New policy assures Rs 7,000-cr business for Dalit, ST entrepreneurs
Monday, 12 December 2011 21:51
T E Narasimhan
Some Dalit businessmen plan to launch a Rs 500 crore venture capital
fund — India's first community-focused fund.
The Central government's new procurement policy will open business
opportunities worth Rs 7,000 crore for Dalit and s (ST) entrepreneurs.
These entrepreneurs are now gearing up to tap this opportunity by
launching their own venture capital fund and increasing their
production capacities.
The proposed Rs 500 crore venture capital fund will be the country's
first community-focused fund, according to industry representatives.
It will help entrepreneurs from the community, from whom financial
institutions are shying away, said a senior official.
Milind Kamble, chairman, Dalit Indian Chamber of Commerce and Industry
(DICCI), said that the association has approached the market
regulator, the Securities and Exchange Board of India (Sebi), with the
proposal. The fund will be launched through a special purpose vehicle.
"The first round of funding will be from domestic investors and
businessmen from the community and during the second round we will
look at international investors," said Kamble.
Under the recently announced Public Procur-ement Policy for Micro and
Small Enterprises (MSE), a minimum of 20 per cent of total annual
purchases of Central ministries, departments and public sector
undertakings (PSUs) has been reserved for procurement from MSEs.
Of the 20 per cent share of annual procurement from MSEs, a share of
four per cent (or 20 per cent of 20 per cent) has been reserved for
procurement from MSEs owned by Dalit and ST entrepreneurs.
To enhance the participation of Dalits and ST in government
procurement, all Central ministries, departments and PSUs will have to
organise special vendor development programmes and buyer-seller meets.
They will have also to report their targets and achievements with
respect to procurement from MSEs in their annual reports.
Ministries, departments and PSUs which do not meet the mandatory goal
of the public procurement policy will be required to provide reasons
to a review committee headed by the secretary to the MSME ministry.
However, the ministry of defence, on account of its unique nature, had
reservations about implementation of the procurement policy for MSEs.
Keeping this in view, defence armaments and weapons systems have been
kept out of the purview of the policy.
Kamble of DICCI said that every year the government procures products
and services worth Rs 1.75 lakh crore. Four per cent of this,
amounting to some Rs 7,000 crore, will be reserved for the Dalit and
ST entrepreneurs.
"We are happy, since we now know there is an assured market. With this
we can now go in for expansion and other new initiatives," said
Kamble. Entrepreneurs from the community are already suppliers to big
brands such as Tata, Bajaj, Hero Honda and Kirloskar, among others.
Besides, there are also successful businessmen from this community,
who include Ashok Khade, chairman of Das Offshore Pvt Ltd, who
presides over a Rs 550 crore business empire; Natha Ram, who runs
Steelmont Pvt Ltd, a Rs 600 crore company that makes steel converter
machines; Devjibhai Makwana, whose Rs 300 crore company, Suraj
Filament, makes flat and twisted high-tenacity polypropylene
multi-filament yarns.
The Dalit population in the country is estimated at 200 million, or
one-sixth of India's population, of which 15 per cent are
entrepreneurs, said Kamble. However, according to him, they control
only one per cent of the country's wealth.
"Our community members want to grow, but cannot find anyone to lend
them money to start a unit," he said. Being a Dalit means virtually no
assets, so people from the community end up going to private lenders.
Credit facilities to start a business are hard to come by for the
community, he added.
"Trade and enterprise have never been part of our tradition. The only
trade traditionally linked with Dalits is leather work," he noted.
Dalits need support in terms of training, identifying the market and
financial help, which DICCI provides, he added.
There are no problems that are peculiar to the Dalits once they get to
the market. "But reaching there is a problem, given that they are
educationally and economically backward." To address this lacuna,
DICCI counsels entrepreneurs, provides them with support, and
identifies markets for them.
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