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McKinsey Report on Impact Investing in India
Claudius Gutemann, McKinsey Report on Impact Investing in India 14 Sep 2017
Enhancing Capabilities, Empowering Lives - CSR in Skills and Livelihood: What are India’s top companies up to?
Claudius Gutemann, Enhancing Capabilities, Empowering Lives - CSR in Skills and Livelihood: What are India’s top companies up to? 02 Feb 2017
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Skills Development by Green and Inclusive SMEs in India: Entrepreneurs’ Approaches

This paper examines the approaches of entrepreneurs in developing the skills necessary for themselves and their employees to achieve green innovation.
The rapid population growth and pace of urbanisation in India combine to present a significant threat of environmental damage, which is predicted to significantly increase in the coming decades. Population growth has also produced a ‘youth reservoir’, on the grounds of which India’s National Skill Development Policy calls for the creation of 500 million skilled workers by 2022. Providing workers with the skills necessary for a green economy offers a great opportunity to address the environmental challenges faced by India and provide decent work to youth. At present, however, the formal training offer for ‘green’ skills, such as programmes in achieving energy efficiency, is under-developed.
 
MSMEs are responsible for a great deal of both the employment – particularly of disadvantaged members of societies – and the innovation in the Indian economy. This paper interviewed the entrepreneurs/owners of eight green and inclusive MSMEs – MSMEs that reduce damage to or benefit the environment, create opportunities for all segments of the population and distribute their products, services and dividends of increased prosperity fairly across society.
 
Interviews were also completed with training organisations, in order to better understand the activities which are already being undertaken to provide green skills to workers and how these could be improved.

The policy themes which emerged are as follows:
 
  1. Provide incentives, programmes and support from the national government, to promote the benefits of skills development within green SMEs. Also provide financial aid to encourage and stimulate employee and employer training.
  2. Provide better support from the government for the acquisition of financial and business knowledge. This should be promoted both to registered and unregistered SMEs. SMEs in the green sector, and in particular those which offer community benefits through inclusivity, should be prioritised.
  3. Increase the quality of formal training by improving course curriculums, equipment and teacher training. Steps should be taken to ensure that training reaches those who require it most, such as low-skilled youth.
  4. Provide a standardisation for training institutions (small and large) to ensure the quality of service required for green SME skill needs. The focus should be on business management, sales and firm expansion.
  5. Encourage and promote communication between industry and training institutes to reduce the gap between demand and supply. Innovative tools should be encouraged to assist policy dialogue, such as real time labour market information systems via the Internet.
  6. Endorse green SMEs to construct training plans that incorporate both informal and formal training.
  7. Create a link between the informal knowledge-intensive service activities (KISA) approach for skills training and formal technical and vocational education and training (TVET). This can be done through government support (information sharing and financial) and programmes such as work experience, apprenticeships and the firms’ training plans.
  8. Promote SME inclusivity through mechanisms that provide incentives for green SMEs to advance their business models into disadvantaged and rural communities, such as financial support or tax considerations.
  9. Increase the investment by government and green SMEs in training low-skilled staff to encourage inclusivity and add value in business development.
  10. Encourage apprenticeship training in SMEs for better skilled manpower, since entrepreneurs often cannot afford to spare their manpower for training or pay for their training.
  11. MSMEs have particularly limited information and access to risk capital for sourcing/developing and internalizing new technologies.
  12. Develop industrial estates/laboratories near premier technical institutions.
  13. Strengthen partnerships between Industry and Academia/Other Research Institutes to create IPs domestically