khadi & village industries

7/29/2019 Khadi & Village Industries

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Sub. No: RD30004 Sub. Name: Rural Economy and Industrialisation

STATUS OF KHADI AND VILLAGE INDUSTRIES IN INDIA



i) Mahatma Gandhi had conceived of the development of Khadi & Village Industries

(KVI) which would be involved in processing and conversion of agricultural produce to

final goods by the villagers/local themselves;

ii) During freedom movement, the development of KVI had been used as an instrument

to meet twin objectives of self-reliance through local production and seeking activeparticipation of the poor in the struggle for independence through removal of hunger

and unemployment;

iii) During the initial years of planned development its potential as an instrument of

poverty alleviation had been recognised, and the Government took the responsibility

of bringing its development with the framework of Five Years Plans;

iv) A Statutory body, called the Khadi & Village Industries Commission (KVIC) had been

of by an Act of Parliament in 1956;

v) The Commission had been required to plan, promote, organise and assist in the

implementation of of the programme through:

(a) Financing of eligible units;

(b) training of persons for employment;

© Ensuring supply of raw materials to units/enterprenuers;

(d) Promotion of sales of Khadi & Village industries products; and



(e) Undertaking research and development activities for the growth and spread of khadi

and village industries;

vi) The KVIC had been implementing the Khadi and Village Industries Programme through

its regional/sate level offices and the Khadi & Village Industries Boards (KVIBs);

vii) The state Boards implement about ninety per cent of the village industries programmeand receive funds from both KVIC and the state governments;

viii) Almost the entire khadi sector programme and a small part of the village industries

programme have been implemented by KVIC directly;

ix) Both KVIC and KVIBs have been the implementing bodies, which extend a network of

institutional, infrastructural and financial support to the Khadi and Village Industriesunits/institutions;

The Context:

i) The effectiveness of the KVIC programme in terms of effectiveness, employment

generation capability, resource use efficiency and sustainability have been questioned

from various quarters;ii) The High Power Committee (HPC) under the Chairmanship of the then Prime Minister

(Shri P.V. Narasimha Rao) had examined the relevant issues and suggested a series

of measures.



iii) The High Power Committee recommended for creation of two million additional jobs

through additional financial support during 1994-97;

iv) To achieve this target KVIC had identified 21 most backward districts in the country with

a target of creating 10,000 employment opportunities/district;

v) These districts are in addition to the 50 districts and 125 RPDS blocks selected under the Special Employment (SEP) of KVIC;

Causes for non-operationalisation of projects:

i) The constraints for non-operationalisation of projects has been as follows:

(a) Non-availability of funds (to 56% of the State level agencies);

(b) Procedural delays (33%);

© Inability of the units to furnish security (22%);

(d) Mis-utilisation of funds (17%);

Provision of necessary help to ensure timely implementation of sanctioned projects:

i) The KVIC only provides technical guidance to the units;

ii) The problems faced by the units had not been adequately addressed;

iii) This has resulted in closure and inoptimal functioning of units and high



drop-outs among the new entrants;

iv) Resulting to low employment growth and inefficient use of public resources;

v) Another major weakness in planning has been inadequate linkage between production

and marketing;

vi) The KVIC had seemed to believe either in the Law that the supply creates its own

demand or in a fixed and non-expandable market size for KVI products;

vii) It expects loyal customers would come to their outlets to pick up the products on

display;

viii) This passive marketing strategy had resulted in:

(a) Accumulation of stocks;

(b) Untimely payment to institutions/units whose rebate and investment get locked for

years adversely affecting the economics of production;

ix) Inability of KVIC in maintaining an inventory of closed/sick units, ensuring adequate raw

material supply, identifying the constraints of units/institutions and in generating reliablestatistics on employment, earnings, production, sales, stocks etc.

x) All of which provide important management information for planning, implementation and

corrective interventions;



xi) Survey results indicates that:

(a) Data base with the KVIC had been inadequate;

(b) It does not reflect the grass root reality;

xii) The entire Management Information System of the KVIC needs overhauling, if planningand implementation are to be oriented towards meeting the primary objectives of the

scheme;

Financial performance:

i) Before introduction of the concept of the margin money budgetary support of the

Centre constituted more than 80% of the resources of the KVIC;ii) During last 2 years of the 8th Five Year Plan (1995-97), the share of budgetary support

came down to 35% only;

iii) The other sources of KVI programme had been:

(a) Credit from Consortium Banks (since 1995-96);

(b) Refunds of unutilised grants; and

© Loans

iv) Before 1995-96, more than 50% of the paln expenditure had been spent for the khadi

sector;



v) Since introduction of the Rural Employment Guarantee Programme, the Khadi sector

continued to receive a large (32.5%) of the divisible pool of the budgetary support;

vi) But a larger chunk (45%) of such resources went to the REGP for which the sectoral

break-up between khadi and village industries has not been available;

vii) Based on the information supplied by the states, the REGP fund has been allocated inthe ratio of 37:63 between khadi and village industries sector;

viii) Thus about two-thirds of the budgetary resources during the 8th Plan went to the khadi

sector in the form:

(a) Grants;

(b) Loans and

© Interest subsidy.

ix) This bias allocation in favour of khadi sector did not commensurate with its performance

in terms of employment generation and output;

x) During the 8th Five Year Plan, allocation to KVI programme had been Rs 1498 Crores, as

against the revised budget proposal of KVIC for Rs 5864 crore;

xi) This wide diverdgence between the “proposals” and “actual allocations” and multiple

revisions of the proposal points to the weakness in the budget formulation process of KVIC



xii) Financial resources of the Khadi & Village Industries Boards (KVIBs) which implements

about 90% of the village industires programme comes from the following organisations:

(a) KVIC;

(b) The State Governments (Plan and Non-Plan);

© Banks and

(d) Refund from its subsidiary units.

xiii) The share of alternate sources (State Governments) had varied to a great extent such

as:

(a) Share of KVIC had been more than 50% for Andhra Pradesh, Jammu & Kashmir,Karnataka, Kerala, Meghalaya, Orissa, Rajasthan, Tamilnadu, Uttar Pradesh and West

Bengal;

(b) While share of the State Governments has been substantial for Assam (895),

Gujarat (52%), Himacahal Pradesh (99%) and Tripura (59%);

xiv) The actual release and utilisation rates of available resources had been extremely low(less than 10% in some states) in both the Khadi and Village Industries sectors.



Physical Performance:

i) The High Power Committee (HPC) had set creation of 20 lakhs additional employment

opportunities;

ii) But only 8.01 lakhs additional employment opportunities have been created;

iii) Of this share (8.01 lakhs additional employment) the share of khadi sector had been

only 0.59 lakhs and that of village industries 7.42 lakhs;

iv) These figures have included both part-time and full time employment opportunities.

Full time equivalent employment:

i) Employment growth in the khadi sector had been negligible while in the village industriessector it had been more;

ii) This has been because the physical output of cloth had remained same in the khadi

sector

iii) But labour productivity in value terms had increased more than 70% without any major

change in the composition of output in terms of cotton, woollen, silk and muslin;10.03.2007

i) Thus, additional budgetary resources (grants and rebates) allocated to the khadi sector

seem to be absorbed year after year without any corresponding increase in employment,

output and sales realisation



v) In the village industries sector on the other hand, there has been positive growth in

employment, labour productivity and sales realisation;

Training:

i) The Directorate of Human Resources Development has been responsible for planning

and organisation of training of working persons and potential entrepreneurs through their 611 training centres functioning under KVIC;

ii) In the 8th Five Year Plan only 1% of the targeted persons/entrepreneurs could be trained

through these centres;

iii) In States there has been further variation (less than of 1%) in the number of persons

trained;

iv) The main reason in short fall in the number of trained persons/entrepreneurs had been

that the training programmes were not designed keeping in view the employment

situation/potential of the various sectors;

Table: Share of trained persons and employment generatedSl.

no.

Sub-sectors % of persons/entrepreneurstrained

% of persons/entrepreneursemployed

1. Khadi 38.00 25.40

2. Village industries 62.00 74.60



Table: Share of trained persons and employment generated (Contd.)

Sl.

no.

Sub-sectors % of persons/entrepreneurstrained

% of persons/entrepreneursemployed

3. Engineering &Non-conventionalenergy

24.50 5.00

4. Agro-basedindustries

20.00 10.70

v) The khadi and village industries can only sustain competition from organised industries

only through continuous up-gradation of their products and technological improvements;

vi) Regular training by competent staff must be imparted to the artisans through a widenetwork of training institutions;



Cost of job creation:

i) Derivation of cost norms for job creation and maintenance has been beset with problems

like:

(a) Various types of part time employment in khadi and village industries units,

(b) Multiple sources of funds;

© The practice of accounting followed by KVIC.

Table: Cost of job creation

Sl.

no.

Particulars Amount

(Rs.)1. Average public cost of job creation in khadi 27,259/FTE

2. Average public cost of job creation in villageindustries

43,366/FTE

3. Annual cost of maintaining a job in khadi 4979

4. Annual cost of maintaining a job in village industriessector

2158

5. Estimated annual earnings in khadi 4835/FTE

6. Estimated annual earnings in village industries 4323/FTE



Table: Cost of job creation (Contd.)

Sl.

no

Particulars Amount

(Rs.)

7. Payment of Government towards wage bill to khadi 182%

8. Payment of Government towards wage bill to villageindustries

50%

Economics of khadi production:

i) On an average a sample khadi unit has been found to have machinery and equipment

worth of Rs 4,96,305.00 (Fixed cost);

ii) On an average a sample unit have invested Rs 61,39,744.00 as working capital;

iii) On an average employment has been of 246 FTE workers annually;

iv) An average khadi unit generates Rs 5,987.00 per FTE worker;

v) But the surplus has not been translated into profit as the entire production has not been

sold during the year;



vi) The average unintended build-up of stock has been around 35% of the annual

production and for small units (under khadi) as high as 80%;

vii) Second area of concern has been the high raw material to output ratio;

(a) For some units it has been as high as 75%;

(b) A ratio of more than 25% has been neither justified nor sustainable;

© While large khadi units have been able to keep their input-output ratio as low as

20%;

(d) But most of the medium and small units have a very high ratio implying:

- high input prices;

- dominance of lower count khadi items or both

viii) Third area of concern has been low wage payment to the workers.

Economics of village industries units:

i) On an average, a village industry unit invested Rs 6,97, 940.00 and employed about16.20 FTE workers;

ii) The pattern of financing has been as follows:

(a) 25% of the investment has been from government grants;

b 65% loan;



© 10% own contribution

iii) The composition of capital shows much higher contribution of own capital because

of obtaining concessional loan;

iv) Village industries units have been commercially viable and capable of sustaining

themselves without much Government subsidy;

v) The average wage payment to an FTE worker has been 58% higher than that in the

khadi sector;

vi) The Government contribution to wage bill towards village industries has been only 50%

implying positive contribution by village industries to the social goal of generating

employment opportunities at low public cost;

Profile of beneficiaries and impact:

i) The workers of KVIC units/institutions have been found to be mostly:

(a) Poor;

(b) Disadvantaged;© Illiterate;

(d) Local people.

ii) Annual per capita income of the beneficiary households has been Rs 5655 and the

earnings from KVIC programme constitutes about 52.71%



iii) Income of an average village industries worker’s family has been more than 70% than

that of khadi worker’s family

iv) The khadi workers’ families get 46% of the annual income from KVIC programme;

v) While the villages industries workers’ family earns about 58%

vi) The relative low income of khadi workers’ families has been because of the dominance of

part time employment in the khadi sector;

vii) Two-third of the households belonged below the poverty line;

viii) Of these poor households, about 71% have actually crossed the poverty line with the

help of additional income from KVIC programme;

ix) Performance of village industries sector had outweighed that of khadi sector;

x) Comparison of household expenditure pattern of workers of the khadi and village

industries sector suggested that high earnings from KVIC have enabled the beneficiary

households to spend lower proportion of income on education, health and clothing;

xi) Thus the programme has contributed towards improvement in the well being of beneficiaries;

xii) Key persons like presidents/secretaries have been direct beneficiaries of the KVIC

programme



xiii) Non-working members of the governing bodies have also been recipient of financial

benefits of the programme;

xiv) On an average 15% of their annual household income comes from the KVIC

programme;

Highlights of 3rd Census of Small Scale Industries:

The highlights of the 3rd Census of Small Scale Industries can be divided in three sub-

headings for discussion:

(a) Registered SSI Sector;

(b) Un-registered SSI Sector;

© Sickness in SSI Sector.

Registered SSI Sector :

i) Total number of units registered as on 31-03.2001: 23,05,725

ii) Of the total 23,05,725 units only 62.35% has been found working;

iii) Rest 37.65% units have been found to closed;

iv) About 4.50% of the units have ancillary units;

v) Proportion of units operating in the rural areas has been 45.80%



vi) Five states cumulatively accounted 52.50% of the closed units:

(a) Tamil Nadu – 16.20%

(b) Uttar Pradesh – 13.40%

© Kerala – 8.40%

(d) Madhya Pradesh – 7.40%

(e) Maharastra – 7.10%

vii) 90% of the units have been proprietary units and about 6% of the units have been on

the basis of partnership;

viii) Per unit employment has been around 4.60. Employment per one lakh rupees of fixedassets has been only 0.85;

ix) 11.08% of the units have been managed by women and 51.45% of the units have been

managed by socially backward classes;

16.04.2007

x) Rice milling industry topped the list of industries in terms of gross output. Among the top

50 industries having fixed investment, its contribution to generation of employment per

rupees one lakh of fixed investment had been 0.37;

xi) Compared to the second Census, the 3rd Census had brought out some structural

changes in the Registered SSI Sector.



(a) While the proportion of working units remained the same by and large;

(b) The domination of SSIs among the working units has gone down considerably from 96

to 66%;

© This has been mainly due to the increase in the number of units engaged in Services;

(d) The per unit employment has gone down from 6.29 to 4.60;

(e) The per unit fixed investment has gone up from Rs 1.60 lakhs to 7.11 lakhs;

(f) This could be due to technological upgradation.

Unregistered SSI Sector :

i) Out of 96,431 unregistered units, only 36% had been SSIs and the rest were SSSBEs;

ii) The reasons for Non-registration had been elicited in the Third Census. Interestingly,

52.30% of units informed that they had been not aware of the provisions of Registration,

while 40.60% of the units indicated that they were not interested;

iii) About 49.80% of the units had been engaged in Services while 33.60% were engaged in

manufacturing and rest 16.60% in repair/maintenance;

iv) 97.20% of the units had been of proprietary units and about 12.50% of the units were

being run on partnership basis;

v) The average employment has been 2.11 and the employment generated per rupees one

lakh of fixed investment was 1.71;



vi) About 10.66% of the units had been women enterprises and 55.62% of the units were

managed by the entrepreneurs from socially backward classes;

Sickness in SSI Sector:

i) Sickness had been identified through latest definition of Reserve Bank of India by the

Kohli Committee and Incipient Sickness had been identified in terms of continuousdecline in Gross Output;

ii) Sickness identified in the Registered SSI Sector had been of the order of 2.50%,

whereas in the Unregistered SSI Sector it had been 0.78%;

iii) Out of the units having loan outstanding with Institutional Sources like Banks and

Financial Institutions, sickness had been about 14.08% in the Registered SSI Sector and 13.47% in the case of Unregistered SSI Sector;

iv) Combining the three yardsticks used to measure sickness, viz,

(a) Delay in repayment of loan over one year;

(b) Decline in net worth by 50%;

© Decline in output during last three years;

(d) About 14.47% of the units in the Registered SSI Sector had been either identified to

be sick or incipient sick,

(e) While this percentage had been only 8.25% in the case of unregistered units.



v) The States of Kerala, Kanataka, Chattisgarh, Maharastra and Tamil nadu had the

maximum share of sick units in the Registered SSI Sector;

vi) “Lack of demand” and “Shortage of Working Capital” had been the main reasons for

sickness/incipient sickness in both the Registered and Unregistered SSI Sectors;

D fi iti f ill i d t i



Definition of village industries:

i) Any industry located in rural area which produces any goods or renders any service

with or without the use of power and in which the fixed capital investment per head of

an artisan or a worker does not exceed (one lakh rupees) or such other sum as may,

by notification in the Official Gazette, be specified from time to time by the Central

Government;

ii) Provided that any industry specified in the Schedule and located in an area other than

a rural area and recognised as a village industry at any time before the

commencement of the Khadi and Village Industries Commission (Amendment) Act

1987 shall, notwithstanding anything contained in the sub-clause, continue to be a

village industry under this Act;iii) Provided further that in the case of any industry located in a hill area, the provisions of

this sub-clause shall have effect as if for the words “one lakh rupees”, the words “one

lakh and fifty thousand rupees” has been substituted.

iv) Any other non-manufacturing unit established for the sole purpose of promoting,

maintaining, assisting, servicing (including mother units) or managing any village

industry.

Village industries under KVIC’s purview:

The KVIC has broadly re-grouped various village industries under seven heads for the

purpose of implementation of its programmes. The list of industries including the newly

added one is a under:

A Mi l B d I d t



A. Mineral Based Industry:

1. Pottery

2. Lime

B. Agro Based & Food Processing Industry (ABFPI):

1. Pulses & Cereals Processing Industry;

2. Gur and Khandsari Industry;

3. Plamgur Industry;

4. Fruit & Vegetable Processing Industry;

5. Village Oil Industry

C. Polymer & Chemical Based Industry (PCBI):

1. Leather Industry;

2. Non Edible Oils & Soap Industry;

3. Cottage Match Industry;

4. Plastic Industry;

D. Forest Based Industry (FBI):

1. Medicinal Plants Industry;

2 Bee Keeping Ind str



2. Bee Keeping Industry;

3. Minor Forest Based Industries;

E. Hand Made Paper & Fibre Industry (HMPFI):

1. Hand Made Paper Industry;

2. Fibre Industry;

F. Rural Engineering & Bio Technology Industry (REBTI):

1. Non Conventional Industry;

2. Carpentry & Blacksmithy;

3. Electronics.

G. SEP/Service Industry:

1. V.I. Co-ordination.

The need for small enterprises – Anti-polarisation argument:

i) In the industrialised countries of Europe, the large sector had been much fashionable up

to 1960;

ii) There has been a major turn-around since then;

iii) Small and medium enterprises (industries) have been on the centre stage



iii) The theoretical articulation of this form a sociological angle has been provided by

eminent German Sociologist Erhard;

iv) Erhard says that “the major problem of Germany in the post-World War era has been

sharp polarisation of the industrial society”

v) In order to create a balance in society, a strong middle class has been necessary;

vi) Viewed from this angle, small business have been perceived as an income distributor in

society;

The state of Small Enterprise Development in India, 1997

The neo-classical economic theory brought to the fore the concept of small scale

production in the concept of industrial development;

ii) Hence, small and large scale enterprises have been defined as having distinct relative

advantages/disadvantages;

iii) Small enterprise policy in any country can be identified under one of the three types:

(a) Passive;



(a) Passive;

(b) Protective;

(c) Developmental

Passive policy:

Passive policy has been essentially a policy of neglect, resulting from indifference, lack

of information and lack of leadership;

Protective policy:

Protective policy has been to defend the existing small enterprises against competition

from large and modern ones;Developmental policy:

Developmental policy has been promotion of industrial initiatives with the objective of

creation of ‘economically viable’ enterprises which can stand on their own feet without

perpetual subsidy and can make positive contribution to the growth of real income and

therefore, to better living levels.

iv) Based on specific typologies as outlines above, different countries of the world have

specific definitions of small enterprises. Such definitions vary according to operational

criteria such as:

(a) Employment;

(b) Si f i t t



(b) Size of investment;

© Location;

(d) Turnover; and

(e) Administrative units.Germany:

In Germany, a small firm has been defined as one with less than 100 employees;

Italy:

In Italy the cut-off point has been 20 employees;

Japan:

In Japan there has been a multi-criteria definition: in manufacturing, there has been a cut-

off point of 300 employees and capitalisation of less than 100 million Yen;

In wholesale trade, they are 100 persons and 13 million Yen;

In retail trade, they are 50 persons and 10 million Yen;

Britain:

In Britain, the cut-off point prescribed by the Bolton Committee i.e. 200 employees, has

been officially accepted;

United States of America:



United States of America:

i) The definition in USA has been more complex. In manufacturing and wholesale

trade, the definition has been based on employment;

ii) In retailing, construction and trade, the definition has been based on turnover.

v) Thus scale of production, in an international context, has been a relative concept;

vi) Therefore, international comparison of small scale enterprises has been a difficult task;

vii) What can be construed is that the relative position of small and large enterprises within

specific countries;

Milestones:i) The 2nd Five Year Plan, and the Mahalanobis model which provided theoretical

underpinning, came out with a clear statement on the respective roles of small and large

industry in the policy and strategy of development in the country;

ii) In the 2nd Five Year Plan, the vital need of the modern sector of small industry, has been

to provide mass consumption goods and to contribute to inter-sectoral linkages;

iii) While recognising this imperative, the planners gave due importance to the Gandhian

dream and philosophy of Grama Swaraj (village autonomy) through a concrete and

specific policy for the development of such enterprise, named variously as, traditional

industries, decentralised industries, village industries etc.

iv) The recommendations of the Karve Committee which focussed on village and cottage



iv) The recommendations of the Karve Committee, which focussed on village and cottage

industries has been instrumental in shaping policies in this area;

v) Under democratic system of governance, but with a wide variety of problems, economic,

political and social, the legacy of democratic planning offered an inherent strength to the

Indian economic system by facilitating economic activities with diverging organisational

forms;

vi) The mid-1960s marked a watershed in the history of planning in the country:

(a) The so called crisis of planning;

(b) The Chinese aggression as well as the Indo-Pakistan War had been highly

instrumental in deciding the course of this crisis;

vii) What has been described in the terminology of finance as “resource crunch” prompted

the planners and administrators to streamline the existing developmental programmes and

to have a more target group-oriented approach;

viii) Hence, the various sub-sectors of the industrial economy of the country got increasingly

focused on short-run objectives and targets, as against a serious exercise of perspective

planning;

ix) The third major phase of small enterprise development in the country has been

inaugurated by mid-1980s;

x) This era has been marked by a further focus on project-based approaches, and small

-scale sector (through definitional hikes in investment limits);



scale sector (through definitional hikes in investment limits);

xi) Liberalisation regime, formally inaugurated in 1991, brought forward a new policy for

small-scale and tiny industries with significant focus on loosening the protective applicable

to this sector;

Table : Official definition of SSIs

Sl.

no.

Year basic condition Additional condition

1. 1950 Upto Rs 5 lakhs less than 50/100 persons infixed assets

With or without power

2. 1960 upto 5 Lakhs in fixed assets No condition

3. 1966 upto Rs 7.50 lakhs in plant and machinery No condition





xii) The historical phases as outlined above, there took place a progressive erosion of a

scientific policy thrust on small enterprise sector;

xiii) Unfortunately planning it at all there has been anything for the small scale sector has



xiii) Unfortunately, planning, it at all there has been anything for the small-scale sector, has

just been project-oriented rather than of a wider frame which gives due importance to

their role in an industrial system.

Planning and Policy Formulation:

i) Macro-level policy formulation for small enterprises has been as old as planning in t hecountry;

ii) The basic building block of a small industry policy under planning has been the

Industries Development and Regulation Act (IRDA) of 1951;

iii) This IRDA Act laid down that all the undertakings with size larger than a specific

minimum would need to be registered with an agency to be notified by the Government;iv) The 1st Five Year Plan document advocated development of the small sector of industry,

based on the concept of a common production programme with reference to large

and small-scale industry;

v) The Central Small Industries Corporation had been set up in 1954;

vi) Among many other committees “Karve Committee” had recommended substantial policychanges;

vii) The 2nd Five Year Plan laid down equity as the guiding principle of development of a

small industry;

viii)The Policy Statement of 1956 rationalised the role of this sector in terms of its ability to

to provide “large-scale employment, offer a method of ensuring a more equitable



p g p y , g q

distribution of national income and facilitate an effective mobilisation of capital

and skill which might otherwise remain unutilised” (Same as Germany);

Policy Statement of 1977

The main thrust of this policy has been effective promotion of cottage and small enterpriseswidely dispersed in rural areas and small towns. The major provision of the above policy

statement had been as follows:

i) What-ever can be produced by small and cottage industries must only be so-produced;

ii) The number of products reserved for SSIs has been raised from 180 to 504 and further

to 807 items;

iii) Special attention had been given to ‘tiny sector’ defined as enterprises with investment

in plant and machinery of up to Rs 1.00 lakh and situated in towns and in villages with

population less than 50,000;

iv) Thrust on special legislation to give due recognition and protection to the self-employed

in cottage and household enterprises;

v) The focal point of development for small sector and cottage industries will be taken

away from big cities and state capitals to the district headquarters. In each district, there

will be one agency to deal with all requirements of small and village industries: ”District

Industries Centres”

vi) Thrust on special arrangements for marketing of the products of small-scale sector ,



) p g g p

with emphasis on product standardisation, quality control, market surveys etc;

The Policy Statement of 1980 has sought to further widen the rural reach of small-scale

industries. Besides, it laid a special emphasis on ancillaries:

The Policy Statement of 1985 has been a pre-runner of the liberalisation era which hasbeen inaugurated in 1991. The latest Policy Statement of 1991 envisaged several

measures to cultivate a dynamic and vibrant small scale sector of industry in the country.

The important measures has been as follows:

i) Focus on imparting greater vitality and growth to the SSI sector. In furtherance of this

objective, the sector would be deregulated and debureaucratised to remove all fetters on

its growth potential;

ii) Modifications in all statements, regulations and procedures should be made to ensure

that they do not militate against the interests of small and village industries;

iii) A separate package for the promotion of tiny enterprises and recognition of all industry

related service and business enterprises as small-scale industries;

iv) Policy shift from target group based subsidised/cheap credit to its adequate flow anormative basis;

v) Access to capital markets for the SSI sector through 24% equity participation by other

industrial undertakings;

vi) Legislation to ensure prompt payment of SSI bills and legislation for Limited Partnership



Act;

vii) Introduction of a new scheme of Integrated Infrastructural Development to promote

industrialisation in rural and backward areas;

viii) Significant stress on technology upgradation by setting up of a TechnologyDevelopment Cell and strengthening the existing facilities available with SIDO;

ix) Promotion of marketing of SSI products through institutions, other agencies and

consortia approach;

x) Promotion of ancillarisation;

xi) Strengthening of exports through setting up of Export Development Centre;

xii) Enforcement of quality control and support to modernisation and technology upgradation

of the SSI sector;

xiii) Change in definition of women enterprises and support to women entrepreneurs;

xiv) Significant expansion in programmes for entrepreneurship development.

khadi & village industries

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