48

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.

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(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.

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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.

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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)

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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