New Delhi, 26 September 2014: The Prime Minister, Narendra Modi, today launched the Make in India initiative with an aim to give the Indian economy global recognition.
Addressing a gathering consisting of top global CEOs at the event in Vigyan Bhawan in the capital, the Prime Minister said “FDI” should be understood as “First Develop India” along with “Foreign Direct Investment.” He urged investors not to look at India merely as a market, but instead see it as an opportunity.
The Prime Minister said it is important for the purchasing power of the common man to increase, as this would further boost demand, and hence spur development, in addition to benefiting investors. The faster people are pulled out of poverty and brought into the middle class, the more opportunity will there be for global business, the Prime Minister said. Therefore, he said, investors from abroad need to create jobs. Cost effective manufacturing and a handsome buyer – one who has purchasing power – are both required, the Prime Minister said. More employment means more purchasing power, he added.
The Prime Minister said that India is the only country in the world which offers the unique combination of democracy, demography, and demand. He said the new Government was taking initiatives for skill development to ensure that skilled manpower was available for manufacturing. He also referred to the Digital India mission, saying this would ensure that Government processes remained in tune with corporate processes.
The Prime Minister said he had felt a mood of gloom among India`s business community in the last few years, due to lack of clarity on policy issues. He said he had heard even Indian businessmen say that they would leave India and set up business elsewhere. The Prime Minister said this hurt him, and added that no Indian business should feel a compulsion to leave the country under any circumstances. He said on the basis of the experience of the last few months, he could say that the gloom has lifted.
The Prime Minister gave the example of the new Government`s initiative on self-certification of documents, and said this was illustrative of how the new Government trusted the citizens. The Prime Minister said trust is essential for investors to feel secure. Let us begin with trust; if there is an issue, Government can intervene, he said. The Prime Minister said trust too can be a transformative force.
Narendra Modi said development and growth-oriented employment is the government`s responsibility.
The Prime Minister noted that India ranks low on the “ease of doing business” and added that he has sensitized Government officials in this regard. He also emphasized the need for “effective” governance.
To the expression “Look East,” the Prime Minister added “Link West”, and said a global vision was essential. He said Mission Swachh Bharat and “waste to wealth” could lead to good revenue models for business as well. He referred to his vision of waste water management and solid waste management in 500 towns across India through public private partnership.
The Prime Minister also spoke of infrastructure of the future – including i-ways besides highways – and mentioned port led development, optical fibre networks, gas grids and water grids.
The Prime Minister also unveiled the Make in India logo, and launched the website makeinindia.com.
Prime Minister Narendra Modi’s speech at the launch of “Make in India” global initiative
“Dignitaries on the dais, my colleagues in the Council of Ministers, Captains of Industry, and my friends here and abroad where this programme is running simultaneously.
First of all I would like to apologise as I can see that many business leaders could not find a place to sit in the auditorium, I apologise to you for this inconvenience. One of the reasons for this inconvenience is that this auditorium is not used to such gathering.
I was listening to all the business leaders. Our Minister also discussed the works done in recent times; major initiatives were presented before you by a film also. After listening and hearing so much I don’t think that there is a need for me to convince you any further for ‘Make in India’.
What happened in years gone by? Whomsoever I met in last two three years, everybody said that we have to leave, have to shift business from here, have to shift industry from here. I never saw anything political in that nor planned to take any political mileage out of it. It used to hurt me. What has happened to my country that my own countrymen are compelled to leave?
Today, when I have brought this ‘Make in India’, I don’t want that any industrialist or any entrepreneur should feel compelled to leave. That situation has to change. I speak from the experience of past few months that circumstances have changed. People in industry had lost self-confidence. They felt that they will not be able to face competition and had no way out. When a person loses self confidence it is very difficult to prop him up again. Secondly, his trust was broken – ‘you never know what policy will the Government bring, never know when what policy will change, when will CBI come knocking’. This is what I have heard from you people.
It is a must that there should be rule of law. There should be an atmosphere of corporate government responsibility on the lines of corporate social responsibility. But at the same time there are responsibilities of government.
Just now Devesh ji was saying that money does not come by invitation only. I agree with that. The biggest requirement is trust, confidence. I don’t know how we have run our country that we have doubted our own countrymen at every turn. I need to change this vicious cycle. We should not start from distrust, we should begin with trust and government should intervene only if there is some shortcoming. When we take such decisions people think that this is no grand vision. Nowadays, I am often hearing and reading this. When my government decides about self-certification you may feel this to be a very small decision. There cannot be bigger decision than deciding to trust the authenticity of 125 crore countrymen. You have always doubted him, he certifies and you tell him to get certification from a gazetted officer. And what does gazetted officer say – if it is urgent give me this much, and if you have time then that much. Can’t we trust our own countrymen? After all who is government for? Government is for common people, for every citizen. And this beginning of change does not stop here. It goes up to Income Tax Department also. As business community is sitting here I am talking of Income Tax Department.
I mean that it is the mantra of my Government, our first commitment- we want to move while trusting every citizen. This atmosphere of trust has the strength of changing the system. It is not that change can be brought only by making laws within the walls of Parliament. Outside too flow of change can be brought by awakening the hearts of every person.
These days FDI is in discussion and it is natural. I look at it slightly differently – for Indian citizens also FDI is a responsibility, for 125 crore Indians, FDI is a responsibility. For entrepreneurs and businessmen of the world FDI is an opportunity. When I say that it is a responsibility for every Indian an opportunity for outsiders then my definition for FDI for Indians is – First Develop India. And to global business developers, I say India is an opportunity. For FDI we can move ahead on the journey of progress by taking this twin definition. There is a talk in the entire world, quite a mouth watering one, that India is a huge market. On first look this feeling is natural. I am not an economist but the industrialist, who considers India to be big market, has he ever thought that what is the purchasing power of that market. What is the purchasing power of the citizen, has it gone up? Even if the number of people is high, without purchasing power and pocket with no depth, the world will fritter away this opportunity. Therefore, I would like to tell the global industries that don’t consider India to be just a market. You should see every Indian citizen for his potential. The faster the bulk of Indian middle class increases, the faster people move from poverty to middle class, the faster will be their conversion into a favourable market for the world.
What needs to be done to increase the bulk of middle class? Straight answer is that opportunities for employment will have to be made available. If you come from outside and don’t bother about industrial development, manufacturing sector and don’t create employment opportunities, this loop will never complete. That is why, when we talk of Make in India, we are not just offering a competitive situation. When we talk of Make in India, we give you an opportunity to create a huge market for your product. After all, handsome buyer is equally important as cost effective manufacturing. You may produce as many Maruti cars but nothing will happen if there is no buyer.
For this, we need to bring some changes in Indian economy. In this change, on the one hand, manufacturing growth is to be promoted, at the same time we need to ensure that direct benefit goes to the youngsters of India. He should get employment so that there is improvement in the economic situation of even the poorest family. These poor should move towards middle class and there purchasing power should improve. This will lead to manufacturing growth and growth of the market.
This is a cycle. And important measure has been taken to move this cycle forward. This is a lion’s step. Lion’s step – Make in India. When I talk of it and I am speaking from my Chief Ministers experience, industrialists don’t come due to some fancy incentive scheme. One can say you will get this or that, will make this tax free or that tax free. Incentives don’t work. We need to create development and growth oriented environment. This is government’s responsibility. People in government, financial institutions need to concentrate on all these systems. Then only investor will have a sense of security. Investor first wants security of his investment. Growth and profit come later. He doesn’t seek profit the first day. For profit, he has other 50 other companies. Government’s effort is, we have taken continuous measures; we want to reassure you that your money will not sink.
Secondly what more does he want? These days there is a ranking for ease of doing business. Recently I met World Bank Chairman. He was also expressing this worry. Probably we were 135th in the world at that time. What hinders ease of doing business? If we have to come to 50 from 135 then Government alone can do this. If Government brings transparency in its decisions and rules, pushes works with simplicity we can occupy number 50 from 135 in ease of doing business. I have sensitized my entire team and I have asked whether we are not placing obstacles in the name of scrutiny and more perfection? On the basis of my three months’ experience I can say that my entire team in the Government, my entire bureaucracy is moving two steps ahead of me in this positive thinking. Why is this a strength? He is convinced that this opportunity has come his way and he does not want to lose this.
Entire world is looking towards Asia. I don’t need to waste time in inviting, I just need to make some efforts in giving the address that this is the place. He is ready to come. Entire world is ready to come. They just don’t know where to come in Asia. Then he thinks where is democracy, where is demographic dividend, where is demand in huge quantity? If these three are available in any part of the globe then this will be India. All three are available together and being used positively. If we use democracy, demographic dividend and demand properly then I am sure that there will be no need to give India’s address to the world. Many Vasco da Gamas will appear in every nook and corner and will come looking for India. He needs effective governance. Just government is not sufficient but a feeling of government is needed. If somebody comes knocking, he should feel that his problem will find a solution here or he will get guidance on what route to take – effective governance. I am not talking of just good governance I am also talking of effective governance. There is a need to emphasise two important pillars.
If industries are to be established then skilled manpower will be needed. This skilled manpower should be as per the requirement. If there are possibilities for textile industry somewhere and if we are doing skilled development for engineering then neither engineering skilled person will go there for job nor will the textile industry be helped. We have to do the mapping and we are doing. What are such clusters where there is natural potential of this sort? How to do human resource development for that potential? How to handle environmental issues there and on what points government should decide its foundation for sustainable growth? And if we are doing this then the effective governance can be obtained through skilled development.
Today, is there any synchronisation between the thinking of government, academic world, industry and the thinking of job seeking youngsters? I am sorry to say – No. We may want to develop tourism. But we may not have a system of developing guides in that village. Guide would be taught somewhere in Tamil Nadu and Taj Mahal would be in Agra. I mean to say that these are small things. If we do these focussed activities then circumstances may change.
Academic world should study that what kind of industry is possible in coming 20 years. If the entire world is focussed on eco-friendly environment technology, global warming then it flows that solar energy field has opened. If the solar energy field develops, then engineering college will get training for solar equipments. There will be requirement of skilled labour in the field; for that training may begin now itself. Solar related entrepreneurs should be informed of these arrangements, there is barren land near Barmer, come and establish solar power plant and give light to India. Government needs to facilitate in this networking exercise and when government becomes facilitator, desired results are obtained. Therefore, how to promote skilled development; we want to proceed with the model of public-private-partnership in this area.
If industrialists feel that industry needs certain type of trained manpower, we will say that take this ITI and train the manpower locally according to your needs. You will get a good worker for your industry and our ITI will start running. Our youngsters will get employment, his family will be strengthened and better purchasing power will help the economy. We need to push such a cycle. And perhaps that is why I have brought the issue of Ashok Chakra. How this can become a wheel in the journey of our economic development?
At the time of industrial revolution, we were lagged behind as we were slaves. Before that we were known as Golden Bird. That opportunity was lost. Now, a new era of economic regeneration has begun and that belong to Asia. It is our responsibility that how to make it belong to India.
Our greatest strength that 65% population is below 35. I don’t believe that after yesterday’s event, anybody will question our talent. No one can question talent of Indian youth after yesterday’s Mars achievement. Everything was indigenous. We should bring out photographs of the factories where these small parts were manufactured. In these seemingly small factories, every particle was manufactured that made Mars Mission successful. There is no dearth of talent. Mars success should be made an opportunity to make the world aware of Indian talent. It is not just that 65 % of the population is below 35, it is the fact that we have talented and capable manpower.
Second point is Digital India. Corporate world, industrial world and private life is moving fast with digital world. If government and official system lags behind, I can imagine how wide chasm will be created. Entire social system on one side and government on the other. We have taken up the mission of Digital India to bridge this chasm. Why not entire governance should go towards mobile governance?
You will be surprised that in my first ten days I asked, “Please tell me why there are 10 pages in the forms filled in Government?” You must be filling those forms, not you; your staff members must be doing it. I told them on the first day that make it one page and I am happy many departments have done it. There is no reason, all these things are available. We keep on demanding again and again. I mean to say that like ease of business, we also need easy and effective governance. Every person should have his details on the tip of his fingers. These are the things which enable us to move forward.
For a long time Look-East policy is under discussion, everyone is talking about it. This is a good occasion, along with Look East, I would like to talk about link-West. Look-East is on one side and Link-West on the other and we are linking the both from the middle. We can establish our economic structure on a new platform from here. Whatever is the best in the world, why we should not have it? This should be the mood of the nation.
New avenues of business are opening. Please note down my words. I do not know what you have thought. May be some small companies must have thought of it. In the coming days there is big business opportunity in India of creating wealth from waste. We wish to take the work of solid waste management and waste water treatment forward through public private partnership. By generating electricity from waste, garbage of the village you can sell electricity by becoming owner of electricity factory. This big revenue model is coming. We should start thinking I have seen that those who do forward thinking…..many big multinational companies came out to sell vegetables. Because they knew how big is the market. Similarly big companies are likely to come for this wealth from waste. The cleanliness movement that we have started will open many new opportunities. I am inviting interested entrepreneurs. Even small municipalities should come with this revenue model. We invite you.
Opportunities are many, Infrastructure sector is also important as manufacturing sector is important. Now India cannot be run on that infrastructure if we have to reach our desired destination. Earlier, when there was talk of infrastructure, it was over with discussion on Rail, road, port and airport. We have to move towards next generation infrastructure. We need highways similarly we need ‘Iways’ too. When I say ‘Iways’, I mean information ways and that is for digital India. If there are electric grids, we need gas grids and water grids too. We also need optical fibre networks. We are dreaming of an India where private sector has ample opportunities to try their luck.
How do we update ourselves from where we are presently on Public Private Partnership? How to go into unchartered areas? We kept our focus confined to port development. Demand of the time is to move towards port led development. With ports there should be cold storage network, roads, rail, and an airport with port. Unless all this develops as a cluster, we can’t make a place for ourselves in the global market. Hence we wish to emphasize that. This is one big area where you can try your luck. Point is that infrastructure is not an issue of just luxury. If we have to develop tourism; it is estimated that tourism is the industry with the highest growth. Can India capture it? The tourism needs huge infrastructure. There is a big scope for hospitality industry, There are so many avenues, how to harness them?
That is why I submit, whosoever thought of going away; I say no need to go anywhere. This country is yours, thrive here then think of stepping out, there is a different joy in that. There is no joy in going under compulsion. I want Indian companies to become multinational. Indian companies should have their arms elsewhere too. We want this. But we should strengthen our land. We must take steps to give employment to our youngsters. And this is a Government dedicated to development. For this government this is not a political agenda but an article of faith. That is why; I share my belief with you. When I was in Gujarat I used to say with confidence- same officer, same government, same office, same file and the same people, despite this world can be changed. I can say that after coming to Delhi also. The same office, officers, cars, files, and even ways of functioning, still they can be enlivened. India’s direction can be changed. India’s destiny can be changed. I move forward with this confidence.
One of the biggest obstacle in our journey is this that if a decision is made by the centre most of the implementations are taken care of by the states. If there is lack of understanding between the two, the industrialists is at loss whether to go to Delhi or to the State Government. He remains confused. Now, this confusion will no longer be there. I believe that states’ development is for India only. If investment comes in the States, it comes in India also. States and Centre should work collectively, shoulder to shoulder as a team. If centre gets a proposal then centre should go to the State on its own and ask how we can help together. If a State gets a proposal that needs Centre’s help the State should come to the centre without any hesitation, they should find solution together and things move forward. This great need has come up, to meet this, Centre and the States will have to come together.
We often talk of current account deficit, export-import imbalance. Just ask any State, have you done any activity for export promotion- none. They think it to be the job of the centre. Immediately after coming to Delhi, I called the States. I told them that manufacturing is with you. Please bolster their confidence so that they can feel like exporting, Government of India’s rules and policies could be utilized by him. If we will work together, the Industrialist will feel empowered and he will sell abroad. Is the External Affairs Ministry is of any use to him He is sitting in some remote corner of a State making oil engine. Who is bothered? He is living by his hard work. Now, whether it is the State or the Centre, as a facilitator of export, we have decided to take up this role aggressively and pro actively. Now, see what difference will it make! If we say ‘Make in India’, we are ready to stand with you as a facilitator to capture global market. There are many fields like this.
We called financial institutions. See how change comes. Recently we took up the movement of connecting the poorest of the poor to a bank account, keeping in mind inclusive growth. Not that it was not done earlier. Initially people said it was done during our time, not any longer. Because they realise that by saying so it will be revealed that they failed. You can imagine that Bank people opened four crore accounts in such short period. I had said that the accounts could be opened with zero balance. I am amazed that people have deposited 1500 crore rupees. If despite a zero balance offer, people deposit 1500 crore during opening of accounts, this indicates trust. This is the power of trust. Banking sector people moving with such speed can become a standard for the Government moving so fast. Financial Institutions should also get involved in the growth and development. World spread at grass root level, we are making efforts to take this journey ahead in every corner.
I mean, today ‘Make in India’ is not a mere slogan or an invitation, it is our responsibility. If we move forward with determination, world will come looking for us, have faith. For this we need to stress both FDIs. ‘First Develop India’ at the same time ‘Foreign Direct Investment`.
All of you took out time for this and got associated with us at the time of such a big initiative. Many guests have come from abroad too. In many countries of the world and all States this is being live telecast by embassies and business chambers. There also people are participating. I assure you that we collectively fulfil our responsibilities in this concept of ‘Make in India’. We move ahead and attain new heights in manufacturing sector and provide jobs to poor youth of India. With employment poor will give new momentum to the wheels of Indian economy. With this belief, best wishes to all. Navaratri wishes to all.
In my personal life, in my political journey too today is very significant. Today is 25th September, Birth Anniversary of Pandit Deen Dayal Upadhyaya, whose ideas and thought inspired us to begin our political journey. Who gave Integral Humanism philosophy to the world. On the birth anniversary of such a great man, who lived and strived for the country, I have got the chance to dedicate Make in India in feet of such a man. We are determined to fulfil that dream.
Navratri is a festival of ‘Shakti Sanchay’ (strength accumulation). On this occasion of ‘Shakti Sanchay’ , India should also do Shakti Sanchay and become a powerful nation. Move forward with this dream, with this prayer, my best wishes to all.
Ministry of Heavy Industries and Public Enterprises on “Make in India”
Union Minister of Heavy Industries and Public Enterprises, Anant Geete has said here today that all round development of industries is the higher priority of the Government. It has taken a number of initiatives for the development of industries. Minister of State for Ministry of Heavy Industries and Public Enterprises, Pon Radhakrishnan, Secretary for Department of Heavy Industries, Dr. Rajan Katoch and Secretary for Department of Public Enterprises, Ms Kusumjit Sidhuwas also present.
- Full text of the Minister addressed is as follows:
“Progress of India and development of industries in India are more or less synonymous, because on the one hand industry contributes to GDP significantly and on the other hand, the government gets a lion’s share in the form of tax revenue from industrial production, which the govt. spends on the welfare schemes and a lot of employment opportunities are generated in industrial sector as well. Hon’blePrime Minister has put forth the various dimensions of “Make in India” philosophy before the people in his address today.
So far as the contribution of my Ministry with regard to “Make in India” is concerned, I would like to make it clear that my Ministry is always striving consistently in this direction.
In the context of Department of Heavy Industry, the meaning of “Make in India” refers to the, production in India with global quality standards. For this purpose, we will be needing substantial capital and technological investment in India. My Ministry is continually striving to achieve this objective.
Our government has recently conveyed its sanction for a pilot scheme for enabling industries in the capital goods sector to be in line with the global competition for which there is a provision of ` 930 crore, out of which Govt. of India will provide ` 581.22 crore through grants-in-aid and the balance amount will be contributed by the consortium of industries. This scheme includes the following major components;
- Five Centres of Excellence for technology development at IITs (Delhi, Mumbai, Chennai &Kharagpur) and CMTI, Bangalore (` 312.5 crore)
- One Integrated Industrial Infrastructure Facilities Park for Machine Tool, near Bangalore (` 400 crore)
- Two Common Engineering Facilities Centres (one of them at Surat, Gujarat) (` 61.20)
- Testing and Certification Centre for construction equipment and earthmoving machinery (`100 crore)
- Technology acquisition programme (` 50 crore)
In my opinion, this pilot scheme will be proved very effective in promoting the small, medium and micro industries and after evaluation of the same, the scheme will be expanded in a big way.
After Capital and Technical Investment in Capital Goods Industry, demand for skilled manpower in this sector will increase and keeping in view of long term demand, Capital Goods Skills Development Council is making a comprehensive plan under which components like skill gap identification, standardization of occupational standards, identification of master trainers, training for trainers and third party certification etc. are being finalized. Our Ministry is also serious on the issue of utilizing the infrastructure and manpower of the PSUs working under Department Of Heavy Industry, in making the youngsters living in the vicinity of the PSUs, skilled. Such skilled youngsters may be provided employment opportunities in small and medium industries (SMEs) around these PSUs. This plan will be completely based on the demand of skilled manpower, so that there may be a full guarantee of employment for them. I am sure that we would soon be able to present before you the meaningful outcomes of this scheme.
There are 32 PSUs working under Department of Heavy Industry in our Ministry and 11 PSUs are paid Govt. aid as non- plan loan for paying salary for their employees and meeting legal liabilities. A road map for these PSUs is being prepared under which, in future, salary support would not be required.
BHEL, a Maharatna CPSE in our Ministry, is continuing to take decisive steps to invest in R&D and technology improvement with the launch of a totally flexible fuel boiler (for 0-100% domestic or imported coal) for Super Critical Power Plants, the first of its kind anywhere.
We are proposing to establish an Ultra Mega Green Solar Park with an ultimate capacity of 4000MW inRajasthan,with 1000MW solar power plant at an estimated cost of ` 7950 crore, in the first phase by a joint venture of various CPSEs viz. BHEL, Sambhar Salts Ltd., Rajasthan Electronic Instrumentation Ltd., Solar Energy Conservation of India, Power Grid Corporation of India Ltd. and Sutlej JalVidyut Nigam Ltd.
Heavy Electrical Equipment Sector accounts for around 70% of the total capital goods sector in terms of production and is thus very important for the Indian industry. Nearly 3/4th of India’s energy is produced through thermal power. We are already facing coal shortage domestically due to various reasons, forcing us to rely increasingly on import of coal and LNG, nuclear fuel etc. With a view to substantially improve thermal efficiency (approx. 11% over super critical level), we are initiating R&D project for Advanced Ultra Super Critical Technology by involving BHEL, NTPC and Indira Gandhi Centre for Atomic Research (IGCAR). R&D project will run till 2017 which will be followed by a full-fledged thermal power plant of 800MW capacity to be set up by NTPC. This will place India in the top 3 or 4 technologically advanced nations which are all presently in the race of developing this technology.
Auto sector, also administered by my Ministry, is an important sector from the point of view of contribution to National GDP (7.1%) total turnover (approx. US $ 80 billion per year) and employment (approx. 19 million direct and indirect jobs). Based on the bold decision to continue the lower excise duty rates till December 31, 2014, the auto sector has bounced back showing over 12% growth in sales till April-August, as compared to last year. Two wheelers have shown nearly 15% increase, three wheelers 17% and passenger cars 4.5%. Even Commercial vehicles have started improving during this period. My Ministry has commenced work to draft Auto Mission Plan II for the period 2016-26 which will include important subjects of advance technologies, future fuels, export, investment, skills etc. AMP II shall be finalised by middle of next year.
My Ministry has also taken a number of steps to assist the auto sector to become more vibrant and strong. These steps include assistance to auto component units, mainly in tier II & III levels, under the UNIDO-ACMAAuto ClusterSchemefor improving the productivity, management and technical processes etc., covering nearly 500 units over the next 3 to 4 years. Similarly, to improve the supply of high quality skilled manpower to both automobile and auto component units, Auto Skill Development Council (ASDC)has been energized and is now functioning in top gear. Over 100 job rolls have been finalized, as also teaching curricula, training of trainers, identification of centres,accreditation, and certification/examination system, absorption in industry have all been firmed up. During this year, a total of one lakh or more skilled personnel shall be churned out by ASDC.
In a path breaking initiative, my Ministry has finalized the proposal for electric vehicle scheme, which envisages the potential demand for 6-7 million hybrid/electric vehicles across all segments by 2020 which shall yield benefits in terms of fossil fuel saving (over ` 60000 crore) CO2 emission reduction (over two million tonnes) and additional job creation of 2.5-3 lakhs. The scheme incorporating the important areas ofdemand and supply incentives, R&D, charging infrastructure, pilot projects in Delhiand other major citiesetc., involving a total outlay of approx. `14,000 crore is now before the EFC/Cabinet for approval. We hope to launch the scheme very soon.
Let me now talk about the other Department which comes under my Ministry – Department of Public Enterprises (DPE). This department is the nodal Department for all Central Public Sector Enterprises (CPSEs) and lays down policy guidelines on autonomy and financial delegation, performance improvement & evaluation , personnel management etc.
Central Public Sector Enterprises (CPSEs) have played a key role in facilitating the process of India’s economic growth and development since independence.
As on 31.3.2013, there were 277 CPSEs having aggregate investment of Rs. 8,50,599 crore and turnover of Rs. 19,45,777 crore. The total turnover of CPSEs has grown by about 6% and net profit has recorded a growth rate of about 17% from 2011-12 to 2012-13 . These CPSEs contributed Rs. 1,62,761 crore to central exchequer by way of excise duty, customs duty, corporate tax, dividend, etc. during the year 2012-13.The foreign exchange earnings through export of goods and services has shown a growth of 8% in the same period. About 14 lakh people are employed in CPSEs.
Considering the importance of CPSEs in the economy especially in the strategic sectors like Energy, Transportation, Defence etc and the changing economic scenario the effort of DPE has been to enable CPSEs to face the challenges posed by an increasingly competitive domestic and global environment. This has been done by issuing guidelines on Empowerment and Professionalization of Boards, Performance Management & Accountability, Corporate Governance and Corporate Social Responsibility.
We have reviewed the experience in implementing these guidelines and have identified areas which can assist CPSEs to operate more effectively. Operational and financial powers have been delegated to profit making CPSEs through the Maharatna, Navratna and Miniratna schemes. We are ascertaining the extent of usage of delegated powers and exploring areas in which further powers can be delegated to CPSEs so that they can expand operations both in domestic and global markets.
To make the Boards of CPSEs more professional we are improving the process of selection and appointment of Independent Directors on the Boards of CPSEs. We are also aligning the existing Corporate Governance guidelines with the provisions of the Companies Act, 2013. The provision for appointing women directors on the Boards has been brought to the notice of all Administrative Ministries/Departments. The data bank of eligible persons has also been expanded.
An important management tool i.e. the Memorandum of Understanding (MoU) signed between the Administrative Ministry/Department and the CPSE after agreeing on targets, is being strengthened by providing for greater flexibility, benchmarking of performance with national and international peer companies and emphasis on globalization.
The CPSEs are also implementing Guidelines on Corporate Social Responsibility .Under the new Companies Act,2013, the Boards of CPSEs have been empowered to allocate 2% of their profits to CSR activities in defined areas in a transparent manner. Since some CPSEs have desired that DPE should formulate guidelines on CSR, which are specifically applicable to CPSEs DPE has formulated the guidelines on the subject, to supplement CSR Rules of MCA. The same are under consideration of Ministry of Corporate Affairs.
The previous Government had set up a Committee under the chairmanship of S.K. Roongta, ex-Chairman, SAIL for suggesting a road map for further development of CPSEs. We are examining these suggestions afresh.
DPE issues guidelines and renders advice to Ministries/Departments/CPSEs in matters of pay revision of CPSE executives, non-unionised supervisors and wage settlement of workmen. To address unresolved issues of the previous pay revision of 2007 and also to review the pay structure in its entirety, DPE is contemplating the constitution of 3rd PRC for revision of pay scales, allowances and other benefits of executives and non-unionised supervisors of CPSEs.
The functioning of the Board for Reconstruction of Public Sector Enterprises (BRPSE) which is an advisory body looking at strengthening, modernisation, revival and restructuring of sick CPSEs , has been reviewed. We want to streamline the multiple mechanisms which are in place for revival of sick CPSEs and have identified the action points in this regard including strengthening of BRPSE.A committee under CMD,NTPC has been set up to explore the possibility of setting up a separate entity funded by financially strong CPSEs to look at management and revival of sick CPSEs.”