Innovation fund not for boosting competition among SMEs

The proposed Rs 5,000-crore India Inclusive Innovation Fund focuses on supporting enterprises that develop novel solutions primarily for weaker sections who have limited access to basic services, government said today.

The fund, however, does not aim making small and medium enterprises (SMEs) technologically better or boosting competition amongst them, Minister of State for MSME K H Muniappa informed the Lok Sabha.

"This fund would, therefore, operate as a for-profit entity with a social investment focus. The focus of the fund is not for increasing competition among the SMEs," Muniappa said in a written reply.

The National Innovation Council in collaboration with Ministry of Micro, Small and Medium Enterprises (MSME) has proposed to set up a dedicated fund in the name of India Inclusive Innovation Fund for promoting grass-root innovations with social returns as well as modest economic returns.

The total corpus of the fund is proposed to be Rs 5,000 crore of which the government contribution may be up to a maximum of only 20% or Rs 1,000 crore.

Replying to a separate query, the Minister said multi-lateral lending agency Asian Development Bank (ADB) has allocated funds to Khadi and Village Industries Commission (KVIC) for reforming the Khadi sector in the country.

"Department of Economic Affairs has arranged for an assistance of $150 million in four tranches from ADB for implementation of a comprehensive Khadi Reform and Development Programme (KRDP) through KVIC for revitalising the Khadi sector," Muniappa said.

Under KRDP, 300 Khadi institutions have been tentatively identified for reform assistance and there is provision for improved marketing and supply of quality raw materials by setting up a marketing organisation with private participation and executing Public-Private-Partnership (PPP) in central sliver plants of KVIC. The first tranche Rs 96 crore has already been released by KVIC.