The Prime Minister has given a call for self-reliant Bharat, an Atmanirbhar Bharat; as a Minister for Roads and Highways and MSMEs, your task is cut out as MSMEs contribute 30% or one-third to India’s GDP. I want to understand what is your prescription for making sure that India becomes Atmanirbhar?Well, 48% of the exports are from the MSME sector and up till now, MSME has created 11 crore jobs. The most important thing is that it is related to the village industry. The turnover of the village industry up to March comes close to Rs 88,000 crore.
The Prime Minister’s dream is to make India a super economic power and a $5 trillion economy with Rs 100 lakh crore worth of infrastructure; so the MSME’s role is very important. Changing the definition of MSME is the most historical and remarkable decision for the Indian economy taken by the government under the leadership of Prime Minister.
From the last 15 years, there was discussion related to the change of definition but nothing was happening then. Earlier, there were two classification – manufacturing sector and service enterprises – but now we have merged it as one; manufacturing and servicing are now one. In the micro industry, the criteria was investment in plant and machinery equipment of Rs 25 lakh but now under the new definition, we have increased it to Rs 1 crore which is four times more.
Now whatever the situation is, we have decided to launch scrappage policy. We are in the final stage~
Regarding turnover, it was Rs 10 lakh earlier and now we have taken it Rs 5 crore. Under small industry, the investment criteria have been raised to Rs 10 crore from Rs 5 crore and turnover to Rs 15 crore from Rs 2 crore.
The most important thing is related to the medium industries where the investment was Rs 10 crore and now we have taken it to Rs 50 crore and turnover to Rs 250 crore from Rs 5 crore. Exports are the most important thing related to the Indian economy. Now the majority of industries will get the advantage of MSME.
All types of facility will be available to them and that is the most important thing. Prime Minister’s mission is that we have to make India free from unemployment. It is a big problem and whatever poverty we are facing it is because of unemployment. We need to increase employment potential, without that the Indian economy cannot go ahead.
How will you ensure that the MSMEs are self-reliant and we do not isolate our MSMEs? There has been a tremendous pressure to ensure that Indian MSMEs also come up to speed but the concern really here is that our MSMEs are not that deeply entrenched in the global supply chain. So how will you ensure that Indian MSMEs also become a part of the global supply chain?
Already the MSMEs contribute 48% to the exports of our country. I am giving you the assurance that within two years, MSMEs will contribute more than 60% to the exports. That is the way in which we are planning. We are facing a sub-period but sometimes it is a blessing in disguise. Now it is an opportunity for the MSMEs to upgrade their technology.
At the same time, we are giving a special scheme of Rs 50,000 crore to MSME. The government will support the MSMEs that have a good track record in exports, bank turnover, income tax and GST by simplification by methodology. We can give them a rating on the basis of that. We have already appointed an independent, impartial and fair committee who can give permission to them and the government will contribute. MSME department will contribute up to Rs 15 crore of equity.
Now, I am telling you a small thing, I had a discussion with an investor in Dubai and also one of the financial companies arranged a discussion with an American investor and I really appreciate the attitude and approach of the investors. In the present world situation, they are keenly interested to invest in India and this gateway of MSME is open for them.
So we will get foreign investment in MSME, we will get foreign investment in banks as well as NBFCs and also in infrastructure, road, railways, aviation, shipping, port and power and that going to increase the liquidity in the market and will help industry export more and that is exactly the way of Atmanirbhar Bharat.
You are saying that we will be attracting more investments from other nations but it seems that we want to put a halt or some sort of a full stop on investments coming in from China; how will you ensure that that happens? How will the checks and balances be maintained in areas such as MSMEs as well as the highway sector?. You recently said that with respect to investments coming in from China, India will be watching out for them very very closely.
The Indian industry, Indian infrastructure is not depending upon the Chinese investment. Majority of the investments which we are getting are from the whole world and that countries are known. Today, the whole world’s economic point of view is that they do not want to deal with China and that is a blessing in disguise for the Indian industry to get more export order.
I am giving you a small example, two months ago, we had taken a special flight to get PPE kits from China to Delhi because we had a shortage. Today our MSME industry is manufacturing 5 lakh PPSE kits per day. Today, the commerce ministry, the finance ministry is giving permission to our manufacturers to export. Our MSMEs are now exporting their PPE kits to the different parts of the world and it is exactly the way of Atmanirbhar Bharat.
But how will our country ensure that we do not turn protectionist because a lot has been talked about imposing some sort of tariff barriers? And currently, the Indian industry is heavily dependent on imports coming in from other nations. How will we ensure that our own industries’ interest does not get hurt? Look at some of the imports that we are currently getting from China; much of it is stuck at various ports due to the customs department halting these shipments as we want to take a very tough stance against China. But have we put our own industry in jeopardy? How will we ensure that protectionism does not harm our own industry?
To be very clear as I have the given example of PPE kit, you can take the example of the casting industry, particularly automobile spare parts. In India, we have the availability of all type of technology and our people are fully competent. Now is the time for major Indian industries to encourage small scale industries to fix their requirements.
Let me give you example of agarbatti sticks. We increased the 30% duty on agarbatti sticks, now Khadi Gram Udyog is going to launch a scheme for giving special machinery to the MSMEs for making agarbatti sticks and at least I am confident that within two-three months there will be employment potential. We are going to create employment for some 25 to 40 lakh people.
This is exactly what we are expecting. The things which we are importing from China, India already has got the ability to produce it. Probably, initially, there may be some rise in the rate but after that when they standardise their production and increase productivity, ultimately, it will become of reasonable value.
Now it is time for India industry to find out the way out for producing things we are importing from China. We need to upgrade the technology, reduce the cost, we have to make these things without compromising with the quality. It is a challenge for the Indian industry to manufacture all this type of items in India and as a government, we are ready to support them. We will facilitate them and we will give them all type of support in the Make in India mission.
Niti Aayog CEO Amitabh Kant said the government will ensure that they will handhold the entrepreneurs, they will handhold the small industries at this point of time but do not expect subsidies when you are saying that the Indian government will do whatever it takes to support our industries. What kind of steps are we really talking about to ensure that Indian industry also becomes globally competitive?
I am giving you an example of the automobile industry. The present turnover of the automobile industry is Rs 4,50,000 crore; this is an industry which is creating maximum employment potential in India. The exports by automobile industry are of Rs 1,45,000 crore.
Presently, all our automobile companies are producing electric bikes to cars, trucks, busses where we have import-export. I really appreciate that Bajaj Scooter and TVS Scooters are exporting 50% of their production. This is what we are expecting from the automobile industry. This industry also is going to create more ancillaries in India. I am now requesting all the major industry of automobile to not depend upon China, it is the time for the Indian economy and Indian industry to upgrade the technology.
After getting a good volume, the ancillary can reduce the cost. If the volume has increased 100%, they are all in a position to give spare parts at a reasonable price. We will be in a position to export this from India to abroad. This is exactly what we are expecting. This is possible.
India has got the talent, engineering expertise and steel power and we have got all types of technology. From a technological point of view, we can enter into a joint venture with good technology. We can get a low-cost capital investment through FDI. This is a golden opportunity and the Indian industry should take advantage of it.
You were talking about the auto sector, you speak to them very closely, you are working with the auto sector on the scrappage policy as well. Pawan Goenka, Mahindra & Mahindra boss also said that for the auto sector to be self-reliant, the OEMs and tier I suppliers will have to pledge to ensure that the components and the tooling imports are reduced to almost half in the next three years. I want to understand from you is that really possible and if yes, then what kind of policy support will be provided to the auto component manufacturers, a lot of them also come under MSMEs?
You are absolutely correct. Since the last two years, I am constantly pursuing scrapping policy but we have to take at of approvals from the different department and state governments. So, that policy was delayed. But now whatever the situation is, we have decided to launch this policy. We are in the final stage.
The problem is that because of this COVID-19 I am in Nagpur and our secretary has already prepared the draft, only after going to Delhi, I am going to clear it and we are going to declare it. So by this scrapping policy, there will be the lability of raw material such as copper, aluminium, plastic, steel and rubber and recycling will be possible through industrial clusters and by this, we can reduce the cost that Pawan Goenka was speaking about. He is absolutely correct and this can be a great achievement for the side.
We want to implement it as early as possible and that will help and support the industry to reduce their cost. They do not need to import then. So definitely, as early as possible we will make the decision and this is going to boost our automobile industry, increase their production and it will be a great advantage for our export also.
You were talking about making the Indian industry more cost-competitive but many experts believe that will not happen until and unless the government bites the bullet on critical reforms like land and labour. How will we ensure that we increase our cost competitiveness and turn this for us to turn this crisis into an opportunity?
Actually the majority of the state governments are ready to accept labour reforms, not for their existing industry but the new industry and the new investment which is coming to the state. They are ready for them but these laws are not against the labour and therefore it can be a strength for attracting foreign investment in the country. The most important thing related to the industry is foreign investment.
Secondly, I feel that India has got a huge market, the big population is the big strength for India and that is the reason majority of investors want to come to India. The skilled manpower is our strength; already our doctors and software engineers are doing excellent work in the whole world and that is the reputation of Indian people and the reason that they are now interested to come to India.
Regarding technology, we can enter into joint ventures. Take the example of EVs: Already our Indian companies have launched electric bikes, electric scooters; they are in the market. Everything is possible. Indian business and Indian engineering ability are very high. We have got the manpower. The secret behind China’s success story is making industrial clusters.
One city is only working on furniture, one is working only in LED light and allied products. So for Delhi-Mumbai express highway, where the land acquisition cost is very reasonable, NHAI has taken a decision that we will acquire the land and we will develop industrial clusters, smart cities and smart villages and the land cost is very reasonable. It is from the backward and tribal areas of Haryana, Rajasthan, Madhya Pradesh, Gujarat and Maharashtra.
I am ready to give the land for industrial clusters, MSMEs are with me and NHAI is with me. Total attitude, approach and vigil of the state government has also changed. We are going towards creating a land bank and the land will be available, it will not be a problem. There is reform in labour laws and as per the World Bank ranking, there is an ease in doing business. Our number has already increased, still, we are taking a lot of reforms. I feel that it can be possible to bring in more foreign investors to India.
You recently said that your ministry will keep Chinese players out from the new highway project and even for investments in MSMEs, Chinese investments will not be entertained. Let me play the devil’s advocate here. China has spread its tentacles very far and wide in terms of investments in other countries as well. How will you ensure in terms of checks and balances that Chinese investments are specifically kept at bay?
In infrastructure, NHAI is the most important success story of India. We have got the largest highway network in the world our economic viability on project concern is good. Today, we are concentrating on getting FDI. A 100% FDI is allowed in infrastructure. We are dealing with BRICS Bank, ADB, World Bank, pension fund, insurance fund. Already some of the proposals are in the final stages and we are making new innovative models not only DOT, PPP but different types of models.
We are going to the market and we are getting good response from global investor. We have received a lot of offers and I am quite confident that we will get foreign investment at low cost. This can be made possible in MSME also. I had video conferences with investors in America in Dubai. I observed that majority of investors are keenly interested, even in the current economic situation, to invest in India.
They believe they’ll get maximum returns on their investment in India and they are keenly interested to invest here. We are opening MSME by the stock exchange, foreign investors can invest in MSME, they can invest in NBFCs, they can invest in banks, they can invest in infrastructure. I feel it can be an opportunity for them and we will get very good response from all type of investments in infrastructure and MSME.
Do you foresee that with us trying to keep China out, there will not be any funding crunch in terms of our infrastructure sector?
I feel that there will be no problem. We do not have any big investment in infrastructure from China. Actually, because of our technical and financial prequalification, there were a lot of Chinese company. They were coming with joint ventures but now we have prohibited that. We have liberalised and diluted our norms by which India contractor will be technically and financially qualified for the big projects.
Also Read: Don’t need China or Chinese investments: Nitin Gadkari