Following is the text of speech of Minister of State (I /C) Skill Development, Entrepreneurship Youth Affairs & Sports Shri Sarbananda Sonowal at the first Mega MSME Fair and the session on Enterprise and Skill Development. Shri Sonowal was the Chief Guest at the event here today.
Worldwide, MSMEs have been accepted as the engine of economic growth and for promoting equitable development. MSMEs constitute over 90% of total enterprises in most of the economies. They are credited with generating the highest rates of employment growth and account for a major share of industrial production and exports.
In India too, the MSMEs play a pivotal role in the overall industrial economy of the country. It is understood that there are 44 million MSMEs in the country accounting for almost 90% of the workforce of the country in the non farm sector and more than 80% of the total number of industrial enterprises in India. In terms of value, the sector accounts for 45% of the manufacturing output and 40% of the total export of the country and employs over 6 crore people, easily the single largest contributor in terms employment generation in the manufacturing sector. The major advantage of the sector is its employment potential at low capital cost (skill development).
On an average 4 persons are employed per manufacturing MSME. MSMEs have a higher Labour to Capital ratio than large enterprises. This is due to higher employment in MSMEs because of low levels of automation and technology deployment.
One aspect often overlooked in rightfully optimistic conversations about demographics, industry and growth is that the number of local entrepreneurs being created every year in India is very low. According to a World Bank study on Entrepreneurship in 2010 which compares the new business registration density of South Asian countries with the rest of the world, it was found that contrary to popular belief, India has too few entrepreneurs for its stage of development, even compared to countries such as Thailand, Brazil & Malaysia.
The link between entrepreneurship, regional development, and job creation is very strong. But there is huge variation in entrepreneurship across states in India. Some critical factors that affect overall entrepreneurship are education and skill levels, quality of local physical infrastructure, household banking quality, business environment and investment climate.
This has been understood by our Government and a number of initiatives and reforms have been put into motion over the last 100 days. The Prime Minister in his Independence Day address stressed on the need to Make in India and to quote Millions and Millions of Indian youth should go for acquisition of skills and there should be a network across the country for this and not the archaic systems. They should acquire the skills which could contribute towards making India a modern country. Whenever they go to any country in the world, their skills must be appreciated.
I also want to create a pool of young people who are able to create jobs and the ones who are not capable of creating jobs and do not have the opportunities, they must be in a position to face their counterparts in any corner of the world while keeping their heads high by virtue of their hard work and their dexterity of hands and win the hearts of people around the world through their skills. We want to go for the capacity building of such young people. My brothers and sisters, having taken a resolve to enhance the skill development at a highly rapid pace, I want to accomplish this."
My Ministry is committed to work towards the development and execution of programmes that would ensure that the vision of the Prime Minister for Skill India is achieved.
The MSME Ministry has a number of skill development programmes which are appreciated and supported by the industry by providing employment to those who have passed out from these institutions. One such example are the tool rooms. Many of you have indicated that the number has to be increased. Our government is committed to expand the number of tool rooms in the country.
It is well known fact of appropriately skilled workforce is one of the biggest impediments for growth of MSME sector and competitiveness. Given the training needs of incremental and existing MSME workforce, skill development capacity needs to be scaled up and traditional skill delivery models and approaches need to be overhauled and aligned with requirements of unorganized workforce as well as MSME employers.
Skill development initiatives need to be integrated with secondary and intermediate level education. This will address the challenge of low education levels and also provide school dropouts with employability skills. Increased awareness of new employment opportunities based on industry requirements in domestic and international markets should be done to encourage youth to pursue non-traditional vocations. The government will take forward the implementation of the National Skill Qualification Framework.
Manufacturing is not perceived as an attractive sector for employment by youth especially those with a class 10 and above education level. Within manufacturing, the MSME segment would be least preferred due to largely unorganized form of employment and stressful working conditions. Within the MSME segment, services sector would be generally preferred by job seekers. Industry has to change this perception if you would like young persons to join your companies and stay with you.
The profile of the MSME workforce high proportion of unorganized /informal employment, low education levels (Class 8 below), irregular working hours, socially disadvantaged background results in high entry barriers for the workforce to access formal skill development institutions. MSME employers are reluctant to invest in skill building as skilled workers will demand wage premiums. Another reason for reluctance towards skill development among MSME employers is the fear of poaching of skilled employees by local competitors.
For the MSME workforce in rural and semi-urban locations, the lack of physical access to skill development institutions is an additional barrier. The penetration of skill development institutions which can impart training in skills required by local economy at block and village levels needs to be increased tremendously. Our Government will work towards enabling this to happen. The Finance Minister in his budget speech has outlined the Skill India Mission that would focus on job roles like welders, operators, plumbers, masons, cobbler and artisans etc.
The 31 Sector Skill Councils set up by the National Skill Development Corporation are in the process of developing a number of standards for different job roles. 16 sectors have already completed standards for job roles that account for 80% of the workforce in their sectors. As a mandate given to each SSC, they are to have representatives from the MSME Sector. 18 sectors have already done so and others are in the process of identifying the MSME representatives. . As you have heard over 800 such job roles have been already finalised. However, the participation of MSME employers and industry associations in the skill development has to be greatly enhanced. Simultaneously, the Sector Councils should also increase their outreach to the MSME sector. MSME sector should also engage with the SSCs. This process will result in enabling forward planning for emerging skills.
MSMEs should enlarge the areas of their engagement for example with the largely untapped but immense potential of food processing industry, because while a lot of small entrepreneurs are already engaged in identical activities, systemic interventions like planned upgradation of skills can easily align them with this sector.
Collaboration between local MSME clusters / industry associations and training institutions should be strengthened to address the employability gap. Skill development has to be tightly coupled with other cluster development initiatives. At village level, Panchayati Raj Institutions should be involved in skill development of artisans and village industry workforce.
If this is done, then the productivity and quality of products and services of the sector would improve manifold and we could realise the dream of zero defect zero effect.
The Government has introduced an amendment to the Apprenticeship Act. We need to find ways to encourage the MSME organisations to engage apprentices. The power of this idea is huge if each of the 44 million MSME organisations engages one apprentice each year for the next 8 years the target of 500 million would easily be achieved. The MSME sector could be looked at as Maximum Skillers Major Employers.
AD/
Worldwide, MSMEs have been accepted as the engine of economic growth and for promoting equitable development. MSMEs constitute over 90% of total enterprises in most of the economies. They are credited with generating the highest rates of employment growth and account for a major share of industrial production and exports.
In India too, the MSMEs play a pivotal role in the overall industrial economy of the country. It is understood that there are 44 million MSMEs in the country accounting for almost 90% of the workforce of the country in the non farm sector and more than 80% of the total number of industrial enterprises in India. In terms of value, the sector accounts for 45% of the manufacturing output and 40% of the total export of the country and employs over 6 crore people, easily the single largest contributor in terms employment generation in the manufacturing sector. The major advantage of the sector is its employment potential at low capital cost (skill development).
On an average 4 persons are employed per manufacturing MSME. MSMEs have a higher Labour to Capital ratio than large enterprises. This is due to higher employment in MSMEs because of low levels of automation and technology deployment.
One aspect often overlooked in rightfully optimistic conversations about demographics, industry and growth is that the number of local entrepreneurs being created every year in India is very low. According to a World Bank study on Entrepreneurship in 2010 which compares the new business registration density of South Asian countries with the rest of the world, it was found that contrary to popular belief, India has too few entrepreneurs for its stage of development, even compared to countries such as Thailand, Brazil & Malaysia.
The link between entrepreneurship, regional development, and job creation is very strong. But there is huge variation in entrepreneurship across states in India. Some critical factors that affect overall entrepreneurship are education and skill levels, quality of local physical infrastructure, household banking quality, business environment and investment climate.
This has been understood by our Government and a number of initiatives and reforms have been put into motion over the last 100 days. The Prime Minister in his Independence Day address stressed on the need to Make in India and to quote Millions and Millions of Indian youth should go for acquisition of skills and there should be a network across the country for this and not the archaic systems. They should acquire the skills which could contribute towards making India a modern country. Whenever they go to any country in the world, their skills must be appreciated.
I also want to create a pool of young people who are able to create jobs and the ones who are not capable of creating jobs and do not have the opportunities, they must be in a position to face their counterparts in any corner of the world while keeping their heads high by virtue of their hard work and their dexterity of hands and win the hearts of people around the world through their skills. We want to go for the capacity building of such young people. My brothers and sisters, having taken a resolve to enhance the skill development at a highly rapid pace, I want to accomplish this."
My Ministry is committed to work towards the development and execution of programmes that would ensure that the vision of the Prime Minister for Skill India is achieved.
The MSME Ministry has a number of skill development programmes which are appreciated and supported by the industry by providing employment to those who have passed out from these institutions. One such example are the tool rooms. Many of you have indicated that the number has to be increased. Our government is committed to expand the number of tool rooms in the country.
It is well known fact of appropriately skilled workforce is one of the biggest impediments for growth of MSME sector and competitiveness. Given the training needs of incremental and existing MSME workforce, skill development capacity needs to be scaled up and traditional skill delivery models and approaches need to be overhauled and aligned with requirements of unorganized workforce as well as MSME employers.
Skill development initiatives need to be integrated with secondary and intermediate level education. This will address the challenge of low education levels and also provide school dropouts with employability skills. Increased awareness of new employment opportunities based on industry requirements in domestic and international markets should be done to encourage youth to pursue non-traditional vocations. The government will take forward the implementation of the National Skill Qualification Framework.
Manufacturing is not perceived as an attractive sector for employment by youth especially those with a class 10 and above education level. Within manufacturing, the MSME segment would be least preferred due to largely unorganized form of employment and stressful working conditions. Within the MSME segment, services sector would be generally preferred by job seekers. Industry has to change this perception if you would like young persons to join your companies and stay with you.
The profile of the MSME workforce high proportion of unorganized /informal employment, low education levels (Class 8 below), irregular working hours, socially disadvantaged background results in high entry barriers for the workforce to access formal skill development institutions. MSME employers are reluctant to invest in skill building as skilled workers will demand wage premiums. Another reason for reluctance towards skill development among MSME employers is the fear of poaching of skilled employees by local competitors.
For the MSME workforce in rural and semi-urban locations, the lack of physical access to skill development institutions is an additional barrier. The penetration of skill development institutions which can impart training in skills required by local economy at block and village levels needs to be increased tremendously. Our Government will work towards enabling this to happen. The Finance Minister in his budget speech has outlined the Skill India Mission that would focus on job roles like welders, operators, plumbers, masons, cobbler and artisans etc.
The 31 Sector Skill Councils set up by the National Skill Development Corporation are in the process of developing a number of standards for different job roles. 16 sectors have already completed standards for job roles that account for 80% of the workforce in their sectors. As a mandate given to each SSC, they are to have representatives from the MSME Sector. 18 sectors have already done so and others are in the process of identifying the MSME representatives. . As you have heard over 800 such job roles have been already finalised. However, the participation of MSME employers and industry associations in the skill development has to be greatly enhanced. Simultaneously, the Sector Councils should also increase their outreach to the MSME sector. MSME sector should also engage with the SSCs. This process will result in enabling forward planning for emerging skills.
MSMEs should enlarge the areas of their engagement for example with the largely untapped but immense potential of food processing industry, because while a lot of small entrepreneurs are already engaged in identical activities, systemic interventions like planned upgradation of skills can easily align them with this sector.
Collaboration between local MSME clusters / industry associations and training institutions should be strengthened to address the employability gap. Skill development has to be tightly coupled with other cluster development initiatives. At village level, Panchayati Raj Institutions should be involved in skill development of artisans and village industry workforce.
If this is done, then the productivity and quality of products and services of the sector would improve manifold and we could realise the dream of zero defect zero effect.
The Government has introduced an amendment to the Apprenticeship Act. We need to find ways to encourage the MSME organisations to engage apprentices. The power of this idea is huge if each of the 44 million MSME organisations engages one apprentice each year for the next 8 years the target of 500 million would easily be achieved. The MSME sector could be looked at as Maximum Skillers Major Employers.
AD/