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Fifteen of 45 Companies have Defaulted on CSIR Loans

Fifteen of 45 Companies have Defaulted on CSIR Loans

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One-third of all companies that obtained loans from the Council of Scientific and Industrial Research (CSIR) have defaulted on them, The Hindu has reported. According to Harsh Vardhan, the Union S&T minister, these defaulted loans are worth Rs 102 crore.

CSIR grants “soft” loans with 3% interest to companies for research and development under the New Millennium Indian Technology Leadership Initiative (NMITLI). Since its launch in 2001, 45 unsecured loans amounting to Rs 298 crore have been granted under the scheme.

The NMITLI was initially conceived by R.A. Mashelkar as a loan that could be written off if the technology failed. After the Cabinet rejected this idea, it was restructured as a low-interest loan to encourage development of technologies that could enable India to global leadership positions. At one point, it was hailed as the largest public-private partnership. The scheme sought to “catalyse innovation-centred scientific and technological developments as a vehicle”.

According to Vardhan, who submitted a letter with these details in Parliament in response to another MP’s question, a third of the companies had defaulted on their loans. The biggest of these was Ghaziabad-based Samtel Color Ltd., which had borrowed Rs 28 crore between 2007 and 2010 for developing a “next generation plasma display technology” for a 50-inch “HD TV prototype”. Shortly after availing the loan, however, the company “went sick”, Vardhan said; it’s unclear what he meant.

Faridabad-based Clutch Auto Ltd., which received Rs 14.93 crore from 2007 to 2008 to develop new generation clutches, and Encore Software, which received Rs 3 crore between 2004 and 2005 for developing a platform to replace the PC, have also defaulted on their. The former was declared a defaulter by former S&T-minister Jaipal Reddy in 2014 in a similar letter to the Lok Sabha.

Companies that successfully completed projects initiated under the NMITLI scheme include Lupin and Biocon, according to Vardhan. Tata Consultancy Services, which had borrowed Rs 8 crore to develop a bioinformatics-based application, has paid it back.

Asked about the number of defaulters, a CSIR official told The Hindu that 15 out of 45 was an “acceptable rate.” The official added that CSIR did not intend to write off these loans and would pursue them legally. “However, in terms of successes, this is still a good rate compared with many other scientific departments,” he said.

Last year, CSIR, which runs 37 premier laboratories across the country, had declared a financial emergency. Its then director general, Girish Sahni, had said that changes due to the 7th Pay Commission had left very little for research after allocation for salaries, pensions, etc.

Of the Rs 4,063 crore allocated for CSIR in the 2017-2018 budget, only Rs 202 crore was left for research and laboratory allocations after meeting salary, pension and other commitments. “Of this, a sum of Rs 158 crore has already been allocated,” Sahni said, asking all laboratories to sell their research results to meet their funding requirements and asked them to prepare business status reports on all technologies that could be “out-licensed to stakeholders/industries immediately.”

Further, he aimed to meet 25% of CSIR’s budget for this financial year through such external earnings, and increase it to 50% by 2020. But skeptics termed CSIR’s goals a “pipe dream”. “There is no ready market for CSIR technologies,” Dinesh Abrol, a science policy expert at the Institute for Studies in Industrial Development, New Delhi, had told Science magazine.

The loan defaults also come against the backdrop of India struggling to promote translational research, which focuses on bringing ideas shaped in laboratories into the market. The country is also currently seeing an increasing trend in the number of loan defaulters (see here, here and here). In fact, the 2017-2018 fiscal year saw a default rate of 3.4% as opposed to 2.6% in the previous year. And it is only expected to increase further in the current fiscal year.

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