters and not the resources. As of now the best example of spirit of entrepreneurship, I have seen in Tirupur. Where more than 80% of the 1st generation entrepreneurs never been to school but today they export Rs.20,000 Cr worth of knitwear products. India has got an installed capacity of producing around 14.54 engineers every year? This poses a great challenge for their due employment? What kind of career avenues can SMEs offer to this vast talent pool of engineering graduates? I have no doubt that this sector is the backbone of our economy and the future belongs to this sector. We need a country of billion entrepreneurs. There is a huge potential for all the budding engineers. We can only become a developed nation when we increase share of manufacturing sector in our GDP, which is currently just a little above 15%. With the downfall in the manufacturing sector now there is a huge gap in demand and supply, we can’t afford to become the Euro Zone. The western economies are falling due to major decline in the manufacturing sector. Therefore, the budding
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engineers can fill this gap. Government is trying its best to promote the manufacturing and the young engineers need to take advantage of the government schemes such as Credit Guarantee Scheme where banks provide a loan up to 1Cr without any collateral or security to the first generation entrepreneurs. What’s new in the third season of Zee Emerging Business Forum? How can the various engineering colleges leverage from this forum? The 3rd season of Emerging Business Forum will focus on detailed solution of specific problems of entrepreneurs. At this point, I can’t share much detail but this year I am trying to make it the biggest SME forum of India. There will be a lot of take away for the budding entrepreneurs. What makes you so passionate about the SME sector? What more is on the cards for this emerging sector? This sector is the 2nd largest employer. This is the sector, which contributes more than 45% of the total industrial output, more than 40% of direct export. These facts make me passionate for this sector. But we need better policy frame work and much better infrastructure to boost the moral of this sector. I strongly believe that only this sector can make India a developed Nation.
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“ MSME Sector is the 2nd largest employer.
45%
which contributes more than
40%
of the total industrial output, and more than of direct export Piyush Srivastava is best known for his work for the small and medium enterprises. For last 6 years Piyush is reporting the development and challenges of MSME sector. An alumnus of London School of Economics, Piyush Srivastava is currently working as a news anchor and special correspondent with Zee Business. In his 6 years of experience in journalism Piyush realized the potential of Small & Medium enterprises. He feels that this sector is the real back bone of India’s economy and it’s
”
Piyush Srivastava Special Correspondent, Zee Business www.facebook.com/engineeringwatch www.twitter.com/enggwatch
MSME WATCH
Andhra Pradesh Hyderabad Balanagar
POK
MSME
JAMMU AND KASHMIR
ENGINEERING CLUSTERS IN INDIA
JAMMU
HIMACHAL PRADESH
Batala
Bihar Barauni Chattisgarh Raipur
JALANDHAR LUDHIANA
Parwanoo Mandi Govindgarh
PUNJAB
AMBALA
PATIALA
UTTARAKHAND
Roorkee
KARNAL
HARYANA Samalkha
ARUNACHAL PRADESH
ROHTAK
DELHI
GURGAON
SIKKIM
Hathras NAGAUR
UTTAR PRADESH
AGRA
JAIPUR
ASSAM (ASOM) NAGALAND
RAJASTHAN
MEGHALAYA
BARAUNI
MANIPUR
VARANASI
Delhi Okhla Naraina Mayapuri Gujarat Ahmedabad Rajkot Bhavnagar Surat
BIHAR
TRIPURA
R A N N O F K A C H C H H
JHARKHAND
GUJARAT BHOPAL
WEST Jhalda Proper BENGAL
MADHYA PRADESH
AHMEDABAD
Jamshedpur Adityapur DEWAS
PITHAMPUR
BHAVNAGAR
CHHATTISGARH
SURAT JALGAON
NAGPUR
RAIPUR
ORISSA (ODISHA) CUTTACK
MAHARASHTRA AURANGABAD JALNA
Himachal Pradesh Parwanoo
GADCHIROLI
AHMADNAGAR
PUNE
Agricultural Implements
Hand Pumpsets
Agricultural Implements & Tractor Trailer
Handtools
Auto Components
Industrial Fasteners
Ball Bearing
Light Engineering
Bicycle Parts
M S Rods
Castings & Forging
Machine Tools
Castings & Metal Fabrication
Mechanical Engineering Equipment
Copper Coated Wires
Metal Fabrication
Cutting Tools
Nuts/Bolts
Electric Motors
Oil Mills Machinery
Electrical Equipments
Scientific Instruments
Electrical Goods
Sheetwork (Globe, Lamp)
Electronic Goods
Steel Re-rolling
Engineering & Fabrication
Surgical Instruments
Engineering Equipment
Survey Instruments
Forging
Textile Machinery
Foundry
Textile Machinery Parts Wet Grinding Machines
SANGLI
GOA
Jammu & Kashmir Jammu
BALANAGAR HYDERABAD
ANDHRA PRADESH
KHOLAPUR KOLHAPUR SINDHUDURG
HOWRAH Taltala Kalyanpur
RAJKOT
MUMBAI
MIZORAM
BOKARO
KACHCHH
YANAM (PUDUCHERRY)
Jharkhand Adityapur Bokaro Jamshedpur
BELGAUM DHARWAD
KARNATAKA
BANGALORE CHENNAI
TAMIL NADU COIMBATORE
KERALA
Haryana Karnal Faridabad Gurgaon Pinjore Samalkha Rohtak Ambala
Karnataka Dharwad Bangalore Belgaum
TIRUCHCHIRAPPALLI
Madhya Pradesh Pithampur Dewas Bhopal
Maharashtra Jalgaon Ahmednagar Aurangabad Gadchiroli Sindhudurg Mumbai Pune Jalna Kolhapur Nagpur Sangli Orissa Cuttack Punjab Jalandhar Patiala Ludhiana Batala Mandi Govindgarh Rajasthan Jaipur Nagaur Tamil Nadu Coimbatore Chennai Tiruchirappalli Uttar Pradesh Varanasi Noida Agra Ghaziabad Hathras Uttaranchal Roorkee West Bengal Howrah Jhalda Proper Taltala Kalyanpur
As per certain estimates only 2.2 lakh engineers get placed in the organized sector comprising of IT, Telecom, Core Engineering etc. out of the total pool of 10 lakh engineers graduating every year. This vast amount of left-over engineers is eventually absorbed by the mid-cap IT & ITes companies, Start-ups and the humongous MSME sector of India. We thought of seeking the views of none other than the Secretary of the Ministry of Micro Small & Medium Enterprises, Sri Vivek Rae on the prospects of Engineering Graduates in the MSME sector. As per Sri Rae, the MSME sector yields more economic value for the European Union in comparison to that of India. This reascertains the sentiment that if India has to become a developed economy, it has to channelize the creative energies of its graduating energies to empower its vast MSME sector. --Editor
What is the state of MSME sector in India vis-a-vis other advanced countries in the world? What importance do you accord to it in national development? The MSME sector in India contributes 8.5-9% of GDP while its share in the total industrial production and exports of the country stands at about 40% and 45% respectively. There are about 32 million MSME units in India employing about 73 million persons with an aggregate fixed investment of above Rs.62 billion. A like to like comparison of the Indian MSME sector with those of advanced economies such as the European Union is difficult to make owing to differences in the definition adopted for small businesses. The Indian definition uses the criterion of fixed investment in plant and machinery with manufacturing and service sector units having a fixed investment not exceeding Rs. 10 crore and Rs. 5 crore respectively falling in the MSME
Engineering Watch | December 2012
bracket. On the other hand the criterion used by the EU is employment with all units employing less than 500 workers constituting the small business segment.
synergy has become possible between SME and employment promotion policies, which underscore the critical importance of the MSME sector in national
The EU economy is more dependent on its SME sector to drive growth than the Indian economy is on its MSME sector. In spite of fewer SME units, EU SMEs employ larger number of workers at about 87 million compared to 73 million in the Indian MSME sector. Notwithstanding the differences in the definitions adopted for small businesses, it is seen that the EU economy is more dependent on its SME sector to drive growth than the Indian economy is on its MSME sector. This is reflected in the fact that the share of EU SMEs in total gross value added by EU industry is about 60 % as compared to 40% share of Indian SMEs in the country's industrial production. However Government of India is far more stretched than its EU counterpart in supporting small businesses since as compared to 32 million MSME units in India, EU has fewer SME units at about 21 million. In spite of fewer SME units, EU SMEs employ larger number of workers at about 87 million compared to 73 million in the Indian MSME sector. The comparison is somewhat anomalous as the Indian SME definition precludes all units with fixed investment above Rs. 10 crore from the MSME bracket even if such units have fewer than 500 employees. If this anomaly were to be corrected the Indian SMEs can be shown to be more labour intensive than the EU SMEs reflecting the labour abundant feature of the Indian economy. Following the announcement of the National Manufacturing Policy (NMP) in 2008, a greater convergence and
development. The NMP has set an objective to achieve a sustained growth of 12-14 % of the manufacturing sector while creating 100 million additional jobs therein by 2022. To this end the policy contains dedicated interventions for MSMEs which have been taken up by the Ministry of MSME. These include up gradation of technology and greater infusion of equity in SMEs, which would enhance growth of the MSME sector and the manufacturing sector at large. Concomitantly, workers would be trained and re-skilled to make them more employable in small businesses so that the employment target under the NMP could be realistically pursued. What type of career opportunities is available for engineering graduates in Indian MSMEs? Through the Tool Rooms, MSME Sector of India has become one of the major providers of employment for technical as well as non-technical manpower. Graduate engineers are important for the following positions: Production Supervisors Since graduate engineers are technically sound, they can guide the semi-skilled or non-skilled machine operators to meet organizational targets.
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MSME sector can be used as a stepping stone for young Engineers dreaming big in industries. The experience obtained in MSME sector can make the Young Engineers
equipped to handle tough competition in bigger firms.
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Vivek Rae Secretary MSME
December 2012 | Engineering Watch
CAREER OPPORTUNITIES FOR ENGINEERS IN MSMES Ÿ Production
Supervisors Ÿ Design Engineers Ÿ Marketing Engineers Ÿ Techno-commercial
Engineers Design Engineers T h e g ra d u a t e e n g i n e e rs a r e competent to roll out concepts in respect of new product design and development.
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opportunities in such units. Preference for work experience in large scale industries As of now, recruiters prefer engineering graduates working in large scale industries as technological challenges are perceived to be more in larger units. Industry Reputation Engineering graduates prefer to join larger firms as they find such firms more reputed than smaller units in the MSME sector. Engineering graduates may be reluctant to set up MSME units in t h e i r h o m e to w n s o w i n g to inadequate availability of necessary infrastructure facilities such as industrial plots, road, power, fiscal incentives, skilled manpower etc.
Marketing Engineers Since communication skills of graduate engineers are co m p a rat i ve l y b ette r t h a n a generalist in explaining a product, they can also be utilized for marketing jobs.
What governmental support is being provided in this respect? What have been the definitive outcomes of the same?
Techno-commercial Engineers The engineering background also helps engineers finalize commercial contracts, which involve technical specifications.
Latest technologies are adopted in MSME Tool Rooms set up by Govt. of India so that technically skilled manpower is made available to support the Indian MSMEs.
In general the MSME sector acts as a nursery for large firms by providing trained & experienced technical persons with fundamental experience of industrial sector.
Ministry of MSME is also providing free training to the SC/ST students to help the Engineering graduates from SC/ST community to get hands on practical training which will enable them join MSMEs.
What holds back the engineering graduates from joining or establishing MSMEs in their respective home towns? The main reasons that hold back engineering graduates are: Low Wages Since MSMEs invest comparatively smaller amounts in their business they are not able to pay high wages. Old Technology MSMEs are slow to adapting newer technology owing to limitation of funds and thus engineering graduates do not find ample learning
Engineering Watch | December 2012
Entrepreneurship Skill Development training (ESDP) training programmes are provided to the Engineering graduates, which, enables them to establish their own MSMEs in their respective home towns. Government has also launched UDYAMI, a help line centre, which among other things, guides prospective entrepreneurs in setting u p a b u s i n e s s a n d p ro v i d e s information on financing such as Credit Guarantee Fund Scheme for MSMEs, which provides them collateral free loans.
What are the plans of MSME to make it one of the sought after sectors for employment? MSME Tool Rooms have been set up in different parts of the country. Tool Rooms are providing consultancy services to the MSMEs in the field of tool engineering and allied fields to make them internationally competitive. MSME Tool rooms are also giving consultancy for implementation of Lean Manufacturing concepts, which reduces costs and lead times thereby making smaller units more competitive. The products/items manufactured by MSMEs are also supported for priority purchase by Government departments. What message would you like to give to budding technocrats towards opting for a career in MSMEs? MSME sector can be used as a stepping stone for young Engineers dreaming big in industries. The experience obtained in MSME sector can make the Young Engineers equipped to handle tough competition in bigger firms. There are ample opportunities for Engineering Graduates to sharpen their technical as well as commercial skills in the MSME sector.
REASON WHICH HOLD BACK ENGINEERS TO OPT FOR A CAREER IN MSMES Ÿ Low Wages Ÿ Old Technology Ÿ Preference for work experience in large scale industries Ÿ Reputation issues in working with MSMEs
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