Small industry cannot be protected permanently: FM  

Finance Minister Shri Yashwant Sinha has suggested a national debate on SSI reservations policy to find out the extent to which protection is actually helping the sector. He had, he said, come across several small units which did not have any protection but were nonetheless producing sophisticated items and selling them successfully. "We have to understand that we cannot sleep with the sheet of protection wrapped around us for much longer and therefore should make adequate preparations." The government was not thinking of immediately stripping the small sector of all protection and accepted that it should get some protection till it gets used to open competition. Protection has to be temporary and not permanent.  

Bank Finance to small industry  
Finance Minister Shri Yashwant Sinha considered it unfortunate that only 15 p.c. of SSI in the country had access to bank credit. There was need, he felt, for a fundamental shift in the functioning of banks so that they themselves search out the needy instead of waiting for the latter to approach them. He also expressed concern over the fact that loan approvals had gone down last year as compared to the previous years and units numbering 2,35,000 were sick. He was speaking at a seminar in New Delhi on 30.7.1999.  

LUB in talks with ILO for SSI training programme  
The Laghu Udyog Bharti (LUB) is to join hands with the International Labour Organisation (ILO) to organise a series of training programmes and seminars for bringing about improvement in the management of the small scale sector in the country.  

According to LUB's national President (also Vice President COSIDICI) Shri Sudarshan Sareen, the small sector in India had not geared up enough to face the marketing challenges thrown up by the era of liberalisation.  

The training programmes would help the small sector to deal with the requirements of marketing ignored earlier and enable them to retain their competitiveness.  

Information Technology is another field where Shri Sareen feels that the small sector needs to be trained. "Advertising on the internet is much cheaper than advertising on television or journals."  

LUB also plans to create Information Centres throughout the country which would keep the SSIs informed on all relevant policy changes taking place in the country.  

Yet another study on SSIs : Medium Scale to be defined  
The Planning Commission has set up yet another study group to undertake a wide ranging study of the problems connected with the development of small industries including small firms. The impact of existing policies is also to be assessed in the light of international experiences.   
Apart from issues like definition, legal framework, finance (including revision of Nayak Commission's impact), reservation policy, the group would also, for the first time, take up the question of defining the hitherto undefined 'middle scale unit. `As of now, which is not small is either `middle' or large'. But where the line between `middle' or large' is to be drawn, has so far remained vague.  

The group is to be headed by Shri S. P. Gupta, Member of the Planning Commission, Secretary Small Scale (Gol), Dr. Rakesh Mohan, Director General, NCEAR and Dr. Sailendra Narain, MD, SIDBI. The latter two were also the members of the Abid Hussain Committee (Dr. Rakesh Mohan being its Member Secretary).  

SSI scenario in Karnataka  
There has been a consistent growth of small scale industrial sector in the state of Karnataka since 1970-71 in terms of the number of units, investment in them and employment provided by them as would be observed from the data given on the next page.  

There is also a considerable spread in the distribution of small scale industries in the State. Of the 2.23 lakh units, about 50,000 are located in Bangalore. Backward areas such as Mysore (20,000 units), Belgaum (21,226 units), Dharwad (18,428 units) etc have a fair share of such units Even district of Bidar which was declared a non-industry district and had very few industries till the early eighties, has today about 5064 SSIs registered in it. The continuous growth of SSIs in Karnataka can be broadly attributed to the following factors :  

  • Active support by Government institutions such as KSIIDC,KSFC, KHDC, KSHDC, KIADB etc.
  • Key role played by District Industries Centres in identifying and promoting entrepreneurs.
  • Grant of concessional financial assistance by financial institutions.
  • The introduction of National Equity Fund Scheme (NEFS) by SIDBI which is operated through KSFC, providing finance to the extent of 90% of project cost.
  • The composite loan scheme offering 100% finance upto Rs. 50,000 since 1998.
  • Training and Entrepreneurial Development Programmes conducted by DIC's CEDOK and KSFC.
KSFC has played a catalytic role in assisting small scale Industry. It has assisted 81,773 SSI units in the State with total assistance of Rs. 24,448 million. The number accounts for 37% of small scale units registered in the State. Out of Rs. 32904 million investment in SSI sector in Karnataka, the share of KSFC is about Rs. 23,302 million i.e. over 70 P.C.  

The SSI units in Karanataka are engaged in the manufacture of textiles, leather based products, metal products, etc. The state government has taken steps to upgrade technology in the SSI sector. It has promoted infrastructure in the form of Software Technology Park, for boosting software industry.  

S.No. SSI Years units Number of SSI units Investment (Rs. in million)  Employment (000 Nos)
1.  1970-71 5798 575 92.2
2.  1980-81 27669 2641  344.6
3. 1990-91 115451 10887  808.1
4. 1997-98 223311 32904  1347.9
KVIC to launch Sarvodaya brand village industry products  

The Khadi & Village Industries Commission (KVIC) will launch Sarvodaya brand village industry products. To begin with, Honey, Pickles and Agarbatti will be launched as village industry products under Sarvodaya brand at four places, at Mumbai, Bangalore, New Delhi and Ernakulam.  

The launch of Sarvodaya brand of village industry products by KVIC follows the recommendations by an Expert Committee on marketing constituted by the Commission. The Sarvodaya, as an umbrella brand  has been registered for various village industry products. The marketing of Sarvodaya brand village industry products by KVIC is expected to step up employment in the North-East and other economically backward areas.  

National awards for small scale entrepreneurs  
The Ministry of Industry (Small Industries Development Organisation),Office of the Development Commissioner, Small Scale  industries, Nirman Bhawan, New Delhi has invited applications in prescribed form from Small Scale Entrepreneurs for their outstanding Quality Products latest by October 1, 1999. There will be three National Awards, one Special Award for SC/ST Entreprneur and one for a Woman Entrepreneur besides an award to one entrepreneur from each state and Union Territory. National Awards for Quality Products will be given in 17 selected product groups of consumer interest. All Small Scale Units, which are permanently registered with a State Directorate of Industries and have been in production for a minimum period of four years, are eligible to apply. Application forms can be had from Small Industries Service Institutes, State Directorate of Industries and District Industries Centres.  

The Village and Small Scale Industries Sector is an important segment of Indian economy and has played a vital role in bringing about decentralised economic development, dispersal of industrial activities and means of production, development of backward regions and reduction in regional imbalances. The sector accounts for 95% of the industrial units in the country, generating employment for nearly 170 lakh persons, contributing nearly 40% to the total industrial production and 35% to the total exports. The small scale sector has shown considerable resilience and strength. Its growth rate has been about 2 to 3°<?igher than that of large and medium scale industries.   
The Indian economy, as is well - known, is characterised by high incidence of un - employment, poverty, un-even growth etc. After 5 decades of planned economic development through successive 5 year plans the disparities in income distribution seems to have been further widened. The people below poverty line which numbered 300 million at the beginning of economic reforms in 1991 have increased to 355 millions in 1998. In the backdrop of these facts, the strategic role played by the village and small scale industries sector in the country has to be appreciated. This sector has the potential to create employment opportunity and empowerment of people below poverty line.  

Notwithstanding the phenomenal growth achieved by this sector, there has been a perceptional gap in the dissemination of information relating to the actual status, problems and prospects of the SSI sector through any single source. The financial institutions, government agencies, research bodies and individuals had to struggle a lot in obtaining authentic information relating to the various schemes of incentives and financial assistance available from central government, state governments etc. for the setting up these industries.  

It is gratifying that SIDBI has published a comprehensive report on SSI sector titled 'SIDBI Report on Small Scale Sector-1999. The publication of this report is a pioneering attempt on the part of SIDBI to fulfil this long-felt need of the individuals and institutions engaged in the development of this sector. SIDBI proposes to bring out this report every year with updated statistics relating to small scale sector. This report provides a comprehensive insight into SSI sector. The report has exhaustively traced the evoluation of state policy through industrial policy resolutions starting from 1948 till 1999. The report confirms elaborate presentation on various policies announced by the Government from time to time to provide impetus to this sector. The report lucidly deals with the schemes of financial assistance offered by different financial institutions to the village and SSI sector such as SIDBI, commercial banks, state financial corporations, state industrial development corporations, co-operative banks, regional rural banks, NSIC, NABARD, KVIC etc. The need for providing financial support to the sector and the recommendations of various committees and working groups appointed by the RBI/Government of India to increase the flow of credit to the sector has also been discussed in the report. An elaborate detail has been given in the report regarding the training facilities being provided at various national state level training institutions for technological upgradation of the SSI Sector. The report in short, contains all conceivable and relevant information relating to growth of village and small scale industries sector units and serves as a reference manual. SIDBI report will be particularly useful to the financial institutions, research bodies, planning agencies, non governmental organisations universities, libraries, SSI associations and prospective entrepreneurs. This is an indispensable reference manual.