Kerala ranks among the developed nations in terms of human development indices. The State has made outstanding achievements in the fields of education, health, and social welfare. Its limitation, however, continues to be its manufacturing sector. Recognising this fallacy, there has been a concerted efforted to strengthening its industries.
When we think about the manufacturing sector and development, it is hard not to make a connection to the initiative launched by the Central Government in 2016, “Make In India”, an initiative focused on attracting investments from across the globe and strengthening India’s manufacturing sector. Modelled on this, Kerala has recently launched “Make in Kerala”.
This novel initiative places special emphasis on the Micro, Small and Medium Enterprises (MSME) sector, which has emerged as a highly vibrant and dynamic sector of the Indian economy over the last five decades. MSMEs not only play a crucial role in providing extensive employment opportunities at comparatively lower capital costs than large industries but also help in the industrialisation of rural & backward areas, thereby reducing regional imbalances and assuring a more equitable distribution of national income and wealth. According to a report, the MSME sector contributes 29 per cent of the GDP and 50 per cent of the country’s total exports. This sector has the potential to spread industrial growth across the country.
Make in Kerala: Shifting Narratives
The policies adopted by the Central Government have fuelled fierce competition among States to attract investments. As a part of this, States are constantly revising their respective policies. The Make in Kerala initiative launched by the Kerala Government aims to identify the products that can be produced locally, develop the necessary infrastructure, encourage technological advancements, and promote branding and marketing of the products.
The rationale for Make in Kerala stems from the thought that the State's trade deficit can be reduced by promoting domestic production and increasing exports. The State has been importing a significant portion of its products from other states, which has been contributing to the trade deficit.
As a first step, the State, with the help of the Centre for Development Studies (CDS), has conducted detailed research and brought out a priority list of industrial products capable of being manufactured in Kerala; the State will now be focusing on promoting the said products.
The Action Plan
In an attempt to fulfil this novel goal, the government of Kerala has launched two schemes aimed at the MSME sector, namely the MSME Scale Up Mission (Mission 1000) and the Entrepreneur Support Scheme. The Scale Up Mission initiative by the Government of Kerala is aimed at uplifting 1000 Micro, Small and Medium Enterprises (MSMEs) in the State into businesses with Rs. 100 crore turnovers within four years while the Entrepreneur Support Scheme, operated by the Directorate of Industries and Commerce aims to provide financial assistance to Micro, Small and Medium Enterprises engaged in manufacturing activities in the State, proportional to the capital investment made. Depending upon the category of the investor, sector and District of investment, the unit can avail of a subsidy from 15% to 45% of the fixed capital investment. The schemes can be availed by MSMEs who fulfil the eligibility and are part of the aforementioned priority criterion, which is to be made based on the list brought out by CDS.
Challenges Ahead
Despite the concentrated effort on the part of the authorities, the MSME sector is still riddled with a myriad of issues, the most prominent of them being the lack of skilled labourers; these sectors often tend to work in certain niche areas where skilled labourers form the backbone of the industry. Most entrepreneurs conceive the idea of their enterprise with a noble cause of employing the economically weaker section. The area surrounding the enterprise is seen as the source providing the workers for the unit. But recently, entrepreneurs have faced difficulty in the running of their enterprises because of the non-availability of workers. The availability of alternate sources of income, coupled with the sporadic nature of work, pushes the workmen to choose other forms of work over the enterprise. This creates an irregularity in the number of workers at the entrepreneur’s unit, resulting in pending work logs.
Apart from this particular problem, the entrepreneurs face another issue, which is lack of awareness about the government schemes. Despite initiating numerous schemes, the fact remains that these are seldom utilised owing to the lack of knowledge. This forces these individuals to approach private entities that extend loans on tangible assets. This acts as a barrier for individuals who don’t own such assets, and it becomes particularly difficult for women entrepreneurs. Financial institutions tend to be more cautious in supporting women entrepreneurs. One reason is that the level of tangible assets held by women entrepreneurs is limited compared to the required capital. This reduces the capacity to find capital and working capital for the enterprise. Even though many schemes have been introduced for the support, there is still lack of measures to ensure proper dissemination of such support.
THE WAY FORWARD
Despite the challenges that mar it, the "Make in Kerala" initiative has shown promising success in attracting investments and promoting entrepreneurship in the State. One example of its success is the establishment of the Start-up village in Kochi, which has become a hub for innovative startups. Additionally, the government plans to make Kozhikode the next start-up destination, further bolstering the entrepreneurial ecosystem in the state.
It is important to note that the success of the "Make in Kerala" initiative, like any other initiative, depends on factors such as government policies, infrastructure development, availability of skilled workforce, and ease of doing business. It’s imperative that steps are taken in the direction of better cooperation with the entities at the grassroots level to ensure a synergy exists between the entrepreneurs and the decision-makers.
Overall, the "Make in Kerala" initiative has shown positive outcomes and continues to attract investments and promote entrepreneurship in the state.