For Private Circulation only NATIONAL MSME CONCLAVE Skilling Challenges in the Indian SME Sector Anup Gulati November 19, 2014 New Delhi

1 Proprietary and confidential. This information does not represent and should not be construed as, legal or professional advice. © 2014 NSDC. All Rights Reserved. SMEs constitute over 90% of total enterprises in most world economies. In India SMEs account for more than 80% of the total number of industrial enterprises and employ over 6 crore people. SME sector has consistently registered higher a growth rate compared to the overall industrial sector. ROLE OF SMES

2 Proprietary and confidential. This information does not represent and should not be construed as, legal or professional advice. © 2014 NSDC. All Rights Reserved. GROUND REALITIES WORKERS: Do not perceive manufacturing as an attractive sector for employment. Are usually class 8 and below, and come in without skills and competencies. Find the cost and availability of quality skilling prohibitive. EMPLOYERS: Reluctant to skill workers fearing poaching and wage demands. Difficulty in locating and assessing the right training institution, especially in rural areas. Poor alignment of skill development institutions with industry requirements and expectations. Lack of competency and lack of standards.

3 Proprietary and confidential. This information does not represent and should not be construed as, legal or professional advice. © 2014 NSDC. All Rights Reserved. SKILLING CHALLENGES

4 Proprietary and confidential. This information does not represent and should not be construed as, legal or professional advice. © 2014 NSDC. All Rights Reserved. SKILL DEVELOPMENT LANDSCAPE Ministry for Skill Development: The new Ministry of Skill Development, Entrepreneurship, Youth Affairs and Sports will work to harmonize skill development activities across the country. National Skill Development Corporation (NSDC): This public private partnership (PPP) was created to catalyze the setting-up of large-scale, for-profit, sustainable vocational institutions, by providing low-cost funding for creation of training capacity. National Skill Development Agency (NSDA): Created in June 2013 to coordinate and harmonize skill development efforts across Central Ministries, States and the private sector in the country.

5 Proprietary and confidential. This information does not represent and should not be construed as, legal or professional advice. © 2014 NSDC. All Rights Reserved. THE NSDC PPP setup by Ministry of Finance. Equity base Rs 10 crore (Government of India 49%, Private Sector 51%) Private-sector shareholders include 10 business chambers & industry associations (5.1% shareholding each) Federation of Indian Chambers of Commerce and Industry (FICCI) -Associated Chambers of Commerce and Industry of India (ASSOCHAM) -Confederation of Indian Industry (CII) -National Association of Software & Services Companies (NASSCOM) -Society of Indian Automobile Manufacturers (SIAM) -Confederation of Real Estate Developers Associations of India (CREDAI) -Gems and Jewellery Export Promotion Council (GJEPC) -Confederation of Indian Textile Industry (CITI) -Council for Leather Exports (CLE) -Retailers Association of India (RAI)

LARGE, QUALITY VOCATIONAL TRAINING INSTITUTIONS COMMERCIALLY VIABLE, SCALABLE, SUSTAINABLE TRAINING ENTERPRISES SECTOR SKILL COUNCILS QUALITY ASSURANCE & CERTIFICATION OCCUPATIONAL STANDARDS SECTOR SKILL COUNCILS QUALITY ASSURANCE & CERTIFICATION OCCUPATIONAL STANDARDS CREATE THE VISION, DEFINE THE PATH DEMONSTRATE COMMITMENT CREATE A VIABLE ECOSYSTEM ADDRESSING CHALLENGES: NSDC’s 3 PRONGED APPROACH CREATE FUND ENABLE 6

7 Proprietary and confidential. This information does not represent and should not be construed as, legal or professional advice. © 2014 NSDC. All Rights Reserved. SECTOR SKILL COUNCILS: Creating an enabling ecosystem - Aligning training with employers’ needs TRAINING NEED ANALYSIS CURRICULUM DEVELOPMENT ROLLOUT OF TRAINING ASSESSMENT & CERTIFICATION 22 SSCs have developed 879 Qualification Packs (QPs) covering 2,247 unique National Occupational Standards (NOS) of which 455 QPs have been declared as National Standards International collaboration to create transnational standards

8 Proprietary and confidential. This information does not represent and should not be construed as, legal or professional advice. © 2014 NSDC. All Rights Reserved. Endorsement Campaign CREATING AN ASPIRATION FOR SKILLS Advocacy campaign encouraging youth to take up skills - a series of TV, radio, print ads and posters supported. A TV serial ‘Hunnarbaaz’ supported (40 episodes) Hunar Yatra Creating mobile kiosks which will go around the country Target catchment areas to like weekly markets, pooja pandals, panchats, job fairs etc Collaborate with local TPs to drive on-the-spot enrollment

9 Proprietary and confidential. This information does not represent and should not be construed as, legal or professional advice. © 2014 NSDC. All Rights Reserved. FOSTERING SKILL DEVELOPMENT IN CLUSTERS Standardized Training & Certification as per Industry led standards through SSCs Work-Ready manpower with industry relevant skills Creation of new entrepreneurs Skilling Centers Leveraging ITI’s Campaign to increase aspirational values of Skills Testimonials from Industry Leaders AspirationTraining Quality Employm ent/ Entrepren eurship

10 Proprietary and confidential. This information does not represent and should not be construed as, legal or professional advice. © 2014 NSDC. All Rights Reserved. SKILLED VS UNSKILLED WORKERS Skilled workers Unskilled workers Productivity Unskilled workers Skilled workers Defects Unskilled workers Skilled workers Rework Skilled workers Unskilled workers Wages Skilling has a cost - it takes money and time to skill workers A skilled worker demands and deserves more than an unskilled worker

11 Proprietary and confidential. This information does not represent and should not be construed as, legal or professional advice. © 2014 NSDC. All Rights Reserved. WHAT CAN YOU DO? Create entrepreneurs in skill development. A number of NSDC training partners are SMEs. Ensure the success of Sector Skill Councils – dialog with them continuously. Create awareness amongst employers: Hire certified employees Encourage existing employees to get certified Provide access to training opportunities to potential employees Mandate all suppliers and service providers to have certified employees Encourage employees to act and enrol as trainers & assessors 1 2 3

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