Kerala Budget 2020 – Comments

Perspective of a marine startup, MSME shipyard

Some good things first.

  1. As a startup the most important benefit one can get is to get sales. Kerala govt. led the way three years back with ADITYA, India’s first solar ferry. Riding on its success we got six more solar ferries. Now this budget has announced 110 Cr. for water transport that includes Solar ferries and Solar RORO ferry. A step indeed and a validation of our argument that solar ferries are not only environmentally friendly, but also value for money.
  1. After getting a purchase order the next issue a startup faces is to arrange working capital to execute the project. To solve this issues the budget has announced soft loan valued 90% of purchase order, upto 10 Cr, at a low interest of 10% and collateral free. This is best thing that has happened to startups. This is one scheme which StartupIndia can emulate and take it to a higher level. Currently we struggle to get finance at 15% and it gets worse when govt. firms like Cochin Shipyard forces MSME to finance the project for them with skewed payment terms – 100% after delivery!
  1. When it comes to pushing the limits of frontier in technology, one thing that act as barrier is the lack of grant support. Kerala Startup Mission (KSUM) provides grants upto 15 lakhs and it has helped many firms like us. The announcement of 1 Cr. grant for social impact startups is a great move. This move will accelerate development of many products lined up. This is another scheme which StartupIndia can emulate and take it nationally and at a higher level.
  1. The West Coast Canal, 585 Km long water way from Bakel to Kovalam will be opened for transportation in 2020-21. Its width will be increased from 20 m to 40 m. This will transform inland navigation and give fillip to passenger and cargo transportation on water.

Things that could have been better.

  1. KSUM is one of the best run organisation that supports the ecosystem. This year the allocation has been increased by 5% to 73.5 Cr. It should have been much more.
  1. MSME are the backbone of any economy. It is no different for India or Kerala. The issue MSME faces in getting projects and finance at reasonable rates is solved. However MSME also get discriminated by other means. Let me quote the case of boatbuilding. There has been many projects in the recents time that should been done by MSME boatyards, instead, by gaming the tender, it has been given to large shipyard. In one case, KMRL water metro project, Cochin Shipyard (CSL) got the tender with no experience of building electric boats but with just their balance sheet strength. Other projects which should have been built by MSME boats yards, again built by CSL, were the water ambulance project for fisheries department, RORO ferries for Cochin Corporation. Govt. firms and PSUs must resist the urge to award small-boat projects to large shipyards which eventually lead to these small yards getting killed. 

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