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New policy assures Rs 7,000-cr business for Dalit, ST entrepreneurs

T E Narasimhan  |  Chennai 

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.

First Published: Tue, December 13 2011. 00:47 IST