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CHAPTER 3
SMALL SCALE INDUSTRIES: A FRAMEWORK
3.1 SMALL BUSINESS IN INDIA
The Small Scale Industrial (SSI) sector plays a key role in the
Indian economy in terms of its input to the
exports, employment and the creation of an entrepreneurial base. This sector
has witnessed a high growth rate since 1947 regardless of heavy competition
from the large-scale sector. The rapid growth of the small-scale industries has
a great persuasion in our national economic policies. The expansion of the
small sector has also enhanced the production of non-durable consumer goods
of mass consumption. The yielding period or the development period is faster
in the small-scale industrial units dispersed around the country and are
commonly set up to satisfy the local demand for goods, which may later cater
to the overall economic and global requirements. Small-scale industries have
significance in the overall economic growth of our country, since a small unit
can be established with relatively less capital and offers more employment
opportunities to those who are skilled, semi-skilled and unskilled.
3.1.1 Role of Small Business in India
Small Scale Industries in India enjoy a different position in view of
their contribution to the socio-economic development of the country. The
following point emphasizes their contribution:
49
(i) Small industries in India account for 95 per cent of the
industrial units in the country. They contribute almost 40 per
cent of the gross industrial value added and 45 per cent of the
total exports for the country.
(ii) Small industries are the second largest employers of human
resources, next to agriculture. They generate more number of
employment opportunities against per unit of capital invested
compared to large industries. So they are considered to be
more labour intensive and less capital intensive. This is an
advantage for a labour surplus country like India.
(iii) Small industries in the country supply a vast variety of
products which include mass consumption goods, readymade
garments, hosiery goods, stationery items, soaps and
detergents, utensils, leather, plastic and rubber goods,
processed food and vegetables, wood and steel furnitures,
paints, varnishes, safety matches and so on. Among the
sophisticated items manufactured are electric and electronic
goods like televisions, calculators, electro-medical
equipments, electronic teaching aids like overhead projectors,
air conditioning, drugs and pharmaceuticals, agricultural tools
and equipments and several other engineering goods. A
special mention should be made on handlooms, handicrafts
and other products from traditional village industries in view
of their export value.
(iv) The contribution of small industries to the balanced regional
growth of our country is significant. Small industries which
produce simple goods using simple technologies and depend
on local resources both material and labour can be set up
50
anywhere in India. Since they can be widely spread without
any location constraints, the benefits of industrialization can
be reaped by every region. They, thus, contribute significantly
to the balanced development of the country.
(v) Small industries provide plenty of opportunity for
entrepreneurship. The hidden skills and talents of people can
be channeled into business ideas which can be transformed
into reality with little capital investment and almost no
formalities to start a small scale industry.
(vi) Small industries also enjoy the advantage of low cost of
production. Locally available resources are less expensive.
Establishment and running costs of small industries are on the
lower side because of low overhead expenses. In fact, the low
cost of production which small industries offer is their
competitive power.
(vii) Due to the small size of the organizations, speedy decisions
can be taken without consulting many people like it happens
in large organizations. New business opportunities can be
captured at the right movement.
(viii) Small industries are best suited for customized production.
i.e., designing the product as per the taste of the customers.
The latest trend in the market is to go in for customized
production of even non-traditional products such as computers
and other such products. They can manufacture according to
the needs of the customers as they use simple and flexible
production methods.
51
(ix) Small industries have in-built strength of flexibility and a
personal touch and therefore maintain good personal relations
with both customers and employees. The Government does
not have to involve in the functioning of a small scale unit.
New business openings can be captured at the right time, thus
providing healthy competition to big business which is good
for the economy.
3.1.2 Role of Small Business in Rural India
Conventionally, rural households in developing nations have been
sighted as exclusively engaged in agriculture. There is an increasing proof
that rural households can have highly varied and multiple sources of income
and that, rural households can and do participate in a wide range of non
agricultural activities such as wage employment and self-employment in
commerce, manufacturing and services, along with the conventional rural
activities of farming and agricultural labour. This can be largely credited to
the policy initiatives taken by the Government of India, to support and
promote the setting up of agro-based rural industries.
The emphasis on village and small scale industries has always been
an integral part of industrial strategy, after the second Five Year Plan
of the country. Cottage and rural industries play a vital role in providing
employment opportunities to the rural, especially the traditionally weaker
sections of society. Development of rural and village industries can also
prevent movement of rural population to urban areas in search of
employment. Village and small industries are important as producers of
consumer goods and absorbers of surplus labour, thereby addressing the
issues of poverty and unemployment.
52
3.1.3 Challenges and Opportunities for the Small Scale Industries
The various agreements entered into by WTO (World Trade
Organization) member nations including India will have far-reaching
implications on the Micro and Small Scale Industries, as they have
traditionally been controlled by a number of factors obstructing their
competitiveness. Some of the agreements which have already had a
noteworthy impact on Indian industry and particularly the micro and small
enterprises are GATT (General Agreement on Tariffs and Trade),
TRIPS(Trade Related Intellectual Property Rights) and TRIMS(Trade Related
Investment Measures) Agreement on Technical Barriers to Trade.
Decrease in import duties under GATT and elimination of Quantity
Restrictions (QRs) have improved the inflow of cheaper imports particularly
from China and affected the domestic sales of micro and small enterprises
leading to declining profit margins. On the positive side, reduction in duties
on imports of good quality raw materials and accessories have improved the
access of domestic industry to crucial raw materials resulting in improving the
quality of finished products like high value ready-made garments, leather
goods, gold jewellery etc., resulting in better export awareness.
Widespread prospects to Indian manufacturers in the markets of
other member countries are made possible as no favoritism is permitted
between imports from member countries. In the domestic market this has
given rise to competition for micro and small enterprises, which is expected to
lead in the consolidation of industry. Those intending to survive will have to
grow in size, set up best capacities, enter into strategic alliances with Large
Scale Industries or their SME counterparts in other developing countries or
enter into tie-ups with global manufacturers. Enterprises will have to
53
concentrate on manufacturing products in which they have a clear cost
advantage.
The Agreement on Technical Barriers to Trade (TBT) has permitted
member countries to lay down their own stringent manufacturing standards on
products imported from the developing countries to protect health and safety
of their people and to protect the environment. Enterprises who are unaware
of these internationally accepted manufacturing standards or have failed to
adopt them have faced rejections of their exports as in the case of Azo dyes,
which have been banned by European Union. To overcome technical and
environmental barriers, enterprises will have to harmonize their production
processes with international standards. This would require increased
investments in latest technologies, Research and Development, Quality
Certifications and in turn increase the cost of production of micro and small
enterprise.
Under the Agreement on Safeguard Measures counter availing
duties on cheap imports that cause injury to domestic industry is permissible
and this would safeguard the products made by micro, small and medium
enterprises in the domestic market. Agreement on Anti-dumping Measures
also allows Governments to take action against exporters who dump products
into India, causing damage to domestic industry.
Agreement on Trade Related Intellectual Property Rights (TRIPS)
requires WTO member countries to amend their legislations for various
Intellectual Property Rights including Trademarks, Copyrights, etc. This
Agreement and the amendments in the Indian Patent Act will put severe
restrictions on SSIs manufacturing patented products through reverse
engineering. These enterprises being unable to mobilize huge resources for
Research and Development and patenting of their products will have to tie up
with large manufacturing companies as contract manufacturers.
54
Most of the restrictions imposed on foreign investors as in the
agreement on TRIMS (Trade Related Investment Measures) have been
relaxed so as to improve the flow of FDI (Foreign Direct Investment) into the
Indian industry. Indian industry also benefit due to enhanced inflow of FDI
which brought in the latest technology and extended market openings for
these industries through strategic alliance. Already selective de-reservation of
some sectors has started taking place with a view to enhancing exports and
competing effectively in the global market.
In order to fight the developments under the WTO regime,
Government policies relating to trade and industry in India have been
significantly liberalized and tailored to keep with the WTO related trade
commitments. These actions have accelerated the competition, not only in the
global markets, but also in the domestic market due to the improved inflow of
low cost imports and significant FDI even in the Micro and Small Enterprises-
dominated sectors.
The rural industries function in a different scenario. They may have
to strive for overcoming the problems which characterize them at present. The
multitude of agencies involved in promotion of the sector has to address the
contradictions between the programmes of the different departments/agencies
with a view to integrate them. For instance, rural crafts are promoted and
supported by separate agencies like KVIC, Development Commissioner
(Handicraft), etc., with very little give and take. The same applies to agencies
like NABARD, SIDBI, Coir Board, Central Silk Board, Banks, etc.
In this regard a planned and systematic approach is imperative and
the Cluster Approach may be regarded as the desirable one in this direction.
The task would commence right from sensitizing and creating needed
awareness among the entrepreneurs about the positive and challenging
features under the WTO regime with a view of making them responsive to the
55
measures to be adopted to cope with the challenges and benefit from the
opportunities.
The agencies may also have to re-orient their approach and become
proactive and responsive for intensive and coordinated action in a
collaborative mode. Here again, the methodology perceived under the Cluster
Approach may be regarded as a promising tool in achieving results through
interventions towards organizing the widely dispersed production,
standardization of products, quality development, technology up-gradation,
infrastructure expansion, organized marketing efforts, patenting including
registration for Geographical Indication (GI), export oriented activities and tie
up with the Corporate. It would also be favorable for social interventions
wherever desirable. The role of Banks and Financial Institutions is of greater
importance in the highly competitive industrial surroundings as they are the
main launch pad for all the above developmental initiatives. Finance at
worldwide equivalent interest rates may have to be channelized into the
enterprises and targeted at the entire range of promotional activities
(technology or export-oriented) to bring in the necessary conversion of units
into more competitive units. In the post -WTO environment, the financial
needs of different sectors would vary and the priorities also vary. Suitable
financial products and need-based financing schemes have to be developed to
suit the various requirements of the sector.
Major employment provider
Employment in the manufacturing sector has been largely created
by the small scale industries. In the total manufacturing sector, the share of
organized small scale industries is about 49%. The household and
unorganized SSIs together contribute 37% of the employment created.
Together all SSIs, organized and unorganized create employment to the level
of about 86% of the manufacturing sector.
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Rural industries
Rural and Traditional Sector industries largely from the
unregistered SSIs and unorganized sector contribute about 15 % of the total
output of Small Scale Industries but about 40% of the work force is employed
in rural industrial sector. These industries are based on traditional skills and
are based on simple manufacturing processes that are carried out by making
use of hand tools regularly and in some cases by employing simple machines.
This also makes clear how larger employment is generated in these units.
3.1.4 Institutional Finance for Small Scale Industries
The following institutions through their various schemes provide
financial support to small scale industrial sector under the overall policies and
guidelines evolved by the Reserve Bank of India.
At the National Level
SIDBI (Small Industries Development Bank of India) -mainly in
the course of re-finance, NABARD (National Bank for Agriculture and Rural
Development), NSIC(National Small Industries Corporation), Khadi and
Village Industries Commission, IDBI Ltd, IFCI, Nationalized Banks, DCSSI
(Development Commissioner Small Scale Industries ).
At the State Level
SFCs (State Financial Corporations), SIDCs (State Industrial
Development Corporations)-for Infrastructure / Finance, State Cooperative
Banks, Khadi and Village Industries Board.
57
At Regional and District Level
RRB (Regional Rural Bank), District Central Cooperative Banks,
Primary Cooperative Banks, State level Institutions and Nationalized Banks,
Khadi and Village Industries Commission, (DIC)District Industries Centre.
3.1.5 The Government Promotional Framework and Assistance to
Small Scale Industries
The State and Central Governments in India together established an
elaborate structure for promoting the small scale industrial sector:
National level, in pursuance of the suggestions of International
Perspective Planning team (1953-54), numerous institutions have been set up.
There is CSIO (Central Small Industries Organization) which has been
renamed as SIDO (Small Industries Development Organization). During the
last four decades, this institution has emerged as the core promotional agency
at the national level with a professional staff of more than 13,000 in the year
1993. It consists of 28 SISIs (Small Industries Service Institutes), 30 branch
SISIs, 37 extension centers in specific products and 74 workshops as on1993.
However, over the years, some of these have been wound up because of their
financial problems in continuing the business. These institutions provide
technical and management consultancy services, arrange training
programmes, conduct techno-economic study, prepare project profiles as
demanded and help to prepare specific project reports. Besides, there are four
regional testing laboratories with state of the art equipment and 19 field
testing stations which are meant to promote awareness on quality control and
standardization, provide testing facilities, provide pre-shipment inspection as
required by the EPC (Export Promotion Councils), and organize related
58
training programmes. In addition, there are two PDTC (Prototype
Development and Training Centers) to develop new technologies and upgrade
the existing technology. There are many other technical institutions that are
working with SIDO, which are more specialized in the fields of tool designing,
Electronics and Measuring instruments, Prototype development and Hand tools,
etc., Four CTRs (Central Tool Rooms) in Bangalore, Calcutta, Delhi and
Ludhiana, have been set up under bilateral assistance programs.
Keeping in view the contribution of small business to employment
creation, balanced regional development of the nation, and promotion of exports,
the Government of Ind s policy drive has been on establishing, promoting and
developing the small scale industrial sector, predominantly the rural industries
and the cottage and village industries in backward areas. Governments both at
the central and state level have been actively participating in promoting SSIs by
offering support in different forms as listed below:
i. Institutional support in respect of credit facilities
ii. Provision of developed sites for construction of sheds
iii. Provision of training facilities
iv. Supply of machinery on hire purchase
v. Assistance for domestic and export marketing
vi. Technical and financial assistance for technological up-gradation
vii. Special incentives for setting up of enterprises in backward
areas
All these are mainly concerned with the promotion of small and
rural industries. Some of the support measures, institutions, and programmes
59
meant for the promotion of small scale industries and to offer the above
mentioned supports are listed below:
9 National Bank for Agriculture and Rural Development
(NABARD),
9 The Rural Small Business Development Centre (RSBDC),
9 National Small Industries Corporation (NSIC),
9 Small Industries Development Bank of India (SIDBI),
9 National Commission for Enterprises in the Unorganized Sector
(NCEUS),
9 Women Entrepreneurship Development (RWED),
9 World Association for Small and Medium Enterprises
(WASME),
9 District Industries Centers (DICs),
9 Integrated Rural Development Programme (IRDP),
9 World Association for Small and Medium Enterprises
(WASME)
9 Prime Minister Rojgar Yojana (PMRY),
9 Scheme of Fund for Regeneration of Traditional Industries
(SFURTI),
9 Schemes to provide skills - Training of Rural Youth for Self
Employment (TRYSEM),
9 Schemes to strengthen the gender - Development of Women and
Children in Rural Areas (DWCRA)
60
Schemes to provide wage employment like
9 Jawahar Rojgar Yojana (JRY), and
9 Food for Work.
All the rural development programmes are aimed to achieve the
twin objective of
9 Creation of rural infrastructure, and
9 Generation of additional income for the rural poor, particularly
during the lean agricultural season.
Furthermore, there are schemes for specific groups of industries
such as khadi, handlooms, and handicrafts.
Some of the common incentives offered to SSIs, as a token of
encouragement, are discussed as below:
(i) Land -Every State provide developed plots for setting up of
industries. The terms and conditions may vary. Some States do
not charge rent in the initial years, while some allow payment in
installments.
(ii) Power- is supplied at a concessional rate of 50 per cent, while
some states exempt such units from payment in the initial years.
(iii) Water- is supplied on a no-gain, no-loss basis or with 50 per
cent concession or exemption from water charges for a period of
five years.
(iv) Sales Tax- In all Union Territories, industries are exempted
from sales tax, while some States extend exemption for five years.
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(v) Octroi - Most States have abolished octroi.
(vi) Raw materials - Units located in backward areas get preferential
treatment in the matter of allotment of scarce raw materials.
(vii) Finance - Subsidy of 10-15 per cent is given for building capital
assets. Loans are also offered at concessional rates.
(viii) Industrial estates - Some States prefer setting up of industrial
estates in backward areas.
(ix) Tax holiday - Exemption from paying taxes for 5 or 10 years is
given to industries established in backward, hilly and tribal
areas.
3.1.6 Industrial Agency Administrative Department / Ministry
These are the Ministries and Departments in the country to
encourage/support SSIs: Ministry of Industry-Small Scale Industries, Small
Industries Development Organization, Department of Small Scale, Agro and
Rural Industries, and Ministry of Textiles.
National Small Industries Corporation (NSIC) is a vital institution
set up in 1955. Primarily it facilitates supply of imported machinery on easy
finance terms, provides marketing assistance, operates PDTC (Prototype
Development and Training Centres) in specific fields like injection moulding
industries, machine tools, leather manufacturing equipments etc., NIESBUD
(National Institute of Entrepreneurship and Business Development) has been
set up to train and promote personnel, industrial managers and entrepreneurs.
Other national level institutions that are assisting the small scale sector are
NRDC (National Research Development Corporation), BIS (Bureau of Indian
Standards), NPC (National Productivity Council), CDC (Consultancy
Development Centre) and ETDC (Electronics Test and Design Centre). The
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central financial institutions have also set up the EDII (Entrepreneurship
Development Institute of India) at the national level to encourage
entrepreneurship. All the above mentioned institutions are largely meant for
the modern small scale industry. For promoting khadi and village industries, a
separate commission has been formed by the Ministry of Industry. Likewise,
for the handlooms, handicrafts, sericulture, and other non-modern small units,
there are separate divisions to encourage them. At the state level, the
Governments have set up institutions as follows: SIDCs (Small Industry
Development Corporations) to expand infrastructure in the form of industrial
plots and industrial sheds, SFCs (State Financial Corporations) to support
long term credit requirements, and State Exports Promotion Corporations to
provide marketing assistance for exports from the small scale sector. TCOs
(Technical Consultancy Organizations) that provide technical, financial and
marketing support to the sector. CEDs (Centre for Entrepreneurship
Development) and IEDs (Institute of Entrepreneurship Development) have
been set up to promote entrepreneurship through training. At District level, in
1978, the Central Government launched a programme for establishing District
Industries Centres to provide under a one roof clearance, all types of support
services, licences, and certificates required by the SSI promoters. There are
more than 400 centres, covering many districts.
3.1.7 The Non-government Promotional Structure
There are three national associations representing entire industries in the country. These associations are FICCI (Federation of Indian Chambers of Commerce and Industries), CII (Confederation of Indian Industries) and ASSOCHAM (Association of Chambers of Commerce and Industries). These associations represent mainly the interests of large scale industries. Though these associations have membership of the small sector as well and represent mainly the policy related interests of small scale industrial sector. The exclusively small industry related associations are diversified geographically
63
and sector wise, these are supposed to have been linked with FASSI (Federation of All India Small Scale Industries), FOSMI (Federation of Small and Medium Industries) and also ICSI (Indian Council of Small Industries). However these institutions are weak in character due to their working for cross purposes and lack of vibrant perspective for small scale sector expansion. They have almost no linkages with the small industry in general and their local associations in specific. Another institution that is concerned with the small and medium enterprises is WASME (World Assembly of Small and Medium Enterprises). There are only a few of the local associations that are involved in providing specific individual level services to the small industries. However, all the associations are concerned with lobbying the Government to provide one or the other facilities or benefits to the small scale sector.
3.1.8 Development of Small Scale Industries During Five Year Plan
Periods
It has been demonstrated that the SSIs have received a step- motherly treatment at the hands of the British rulers and have been made to disintegrate. But the national movement, ever since its commencement, has made every effort to protect and organize them. The Government considers the small-scale sector as an important necessary instrument for attaining the economic and social objectives and has evolved a programme for the development of these industries as an integral part, development of other sectors of the economy.
This approach was first laid down in the Industrial Policy Resolution (IPR) of 1948 and was later adopted as the basis for policy in the First Five Year Plan. The same was reiterated and further elaborated in the IPR of 1956. It has subsequently become a part of the strategy for economic development in the consecutive plan periods.
64
Development of Small Scale Industries During Pre-Plan Era
In the first phase of development of SSIs, the accent was laid on providing favorable climate conducive to the setting up of new units as well as the modernization and nationalization of existing small-scale units. Manufacturing units in this sector have been protected from competition from the better organized large-scale units by providing subsidies and preferential excise duties as well as by imposing restriction on the production pattern in large scale units.
Industrial Policy Resolution 1948 and the Ford Foundation Team Recommendations are the other major events with regard to SSIs during the pre plan era. Industrial Policy Resolution (IPR) 1948 was the basis to frame the First Five Year Plan. It recommended mon Production Programme to ensure both Large Scale Industries (LSI) and SSI sectors make their contributions to the total requirement of the community. The Ford Foundation International Planning Team on SSIs was invited to formulate plans for the development of SSIs. It recommended the setting up of four regional institutions at Gauhati, Faridabad, Poona and Madura.
First Five Year Plan (1951-1956)
The First Five Year Plan had two-fold objectives. Firstly, it aimed at correcting the disequilibrium in the economy caused by the war and the partition of the nation. Secondly, it planned to initiate simultaneously a process of all-round balanced development which would guarantee raising the national income and steady improvement in living standards over the period.
Second Five Year Plan (1956-1961)
The principal objective of the Second Five Year Plan was to increase the national income by about 25 per cent over the plan period and creation of employment opportunities for about 10 to 12 million persons.
65
In the thinking and the formulation of the Second Five Year Plan also
the village and small industries assumed a dominant role. Industrial Policy
Resolution (1956) based on the recommendations of the Karve Committee stated
that lack of technical and financial assistance and suitable working
accommodation were among the serious handicaps of small producers.
Observations:
The State has been following a policy of supporting SSIs by
restricting the volume of production in the large-scale sector by differential
taxation. The aim of the state policy will be to ensure that the decentralized
sector acquires sufficient vitality to be self-supporting and its development is
integrated with that of large-scale industry. An effort has been made with the
establishment of industrial estates to support these deficiencies.
The progress during the first and second plans of village and small
industries were reviewed in the middle of the second plan by a number of
working groups. During the First Five Year Plan, agriculture got all the
importance and during the Second Five Year Plan large-scale industries
received the prominence. The thinking of the policy makers at that time was
to consider SSIs as a supporter to LSIs. SSIs were to play the supportive role
by providing the requirements of the employees of the large-scale sector i.e.,
to say SSIs role was limited only to the production of consumer goods.
Third Five Year Plan (1961-1966)
During this period credit facilities which were an essential
requirement of all village and small industries had to be organized on a larger
scale. A substantial provision had been made for loans under State Aid to
Industries Act to meet the need for long and medium term capital as well as
working capital.
66
Considerable progress was also made in providing credit facilities
to Small Industries from institutional agencies. In pursuance of the
recommendations of the Rural Industries Planning Committee which was
constituted in April 1962, rural industries projects were taken up in selected
rural areas.
Table 3.1 Actual Expenditure in Third Five Year Plan (1961-1966)
Sl. No
Sector
Planned
Expenditure `In crores
Actual
Expenditure `In crores
Percentage of Actual Expenditure to
planned Expenditure `In crores
1 Agriculture 1068 1089 1.96 2 Industries 1520 1726 13.55
3 Village and Small Industries
254
240
(-) 9.09
4 Total 7500 8577 14.36 Source: Commerce Annual Number on Industries, 1968, pp.306.
It is evident from the above table that the actual expenditure
crossed the planned expenditure in both agriculture and industrial sectors, but
in the case of Small Scale Industries sector, actual expenditure is less than the
planned expenditure.
Fourth Five Year Plan Period (1969-1974)
The objectives and approach in the fourth five year plan were
drafted by keeping in view the wide range of industries that are covered by
Village and Small Industries. This sector had been designed to achieve the
objectives of widening employment opportunities, mobilizing the resources of
capital and skill particularly in the countryside, and providing more equitable
distribution of national income.
67
The number of units (SSIs) registered on voluntary basis with the
Industries Directorates of the States and Union Territories became increased
from nearly 2 lakhs in 1969 to about 3.18 lakhs in 1972 and the total
employment in these units was estimated to be at 41.4 lakh persons. A further
list of 77 items was added to those reserved for exclusive development of the
small-scale sector bringing the total to 124. And there was a substantial
increase in the flow of institutional credit for these industries. The Credit
Guarantee Scheme administered by the Reserve Bank of India was further
extended and liberalized. A total of 183 credit institutions including all the
major commercial and cooperative banks and the SFCs have joined the
scheme.
Fifth Five Year Plan (1974-1979)
The fifth five year plan emphasized that small industries had an
important role to play in the eradication of poverty, removal of disparities in
income, wealth and regional imbalances. The sector had definite potential for
providing increasingly large employment opportunities with relatively smaller
capital investment. During the Fifth Five Year Plan, the emphasis was on the
development of SSI and their role as ancillaries to large undertakings. The
combined development programmes of the Centre, States and Union
Territories were expected to create additional jobs for 15-16 lakh persons. The
progress made during this plan period was not encouraging due to various
factors but mainly due to inflation and political disturbances. But the progress
made in the field of providing infrastructural facilities to SSI sector was
satisfactory.
The fifth five year plan could not continue its full term due to the
changes that took place at the Union Government in January 1977. The plan
was scrapped by the Janata Government in 1977 and in its place the Rolling
Plan was introduced.
68
Another vital development during this period had been the
establishment of District Industries Centres (DICs). It was an umbrella for the
growth of SSIs. The District Industries Centre programme was launched in
first May 1978 by the Government of India as a focal point for promotion of
small, cottage and village industries to provide all services and support to the
decentralized sector under a single roof at pre-investment, investment and
lost-investment stages.
All the assistance required for developing existing industries or
supporting the new ones under one roof at the district level itself were
provided so that the delays and difficulties faced by the industrialists and
entrepreneurs were solved locally. Under this scheme of DIC, the
entrepreneurs were to get all special assistance from one agency. Of the more
than 420 districts in the country, 380 were covered by DIC scheme during
1981-82.
Sixth Five Year Plan (1980-1985)
Promotion of SSIs continued to be an important element in the
development strategy because of its favorable capital output ratio and the high
employment intensity. The RBI continues to operate the credit guarantee
scheme for SSIs. For target or priority sector lending through the commercial
banks was increased from 33 per cent to 40 per cent.
However, some of the long-term objectives set for the VSI (Village
and Small Industries) sector are still to be achieved. The growth and
development of this sector had been constrained by several factors like lack of
technological advancement, availability of raw materials, lack of marketing
channels, availability of credit facility and deficient managerial skills, etc.
69
Seventh Five Year Plan (1985-1990)
The SSI sector had played a vital role in the development of the
economy and still there was scope for increase in production and productivity
by this sector. To facilitate modernization and achieve rapid growth in this
sector, the upper limit on the investment on plant and machinery had been
raised with respect to small scale units from `20 lakhs to `35 lakhs and in the
case of auxiliary industries from ` 25 lakhs to ` 45 lakhs. Promotion of
industries in this dispersed sector primarily fell within the responsibility of the
State Governments. The Centre, however, supplemented their efforts. Within
the overall aim of food, and work productivity laid down in the Seventh Five
Year Plan, this sector contributed towards improving the occupational profile
of rural, semi-urban economic and weaker sections of urban communities
through promotion of VSIs.
Eighth Five Year Plan (1992-1997)
The plan proposeda growth rate of 5.6 percent per annum on an
average during the plan period. The level of investment proposed to
be at ` 798 crores and Public Sector outlay was proposed to be at ` 4, 34,100
crores. Acceptance of significance of industrialization had been a basic tenet
of policy in India during all these years since the execution of the Second Five
Year Plan. But, for this, the country would not have had the capital goods
base, the highly diversified nature of the industrial sector and the skills and
the technical know-how all that it possesses today.
The outlay on VSIs was ` 4778 crores (`34,075 crores for large and
medium industries),a departure in 8th plan was in respect of the significant
distribution of investment in both the public and private sectors in view of the
shift in economic policy, placing greater reliance in the market. The private
sector was expected to shoulder a greater responsibility in investment.
70
After going through the approach paper on Eighth Plan, it appears
that the Eighth Five Year Plan was less fussy about targets and more about
such industrial restructuring as could automatically make for better use and
enlargement of resources in industrial sector through the spurt of private
enterprises and initiatives including foreign investment.
Ninth Five Year Plan (1997-2002)
Ninth plan recognized that the biggest problem facing the small
scale sector was the inadequate availability of credit and proposed a number
of initiatives in this regard like strengthening the financial and managerial
base of State Financial Corporation and Small Industries Development
Organizations to enable them to provide better services to the small scale
sector. However, there had been lack of effective coordination among the
various support organizations setup over the period of time for the promotion
and development of these industries. The productive activities in over 67% of
firms were constrained due to inadequate physical infrastructure. Small scale
industries had to depend upon the State Electricity Board for meeting their power
requirements, but these in turn did not supply the regular and adequate power.
Regarding road transport is concerned, poor conditions of roads and
vast delays in octroi and entry points had the most lasting adverse effects on
SSI sector. Following the adoption of the import liberalization policy during
the 1990s, tariff material like steel, copper and many non-ferrous metals,
plastics, several chemicals, papers, etc., remained high in comparison to tariff
on manufactured goods. This in turn had created the problem of significant
inversion in tariff structure, which specifically hurt small firms since they
were more labour intensive and had high material to output ratios.
Competition became increased under the WTO regime and posed a threat to
many obsolete and uncompetitive small scale units which might lead to the
closure of several of them. Following the removal of quantitative restriction,
71
many SSIs especially in the consumer goods sector found it difficult to survive as
more imported product would find an easier access to the Indian market.
Due to the absence of marketing organization, their products
compared unfavorably with the quantity of products from multinational
companies and large scale Indian industries. Poor infrastructural facilities and
competitive strength, slow technical upgradation, ignorance of WTO
provisions, lack of international exposure and flow of costly credit were the
main factors responsible for the low performance recorded in these industries.
This low performance can be seen from the statistics that the expenditure had
been `385.45 crores against the outlay of `600 crores for village and small
industries during the ninth plan.
Tenth Five Year Plan (2002-2007)
During the Tenth Five Year Plan the sectorial share of industry in
the GDP started rising after continuous decline. The contribution of
manufacturing also maintained an increasing trend after falling in the first
year of the Tenth Plan.
The Annual Survey of Industries (ASI) is the vital source of data
for the registered units and no reliable data were available for the unorganized
units from the ASI. In this situation, the Central Statistics Organization (CSO)
has been using the limited Index of Industrial Production (IIP) to project
growth of both the organized and the unorganized units at a two digit level for
manufacturing. Cotton, textiles, paper and paper products, metals and alloys,
machinery and transport equipment, and other manufacturing industries
scored substantial rate of growth, while beverages, tobacco products,
chemicals and chemical products maintained notable rates of growth. After
recording negative growth in the first two years of the Plan period, cotton
textiles made remarkable growth in the last three years, which created a level
72
playing field between the small-scale and large industries. The performance
of the textile industries other than cotton was striking. The performance of the
capital goods industry was another positive feature in view of the implication it
had about the rising investment in manufacturing. The production of metals with
both steel and non-ferrous metals showing a good response, rushed ahead.
Although paper and paper products showed good overall growth,
the performance was uneven. Chemical products were lifted by the
accelerating growth in the export of pharmaceutical products. Another key
industry that seemed to be on a high growth path was automobiles and parts,
in which both domestic and export demands had been increasing. The three
areas that have shown negative growths were jute, textiles, wood products,
and leather and leather products.
Quantitative restrictions on trade had already been progressively
eliminated before the Tenth Five Year Plan period and import tariffs on non-
agricultural products were drastically reduced after the introduction of
economic reforms in 1991 92. The process was carried forward strongly and
peak tariffs on non-agricultural products were brought down from 30% in
2002 03 to 10% in the Union Budget for 2007 08. The Foreign Direct
Investment (FDI) policy was also successively liberalized during the Tenth
Five Year Plan.
Eleventh Five Year Plan (2007-2012)
In order to achieve an average growth rate of 9% per annum in
GDP during the Eleventh Five Year Plan, it has been projected that,
individually, industry and manufacturing will have to grow at an average
annual rate of 9.8%. Innovation and Entrepreneurship hold the key to
enhancing the role of SMEs in improving the Indian economy. As their
importance is not well realized, countrywide programmes on entrepreneurship
73
and innovation have been launched in the shape of a national movement.
Recognition for innovation and entrepreneurship in the clusters and education
institutes has been given.
Self Help Groups (SHGs) of Women and their associations and
networks, etc., have been encouraged with increased micro financing and
revolving credit during the 11th five year plan. The potential of the organized
sector linking up for quality and international attainability has been brought to
the light and encouraged.
A strong requirement for preparing sectoral technology profiles of
the SMEs has been felt. These technology profiles will help in critically
addressing technology needs in line with the business requirements of the
sector. To begin with, 10 SME sectors namely Food and allied industries,
Wood and wooden products, Paper, Leather and leather goods, Rubber goods,
Plastic goods, Glass and ceramics, Electrical machines, appliances ,
apparatuses, Bicycle parts, tricycles and Sports goods can be taken up for
technology profiling. There is another strong need for creating awareness
about IPR (Intellectual Property Rights) amongst the SMEs. Patenting should
be encouraged by offering financial support and subsidies. Similarly, quality
assurance, eco-labelling, bar coding of products should also be encouraged.
There are a large number of engineering and professional societies
in the country. They are content with interactions with the big companies,
who support them by way of corporate membership and sponsorship of
events. There is a need to bring a paradigm change in this approach so that
these professional societies would evolve, during the 11th Plan, specific
programmes which will go a long way in enhancing the scientific and
technological capabilities of the SMEs.
74
Twelth Five Year Plan (2012-2017)
The recommendations of the Working Group are considered to be
vital to support the growth of the MSME sector during the12th Five Year Plan
period. The Group would like to point out the following aspects in the
recommendations given wherein the execution of which will be essential for
the ski-jumping of MSME Sector in the global market place.
Finance
SME exchanges operations for facilitating access to Equity Finance
Technology
Scheme for attainment and up-gradation of technology
Infrastructure
Developing clusters of excellence, setting up of 100 Tool Rooms
and PPDCs (Process cum Product Development Centers).
Marketing
Procurement policy for Goods/services from MSEs by the
Government Depots and Central PSUs (Public Sector Undertakings). B2B
(Business to Business) International portal. Enabling global footprints of
MSMEs. Leveraging Defence Offset Policies in favour of MSMEs.
Skill Development
Skill Development and Capacity Building Programmes are aiming
at encouraging youngsters/First Generation Entrepreneurs by up-scaling
75
PMEGP (Prime Employment Generation Programme) and other
programmes.
Institutional Structure
Strengthening of Institutions MSME-DIs, EDIs and KVI
Institutions Application of E-tools in promotional and regulatory matters for
facilitating easy entry. Real time Statistical and Policy Analysis through
strengthening of Database.
The Working Group recommends 6 umbrella schemes relating to
six verticals, i.e Credit and Finance, Technology and Innovation,
Infrastructure, Marketing, Skill and Entrepreneurship Development, and
Institutional Structure.
The schemes mentioned under each vertical would be treated as
components of the Umbrella Scheme.
Table 3.2 Umbrella scheme-proposed plan allocation for 12th five year plan (2012-2017)
Sl. No.
Allocation Projected Expenditure
for 12th Plan (` in cr.) 1 Credit and Finance 19,450 2 Technology Up gradation 9,500 3 Infrastructure Development 11,360 4 Marketing and Procurement 2,110 5 Skill Development and Training 3,600 6 Institutional Structure 3,100 7 Khadi and Village Industries sector 14,800 8 Coir Sector 870
Total 64,790 Source: Report of the working group on micro, small and medium enterprises growth for
12th five year plan (2012-2017)
76
Recommendations of the 12th plan
It is suggested that the scheme should be promoted to support the
development and strengthening of the small, tiny and micro enterprises in the
following manner.
i. From among the already existing / newly formed SHGs,
Producers Collectives etc. identification and recognition of the
cluster of SHGs within the cluster or concentration of SHGs
within a radius of geographical area should be done.
ii. These SHGs should be notified as Enterprise and Business
Resource Centres or each member of SHG as an own account
worker and therefore an enterprise.
iii. The mapping and grading as per their age, competencies, etc.,
should be done for the notified SHGs / Producer Collectives.
iv. Based on the above, needs would be assessed and based on the
need assessment, the different technical, commercial, and
academic institutions would be identified which will provide
the needed inputs to the SHGs / Producer Collectives. These
institutions / agencies / universities will conduct workshops,
trainings, case studies, and work on technology inputs and
technical services as per the need.
v. To integrate the micro enterprises into mainstream trade, these
SHGs / Producer Collectives / micro enterprises under
Enterprise and Business Resource Centres should be given
stimulus by
(a) Providing tools and equipments,
(b) Infrastructure,
77
(c) Tax and duty exemptions,
(d) Access to softer credit,
(e) Certification to the products,
(f) Brand building,
(g) Marketing and related inputs including organizing buyer-
seller meet etc.,
(h) Designing and product development inputs, and
(i) Access to and application of modern technology to the
use of unorganized sector workers.
vi This could be further supported and it lead to the development
of IT centres, technology parks etc. for the workers from the
unorganized sector.
vii Micro Enterprises in the unorganized sector should be given
need based loans at reasonable rates of interest along with the
provision for adequate period of moratorium to help the Micro
enterprises to face the initial period of teething trouble.
Enterprise and Business Resource Centre is an effort towards
accelerated approach to empowerment of informal economy
workers. This will lead to development of owned and
managed micro enterprises by the unorganized sector workers.
Further it will enhance the linkages and partnerships between
the existing technical institutes, agencies and facilitate the
access and application of the existing knowledge, resource and
application to strengthen the unorganized sector workers
enterprises. Through the Enterprise and Business Resource
Centers, effort should be made to identify the potential of the
78
individual or group keeping in view their hereditary skills
capacity for innovating products for the contemporary market.
The Sub-group has identified three major areas to focus. These are:
1. Skill Development,
2. Credit and handholding support, and
3. Infrastructural support.
Table 3.3 Details of cost component of the schemes (for 5 years 2012-2017)
Sl. No.
Scheme development
No. of persons
Cost involved (`in Crore)
1 Skill development 1.5 crore 17550
2 Hand holding support 50 lakh 2500
3 Credit support 25 lakh 7500
4
Infrastructure
development
25 lakh
16000
5
Creation of database of
Unorganized sector
2000
Total cost 45550 Source: Report of the working group on micro, small and medium enterprises growth for
12thfive year plan (2012-2017)
Proposed Outlay during the 12thPlan Period
The following outlay is required for completion of the schemes /
programmes recommended by sub group during the 12th Plan Period to considerably enhance the marketing potential of MSMEs.
79
Table 3.4 Proposed outlays during the 12th plan period (2012-2017)
Sl. No Name of the scheme
Total cost of
the scheme (`in Crores)
Contribution by
implementing agency
(`in Crores)
Budgetary
support (`in Crores)
I Existing Schemes
1
Marketing Development Assistance (MDA) Scheme, Marketing Assistance Scheme and International Co- Operation scheme
500
-
500
2 Financial Assistance for using Global Standards (GSI) Bar Coding
20
-
20
3
Performance and Credit Rating scheme for Micro and small Enterprise
270
-
270
Total (Existing Scheme) 790 - 790 II New Schemes
1 Establishment of Marketing Organization (SPVs) in Clusters
40
18
22
2
Scheme for Development of Marketing Infrastructure for MSMEs under Public Private Partnership
500
325
175
Total (New Schemes) 540 343 197 Total Outlay (Existing and
New Schemes)
1330
343
987
Source: Report of the working group on micro, small and medium enterprises growth for 12th five year plan (2012-2017)
80
3.2 SMALL SCALE INDUSTRIES IN TAMILNADU
3.2.1 Tamil Nadu Small Scale Industries Profile
Tamil Nadu is one of the well-developed states in India in terms of
industrial development. In the post-liberalization period, Tamil Nadu has
emerged as one of the leading states by attracting a large number of
investment proposals especially in recent times.
The Small Scale Industries, defined in terms of value of productive
machinery, made an early start in Tamil Nadu with the Government stepping
into setting up of major industrial estates at Guindy and Ambattur in Chennai.
In 1973, Tamil Nadu had the most number of SSIs in the country with 18,500
registered units and since then it has maintained this leadership, by and large.
When the Second All India Census of SSIs was carried out in 1987-88, Tamil
Nadu was still the leader in terms of units and employment, though not in the
growth rate. According to SIDBI (2000), in its Report on small-scale
industries sector during 1988-89 to 1998-99, the Tamil Nadu SSI sector
continued to grow fast. The average annual rate of growth of number of units
was 12.8 per cent and of employment 10.9 per cent.
As a vital sector of the economy, Small Scale Industries sector
accounts for 95 per cent of industrial units, 40 per cent of production in
manufacturing sector, 35 per cent of exports and employment to 30 lakhs
persons in the State. There are nearly 4,20,000 registered SSI Units and total
investment amounting to nearly ` 12,500 crores. The contribution of Small
Scale Industries to employment generation is next only to Agricultural and
allied industrial sectors. The SSI sector has been measured as a commanding
instrument for realizing the twin objectives namely Accelerated Industrial
Growth and Creating additional Productive Employment Potential in rural and
backward areas.
81
The Government agencies concerned with Small Industries consist
of the Small Industries Department at the Secretariat, the Directorate of
Industries and Commerce, the Tamil Nadu Small Industries Development
Corporation (SIDCO), the Tamil Nadu Small Industries Corporation
(TANSI), the Entrepreneur Development Institute and Tamil Nadu Industrial
Co Operative Bank (TAICO Bank) and Industrial Co-operatives.
The Village and Small Industries sector encompass as five Sub-
Sectors. They are Small Scale Industries (under the control of the Director of
Industries and Commerce), Handlooms and Textiles, Khadi and Village
Industries, Handicrafts Development and Sericulture.
I. Small Scale Industries
Directorate of Industries and Commerce - It is the nodal agency
for planning and executing various schemes for the promotion of Small Scale
Industries in Tamil Nadu. It provides a range of services through the District
Industries Centres such as registration of SSIs, training of entrepreneurs,
industrial guidance, promotes Village and Small Industries by organizing
Industrial Co-operatives (particularly for match, tea and coir industries) and
identifies and promotes craftsmen and artisans engaged in the handicrafts
industry.
The Department of Industries and Commerce also implements a
variety of programmes to provide financial support, technical assistance and
guidance service to the existing as well as new industries. These programmes
are executed with an accent on the development and rejuvenation of
industries, up-gradation of technology and quality control. It operates through
a network of District Industries Centres (DICs), in each district, headed by a
General Manager.
82
The range of activities undertaken by the Department includes:
i. Registration and promotion of small scale and micro industries
and industrial co-operative societies.
ii. Sanction and disbursement of different subsidies and
incentives like State Capital Subsidy, Generator Subsidy, and
Power Tariff Subsidy.
iii. Offering a variety of testing amenities for chemicals, metals,
metallurgical, and electrical and electronic gadgets /
appliances.
iv. Execution of centrally sponsored schemes like Self
Employment Programmes for the Educated Unemployed
Youth and Prime Rozgar Yojana Schemes.
v. Conducting Entrepreneur Development Programmes
particularly for women.
vi. Creating awareness about the different policies and
programmes of the Government through seminars and
dissemination meetings.
vii. Extending Escort Services to the Entrepreneurs.
viii. Maintenance of exceptional purpose Industrial Estates for
Electrical and Electronics Industries.
ix. Extending entrepreneurial guidance through Data Bank and
Information.
x. Technical information sections and centres attached to many
District Industries Centers.
83
xi. Identifying new areas of growth potential and providing
familiarization and incubator facilities to promising
entrepreneurs.
xii. Conducting Techno-Economic Surveys.
xiii. Conducting Sample and Comprehensive surveys.
xiv. Development and promotion of cottage and handicrafts
industries.
xv. Providing training facilities in the field of light engineering,
tool and die designing.
xvi. Assistance to the introduction of capital goods machineries
and scarce raw materials.
xvii. Execution of Quality Control Act on Electrical household
appliances, and such things.
xviii. Export Promotion.
xix. Supervision of implementation of special assistance schemes
announced by the Government in favour of small and tiny
sector units.
The promoters are supported in getting statutory clearances from
Local Bodies, Town Planning, Pollution Control Board, Factories, Public
Health, and other Departments and getting power connections through the
Single Window Committee. The District Single Window Committee has been
formed with the District Collector as the Chairman. A State Level Committee
under the Chairmanship of the Chief Secretary to Government periodically,
reviews the functioning of the District Window Committees in the State.
In order to promote micro and rural industries, around 300 Blocks
in the State have been declared as industrially backward. SSIs located therein
84
are eligible for grant of the State capital subsidy, Low Tension Power Tariff
(L.T.P.T.) subsidy and other concessions. These incentives and concessions
are also available to the units located in the Industrial Estates and Industrial
Complexes sponsored by Government Agencies. An outlay of ` 200 crores
was provided for the Small Scale Industries including Industrial Estates
during the Ninth Five Year Plan (1997-2002) for which the expenditure
incurred was around ` 124 crores.
The Prime Rozgar Yojana Scheme, (PMRYS) for the
Educated Unemployed Youth was launched by the Government of India on
2nd October 1993 for supporting the educated unemployed youngsters to set
up self-employment ventures in Industries, Services, Businesses, and so on.
Under this scheme training is provided in Government recognized institutions.
During the Ninth Plan Period as against the target of 90,500 persons to be
trained, 68,525 persons were trained. A total number of 73,672 applications
were sanctioned for providing financial support to the tune of` 380 crores of
which an amount of ` 297 crores was dispersed to 59,578 applicants. The
subsidy was met entirely by the Government of India.
3.2.2 Tamil Nadu Small Industries Development Corporation
Limited (TANSIDCO)
Tamil Nadu Small Industries Development Corporation Limited
(TANSIDCO), a Government of Tamil Nadu Undertaking was funded in the
year 1970 with the definite objective of playing a crucial role in the
promotion and development of Micro and Small Enterprises (MSEs) and to
accelerate uniform industrial dispersal in the state.
The performance of SIDCO during 2011-12 and the programmes
for the year 2012-13 on various activities are discussed below:
85
Formation of Industrial Estate:
Prior to establishment of SIDCO, Government of Tamil Nadu
established 35 Industrial Estates through Directorate of Industries and
Commerce. Afterward SIDCO developed 59 Industrial Estates on its own. At
present totally 94 Industrial Estates are functioning under the control of
SIDCO.
(a) New Industrial Estates
It was announced during 2012-13 Budget that in the following
places New Industrial Estates would be established.
Table3.5 List of new industrial estates (2012-2013)
Sl.No.
Name of the Industrial Estate
District
Area (in acres)
1 Rasathavalsu Tirupur 51.8
2 Venmaniathur Villupuram 38.88
3 Vaniambadi Vellore 7.08
4 Marikundu Theni 79.43
5 Pidaneri Thuthukudi 108.23
6 Mathur Pudukottai 19.92
7 Palayapatti Thanjavur 103.03
8 Virudhunagar (Urban) Virudhunagar 37.54 Source: TANSIDO policy note 2012-2013
86
Out of the eight locations, Industrial Estates have been
established in two locations viz., Venmaniathur and Rasathavalasu. For the
remaining 6 locations, lands have been taken possession and the development
work will be taken up during this year. In addition to the 6 locations, it is
proposed to establish new Industrial Estates at the following 7 locations.
Table 3.6 Lists of proposed new Industrial Estates (2012-2013)
Sl. No.
Name of Industrial Estate
District
Area (acres)
1 Kurukkalpatti Tirunelveli 68.77
2 Minnur Vellore 10
3 Pattnam Villupuram 60.55
4 A.Sathanur Villupuram 219.52
5 Ponnukudi Tirunelveli 82.18
6 Chengarai Thiruvallur 36.53
7 Asanur(Phase-II) Villupuram 143.94 Source: TANSIDO policy note 2012-2013
Under MSE CDP Scheme, besides the above at Kurichian a
Common Facility Centre with an area of 1.51 acres, will be established.
(b) Land Identification:
To promote industrial estates continuously, land identification has
to be carried out on a continuous basis. During 2012-2013, lands measuring
1257.53 acres have been identified in another 15 places and the process of
alienation/acquisition is under progress.
87
Table 3.7 List of land identified for new Industrial Estates (2012-2013)
Sl. No. Name of Village / Taluk Name of the District Extent (In acres)
1
Kalakurichi Karur
70.79
Aravakurichi
2 Vazhkai
Tiruvarur
50.43 Nannilam
3
Sedapatti Madurai
50.91
Peraiyur
4 Kattamaduvu
Thiruvannamalai
83.78 Chengam
5
Sadayampalayam Tiruppur
67.86
Dharapuram
6 KandiyanKoil
Tiruppur
252.44 Tiruppur
7
NanjaiUthukuli (Ph 2) Erode
56.5
Erode
8 Thandarai
Kancheepuram
43.9 Chingleput
9
Vaipur Tiruvarur
58.21
Tiruvarur
10
Mullu-vadi
Vellore
25.53 Allalacheri
Nagaleri
Arcot
11 Kaverirajapuram
Thiruvallur
135.18 Uthukkottai
12
Enambakkam Thiruvallur
200
Uthukkottai
13 Pappambadi
Thiruvannamalai
60.83 Murugapadi Polur
14
Kasthuripatti Salem
51.71
Sankagiri
15 Vadamugam
Erode
49.46 Kangeyampalayam Perundurai
Total 1257.53 Source: TANSIDO policy note 2012-2013
88
Table 3.8 Sale of worksheds / developed plots during 2011-12 and target for 2012-13
Sl. No
Particulars
Target for the year 2011-12
Value (` in Lakhs)
Achievement for the year 2011-2012 (Up
to Feb-2012) Value (` in Lakhs)
Target for the year 2012-13
Value (` in Lakhs)
Nos. Value Nos. Value Nos. Value
1 Development of Plots
260
1928
107
340.16
250
2250
2
Sale of Developed
Plots
932
6787
-
-
905
6598.16
3 Sale of
Worksheds
10
155.9
3
153.74
43
944.98
Source: TANSIDO policy note 2012-2013
Creation / Up gradation of Infrastructure facilities in new / existing
Industrial Estates:
SIDCO has created / upgraded infrastructure facilities in new /
existing industrial estates under Micro, Small Enterprises - Cluster
Development Programme (Infrastructure Development) (MSE-CDP).
a) Creation of Infrastructure facilities in new Industrial Estates
Under this scheme, Government of India has approved project
worth of `4074.12 lakhs up to 2011-12for creation of infrastructure facilities
in 12 new Industrial Estates. Out of the 12 projects, 8 projects have been
completed, 3 projects (Asanur, Arakkonam and Pollupalli), are in progress
and in one project (Karaikudi), Government of India approved the project and
work will be taken up after receiving of the Government of India sanction
order. During 2012-13 SIDCO has proposed to take up infrastructure works in
7 new industrial estates as follows.
89
Table 3.9 Infrastructure works in seven new industrial estates (2012- 2013)
Sl. No.
Name of the
Industrial Estate and Districts
Project cost (`in lakhs)
Funding Pattern
Stage Grant
from GOI - 60%
(`in lakhs)
SIDCO - 40%
(`in lakhs)
1
Palayapatti Phase-I 770
462
308
Sanction order awaited from
Government of India
Thanjavore District
2
Vaniyambadi, 58
34.8
23.2
Sanction order awaited from
Government of India
Vellore District
3
Mathur (New), 240
144
96
Sanction order awaited from
Government of India
Pudukottai District.
4
Virudhunagar (Urban)
330
198
132
Proposals sent to
Government of India (GOI)for sanction Virudhunagar
District
5 Pidaneri,
805
483
322 Proposals will be sent
to Government of India
Thoothukudi District
6
Marikundu, 720
432
288
Proposals will be sent to Government of India for sanction
Theni District.
7
Kurukkalpatti, 890
534
356
Proposals will be sent to Government of India for sanction
Tirunelveli District.
Total 3813 2287.8 1525.2 Source: TANSIDO policy note 2012-2013
b) Upgradation of infrastructure in the existing Industrial Estates
Government of India has approved projects worth of
` 2389.15 lakhs for the up gradation of infrastructure facilities in 12 existing
industrial estates. Out of the 12 chosen existing Industrial Estates, in 6
industrial estates upgradation works have been completed, and in 6 industrial
estates(Alathur, Kakkalur, Kovilpatti, Athur,( Karur) Mettur and
Ganapathipalayam), upgradation works are in progress.
90
During 2012-13, SIDCO has proposed to upgrade infrastructure
facilities in 2 existing industrial estates as shown below.
Table 3.10 Proposed infrastructure upgradation facilities in existing industrial estates (2012-13)
Sl. No.
Name of the Industrial Estate
Project cost (`in lakhs)
Funding Pattern
Grant from GOI 60% (`in lakhs)
Grant fromGOTN
30% (`in lakhs)
Beneficiaries Contribution 10%
(`in lakhs)
1 Malumichampatti
200
120
60
20 Coimbatore District
2
Thiruverumbur, 368
220.8
110.4
36.8
Trichy Dist. TOTAL 568 340.8 170.4 56.8 Source: TANSIDO policy note 2012-2013
State Government Part II Scheme
SIDCO has been availing grant from Government of Tamil Nadu
under Part II towards strengthening of infrastructure in the existing industrial
estates and so far availed `100.00 lakhs as presented below:
Table 3.11 Grant for strengthening of infrastructure in the existing industrial estates (2006-12)
Sl. No.
Year
No. of Industrial
Estates Benefitted
Approved project cost (` in lakhs)
Government of Tamil Nadu grant
(` in lakhs)
Remarks
1 2006-07 3 101.5 25 Completed 2 2007-08 3 114 25 Completed 3 2008-09 3 120 20 Completed
4
2011-12
5(Marthandam, Gummidipoondi,
R.K.Pet, Thiurmudi- vakkam, Urapuli)
150
30
Total 485.5 100 Source: TANSIDCO citizen s chapter 2012-2013
91
During 2012-13 it has been proposed to strengthen the
infrastructure facilities of the following 3 Industrial Estates at a total cost of
`110.00 lakhs:
Table 3.12 Grant for strengthening of infrastructure in the industrial estates for 2012-13
Sl. No
Name of the Industrial
Estate
Year of Establishment
Extent
in acres
Project Cost (`in lakhs)
contribution 75%
(`in lakhs)
Government of Tamil
Nadu Grant 25% (`in
lakhs) 1
Thoothukudi Phase I,
1988
9.72
50
37.5
12.5 Tuticorin Dist.
2
Keelanagachi, 1993
10
25
18.75
6.25
Ramnad Dist. 3
Gudimangalam 1992
6.74
35
26.25
8.75
ThiruppurDist. Total 110 82.5 27.5
Source: TANSIDCO citizen s chapter 2012-2013
Assistance to States for Infrastructure Development of Export and Allied
Activities: (ASIDE)
The Special Purpose Vehicle (SPV) called Guindy Industrial
Estate Infrastructure Up gradation Company (GIEIUC) which was formed for
the purpose of upgradation of infrastructure facilities in Thiru-Vi-Ka
Industrial Estate, Guindy has implemented the project at a cost of `2794.50
lakhs sanctioned under the Government of India ASIDE scheme during 2005-
06.
92
Industrial Infrastructure Upgradation Scheme (IIUS)
The ongoing upgradation works at Ambattur,
Thirumudivakkam and Thirumazhisai Industrial Estates under the
Industrial Infrastructure Up gradation Scheme was sanctioned by
Government of India at a project cost of `49.00 crores during 2004-05. A
Special Purpose Vehicle called M/s. Chennai Auto Ancillary Industrial
Infrastructure Upgradation Company (CAAIIUC) has been created for the
purpose of implementing the project and it is nearing completion.
Government of India is directly monitoring the work unders IIUS. Further
sum of `12.10 crores has been sanctioned under Government of India ASIDE
scheme as gap funding for the project. SIDCO is monitoring the works.
Common Facility Centre
SIDCO has been nominated as the implementing agency for
establishing Common Facility Centres in Tamil Nadu under MSE-CDP
scheme. In total 50 Projects were identified in Tamil Nadu for
implementation, out of which 15 projects at a total project cost of `57.39
crores have been approved from the Government of India with a maximum of
70% grant for a sum of `36.89 crores. The Government of Tamil Nadu has
sanctioned a grant of (maximum 10%) `4.97 crores. Out of the above 15
projects, 7 projects have been already completed. The remaining 8 Common
Facility Centres are under implementation.
During 2012-13, SIDCO has proposed to take up 20 Common
Facility Centres in Tamil Nadu. The status of the above clusters is
summarized as below:
93
Table 3.13 List of projects identified in Tamil Nadu for implementation (2012-13)
Sl. No. Description Nos. 1 Projects implemented 7 2 Projects under implementation 8 3 Sanctioned and order awaited 1 4 Government of India sought clarification from SIDBI 1 5 To be taken up by the Steering Committee 8 6 Under process approved by Government of India 6 7 Under process with Government of Tamil Nadu 4 8 Projects ready for State Steering Committee 10 9 DPRs under preparation 5
Total 50 Source: TANSIDCO citizen s chapter 2012-2013.
Raw Materials Distribution
One of the main functions of SIDCO is to distribute quality raw
materials to Micro and Small Enterprises at affordable prices. SIDCO is
distributing raw materials from its depots situated at Ambattur, Coimbatore,
Madurai, Trichy, Sattur, Sivakasi and from its branch offices located at Erode,
Salem, Thanjavur, and Vellore. The details of raw materials supplied are:
i. Iron and Steel
ii. Wax
iii. Potassium Chlorate and
iv. TNPL Paper
The details of target and achievements for the year 2011-12
and Target for the year 2012-13 appear in Table 3.14.
94
Table 3.14 Details of achievements for the year 2011-12 and target for the year 2012-13
Quantity in MT Value in` Lakhs
Sl. No.
Name of the
Material
Target for 2011-12
Achievement for 2011-12 (Up to Feb-2012)
Target for 2012-13
Quantity Value Quantity Value Quantity Value 1 Iron and steel 9800 3920 3857.92 1672.7 4981.07 2169.71 2 Wax 6000 5220 4049.265 3461.03 5300.85 4646.3 3 TNPL (Direct Sales) 400 210 184.93 106.18 242.09 147
3 TNPL (Agency
Sales)
1118.8
548.2
453.127
247.47
494.43
269.6
4 Potassium Chlorate 50 34 4 2.8 5 3.34 5 Essar Steel 87.128 37.68 200 70
Total 17369 9932.2 8636.37 5527.86 11223.45 7305.95 Source: TANSIDCO Citizen Chapter 2012-2013
Assistance rendered under Marketing
Under this scheme, the SIDCO approaches the Government departments, and local bodies on behalf of Micro and Small Entrepreneur units which are registered with SIDCO. The orders received are distributed among Micro and Small Enterprises and execution of orders is monitored to ensure quality and timely supply. Payments are received from the Departments, Undertakings, local bodies for the supplies affected and payment released to Micro and Small Enterprises after deducting 3% as consultation fees.
SIDCO has executed orders worth`151.81 lakhs upto February -
2012.To make a substantial progress in 2012-13, the target has been fixed as
`197.87 lakhs.
E-Governance: SIDCO has initiated action to computerize all its activities so as to have a good E-Governance. At present, downloading of application forms for allotment are made available in its website. Software is being developed with the assistance of National Informatics Centre to file the application for allotment of plots online.
95
Table-3.15 Financial performance of SIDCO (2007-2012)
Sl. No.
Particulars
2007-08
` in lakhs
2008-09 ` in
lakhs
2009-10 ` in
lakhs
2010-11 ` in
lakhs
2011-12 (Provisional) ` in lakhs
1 Revenue By sale of Plots and Sheds
6322.2
8059.7
9496.71
7589.11
8446.66
2 Other Revenue 1945.2 1833.6 2126.51 2166.14 2015.39 3 Total 8267.5 9893.2 11623.2 9755.25 10462.05 4 Profit 848.44 309.52 2180.31 1862.73 814.29
5 Dividend paid
to Government
87
87
87
87
87
Source: TANSIDCO citizen s chapter 2012-2013
Table 3.16 List of Industrial Estates managed by SIDCO (2012-13)
Sl. No.
Name of the District
Name of the Industrial Estate Year of formation
Total Extent (in acres)
1
(1) Chennai
Guindy (G) 1958 404.08 2 Arumbakkam (S) 1979 3.92 3 Villivakkam (S) 1979 2.04 4 Kodungaiyur (S) 1979 7.88 5 Ambattur (G) 1963 1167 6 Kakkalur (G) 1988 199 7 Kakkalur-Phase II (G) 2009 84.01 8
(2) Thiruvallur Thirumazhisai (S) 1988 160.85 9 Gummidipoondi (S) 1988 25.24
10 R.K.Pet (S) 1996 8.15 11 Vichoor (S) 1994 59.16 12 Thirumullaivoyal (WIP) (S) 2001 225.88 13
(3) Kancheepuram
Kancheepuram (G) 1968 37.95 14 Maraimalainagar (S) 1981 39.5 15 Alathur (S) 1984 150 16 Thirumudivakkam (S) 1993 201.11 17
(4) Vellore
Katpadi (G) 1968 19.48 18 Arakonam (G) 1968 11.09 19 Arakonam- Phase II (G) 2009 40.65 20 Ranipet (S) 1972 113.44 21 Mukuntharayapuram (S) 1980 86.19 22 Vannivedu (S) 1987 16.44 23 Vinnamangalam (S) 2009 10.49 24 (5)Thiruvannamalai Thiruvannamalai (G) 1968 15.56 25
(6) Krishnagiri
Krishnagiri (G) 1965 41.86 26 Uthangarai (S) 1995 41.28 27 Hosur(SIPCOT) (S) 1976 95.15 28 Hosur (New) (S) 1999 18.8 29 Bargur (S) 1995 13.05 30 Bargur Phase II (S) 2009 18.59 31 Pollupalli (S) 2009 60.96
96
Table 3.16 (Continued)
32 (7) Dharmapurai
Dharmapuri (G) 1965 20.28
33 Kadagathur (S) 2009 7.02
34
(8) Salem
Salem (G) 1967 19.55
35 Mettur (G) 1967 184.38
36 Karuppur (WIP) 2004 51.7
37 Veerapandi (S) 1993 9.79
38 (9) Namakkal
Namakkal (S) 1977 10.09
39 Thiruchengodu (S) 1980 9.18
40 (10)Erode
Erode (G) 1959 25.13
41 Nanjaiuthukuli (S) 1995 13.05
42 (11) Coimbatore
Kurichi (G) 1972 88.43
43 Malumichampatti (S) 1994 36.14
44
(12) Tiruppur
Ganapathipalayam (S) 1993 17.1
45 Tiruppur (S) 1978 10.14
46 Gudimangalam 1992 6.74
47 Rasathavalasu (S) 2011 51.8
48 (13) Nilgiris Ooty (S) 1981 10.65
49 (14) Cuddalore
Cuddalore (G) 1971 15.6
50 Vadalur (G) 1972 26.22
51 (15) Villupuram
Asanur (S) 2009 107.8
52 Venmaniathur 2011 38.88
53 (16) Peramablur Elambalur (S) 2009 44.48
54
(17) Thanjavur
Kumbakonam (G) 1968 32.3
55 Thanjavur (G) 1968 21.94
56 Pillayarpatti (S) 1974 10.96
57 Nanjikottai (S) 1996 26.3
58 (18) Nagapattinam
Nagapatinam (G) 1966 20.97
59 Mayiladuthurai (S) 2009 12.56
60
(19) Tiruchirapalli
Thuvakudi (G) 1974 478.38
61 Thiruvarambur (G) 1974 74.5
62 Ariyamangalam (G) 1974 17.64
63 Valavanthankottai(WIP) (S)
2003
51.7
64
Valavanthankottai (P- II) (S)
2008
87.18
65 Valavanthankottai (P- II)
(S)
2009
26.84
66 Kumbakudy (S) 2009 24.46
97
Table 3.16 (Continued)
67 (20) Karur
Karur (G) 1974 26.63 68 Karur (Athur) (S) 1993 36.29 69
(21) Pudukottai
Pudukkottai (G) 1974 23.18
70 Pudukkottai (SIPCOT) (S)
1988
51.45
71 Mathur (S) 1975 26 72
(22)Theni Theni (G) 1963 26.59
73 Andipatty (S) 1994 22.34 74
(23)Dindigul Dinidigul (G) 1965 39.9
75 Batlagundu (G) 1965 16.26 76
(24)Madurai
Madurai K.Pudur (G) 1960 56.05 77 Kappalur (G) 1966 534.64 78 Kappalur- WIP (S) 2007 18.9 79
(25)Ramnathapuram
Paramakudi (S) 1976 10 80 Keezhanagachi (S) 1993 10
81 Urapuli (S) 1993 12.14 82
(26)Sivagangai
Karaikudi (G) 1966 180.19 83 Sivagangai (G) 1966 70.61 84 Kirungakottai (S) 1993 21.85 85
(27)Virudhunagar Virudhunagar (G) 1958 45.65
86 Rajapalayam (S) 1995 41.13 87
(28)Tirunelveli
Pettai (G) 1959 50.55 88 Kadayanallur (S) 1992 10 89 Valliyur (S) 2005 16.75 90 Valliyur- Phase- II (S) 2010 23.16 91
(29)Thoothukudi Kovilpatti (G) 1962 85.54
92 Thoothukudi (S) 1988 24.18 93
(30)Kanyakumari Konam (G) 1964 20.7
94 Marthandam (G) 1964 7.5
TOTAL 6576.86
Source: TANSIDCO Citizen Chapter 2012-2013
(G) - Government Estates
(S) - SIDCO Developed Estates
(WIP) -Women Industrial Park
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