Make in India is Skill-ing India

Make in India is Skill-ing India

A couple of days back , PM Shri Narendra Modiji launched this scheme

Some 20 odd Central Government Ministries / Departments are engaged in this effort

Many State Governments are joining forces to impart Skills Training to millions of Indian Youth

As to the number of youth planned to be trained , following figures are reported :

>    400 million by 2022

>    Creation of a pool of 500 million skilled youth by 2022

>    Exportable surplus of 40/50 million skilled youths

Major burden for this Herculean effort will be borne by some 11,500 ITIs ( Industrial Training Institutes ) , with a combined intake capacity of 1.6 million students per year ( most have 2 / 3 year courses )

An intake of barely 140 students per ITI per year !

But Skill India program is talking of imparting skills to some 60 million youth every year , for the next 7 years  !

That would require some  4,40,000  ITIs , altogether  !

Now , assuming that setting up a full-fledged ITI , would require an investment of Rs 1 Crore , we are talking of a fund of Rs 4.4 lakh*crores  !

Governments ( Central + States ) don't have that kind of money

Nor will banks lend that kind of money to anyone to set up an ITI , without assurance of adequate returns ! Banks are already bleeding with NPAs amounting to Rs 4 lakh*crores and begging the Central Government for re-capitalization  !

There are two sources from where this kind of money can come from

These are :

>   100 % FDI in ITIs

>   Black Money Channelizing  in ITIs

To encourage Black Money to flow into this most productive and beneficial use , we must come out with an Amnesty Scheme for such investments thru SPVs.

And , whether the investment came through 100 % FDI or thru Amnesty Scheme , the income from operating an ITI , should be made tax-free for 20 years

Nothing short of an " Out of Box " thinking will help  !

If this suggestion is implemented , I see following consequences :

>    FDI  INFLOW  IN  SERVICE SECTOR

       There will be a huge inflow of FDI from Foreign Investors , who , today

       earn 2 % from their bank deposits . Their investment in an Indian ITI ,

       can earn them , may be , 10 %  - and tax-free !

>    UPGRADING  OF  TECHNOLOGY

      Instead of finding ( in our present ITIs ) , a 20 year old lathe , we will

      see most modern machines / technologies in these new ITIs

      This will tremendously raise the Skill Level of graduating students - the

      kind of skills which will enable students to find jobs abroad

>    JOB  CREATION

      We should , simultaneously amend the Apprentice Act - 1951

      Under the amended Act , every factory will be required to take fresh

      Apprentices in the ratio of 1 : 3 ( one trainee for three permanent

      employees , in each trade ) , instead of current prescribed ratio of 1:7

      This will create a huge demand for ITI trained students

>    COST  REDUCTION

      Since ITI trained apprentices are paid a stipend ( generally 20 % of the

      wages paid to regular / permanent / skilled workers ) ,  this will sharply

      reduce the manpower costs of manufacturing units

     This will lead to India becoming a " Low Cost Economy " and increase the

     competitiveness of our products , in the international markets , thereby

     boosting our exports ( currently , a meager 1.7 % of World Trade ! )

     This is the major reason why Foxcon ( Taiwan ) wants to put up 10

     factories in India , at an investment of $ 20 billion

>   ADVANTAGE ,  MSME

     Under amended Apprentice Act , permit MSME to retain ITI trained skilled

     workers , on a stipend-basis , for 4 years ( instead of current 2 years )

     This lowering of wages will make MSME very competitive in their cost.

     In turn , this will encourage large organized factories to outsource /

     sub-contract more components to MSME , instead of manufacturing

     in-house

     This will result in a robust " Supply Chain Eco-System "

     It is such an Eco-System in China , which compels Apple to have 331

     Component-Suppliers in China as against ONE supplier from India !

>   PRODUCT  QUALITY

     Product quality depends upon quality of skilled manpower coming out of

     ITIs

     When lakhs of ITIs are competing with one another for attracting

     students , each will try to raise the quality of its training

     When such highly trained students enter work force , quality of  " Make

     in India " products , is bound to rise

>   PERCENTAGE  OF  SKILLED  WORKERS

     Of the total work force , percentage of skilled workers in India today , is

     meager 3.5 % , as against 96 % in South Korea  !

     If my suggestion gets implemented , we should be able to raise this

     figure to at least 50 % in next 10 years !

>   DEMAND   FOR   TEACHERS

     There will be a huge surge in demand for Highly Skilled persons to act as

     teachers / trainers  in 4.4 lakh ITIs  

>   SELF  EMPLOYMENT

     MUDRA bank will provide loans to ITI trained skilled workers to set up

    themselves as local area Carpenters / Electricians / Plumbers / Welders /

    Masons / Repairers etc

    Thousands of ITI trained workers will tend to become Self Employed

You will be justified in asking :

"  How do we know that your suggestion will transform  India's Unskilled

Youth into a Demographic Dividend  ? "

All I can say is :

"  Luck happens when preparedness meets opportunity . If we prepare

ourselves , opportunity will arrive , sooner than later "

-------------------------------------------------------------------------------------

hemen  parekh

18  July  2015

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