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Natural Gas Pricing in India, 2014

India is an energy deficient country, importing a significant part of its oil and gas requirements. The Indian gas market is oligopolistic in nature with a large number of consumers and a few producers. State-Owned Enterprises (SOEs) controlled the natu-ral gas production before India embarked on eco-nomic reforms in 1991 to engage the private sector in different industries which were otherwise reserved for SOEs.

Private investment in this sector would happen only if the government could ensure adequate return on investment. Main users of natural gas are companies engaged in power and fertiliser production. Prices of both these products are, in turn, regulated and con-sidered to be politically and socially sensitive for the government to raise their prices. Leaving prices to the market may result in high prices for power and fertilisers. If the govern-ment does not want these prices to go up, it will have to provide for subsidy or share subsidy burden with the SOEs. The government was thus left with the difficult task of balancing these two objectives of providing for adequate return to the natural gas producers and at the same time protecting the inter-

est of consumers.On June 27, 2013, the Cabinet

Committee on Economic Affairs decided to implement the pricing formula suggested by the report of the Committee on the Production

Sharing Contract Mechanism in Petroleum Industry (2012) headed by Dr C Rangarajan (Rangarajan Committee), chief economic advisor to the prime minister of India. The gas pricing decision was noti-fied by the government in January 2014 with the new pricing regime being appli-cable from April 2014 for five years. With the revision in pricing, have the uncertain-ties been removed paving the way for increased invest-ment in the sector? Was the increase in price justified? Will the government re-look at the pricing? Will the price

be rolled back? What will the Supreme Court decide? Amidst these uncertain-ties, it appears that the investment in the sector is likely to be put on hold.

WOSCA

For the past two decades, Women’s Organization for Socio-Cultural Awareness (WOSCA) registered under Charitable Society’s Act in Keonjhar district of Odisha in 1993, has been addressing issues concerned with the tribal poor in the district. WOSCA has implemented various projects and programmes in partner-ship with government and non-governmental organi-sations. Their main areas of expertise being addressing governance and livelihood issues, health and nutrition practices, conservation of environment, introduction of modern methods of ag-riculture and various social issues. An ideological fer-vour exhibited by a group of women invigorated a northeastern district in Odisha over two decades, WOSCA started its event-ful journey visualising a society with peace, joy, happiness sans poverty, ignorance, diseases, exploitation, injustice and backed by solidarity, in-tegrity, fraternity, non-discrimination and prosperity.

WOSCA has a lean structure in the top of organisational hierarchy, a flat structure at the bottom, with a justification that more frontline staff is required to move in society. Strategically, it empowered the field-level workers in the community as agents of socio-economic changes.

WOSCA positioned itself as a re-source optimiser and has proved that it is not the multiplicity of schemes and voluminous fund, but involve-

ment and optimum utilisation is the core of success of developmental projects. WOSCA justifies its interfer-ence into community space on two grounds: Firstly, to give a sense of di-rection to the talented, thereby chan-nelising these forces into desirable di-rections. Secondly, to infuse skills and

competency to those who lack and empowering them by promoting an inclusive developmental paradigm.

WOSCA has always fol-lowed an integrative ap-proach in every project.

WOSCA’s capability to overcome the difficulties in community mobilisation was very impressive, and as a result they could accomplish perceptible progress in so-ciety and the same has been reflected in the number of households covered in the programmes over the years.

Can WOSCA’s learning experiences give a sense of direction to the institu-tions of same genre? What is the busi-ness model of WOSCA? Can the role of WOSCA be termed as a social cata-lyst? Can the initiatives launched by WOSCA make the governance mecha-nism responsible and accountable?

Shobana Sivaraman

Dr. KR Pillai

An Emulative Saga of Social Enterprise Way

Is the Hike Justified?

Abhinav Goel

Prof. Ganesh Kumar Nidugalai

PROF. GANESH KUMAR NIDUGALA,Professor, Indian Institute of Management Indore

ABHINAV GOEL,Senior Director, India Ratings & Research Pvt. Ltd.

DR. KR PILLAI, Professor, School of Management, Manipal University, Manipal, Karnataka

SHOBANA SIVARAMAN,MBA-Healthcare Management, School of Management, Manipal Institute of Technology, Manipal, Karnataka

10�THE ECONOMIC TIMES | NEW DELHI | TUESDAY | 2 FEBRUARY 2016Career & Business Life

India should create aworld-class reverseinnovation lab, with the

central government allocating asignificant sum to start such a facility,says Vijay Govindrajan, Coxe Dis-tinguished Professor at Dartmouth’sTuck School of Businessand a MarvinBower Fellow at Harvard BusinessSchool. In an interview to ET’s RicaBhattacharyya, the New York Timesand Wall Street Journal best-sellingauthor and expert on strategy andinnovation says the purpose is not justto provide a space where entreprene-urs can come but also venture moneyand more importantly managementexpertise. Edited excerpts:

What are the biggest hurdles toinnovation for startups in India?The entrepreneurship focus here isright but we have to take a look at thesteps that we take to reach that goal.What is missing to me is strategies inplace for that to happen. Entreprene-urship and new businesses just don’thappen by itself. It is less to do withindividual capability, which meansthat there is nothing inherently wrongwith Indians whether they can or

cannot innovate. It is the same Indianswho innovate when they go abroad,but they don’t innovate here, so whatis really missing is incentive, capitaland institutional infrastructure. If youput those in place, I don’t see anyreasons why it can’t spur innovationhere.

How do you view Indian ‘jugaad’vis-a-vis high technology?Indian startups need to focus onhigh-tech innovation and not jugaad.Jugaad would be a mistake and I thinkwe have taken the train off the trackwith this jugaad innovation concept.We need the latest technology, not oldtechnology, to solve our problems. Aterm like jugaad puts the emphasis onthe wrong place. What is wrong withjugaad is that to solve big complicatedproblems you can’t say that I will makedo with what we have. We have toinvest in research and development. Ifyou have to bring the cost down, youhave to put the latest technology. Inthe US, the government produces a lotof big research and it benefits a lot ofentrepreneurs, or the basic research istaking place in the big universities andthe entrepreneurs benefit from it. In

India we don’t have that culture offundamental research in universities.

What role should the governmentplay in spurring innovation?If I was advising Narendra Modi Iwould say, ‘why don’t we create aworld-class reverse innovation labo-ratory where the central governmentallocates some significant sum to startthat lab’, and the purpose is not just toprovide a space where entrepreneurscan come but also to give venturemoney and more importantly givemanagement expertise. Most of the

problems in startups are in the initialphases where they have to take anidea work through all the unknownsand uncertainties. That is the stepwhere they fail. That’s where we cangive real management expertise. It isalmost like an incubation lab whereyou can have a national competitionand say we are going to choose 25 bigideas and whoever has an idea cansubmit a proposal and you pick the top25…and bring the team with each oneof these ideas. Some of the teams couldbe from large companies like Tatas,Mahindras…you bring the team for oneor two years, they work inside thisreverse innovation lab where they willget the resources but most important-ly expertise to incubate the idea…ifyou do that I think you can kick-startentrepreneurship and startups muchbetter.

What are the execution challenges inreverse innovation in India wheremajority of the companies are familycontrolled?The biggest execution challenge is thatthese are companies with tremendous

amount of history and success over along period of time, be it Tatas, Muru-gappa Group, TVS, Birlas, Mahindras.When you have such a long history ofsuccess, innovation requires changeand change becomes difficult in acompany with a long history of successbecause it makes you believe whatyou have done in the past is correct.Therefore, they want to maintainstatus quo. They don’t want to changeand that is probably the biggest chal-lenge. The family ownership in these groupshas an advantage but is also a liability.The biggest advantage is patientcapital, they can take long-term bets.The bad side is they have the biggestforgetting problem because if youwant to innovate you have to forget. Ifyou can’t forget you can’t learn newthings. Family orientation brings a lot oflethargy and those are the reasonswhy they struggle (in reverse in-novation). I am not underestimatingthe difficulties of these companies, butwhen I talk to them I tell them these arethe traps into which you could fall.

‘Why Don’t Indians Innovate in India? What’sMissing is Incentive, Capital, Institutional Infra’

Q&A

VIJAY GOVINDRAJANCoxe DistinguishedProfessor at Dartmouth’s TuckSchool of Business

Saumya Bhattacharya &Varuni Khosla

New Delhi: The newly rolled outStartups India initiative might justhave hit an unforeseen bump. Lessthan 4% of engineers who gradua-ted in 2015 have the skills to be emp-loyable in a technology startup, ac-cording to a survey done on employ-ability of engineers.

India produces around 8 lakh engi-neering graduates every year, andthe survey findings are based on anemployability test done on 1.5 lakhengineers who graduated in 2015.This is the first time the ‘NationalEmployability Report’ carried outby Aspiring Minds tested engineerson their startup readiness.

"Investments and growth of tech-nology startups is the new businessstory in India. Startups want stu-dents to learn on live projects, andbe job-ready when they join in," saidVarun Aggarwal, chief technologyofficer Aspiring Minds, a companythat evaluates and certifies jobskills. “Job-readiness of engineersis a huge problem facing them.”

The sample that it tested was takenfrom more than 650 engineering col-leges in India. The engineers wereassessed on language, soft skills,cognitive skills, personality andtechnical skills. Top skills requiredfor technology startup-ready roles,according to the report, include

technical skills; problem-solvingskills; work management and prio-ritisation; learning attitude; andcommunication skills.

According to IT industry lobbygroup Nasscom, employability re-mains a concern for the IT industry,but could be a bigger problem forstartups. In a large IT services kindof setup, companies have time totrain engineers, but startups needpeople who can get to work from dayone. “The well-funded startups aregetting the talent but for the boot-strapped startups, it’s even moreimportant to get talented employe-es, and it is harder," said SangeetaGupta, senior vice-president at Nas-scom.

The association is doing trainingprogrammes around startups onthemes like design capability anddesign thinking, product manage-ment and technology series. “We al-so organise Hackathons. Somewhe-re, there is a need for changes in thecurriculum and Nasscom is wor-king on that,” Gupta added.

Startups have witnessed explosivegrowth in the last few years and thedemand for engineers is on the rise.“There will be an endless need foryoung and dynamic tech coders andengineers to contribute to this dy-namic culture. It is also not just thetechnical skills that make engine-ers so valuable; it’s their tremendo-us brainpower and work culturewhich is deeply rooted within

employability in core sectors acrossindustry isn't great," said Singh.

Edureka, a 200-people interactiveelearning platform, is looking formore than 50 engineers this year. Itis looking for employees based ontheir skills rather than the pedigreeof the engineering college. CEOLovleen Bhatia, an IIT-BHU alum-nus, too feels that there is a huge is-sue of the quality of engineers avai-lable out of college and it is normal-ly not great.

Venture capitalists say the talentdeficit has made salaries extremelyhigh. “Hiring top tech talent rema-ins the single hardest challenge forastartup, especially ones that aren'theavily funded,” said SandeepMurthy, partner at Lightbox Ventu-

res. “But it’s not all bad. What we’reseeing around is that this has forcedstartups to find inventive alternati-ves to throwing money at the pro-blem. The growth of hackathonsand increasing number of ‘self-le-arning’ online tools and classes arecreating a new breed of tech talentand ultimately a new, healthier ta-lent pool in India.”

At venture-funded startup Chaay-os, which serves the $6-billion Indi-an tea market, engineers accountfor more than 90% of the 200-plusworkforce. For the company, fin-ding good people is more challeng-ing than ever before. Its reliance onthe internal referral network for hi-ring is increasing. The companyhas stopped interviewing unknownengineers as there may not be eno-ugh credibility without a recom-mendation. "We are looking for onlyengineers with high ownershipskills. They need to be on ground forthree to four days before we hirethem," said cofounder Nitin Saluja.

LivQuik, which runs mobile wal-let QuickWallet, employs a team ofabout 50, half of which is engineers.“Not only are we losing good engi-neers to bigger firms but also biggerstartups who are willing to shell outbig money to hire them. The kind ofpeople we want to attract now areyounger, but want to learn and it do-esn't matter whether they comefrom the top institutions or not,” sa-id cofounder Yudhajit Nag Sen.

them,” said Kunal Shah, founderand CEO of Freecharge. As many as80% of the digital wallet platform’s200 employees is engineers.

Startups like Chaayos, PepperTap,Edureka, MySmartPrice, LivQuikare hiring engineers and say thatfinding quality, job-ready engineersis a priority, and often a challenge.

Nearly 80% of PepperTap's 2,500-strong workforce are engineers andthe CEO, Navneet Singh, admittedthat hiring good talent in a startupis always difficult. This is a concernat a time when the startup economyis going through a consolidationpatch. In the coming year, Pepper-Tap will need 120-130 engineers alo-ne, but is only looking for those whohave their foundation right. "The

Less than 4% of fresh engineering graduates qualify as job-ready for a startup technology role

Startups Find Enough Funds butnot Many Employable Engineers

Employability in Roles (%)IT Roles

Associate ITeS/BPO

40.57%

Creative Content Developer

16.72%

Technical Content Developer

11.66%

Business Analyst- KPO

10.96%

Associate ITeS Operations (Hardware Networking)

37.06%

Sales Engineer

19.08%

Electronics Design Engineer

7.07%

Design Engineer

6.56%

Chemical Design Engineer

1.64%

Engineering Roles Non-Tech Roles

Software Engineer IT Services

17.91%

Startup-ready IT Services

3.84%