08-01-2013, 02:30 PM
Small-Scale Industrial In India
1Small-Scale.doc (Size: 636.5 KB / Downloads: 27)
Introduction.
Small Scale Industries is a term which has been recently used by scholars to describe the phenomena of the creation of small industries and other income generating projects all around the developing world. We remember that at one of the points of its developing a successful way of industrializing, Taiwan has produced 90% of its industrial outputs, coming out of small scale enterprises employing no more than 15 workers each. No doubt that this concept Is of great interest to those who think that development is not about sticking to old fashioned ideas of agricultural development, nor is it possible, at least not in satisfactory measures responding to the needs of the developing world, to introduce heavy industrial development, in these needy countries.
SSI in India
In 1947 after gaining independence, India initiated a path of industrialization to achieve economic prosperity. India focused on developing the manufacturing base. Much of the countries development was done through the five year plans. Industries like iron and steel, oil refineries, cement and fertilizer were brought under the gamut of public sector enterprises. The decision makers then encouraged the development of small scale industries. They perceived that Indian small scale industries would play a vital role in the economic progress of the country and had immense potential for employment generation. Developing small scale sector would also result in decentralized industrial expansion, better distribution of wealth and to encourage investment and entrepreunial talent.
SSI-Location
Small Scale Industries are located throughout the country, though predominantly in the rural areas. The small scale industries in the rural areas are skill based, wherein the skill for manufacturing is passed on from one generation to another. Some of the goods manufactured in these units are textile handicrafts, woodcarving, stone carving, metal ware etc. Small scale industrial factories are also present in urban areas and usually they account for the maximum volume of production for that particular good in the country. For e.g. Ludhiana in the state of Punjab is the main center in the country for producing woolen hosiery, sewing machine parts, bicycles and its parts, similarly Tiruppur in Tamil Nadu accounts for small scale firms that are involved in spinning, weaving and dying of cotton garments.
Post Liberalization
Post liberalization economic conditions has created immense growth prospect for the small scale industries. The government has also supported the small scale industries by the way of implementing policies like investment ceiling for the SSI sector and priority lending. The formation of WTO in 1995 resulted in a major challenge to the well being of the SSI. The protection given to the SSI in the form of reservation and quantitative restrictions has been withdrawn. More than 160 items reserved under the SSI category have been de reserved. It has been found that if the SSI upgrades the technology, adopt better management practices, reengineer the factories to improve productivity and provide qualitative product, they would be competitive in the post WTO scenario. The advancement in computer and telecommunication technology, increase in e commerce, opening up of markets due to WTO, mergers and acquisitions, improved infrastructure and outsourcing noncore area of business have all contributed to the growth of SSi
The Conceptual Approach.
The Setup
It is well known that one of the most important problems facing the majority of the world's population is the problem of development. The Brandt report (1) expressed this feature as well as the fact that the world which looks toward its development is unable to exploit its own resources in an optimal way, for the benefit of its population. This world is characterized by another phenomena described by Professor Arnon (2) as the concentration of 70%-90% of its population in rural areas, engaged mainly in agriculture. Arnon describes these areas with the following characteristics: The land is divided up unequally, and its possession is arbitrary. Moreover, the land does not belong to the people who farm it. Water for irrigation is often non-existent and when it is available, it is not distributed equitably. The land is partially exploited, during the season, according to traditional methods which are not suitable. The labour factor is added to this - there Is a shortage of educated qualified labour. The situation of the workers is precarious. They often work part-time and are thus underemployed. The low productivity of agriculture gives low ields, thus low income, a situation which discourages savings.