PROMOTING BUSINESS AND TECHNOLOGY INCUBATION FORIMPROVED COMPETITIVENESS OF SMALL AND MEDIUM-SIZEDINDUSTRIES THROUGH APPLICATION OF MODERNAND EFFECTIVE TECHNOLOGIES IN INDIA*
...erience The development of the technopolis in Japan is an expression of a trend, which parallels the development of research parks/science parks/innovation centres and other initiatives but with some differences. One difference lies in the basic motivation and the other, in the degree of involvement of the Government of Japan. In the United States, where land is available in plenty, high technology industries moved to locations where the knowledge-capital was available. In Japan, where land is scarce, the plan is to move the universities to those locations where industrial development is envisaged. In the case of technopolises, the initiative and sustaining efforts come from the local governments such as the municipalities and the government with a catalytic role being played by the central government. In 1980, the Ministry of International Trade and Industry (MITI) announced the technopolis concept, an ambitious plan to build new Silicon Valleys throughout the Japanese archipelago. MITI had studied all the science parks and high technology regions in the world and distilled its findings in the technopolis programme. The technopolise will have new universities, science centres, research parks, joint R&D, venture capital and office complexes concentrated to form a critical mass. They will also offer ample housing, shopping centres, schools, recreational areas and a relaxed life style. The technologies are located in the scenic areas away from the cities. They aim at decentralization of the production and R&D functions of high technology industries to local areas, the revitalization of indigenous enterprises and assistance for their building up the strength necessary to create new products and technologies. At least 10 of them have begun functioning and are attracting large companies on to the premises including overseas companies like Texas Instruments, Nippon Fairchild, etc. The technopolis programmes have set off a ground swell of new projects. MITI estimates that the Government of Japan is currently experimenting with 150 regional infrastructure projects with names such as Teletopia, Agripolis, Marinpolis and New Media City. Moreover, there are at least 10 research cities coming up in the Tokyo region and 8 more in the Kyoto region. 142 (e) Experience of other countries Three European nations in addition to the United Kingdom and Germany have shown great interest in STEPs. France had established 18 science parks in 1986 and is planning to develop the Southern Coastline into a Technological Home for 21st century industries. Belgium is consciously attracting research oriented companies to its parks whereas the Dutch are encouraging local initiatives. As a result, the science parks in Belgium have companies like Digital, Honeywell, Wang and IBM from the United States. Other countries like Canada, Australia, Sweden and India have also started many such ventures and the Russian Federation has science cities serving the same purpose. 2. Indian Scenario India is the seventh largest and second most populous country in the world. A new spirit of economic freedom is now stirring in the country, bringing sweeping changes in its wake. A series of ambitious economic reforms aimed at deregulating the country and stimulating foreign investment has moved India firmly into the front ranks of the rapidly growing country in the Asian and Pacific region and has unleashed the latent strengths of a complex and rapidly changing nation. India’s process of economic reform is firmly rooted in a political consensus that spans her diverse political parties. India’s democracy is a known and stable factor, which has taken deep roots over nearly half a century. Importantly, India has no fundamental conflict between its political and economic systems. Its political institutions have fostered an open society with strong collective and individual rights and an environment supportive of free economic enterprise. India’s time tested institutions offer foreign investors a transparent environment that guarantees the security of their long-term investments. These include a free and vibrant press, a judiciary that can and does overrule the government, a sophisticated legal and accounting system and a user-friendly intellectual infrastructure. India’s dynamic and highly competitive private sector has long been the backbone of its economic activity. It accounts for over 75 per cent of its gross domestic product and offers considerable scope for joint ventures and collaborations. Today, India is one of the most exciting emerging markets in the world. Skilled managerial and technical manpower that match the best available in the world and a middle class whose size exceeds the population of the United States or the European Union, provide India with a distinct cutting-edge in global competition. Some of the key economic indicators are: Indian Economy 1997-1998 1998-1999 1999-2000 2000-2001 2001-2002 GDP 13 901 15 980 17 556 18 958 20 803 (billion Rs, at factor cost, current prices) (P) GDP 373.7 379.6 405.5 414.8 438 (billion US$, current prices) GDP growth 4.8 6.5 6.1 4.0 5.4 (percentage, constant factor cost) (P) (Q) (A) GDP per capita 387.4 368.3 405 404 (US$, current prices) Foreign investment inflows 5 385 2 401 1 581 5 099 (Sum) Total exports 35 006 33 218 36 822 44 560 32 572 (sum of current prices) (Apr-Dec 01) CPI (for industrial workers) 380 414 434 445 469 (base: 1982 = 100) (Dec 01) CPI index 6.8 13.1 3.4 3.7 4.2 (percentage, variation) (Apr-Dec 01) Exchange rate 37.2 42.1 43.3 45.7 47.5 Rs/US$ (Apr-Jan 02) Population 964.4 982.7 1 001.1 1 027 (million) 143 (a) Policy framework related to S&T and SMEs “Of the many forces that will shape human history in the new millennium, science and technology will perhaps be the most potent.” – Sri. Atal Bihari Vajpayee, Prime Minister of India “Indians not only have a great learning capability but most of them also have an entrepreneurial and competitive spirit. Today, there are not enough avenues to channelize this spirit constructively and productively. That is what we should aim for.” – Dr. A.P.J. Abdul Kalam, President of India Knowledge-based ventures are engines for the growth of a nation today. So, it is necessary for a government to consciously develop new mechanisms for promoting an environment of business incubation and technology support intervention in this area. India has been an early beginner in this area, at least among the developing countries. The NSTEDB, Department of Science and Technology, Government of India, is a policy making and implementation body primarily promoted for this purpose way back in 1980’s. Since then NSTEDB has been constantly coming up with new mechanisms for promoting knowledge-based venture of science and technology persons. It has established many new institutional mechanisms such STEPs/TBIs as a shining example of developmental institutions in science and technology intervention for promotion of a knowledge-based venture creation environment. (b) India’s SME friendly schemes SMEs are the most vibrant sector of the industries for any nation and India is no exception to this. SMEs in India have contributed commendably to the nation’s industrial development. In India 50 per cent of the industrial production is from the SME sector and with 42 per cent contribution to exports and 80 per cent in employment generation, we can by no means discount the SMEs contribution as small. India has a wide variety of schemes to promote SMEs, with both the central and state governments time and again stressing the importance of their role for a balanced development of our society. The United Nations organizations such as APCTT, UNIDO, UNDP and UNESCAP have also instituted many useful projects for the promotion and well-being of the SME sector. Government of India has promoted many institutional mechanisms such as National Small Industries Corporation, Small Industries Development Organization, Technology Information, Forecasting and Assessment Council, Small Industries Service Institute as fine mechanisms for SMEs promotion. In addition to these each state government have their own framework and institutions to promote SMEs. State government organizations such as district industries centres, small industries development corporations, state industries corporations, and state technology missions are some of the institutions catering to the SMEs needs. Each of these institutions offers a variety of schemes for promotion of SMEs. They also follow many different methodologies to address the SMEs promotional requirement. It shall be beyond the scope of this paper to go into details of the schemes offered by these institutions for promoting industrial growth. Suffice to say that India houses a plethora of development institutions directed at promotion of SMEs. Now, our main focus therefore, shall be on the initiatives taken up by the NSTEDB, Department of Science and Technology, Government of India in promoting TBIs and STEPs in India for promoting knowledge-based ventures. (c) National Science and Technology Entrepreneurship Development Board (NSTEDB) The NSTEDB was established by the Government of India in 1982 “as an institutional mechanism to promote gainful self-employment in the country and to link idle S&T manpower with the underutilized institutional credit facilities”. The Board, which has a governmental structure, is serviced by the Department of Science and Technology. It has representation from socio-economic and scientific ministries/departments. The major objectives of NSTEDB are: To promote and develop entrepreneurship through the use of S&T To facilitate and conduct various informational services relating to the entrepreneurship development using S&T – 144 To network various central and state government agencies and NGO’s in entrepreneurship and self-employment development using S&T with special focus on backward areas as well To act as a policy advisory body to the Government agencies in regarding entrepreneurship based on S&T and conduct studies supporting policy evolution Any other matter incidental to the above While a few promotional programmes were initiated during the terminal year of the Sixth Five-Year Plan (1984-1985), several new programmes were conceptualized and launched during the Seventh Five-Year Plan (1985-1990) in consultation with other ministries/departments and agencies. The programmes have created awareness among S&T persons to take to entrepreneurship as a career. The academics and researchers have started taking a keen interest in such socially relevant roles and have engaged themselves in several programmes. About 100 organizations, most of which are academic institutions and voluntary agencies, were drawn in the task of entrepreneurship development and employment generation. More programmes are being evolved to suit the changing economic scenario and the available scope for entrepreneurship development. STEP – Science and Technology Entrepreneurs Park EDC – Entrepreneurship Development Cell Training – Skill Development Training EDP – Entrepreneurship Development Programme OLPE – Open Learning Programme in Entrepreneurship EAC – Entrepreneurship Awareness Camp STEDS – Science and Technology Entrepreneurship Development Scheme FDP – Faculty Development Programme TEDP – Technology-based Entrepreneurship Development Programme (d) Science and Technology Entrepreneurs Park (STEP) The science park and similar initiatives in the developed countries are the latest in the evolutionary line to create an atmosphere for innovation and entrepreneurship; for active interaction between academics and industries; for sharing ideas, knowledge, experience and facilities for the development of new technologies and their rapid transfer to the end-user. The potential growth of new technology based industrial units is vitally important issue, which has motivated initiation of such new kinds of linkage mechanisms between R&D institutions and industry. The STEP programme was initiated by the NSTEDB in 1984. STEP provides a reorientation in approach to innovation and entrepreneurship involving education, training, research, finance, management and government. It creates the necessary climate for innovation; for sharing ideas, experience and facilities and opens up new avenues for students, teachers, researchers and industrial managers to grow in a transdisciplinary culture, each understanding and depending on the other’s inputs for starting a successful economic venture. The task, therefore, is to create an “employer culture” where increasingly S&T people will seek to create their own employment. Objectives of STEP: To forge a close linkage between universities, academic and R&D institutions on the one hand and industry on the other To promote entrepreneurship among science and technology persons, many of whom were otherwise seeking jobs soon after their graduation To provide R&D support to the small-scale industry mostly through interaction with research institutions To promote innovation based enterprises 145 Promoters: Department of science and technology (DST) IDBI, IFCI and ICICI Concerned state government Host institution Commercial bank Facilities provided by STEPs: Nursery sheds Testing and calibration facilities Precision tool room/central workshop Prototype development Business facilitation Computing Data Bank Library and documentation Communication Seminar hall/Conference room Common facilities such as telephone, telex, fax, photocopying Services offered by STEPs: Testing and calibration Consultancy Training Research Prototype development/Process development Human resource development (short-term courses) Technical support services Business facilitation services Database and documentation services Quality assurance services Common utility services The NSTEDB, jointly with the all India financial institutions, has so far catalysed 15 STEPs in different parts of the country. They are in different stages of development. (e) Entrepreneurship Development Cell (EDC) The concept of EDC was evolved to institutionalize entrepreneurship in S&T institutions. The EDC acts as a nucleus for carrying out entrepreneurship development activities in the institution as well as in the region. The objectives of establishing EDCs are as follows. To create an entrepreneurship culture in the host institution and to promote the activities of NSTEDB in the region where it is located. To organize Entrepreneurship Awareness Camps and Entrepreneurship Development Programmes in the premises of the host institution for the benefit of S&T persons. To extend necessary guidance and escort services to the trainees during approval and execution of their projects. 146 To introduce a curriculum on Entrepreneurship Development formulated by the NSTEDB as an elective subject in various courses (engineering degree or diploma, or degree in science, as the case may be) in the host institution. To conduct research works and survey for identifying entrepreneurial opportunities (particularly in high technology areas). To arrange factory visits for prospective entrepreneurs. To act as a Regional Information Centre on opportunities, technologies, markets, etc. To provide testing, quality assurance, design, tool room, pilot plant and other facilities for entrepreneurs. To conduct FDP in the field of entrepreneurship for teachers from colleges, polytechnics and other institutions in the region. To render advice to sick enterprises to rehabilitate them. To organize Total Quality Management (TQM) training for the working professionals and engineering students. To undertake products/process development which have potential for entrepreneurship development. Organizational structure The EDC is a part and parcel of the host institution for all administrative purposes. All departments of the institution should support the EDC by maintaining proper linkages. Entrepreneurship development should form a part of the objectives of the long-term plan of the host institution. An advisory committee with head of the host institution as chairman guides the EDC. The Cell will have a representative of DST on its Advisory Committee to ensure proper implementation of the scheme on a uniform basis throughout the country. Representatives of organizations dealing with small industries promotion and entrepreneurship development at the State level shall also be included in the Advisory Committee. The faculty members should have an adequate industrial and/or entrepreneurial background. Core staff will be provided to implement the activities of the EDC. Experts from the industry and other institutions could be associated as guest faculty. (f) Skill Development Training through S&T (STST) The NSTEDB, since its inception in 1982, has been devoting its attention for programmes of entrepreneurship development and self-employment generation using S&T methods and techniques and by using the expertise developed in technical and R&D institutions for upgradation of skills. With development of new and better technologies, it becomes essential to upgrade the skills of manpower using such enhanced versions of equipment/tools. Training has been a long felt need in some of these areas and NSTEDB has been trying to fill this gap right from its inception and the present STST addresses itself to upgrade the skills in a need-based manner for a select group of processes and technologies. The main objectives of STST are: To demonstrate that skills can be developed/upgraded through the application of S&T To harness the resources of S&T infrastructure of the country, which have so far remained under-utilized, for skill development training To enhance quality of services/products and thereby enhance income generation among skilled workers (g) Entrepreneurship Development Programme (EDP) An EDP aims at training the S&T graduates and diploma holders in the essentials of conceiving, planning, initiating and successfully launching of an economic activity. Some of the EDPs are jointly sponsored by DST and the all-India Financial Institutions (IDBI, IFCI, ICICI), state governments, Commercial Banks, etc. These EDPs are for potential entrepreneurs and the programme duration is 6-8 weeks. 147 The course content includes, identification of business opportunities, specific product/services to be offered by various constituents of support systems including financial institutions, banks, DICs, State Industrial Development Corporations, etc. preparation of a viable project report, achievement motivation training (AMT) and the essence of management of an enterprise. Advice and guidance on technology are arranged from national and state level technical institutions, depending upon the nature of project selected. Special EDPs are being conducted with more emphasis on linkages with R&D institutions to take up projects based on indigenous technologies and services, in high technology areas, such as leather, plastics, bio-medical equipment, high speed data communication and other emerging areas of technology. (h) Faculty Development Programme (FDP) In order to meet the growing need for trainers in S&T entrepreneurship development, the scheme FDP is being implemented to train teachers from technical institutions, R&D institutions and voluntary agencies in sufficient numbers, so that they can function as resource person in motivating students and teaching them the intricacies of entrepreneurship. This will also fulfil the need to have a large number of counselors for the Open Learning Programme in Entrepreneurship. FDPs are organized by specialized institutions in entrepreneurship development. (i) Technology-based Entrepreneurship Development Programme (TEDP) TEDP is a structured training programme of 6-week duration designed to motivate and develop entrepreneurs in specific products/technologies/processes developed by CSIR labs, R&D institutions, universities, etc. In a TEDP: 1. The entrepreneurs are exposed to technical knowledge about the products and technologies and are enabled to develop their skills at the lab of the technology provider. 2. The R&D lab having commercially viable technologies, get potential entrepreneurs as its “takers”. 3. The entrepreneurship-training institute can put concerted efforts in a specific discipline of product-technology and thus can have better control over the course of the programme and its success. The participants are selected through various tests and personal interviews to assess their potential of becoming a successful entrepreneur. During the training, the participants also gets to know the intricacies of how to start and manage an enterprise. At the end, they are assisted in preparing a bankable project report. (j) Science and Technology Entrepreneurship Development Scheme (STEDS) For identifying and documenting specific entrepreneurial opportunities based on local resources, skills, demand and matching those with prospective entrepreneurs, a programme called STEDS is in operation, since 1985, in some of the backward districts of the country. A number of activities are being taken up which include, among others, preparation of resource inventories, preparation of thematic resource maps, generation of specific entrepreneurial opportunities, identification of prospective entrepreneurs, dissemination of information, organization of skill development training, creation of entrepreneurial awareness among the unemployed educated youth and organization of Entrepreneurship Development Programmes for them. (k) Technology Development Board (TDB) With a view to providing financial assistance to the industrial concerns for the development and commercialization of indigenous technology in a dynamic economic environment. The Government of India constituted a TDB on 1 September 1996. As a Statutory Body under the Department of Science and Technology, New Delhi, the TDB invests in equity capital and gives soft loans to the industrial concerns and other agencies as applicable to: 148 1. Attempting the development and commercialization of indigenous technology OR 2. Adapting imported technology to wider domestic application The Board has provided financial assistance to 97 projects in the emerging areas of health and medicine, engineering, chemical, agriculture, energy and waste utilization, air and road transport, information technology and telecommunication, etc. The Board has also instituted two national awards for the successful commercialization of indigenous technology as per below: 1. Cash award of Rs 5 lakhs each to (a) An industrial concern, which has successfully commercialized (b) The developer/provider of such technology 2. Cash award of Rs 2 lakhs to an SSI unit, which has successfully commercialized a product based on indigenous technology. Awards will be given annually on the Technology Day, i.e., 11 May every year. D. STEPs and TBIs in operation in India The NSTEDB, Department of Science and Technology, have so far promoted 15 STEPs in the country. These STEPs are promoted along side and with the involvement of premier educational institutions in India such as Indian Institutes of Technology and Regional Engineering Colleges and some reputed other engineering and technology institutions. The STEPs are broadly geographically distributed keeping in view the necessity of balanced regional development. Each STEP is an autonomous body attached to a premier education institution to facilitate management requirements and technological assistance required for incubation. STEPs and TBIs use different developmental mechanisms described earlier such as EDP, TEDPs to promote a new class of technology enterprises. They provide required support in the form of training, counseling, facility provision and escorting for budding entrepreneurs. Recently, NSTEDB has also promoted five TBIs as more focused initiatives for promoting knowledge-based industries. STEPs and TBIs attract young S&T persons and catalyse them to become technology-based entrepreneurs. The 15 STEPs so far have promoted 788 technology-based units with an annual turn over of Rs 1,300 millions. These technology enterprises also provide employment for nearly 5,000 persons. E. Business incubation process in STEPs/TBIs STEPs and TBIs being institutions for promoting knowledge-based ventures need to have mechanisms and facilities for entrepreneurship and technology development. Since, STEPs/TBIs are attached to premier educational institutions, the facilities and expertise available with parent institutions readily flow to the requirements of the budding entrepreneurs and then through them are channelized to meet the product/service requirements of the society. In addition to this, facilities are made available in STEPs/TBIs to further this process of serving the customer needs through entrepreneurs. To cite some of these facilities as examples, the following facilities are presented: Product and prototype development Database and information Testing and calibration Design and development Consultancy support Fully equipped incubation space support Infrastructure support like office automation, seminar hall, video-conference, restaurant and recreation facilities 149 The product and prototype facilities such as common machining centres, fabrication centres, rapid prototyping, design facilities and laboratories are available for the budding entrepreneurs. This reduces the risk of the entrepreneurial venture during the initial stages and aids them in developing and testing prototypes and final marketing. Based on the feed back from the marketplace, the budding entrepreneur can then put up his/her own facilities for promoting the business venture further. The catalogue library and databases help the entrepreneurs in strategic planning exercises. Nursery sheds with basic infrastructure facilities such as required power and water further facilitates easy launching of successful ventures for the entrepreneurs. Computer networking and office automation support/consultants support provides much needed business professional support for the entrepreneurial ventures. All these basic initial facilities help the budding entrepreneurs to concentrate on his/her core process of value addition to customer using technology and liberate him/her from the onerous routine tasks. Now the process of business incubation can be seen from the process point of view. The input for the incubation process is often the fresh science and technology graduates from educational institutions. As such they lack experience, awareness, information about many facets of business promotion and industrial requirements. They cannot be expected to possess information about production, marketing, finance and personnel aspects of business. In order to bridge this gap, STEPs/TBIs utilize the EDP and the TEDP as the right entry point in the incubation process. The EDP envisions the budding entrepreneurs about business requirements, further it provides him basic management concepts and tools to develop his business promotion skills. The EDP also provides entrepreneurs with opportunity guidance to expose him to some firm possible opportunities with business potential to venture into. The EDP provides opportunity for entrepreneurs to interact with bankers, venture capitalists and understand the funding possibilities and requirements for his venture. Real-life cases of successful entrepreneurs provide them further insights into the business processes. After completing this EDP now the entrepreneur is expected to have acquired basic entrepreneurial skills and competencies. After the EDP training, STEPs/TBIs begin to address the specific technological as well as business requirements individually. While technological assistance for the proposed entrepreneurial ventures are done through match making with the concerned faculty of the parent institution, the strategic business counselling is done through STEPs/TBIs under the guidance of a professional team. The output of all these value-adding processes creates a favourable condition for the success of the entrepreneurial ventures. This is also validated by the higher success rates of EDPs conducted by STEPs/TBIs when compared to other developmental organizations. While the EDPs conducted by other organizations may provide various services for budding entrepreneurs, STEPs/TBIs provide a comprehensive package and a one-stop-stall for the budding entrepreneurs. For budding entrepreneurs having the required experience lateral entry points are available for his/her technology business venture. The formal EDP training is not the only entry point. A budding entrepreneur can choose his/her own service requirements from STEPs/TBIs, based on his/her business requirements and entrepreneurial capabilities. Thus STEPs/TBIs provide a very flexible model for business incubation process...