1.Evolution of Industries
Development of industries is vital to human and socio-development in any nation. India is well known for its household and cottage industries all across the globe. Demand for silk and muslin products and pottery was very high before industrial development in modern India. Industrial growth got extremely hampered with the British policies of exporting raw goods from India and bringing in finished products. The British rule also affected the traditional handicrafts industry. After the middle of the 19th century, improvement in this situation was seen, however the industrial growth was slow.
Industrial development in India is indicated by industrial policies of 1948 and 1956. A decision for reserving right of control with the state over petroleum, coal, aviation, steel industries etc was taken in 1948. The rest of the industries were exposed to private enterprises. A resolution was passed in 1956 so that private capital could make an entry into reserved sections of industry. Various top ranking industrialists became members of the Central Advisory Council and Development Council. The First Five Year Plan was launched to initiate the industrialization process, which then continued through the plan periods that followed.
- In 1854, rail transportation began between Bombay and Thane.
- In 1854, cotton textile industries were established, with chiefly Indian enterprise and capital, thus initiating the modern industrial sector in an organized manner.
- The jute industry started with foreign enterprise and capital in the Hoogly valley near Kolkata in1855.
- In 1870 the first paper mill in India started at Ballygunj near Kolkata.
- In 1874, modern methods were used in manufacturing steel at Kulti.
- In 1907, the Tata Iron and Steel Company began at Jamshedpur.
- This indicates that the modern industrial industry began only after mid-nineteenth century. Industrial development gained imputes during the 2 World Wars. Many steel and iron, glass, chemical, cement and consumer goods industries developed.
Emphasis was laid on attaining various socio-economic objectives including eliminating imbalances in regions, generating employment, promoting consumer protection and export oriented industries, strengthening agricultural base and increasing production, in the post independence period. To reduce developmental imbalances in regions, a deliberate policy was pursued to locate industries in areas that were economically backward.
Industries in huge numbers were established in joint, public and private sectors, in post-independence India. Industrial resources are available in abundance in many places like Jamshedpur, Bhilai, Renukoot, Bokaro, Ranchi, Rourkela and more which developed as important centres during the first 15 years of independence.
Industrial development started in all states in medium and small scale, gradually. Telecommunication, electronics and transport are important sectors of industrialization. In India, industrial development is lower as compared to developed countries. The organized industrial sector employs around ten percent of the total workers. Since independence, both public and private sectors have developed together.
Public sector undertakings and state enterprises went into huge losses, thus questioning capabilities of the Indian State and its approach towards managing its own establishment. The debate between the public-private sector partnership tilted in favor of the private sector. Private industrialists and entrepreneurs started managing the government enterprises. Even if production is not yet very effective, collaborations with industrially developed nations, is testimony of India’s industrial progress.
2. Industrial Development During the Five-Year Plans
It was during the period of the First Five Year Plans that the real industrial development and growth in India was seen.
First Five Year Plan (1951 – 1956)
Agricultural development was the main aim of the first five year plan. Rather than establishing new industries like paper, cotton, medicines, woolen, cement, sugar, jute textiles, sugar, etc, major emphasis was laid on prevailing industries.
Second Five Year Plan (1956-1961)
Establishing only heavy industries was the main aim of the second five year plan. Development of fertilizer, heavy engineering and iron and steel industries was given a major thrust. Accordingly, three iron and steel plants were newly set up in Rourkela, Bhilai and Durgapur.
Third Five Year Plan (1961-1966)
Major emphasis was laid on expanding major industries like fossil-fuel, iron and steel and machine building. Establishment of the Ranchi Machine Tool and 3 additional HMT units was done, accordingly. Railway Coach making, locomotive building and machine building industries were also established.
Annual Plans (1966-1969)
The period of Annual Plans was between the years 1966 and 1969. During this period, not much industrial progress was made.
Fourth Five Year Plan (1969 – 1974)
Importance was given to chemical industries, vanaspati, sugar, jute, cotton and metal based industries during this period. Good progress was made in machine tools, alloys, aluminum, tractors, electronic goods, automobile tyres and special steel industries.
Fifth Five Year Plan (1974-1979)
Emphasis was laid on mainly rapid growth of exports and steel plants. Additional capacity was created with proposed steel plants at Visakhapatnam, Vijaynagar and Salem. SAIL – Steel Authority of India was constituted. Progress remained steady in heavy engineering, drug manufacturing, oil refining and chemical fertilizer industries.
Sixth Five Year Plan (1980-1985)
Industries like thermostats, aluminum, electric equipment and automobiles were given priority. Exploiting both international and domestic markets was the main aim. In industries like railway wagons, commercial vehicles, coal, drugs, jute, TV, sugar, cement, automobiles, etc, targets were achieved.
Seventh Five Year Plan (1985-1990)
Main focus was on electronic industries. In the plan, preference areas were industrial dispersal, proper training, local resource exploitation and self employment.
Annual Plans (1990-1992)
The period of annual plans was between 1990 and 1992. In 1991 a major change in the industrial policy started. To invest in foreign multinationals, a liberalization policy was adopted. Supporting employment growth in tiny and small sectors and eliminating regional imbalances was emphasized upon.
Eighth Five Year Plan (1992-1997)
Importance was given to products like cement, quality steel, coal, consumer goods, refinery, crude oil, infrastructure and electricity.
Ninth Five Year Plan (1997-2002)
Major emphasis was laid on reducing transaction costs, increasing competitiveness across the globe, modernization, increasing exports, upgradation, technology, enhancing exports and attaining balanced regional development.
Tenth Five Year Plan (2002-2007)
Priority was given to employment, infrastructure and industry. Faster industrial development was sought to generate employment, reduce poverty and make sure that all sections of society get essential services like education and health.
Eleventh Five Year Plan (2007-2012)
Major focus was laid on inculcating ‘inclusive growth’ and generating employment by developing the manufacturing sector and moving the country higher up in the value chain. During this plan period the planning commission aimed at increasing manufacturing related activities by a significant percentage.
Twelfth Five Year Plan (2012-2017)
Growth rate of 8% and poverty alleviation were the target of this plan. In 2017, the Planning Commission was disbanded putting an end to the Five Year Plans.
In economic growth, an important constituent is industrialization. The government adopts various strategies for industrial development, called industrial policies. India’s first industrial policy was amended in 1948 by the government, so that the changing environment could be addressed. Globalizing the economy of India and ensuring that market forces are provided freer play in the local economy was the main objective of the industrial policy.
Industrial Policy Resolution – 1948
Independent India’s first policy was the Industrial Policy Resolution. IPR-1948 remained in focus for eight years. It declared that an active role should be played by the state for industrial development and the government should focus on the socialistic pattern of society.
- Speeding up production to meet requirements of the growing population
- Establishing social order in a way that all are assured of equality and justice.
- Ensuring more employment opportunities
- Promoting better standard of living of people by exploiting resources available in the country
The Industries Development And Regulation Act – 1951
In October 1991 the Parliament passed the IDR Act 1951. The Act was passed for controlling and regulating development of industries in India.
- Preventing concentration and monopoly of ownership industries
- Balancing the investment in industries as well as production as per planned targets and priorities
- Safeguarding small entrepreneurs against competition from bigger industries
- Provisions Laid Down By The Act
- Constructive measures
- Control on cost, distribution and supply
- Direct control and regulation by the government
(Unfair practices adopted by industries were curbed under this provision)
- Enquiry of listed industries
- Cancellation of registration license
- Licensing and registration of industrial undertakings
Industry Policy Resolution – 1956
The IPR – 1948 was replaced by the IPR -1 956
- Developing the public section and growth of co-operative sector
- Speeding up industrial growth especially heavy industries
- Averting private monopolies and concentration of economic process in the hands of few people
- Development of transport facilities and setting up new industrial set up by the state
Industrial Licensing Policy Of 1970
The Dutt Committee recommended this policy to the government.
- Industries involving investment between 1-5 crore were included in the middle sector. These industries were provided liberalized policies.
- No license needed for industries involving investment below Rupees 1 crore
- The heavy investment sector was defined, consisting of industries having investment of more than 5 crore. The private sector opened such industries.
New Industrial Policy of India – 1991
This policy was declared in July 1991 when India’s economy was severely instable.
Raising efficiency and speeding economic growth was the main objective of the policy.
- Anticipating greater role of the private sector
- Making the private sector stronger
- Eliminating the industrial system for many industries
- Disassembling of controls
- Introduced policy to relocated industries in backward and rural areas from big congested cities
- Supporting agro-based industries close to farming areas
- Providing incentives to backward regions and villages to attract industries
- Limiting the role of public sector
- Removing restriction of foreign investments
- Providing automatic approvals for technology related agreements with foreign technology
- Promoting growth of SSI – Small Scale Industries
- Introducing domestic regulatory reforms
- Abolishing the system of industrial licensing
4.Cotton Textile Industry
In India, one of the oldest and the most firmly established industry is the cotton textile industry. It was at Fort Gloster, near Kolkata that the first unit of cotton textile industry was established in 1818. Then in Mumbai, in 1854, another cotton textile mill was established.
This industry and its units continued till 1920 in and around Mumbai. It expanded to Northern India, Tamil Nadu, Madhya Pradesh and Karnataka later. However the two important cotton textile industry centres are Ahmedabad and Mumbai, besides Indore, Sholapur, Nagpur, Kolkata and Kanpur.
The industry provides huge employment opportunities for the people of India and contributes to export value as well. During the last 40 years phenomenal growth has been witnessed by the textile industry. Significant increase was seen in the spindle age in the cotton-man-made fiber textile mills during January 1997.
The 3 well-defined categories in the organized sector include:
- Spinning mills
Cloth and yarn was produced by highly mechanized mills
- Medium and coarse composite mills
Mill-made yarn was used for cloth production by power loom factories
- Superfine and fine composite mills
Both hand spun and mill-made yarn was used for cloth production by widely spread handloom units.
More harmonious and rapid growth of handlooms, power looms and mills is expected from the current policy regime which in turn can increase exports. Since 1950 to 2012 there has been increase in the product of mixed or blended cloth and man-made fibers in India.
India is placed well in the global export market. After Japan, it is second in terms of exporting quality textile goods. Textile goods imports are lesser leading to larger earnings in the net foreign exchange.
Issues Faced By The Industry
- Modernization related problems
- Non-utilization of production capacities
- Old machinery
- Lack of raw material and power supply
- Higher production costs per unit
- Increase in heavy excise duties and government control
- Increasing competition in foreign market and labor issues
- Increasing sickness in textile industrial units and competition in foreign market
- Financial shortage
As of March 1988, a number of mills closed as a result of these problems. Between the period 1995 to 2006 many non SSI and private textile mills were closed down leaving many workers jobless. A large number of mills closed down in Tamil Nadu, Maharashtra, Andhra Pradesh and Gujarat.
Positive Steps Taken By The Indian Government
- Reducing excise duty on improved yarn
- Increasing financial assistance for modernizing the industry
- Introducing the Textile Policy in 1985 for expanding and modernizing the industry
- Reducing import duty on textile machinery import
- Running sick units by setting up the NTC – National Textile Corporation
Policy Measures Taken
In 986 the Textile Modernisation Fund was set up for sanctioning and disbursing loans
BIC and NTC evolved to provide working capital finance to resolve liquidity issues, introduce capacity modernization and shed surplus labor via voluntary retirement schemes through the established NRF – National Renewal Fund.
- Encouraging power loom cooperative societies to upgrade this industry
- Measures to reduce controls to allow better transparency
- Introduction of Quota Policy to ensure greater simplicity and transparency in the system, encourage non quota garment export and increased unit value from garment and textile quotas.
- Agreement on Textiles and Clothing as part of the Final Act of Gatt to dissemble the discriminatory quota regime
- Providing 2 bills for amending Sick Textile Undertakings and Acquisition and Transfer of Textile Undertakings to modernize sick textile mills
- Introducing the TUF- Technology Upgradation Fund and CTM- Cotton Technology Mission address the technology obsolescence issue and to improve cotton quality.
After textile industry, jute industry is the second most important industry which existed as a handloom industry in Bengal.
- It was in 1855 that the handloom industry started on a bigger scale at Rishra near Kolkata.
- Weaving and spinning started at the very first power-looms at the same mill in 1859.
- Rapid progress was made by this export-oriented industry. Jute mills increased significantly from 1884 to 1947.
- In 1947, the partition led to a great setback for the industry as bigger jute output went to Bangladesh (former East Pakistan). Also due to political differences with Pakistan, India felt, acute raw jute shortage.
- Raw material shortage caused many inefficient and sick mills to close down. Raw jute production did increase by relentless campaigns for jute cultivation in West Bengal, Brahmaputra valley and East coastal regions. The situation eased greatly by increasing jute yield per hectare.
Production And Distribution
Significant increase in jute production was seen from 1950-51 to 1990-91, in a four decade period. Thereafter, production trends varied.
The jute industry with jute mills and looms is largely concentrated in West Bengal, which produces major percentage of jute goods.
Andhra Pradesh is the second state to produce jute products. Jute mills are located in a narrow belt along the Hugli River bank. Other important jute textile industry centres, besides Kolkata include Budge Budge, Baidyahati, Titagarh, Naihati, Jagatdal, Uluberia, Haora, Kankinara, Bhadreswar, Bansbaria, Bally, Shyamnagar, Shibpur, Agarpara, Serampara, Rishra and many others.
Concentration In The Hugli Basin
- Jute mill concentration is high in the Hugli Basin. Almost 90% jute in India grows in the Ganga-Brahmaputra delta and provides jute mills with raw material.
- Kolkata has enjoyed an early start in the jute industry with the arrival of British merchants under the patronage of the East India Company in Kolkata.
- Water transportation is affordable. There is a good network of railways and roads available.
- Coal is acquired from Raniganj fields close by.
- Adequate water is available for dyeing, washing and processing jute.
- Weaving and spinning become convenient due to humid climate.
- Cheap labor is available in West Bengal Uttar Pradesh and neighboring regions of Bihar and Jharkhand.
- Insurance and banking facilities are available and the capital flow is made easy by Kolkata’s big capitalists.
- Kolkata port helps in easy import and export of spare parts, machinery and finished jute products.
Besides West Bengal, jute mills are also situated in some parts of Tripura, Assam, Vishakhapatnam, Orissa, Andhra Pradesh, Chhattisgarh, Uttar Pradesh and Bihar.
- During the World War II, many countries could not avail Indian jute, so many substitutes for jute, developed. Demand for jute has decreased as advanced nations produce synthetic packing material thus replacing jute.
- Many jute-producing regions became part of East Pakistan during the partition, the result of which was acute raw jute shortage. However efforts have been put in after independence to increase raw jute supply.
- Bangladesh uses improved machines and has established new mills to produce quality goods as compared to Indian jute products.
- Jute products have overall lesser demand in the global market.
- Higher input cost for Indian jute products.
- To ensure quality wise production, obsolete and old machinery is to be replaced by latest machinery. Modernization of units is being undertaken by the National Jute Manufacturing Corporation for quality improvement, product range diversification and cost reduction while producing new products.
The jute industry is an export based industry by tradition. It is the demand for jute products in the national and international market that determines the rise and fall of this industry.
One of India’s oldest textile industries is the woolen industry. Wool was used by Aryans, inhabitants of the Indus Valley right since 5000 BC. During the historical times, woolen textiles gained popularity as a cottage industry. In 1876 the ‘Lal Imli’ was established in Kanpur thus initiating the modern woolen industry. Later in 1881, 1882 and 1886 mills were set up at Dhariwal (Punjab), Mumbai and Bangalore respectively. Till the 2nd World War, not much progress was made by the industry, however during the Planning Era, the progress seemed rapid. As of today there are hundreds of yarns spinning units, hosiery units and big and small mills.
The woolen textile industry is concentrated mainly in Uttar Pradesh, Maharashtra and Punjab, accounting for around 3/4ths of the total capacity of spindleage. The woolen textile industry is established also in other states like Jammu and Kashmir, Karnataka, West Bengal and Gujarat.
- Uttar Pradesh
The birthplace largest centre of the woolen textile industry in India is Kanpur in U.P. Tanakpur, Shahjahanpur, Modinagar, Mirzapur, Agra and Varanasi are the other centers having mills that manufacture a number of woolen goods across the state.
The second largest woolen textile produce is Maharashtra. Wool is imported from U.K. Australia and Italy to produce top grade woolens. Indigenous wool is used to produce inferior and shoddy woolen goods.
The leader in woolen goods manufacture is Punjab with hundreds of small and big units. The largest centre is Dhariwal with others being Kharar, Amritsar and Ludhiana. Wool is sourced from Kumaon and Kashmir and hydroelectricity from Bhakhra Nangal is utilized by the woolen industry here.
Woolen textile mills are located at Vadodara, Jamnagar, Kalol and Ahmedabad. Jamnagar specializes in producing shoddy goods, blankets and worsteds. While superior wool is sourced from abroad, inferior wool is sourced from Kathiawar and Rajasthan.
Haryana, Rajasthan, Ajmer and Pushkar, Bellary and Bangalore in Karnataka are important centers of the woolen textile industry. In West Bengal the woolen textile industry is concentrated in Haora and Kolkata in the Hugli Basin. Flannels, shoddy goods, serges and blankets are produced in Kolkata while power loom and handloom woolen products are produced in Kashmir from top grade locally available wool.
Products ranging from mufflers, jerseys, gloves, sweaters, socks, pullovers, caps, cardigans and shawls are produced at the manufacturing units at Punjab, Haryana, Maharashtra, Uttar Pradesh, Delhi, West Bengal and Ludhiana.
Felts (Namdahs) and Woolen Carpets
Cheap skilled labor is required in the manufacture of felts and woolen carpets. Uttar Pradesh, Rajasthan, Jammu and Kashmir, Punjab, Haryana, Andhra Pradesh, Bihar, Karnataka, Madhya Pradesh and Tamil Nadu are important centres that produce carpets. Major production of woolen goods is exported to Australia, USA, Canada and Britain.
Exports And Imports
Fine wool in huge quantities is imported from Australia as sufficient top grade raw wool is not produced by India. However woolen goods like namdahs, woolen fabrics, blankets, fabrics, shawls, hosiery, carpets, druggets, knitwear etc are important goods exported by India.
- Indian Sheep Productivity Is Low
- Adequate Top Grade Raw Wool Is Not Produced
- Poor Market
- Obsolete Equipment
- Low Quality Woolen Goods
India is the second largest producer of silk (after China) in the world and has the distinction of manufacturing four varieties namely, mulberry, eri, tussar and muga silks. The country has the world monopoly golden-yellow muga silk produced from Assam. It has also a long tradition of manufacturing and producing silk textiles.
History and Development
In India silk fabrics were made in the cottage industrial sector and were exported to many countries of Middle East and Europe. Mughal emperors were very fond of silk cloths and patronised the industry in Bengal and Kashmir. However, the first silk textile mill, on modern lines, was started by the East India Company at Haora in 1832. Later on new factories also started in Karnataka (in 1845) and Kashmir (1892).
The industry suffered a setback between 1875 and 1915 due to the occurrence of the perinea disease and loss of the raw silk crop. However, it got boost up after the tariff protection granted in 1934. After independence there has been significant increase in the production of silk textiles in the country. At present there are about 300 silk textile mills in the country employing about 50,000 workers. The total production of silk yarn was 825 tons in 2002-03.
The states traditionally interested in sericulture development are Karnataka, Andhra Pradesh, West Bengal, Tamil Nadu, Assam, Manipur and Meghalaya. Karnataka accounts for 55.65 per cent of the silk yarn production of the country followed by Madhya Pradesh (40.48%), Tamil Nadu (2.42%) and Punjab (1.45%) (Table 20.VII).
Karnataka is the largest producer of silk in the country. It produces only mulberry silk contributing about 41.4 per cent of the country’s output. Here mulberry cultivation occupies about 8,500 hectares of the agricultural land yielding about 68 lakh kg of raw silk annually. Bulk of the production comes from Bangalore, Mysore, Kolar, Mandya, Tumkur and Belgaum districts.
Channapatna and Mysore are the main centres of silk textiles. The state-owned Channapatna mill has a capacity of 6,000 spindles. The state hardly uses 40 per cent of the total yarn produced and the rest is sent to places like Varanasi Dharmavaram, Kancheepuram, Arani, Kumbakonam and Surat.
2. West Bengal
West Bengal contributes 9.08 per cent of the total silk production of the country; most of it being of mulberry variety. The cultivation is spread over an area of 6,500 hectares mostly in Malda, Murshidabad, Birbhum, 24 Parganas, Haora and Bankura districts. There are more than 4,500 handlooms with important weaving centers at Bishnerpur, Baswa, Raghunathpur and Chak Islampur.
The reeling work is done on the traditional charkhas. The state has a silk conditioning house at Kolkata and a 100-basin filature at Madhu Ghat (Maldah district).
3. Andhra Pradesh
The state contributes 34.6 per cent the total silk production of the country. Sericulture is carried on in Chittoor, Warangal, Karimnagar, Vishakhapatnam and Anantapur districts. There is flourishing handloom silk industry in Mahbubnagar, Karimnagar, Warangal, Adilabad and Kurnool districts.
Bihar (including Jharkhand) is the largest tussar silk producing state of the country. It contributes about 0.8 per cent of the total silk output of the country. Bulk of the production comes from Palamau, Hazaribag, Bhagalpur and Ranchi districts. About 1.5 lakh persons are engaged in the sericulture. Bhagalpur is an important centre of the industry.
Assam specializes in the production of muga silk. Besides tussar and eri silk varieties is also produced providing employment to about 15 lakh persons. Sericulture is an important cottage industry. Bulk of the production comes from Goalpara, Kamrup, Barpeta, Nalbari and Nowgong districts of the Brahmaputra valley. The state has a flourishing handloom silk industry. A 3,000-spindle spun silk mill has been set up at Jagi Road to utilize the silk waste.
6. Tamil Nadu
Tamil Nadu is the fifth largest producer of raw silk (3%) in the country. The production mainly comes from Coimbatore, Dharmapuri, Nilgiris, Salem and Tirunelveli districts. The state has about 2,000 handlooms and produces about 2.4 per cent of the silk-yarn in the country.
7. Madhya Pradesh-Chhattisgarh
Although Madhya Pradesh (including Chhattisgarh) contributes less than 1 per cent of the total silk production of the country, it is the second largest tasar silk producer (25 per cent of India’s production) after Jharkhand. Bulk of this supply comes from Balaghat, Bastar, Bilaspur, Raigarh and Surguja districts. The state is also the second largest producer of silk yarn (3, 34,000 kgs in 2002-03 or 40 per cent of the country’s output) in India.
8. Jammu and Kashmir
The state produces about 100,000 kg of raw silk annually. Here climate is very favourable for the rearing of silk worms. Main producers are Anantnag, Baramula, Doda, Jammu, Riasi and Udhampur districts. The state has 1,030 handlooms and 148 powers looms. It mainly produces white plain silk called ‘tabby’.
Among other important producers of raw silk and silk goods mentions may be made of Uttar Pradesh (Mirzapur and Varanasi districts), Manipur, Meghalaya, Orissa (hill districts), Maharashtra (Bhandara, Nagpur, Pune, Sangli, Solapur districts), Punjab (Gurdaspur, Ludhiana, Amritsar, Hoshiarpur and Jalandhar districts), Nagaland, Himachal Pradesh and Arunachal Pradesh.
India occupies second place in the silk producing countries of the world. Mulberry acreage tripled between 1971-72 and 1992-93 from 1.04 lakh hectares to 3.4 lakh hectares, while the production of silk increased almost five-fold, from 3,000 tons in 1970-71 to 14,168 tons in 1992-93.
The area under mulberry was 3 lakh ha in 1996-97 against 2.89 lakh ha in 1995-96, with the output of raw silk being 14,126 tons against 13,909 tones previously. It was further higher at 16,319 tons in 2002-03. Mulberry accounts for 90% of the total production, followed by eri 8.06%, tussar 1.74% and muga silk 0.63%.
Efforts are being made by the Central Silk Board (CSB) to increase the area under mulberry cultivation by paying special attention to the development of sericulture in the north-eastern states. An integrated muga and eri sericulture development project has been launched at a cost of Rs.95 crores during the Ninth Plan. Completion of the project will result in the expansion of mulberry plantation to 7,500 acres to produce 77.64 tons of raw silk.
The World Bank is going to provide assistance for a project covering 17 states costing Rs. 165.6 crores. The objective of the project is to improve the quality of the Indian raw silk and introduce sericulture to areas in non-traditional states.
Silk products are essential items of export to European countries, African countries and the Middle East. Although there has been shortfall in the quantity of export in recent years but the value has shown rising trends.
In 1990-91 the value of all exports was Rs.440.53 crores which reached the record high of Rs.937.54 crores in 1994.95. In the next year it fell down to Rs.846.08 crores in 1995-96 but recovered in subsequent years so as to reach Rs. 2294 crores in 2002-03. Silk textile exports constitute about three percent of total textile exports of the country.
Though the quantum-wise exports were lower by 16.3 percent, the unit value increased significantly between 1996-97 and 2002-03. Exports to Europe grew by 9.45 per cent to Rs. 364.19 crores from Rs. 298.49 crores, while those to Africa rose by 31.7 per cent to Rs. 18.46 crores from Rs. 14.02 crores. Germany, Singapore, USA, Hongkong. U.K., Saudi Arabia, Kuwait, Malaysia, Sri Lanka, Russia and eastern African countries are the main buyers of the Indian silk goods.
Raw silk is not an important item of India’s export; Instead India imports raw silk of superfine variety from China for making Kanjeevaram and Dharmavaram varieties of sarees and quality silk products.
Competition from artificial silk is the main problem faced by the Indian silk industry. The artificial silk is cheaper and better in quality. Import of better quality and cheaper raw silk from China is also detrimental for indigenous sericulture. The fluctuation of prices of raw silk badly affects the growers and the silk industry. There is no systematic testing and grading of silk as in advanced countries like Japan. The industry needs supportive measures for modernisation of silk power looms together with a curb on the import of silk fabrics.
The Central Silk Board (CSB) is formulating plans for extending the area under mulberry cultivation, improving quality and intensifying research- work. A project has been initiated with the assistance from the Japanese International Cooperation Agency (JICA) for evolving suitable mulberry varieties and bivoltine silk worm races, as also technology for rearing. The CSB is focusing special attention to the growth of the industry in the north-eastern region.
8. Iron and Steel Industry
India’s ‘key’ ‘basic’ industry is the iron and steel industry. If the iron and steel industry grows rapidly, there is rapid industrial growth in the country. Whether it is development in machine and tool making industry, consumer goods or agricultural industry, electrical machinery industry etc all are dependent on the iron and steel industry. Lakhs of people are employed in the steel industry.
The TISCO – Tata Iron and Steel Company was established in 1907 at Jamshedpur initiating large scale iron and steel production.
Before independence the iron and steel industry capacity was not much, however under the economic planning various steps were taken after independence to develop steel plants in the country’s public sector. The new industrial policy of 1956 made establishment of public sector units possible besides expansion of existing private sector iron and steel industries.
· In 1954 the first public sector – Rourkela Steel plant was established.
· In 1955 the second public sector plant was established at Bhilai under an agreement between USSR and India.
· In 1956 a public sector plant was established at Durgapur under an agreement between the British Consortium and India.
Subsequently, crude steel production and finished increased gradually. Rapid progress was made by steel industry during the first two plans. Production capacity of the previous 3 plants doubled during the Third Plan after which a new plant was established at Bokaro.
In the Fourth Plan, 3 more steel plants were established at Visakhapatnam, Bijoynagar and Salem.
The SAIL – Steel Authority of India Limited was set up in 1974 to bring synchronized and coordinated development of all major industrial units under its control and provide major units. Sail undertook the management of TISCO. SAIL meets around 70% domestic requirement of steel currently. Commissioning of the Visakhapatnam Steel Plant in 1994-1995 helped in significantly increasing the capacity of production.
The major units were Hindustan Steel Works, National Mineral Development Corporation Limited, Hindustan Steel Limited, Bharat Coking Coal Limited and Salem Steel Limited.
Production capacity of saleable steel increased during the 7th Plan. However there existed a huge gap between steel production and its consumption. Accordingly steel was imported, which caused a huge bearing on reserves of the foreign exchange.
- Insufficient finance, coal and power
- Inefficient public sector units
- Sick mini steel plants
- Insufficient technically trained personnel
- Issues related to administered prices of steel
- Dependency of foreign investment
- Higher demand for iron and steel
- Higher input cost
- Disputes in industries
- Transportation issues
- Global competition increased
Major Changes Needed
- Tackling basic problems like tension in labor relation, lack of coal, equipments, experts etc. that hinder development
- Utilizing capacity to the fullest
- Upgrading and improving technologies
- Product diversification
- Availability of better quality coal
- Price stability
- Ensuring efficient management in steel units in public sector
- Training workers
- Liberalizing the steel policy
- Issuing new guidelines to liberalize and rationalize steel and steel-based product manufacture
After China the second biggest fertilizer consumer is India. A number of fertilizer companies in India produce tons of fertilizers each year. However, when availability is short, it is met through imports. Significant increase in the output of urea has been seen in the last few years due to better capacity utilization. It is through indigenous production that requirement of urea is met by the country. However phosphatic and potassic (P & K) fertilizers are imported as raw materials or finished fertilizers through imports.
There are 30 urea manufacturing units, 12, di-ammonium phosphate (DAP) producing units, 19 complex fertilizer producing units and 85 Single Super Phosphate – SSP units and many more.
Players in the private sector, public sector and cooperative sector produce complex fertilizers in India. Between the years 2008 and 2013 negative growth was witnessed, but necessary requirements have been met through imports. To boost investment and make India self sufficient in urea fertilizer, a proposal has been introduced by the Fertilizer Ministry. A joint venture came into being between Krishak Bharati Cooperative Ltd and Oman India Fertilizer Company in the year 2012-2013 to balance out urea availability in India.
The government during the year 2013-2014 increased the total fertilizer subsidy in the Interim Budget, for the following year.
Though the government fixes subsidy in the case of P & K and DAP fertilizer, companies are free to determine rates for other fertilizers. The
Under the NBS – Nutrient Based Subsidy Policy, 25 grades of P & K fertilizers and 18 grades of NPKS fertilizers are provided to farmers, at reduced prices. Farmers pay half the cost while the government bears the rest in subsidy form. Under the NBS Policy, 7 new grades of NPKS complex fertilizers have been included by the government. As of now the NBS Policy has 25 grades of P & K fertilizers under it.
Top Public Sector Fertilizer Companies
- Steel Authority Of India Limited
- National Fertilizers Limited
- Paradeep Phosphates Limited
- Fertilizers And Chemicals Travancore Limited
- Neyveli Lignite Corporation Limited
- Hindustan Fertilizer Corporation Limited
- Rashtriya Chemicals & Fertilizers Limited
- Pyrites, Phosphates And Chemicals Limted
- Madras Fertilizers Limited
Top Private Sector Fertilizer Companies
- Mangalore Chemicals And Fertilizers Limited
- Chambal Fertilizers And Chemicals Limited
- Zuari Industries Limited – Fertilizer Limited
- Balaji Fertilizers Private Limited
- Ajay Farm-Chem Private Limited
- Duncans Industries Limited
- Maharashtra Agro Industrial Development Corporation
- Deepak Fertilizer And Petrochemicals Corporation Limited
- Southern Petrochemical Industries Corporation Limited
- Bharat Fertilizer Industries Limited
- Indo-Gulf Fertilizers And Chemicals Corporation Limited
- Godavari Fertilizers & Chemical Limited
- Coromandal Fertilizers Limited
- Gujarat Narmada Valley Fertilizer Co. Ltd
- Tuticorin Alkali Chemicals & Fertilizers Limited
- Meerut Agro Chemicals Private Limited
- Shri Amba Fertilizers (I) Private Limited
- Duncan Industries Limited
- Self reliance in design engineering, indigenous production and fertilizer project execution
- Consultancies organized the fertilizer project execution right from designing/concept to commissioning of fertilizer plants in the country and abroad
- Mutual understanding between academic institutions and fertilizer for basic research and development
- Support from the Fertilizer Department for project development and research through major institutions in India
- Improved capability of fertilizer plant operators to assimilate and absorb latest technological development
- Introducing energy saving and de-bottlenecking schemes for existing fertilizer plants to improve capacity
- Develop expertise to fabricate and supply critical and major equipment for fertilizer projects
10. Paper Industry
India ranks 15 as the largest paper manufacturing industry across the globe. India can boast of having more than 750 paper mills and 50 mills having a 50,000 TPA power and more.
- Maharashtra, West Bengal, Karnataka, Orissa, Andhra Pradesh and Gujarat account for around 72% of the total installed capacity of manufacturing paper.
- Assam, Uttar Pradesh, Bihar, Tamil Nadu, Kerala and Haryana account for around 26% of the overall paper production.
The domestic paper production is not enough to meet present demand and accordingly India has to resort to imports as well. Estimates state that by 2024-2025 the market for paper will have a growth rate of 6 percent each year.
Newsprints and Paper and Paperboard are the 2 main categories of the paper industry. As domestic demand for paper is increasing, it is necessary for India to become more promising, in future. Development of the paper industry in India is dependent upon lifestyle of people, increasing population, manufacturing sector development, GDP development and escalating rate of literacy. A more eco-friendly and technological shift is being seen in the centre of the paper industry.
In the next few years, a round of cooperation and consolidation could be observed in the Indian paper industry amongst various paper industry players so that diffident addition of new raw materials could be quickly smoothened and manufacturing technologies could change at a faster pace.
The paper industry is depending on wood pulp in making paper based and paper products. Attempts are being made to improve the base for raw materials so reduce invention costs. New technologies ensure that there is huge potential with this respect.
Huge amounts have been invested by the country on upgrading machinery, enhancing manufacturing capacity and acquisitions. Financial development of the paper companies is important for this enthusiastic sector to develop its capacity further.
Thrust on the agro-forestry industry that has been renewed and costs that have been softened will surely help the industry. It is estimated that top grade paper machines and state-of-the-art pulp will positively impact the quality and reduce operating costs in the paper industry of India.
Rising Demand For Paper
Demand for printing paper and writing paper in India continues with growing number of school children in rural areas, increasing consumerism and literacy, modern retailing and growing trend of documentation, despite the continued focus on digitalization.
E-commerce enlargement too has significantly increased demand for paper for packaging. Strategy aspects have an important role to play in the domestic paper industrial development in India. Demand and paper consumption in India is sure to be affected positively with increase in organized retail, literacy and intensified consumerism.
Areas To Address
Depression in rival currencies may impact pressures on paper imports. For this, import pressures need improvement to result in ongoing costing pressures in uncoated and coated paper sections.
Import pressures may increase with continued antidumping duties in the US market for nations in Asia which in turn can delay recovery of prices in the domestic market.
Reduction in wood prices can reduce paper costs in the paper sector. Farm forestry is encouraged so that paper mills get wood from nearby regions. This way costs for procuring wood for mills will reduce.
11. Pharmaceutical Industry
India has a well established pharmaceutical industry with thousands of drug companies and manufacturing units. Cost effective vaccines and medicines are produced by India, one of the leading global producers. India is able to supply meet around 20% of the global demand for pharmaceutical products.
The WHO – World Health Organization has approved hundreds of these units for following good practices in manufacturing. The industries are CEP certificate approved and match guidelines for administration of therapeutic goods. Many of the sites are USFDA – US Food and Drug Administration approved.
Drugs in bulk are produced by India’s pharmaceutical industry. The key acting ingredients having medicinal properties are bulk drugs that form the basic raw material for making medicinal formulations. With APIs –active pharmaceutical ingredients, India sees significant opportunities for creating value in the global market.
A good percentage of anti-retro-viral drugs are supplied by pharmaceutical companies in India for combating AIDS – Acquired Deficiency Syndrome.
Manufacturers of generic drugs hold a strong position in the world’s supply chain and play significant role in the pharmaceutical industrial development.
Important Domestic Players
Sun Pharmaceutical Industries, Piramal Enterprises, Cipla, Glenmark Pharmaceuticals, Lupin, Zydus, Dr.Reddy’s laboratories, Cadila, Torrent Pharmaceuticals and Aurobindo Pharma are some of the main domestic players in India.
Goa, Andhra Pradesh, Maharashtra and Gujarat are some of the major clusters in pharmaceutical manufacturing. It is in Visakhapatnam, Ahmedabad, Hyderabad, Vadodara, Bangalore, Mumbai, Pune, Mysore, Aurangabad, Chennai that drug clusters are located in bulk.
Opportunities for investment are huge in the pharmaceutical hubs where production of biosimilars, bulk or API drugs, neutraceuticals, vaccines, drug and food testing and contract research is done.
FDI – Foreign Direct Investment
The FDI policy allows 100% FDI under automatic route in the green field pharmaceutical projects an up to 100% FDI under government approval in brown-field projects. Under the brownfield investment existing facilities are leased or bought by companies to start new production. In the case of green field category, subsidiary is established by companies to initiate production on their own and start facilities and new plants from the ground up.
Trends in Exports
Half the total pharmaceutical production in India is exported to more than 200 nations across the globe. An increase in exports has been seen year after year and is expected to grow in the future too. India’s pharma industry has a huge market in the US. Generic drugs worth billions are exported to the US though the regulatory environment in the country is tough. United Kingdom, Russia, South Africa and Nigeria are other important destinations for exporting pharmaceutical products.
Research And Contract Manufacturing
With its large genetic pool and patient population, India has emerged quickly as a much preferred destination for multinational nations looking for time and cost efficiency. Multinational companies outsource clinical trials and research to India, besides turning to CRAMS – Contract Manufacturing and Research Services as well as R & D – research and development here.
- Restrictions on licensing and pricing
- Ban on fixed-dose combination drugs
- Regulations related to drugs price control
- Making prescriptions as per generic name instead of brand name
- Interpretations of intellectual property protection favoring biosimilars and generics thus impacting GST –goods and services tax at source, manufacture and distribution channels
12.Industrial Regions of India
When a number of industries develop and position close to each other to share their closeness benefits, then industrial regions come up. Since location factors are more favorable, industries have tendency to locate at particular areas only.
Clustering Of Industries Is Identified By Various Indices Namely:
- Power quantum utilized for the industrial purpose
- Total industrial output
- Industrial unit numbers
- Number of industrial workers
- Value added by manufacturing, etc
- Industrial Regions In India
In India there are a number of industrial regions including:
1. Mumbai-Pune Industrial region
This region extends from Mumbai-Thane-Pune and adjoining districts of Solapur and Nashik. Rapid industrial development is seen in Jalgaon, Kolaba, Sangli, Ahmedanagar, Kolhapur, Manmad, Nashik, Pune, Trombay, Thane, Kalyan Kolaba and Satara districts. The cotton textile industry developed in Mumbai, thus initiating industrialization at this moist climate favored location and cotton hinterland. To meet this industry’s requirements, development of hydroelectricity and chemical industry took place in the Western Ghats and Mumbai.
2. Hugli Industrial Region
This region extends in the north from Bansberia to Birlanagar in the south along the Hugli River. Development of industries is seen in the west in Mednipur. Nucleus of this industrial region is formed by Kolkata-Haora. Kolkata came up as a leading centre and road routes and railway lines connected it with other interior regions. Tea plantations in the northern hills of West Bengal and Assam, iron ore deposits in the Chotanagar plateau and coalfields of the Damodar Valley play a vital role in the region’s industrial development. Development became possible with availability of affordable labor.
Other important industries that developed in the region include jute, petrochemical, paper, fertilizer, paper, chemical, engineering, electrical and textile machinery.
3. Bangalore-Chennai Industrial Region
Post-independence the industrial development in this region was rapid. Industries developed in Madura, Salem and Bangalore till 1960 and spread further to Tamil Nadu excluding Viluppuram. The cotton textile industry, the loom industry, cotton mills also developed in the region. Many heavy engineering came up at Bangalore. Other significant industries like rubber goods, textiles, medicines, rail wagons, light engineering goods, diesel engines, aluminum, radio, leather, glass paper, cement, film, cigarette and more also developed. Recent developments are fertilizer plants, iron and steel plants at Salem and petroleum refinery at Chennai.
4. Gujarat Industrial Region
It is between Ahmedabad and Vadodara that the nucleus of this region is located however it extends to Jamnagar in the west, Surat and Valsad in the south. This region is associated with the cotton textile industry location since the 1960s. As Mumbai’s cotton textile industry decline, this region having proximity of market and raw materials, gained importance gradually. Petrochemical industries were established and oil fields discovered around Jamnagar, Ankleshwar and Vadodara. Rapid growth was seen at Kandla port. Petrochemical industries benefited from raw materials available at the Koyali petroleum refinery. The region now sees a diversified industrial structure.
5. Chotanagpur Region
This region spreads across western West Bengal, northern Orissa and Jharkhand. Famous for its heavy metallurgical industries, coal is sourced from the Damodar Valley and non-metallic and metallic minerals from northern Orissa and Jharkhand which makes establishment of heavy industries much easier. Besides this 6 large integrated iron and steel plants are located in this region. Demands of the industry are met with cheap labor, thermal and hydroelectric plants, and vast markets in the region. Other important industries that have developed here include machine tools, heavy engineering and electrical, fertilizers, locomotives, paper and cement.
6. Vishakhapatnam-Guntur Region
The region extends to Prakasam and Kurnool districts in the south from Vishakhapatnam district. Rice mineral reserves, developed agriculture and the Machilipatnam and Vishakhapatnam ports made industrialization easier here. In 1941 the ship building industry began in Vishakhapatnam. Other industries that developed here include petrochemical, light engineering, sugar, aluminum, textile, cement, jute, fertilizer and paper.
7. Gurgaon-Delhi-Meerut Region
Industries here are light and market oriented as the power and mineral resources are located far away. Major industries in the region include sugar, electronics, synthetic and woolen fabrics, light engineering, cotton, hosiery, tractor, machine tools, cycle, chemical, software, agricultural implements and vanaspati. Leather and glass goods are produced mainly in the Agra-Mathura industrial region.
8. Kollam-Tiruvanantapuram Region
The industrial region covers Alwaye, Tiruvanantapuram, Alappuzha, Kollam and Ernakulam districts. Industrial base is provided by hydropower and plantation agriculture to this region. The mineral belt is located far away and accordingly market oriented light and agricultural goods processing industries dominate the region. Other important industries thriving here include fish, cotton, chemical fertilizer, textile, glass, sugar, matchbox, rubber, coconut coir products, food processing, cement and paper.
MNCs – Multinational Corporations or TNC –Transnational Corporation or MNE – Multinational Enterprise are business units operating in different countries across the globe, at the same time. The manufacturing unit could be in one country in some cases while investment and marketing could be in another nation.
There are also a number of cases where business operations have strategic headquarters in one location in the world but carry out business operations in various parts of the world.
Huge business operations are termed as MNCs. They operate businesses across their country borders through a network of marketing operations and industrial network. MNCS are multi-product and multi-process enterprises with some examples being ITC and Videocon of India, Sony of Japan, Siemens of Germany and IBM of USA etc.
In the past, multinationals were America based but as of today a number of Indian multinational companies have spread across the globe. Before the MNC enters a country, at the MNC headquarters there are specialists and resource people from different fields including commerce international trade and diplomacy, economics, political science etc, to make an analysis of the business environment at that destination country and accordingly advise the top management.
Features Of MNCs
- Opportunity seekers
- Analyze risk factors
- Arrange personnel to understand and learn the business climate
- Develop expertise to understand the economy, culture, legal aspects and politics of the country they intend entering into
- Aggressive marketing
- Many assets
- Huge turnover
- Freedom in financial channel selection
- Adjusting transfer prices on purchase of services and goods and on intercompany sales
- Profits are shifted to low-tax countries from high tax countries
- Trade credit is extended through open account terms to their subsidiaries, thus giving a bigger leverage to financial status
MNCs In India
- Tech Mahindra
- Coca Cola
Commitment Of A True Multinational
- Towards developing research and development
- Financing opportunities
- Innovation Based Multinationals
Barriers for entry are created by some companies for other companies. Existing products are differentiated and new products are introduced continually. Huge amount is invested by domestic and international companies both on R & D with a high ration of factory to technical personnel. Product design is to typically fulfill locally perceived needs which also exist in other countries too.
- Mature Multinationals
Presence of economies of scale is the first approach of such companies. Costs are increased when there is increase in the scale of distribution, marketing and distribution so to become more aggressive or maintain the existing position. They may resort to promotion cost reduction as well as cost advantage through different multi-profitable activities.
- Senescent Multinationals
These companies enter markets where there isn’t much of current competition. They resort to using the company’s global scanning capability and look out for low cost production sites.
Why MNCs Grow
- knowledge is non-transferable
- May exploit reputation instead of protecting reputation to build strong customer base and goodwill
- Protect reputations to invest in a country instead of transfer expertise and licensing to maintain a good name
- Direct investment is preferable instead of granting license to a foreign company as this helps in protecting the product’s secrecy
- Access to capital markets
- Complete exploitation of all stages of the product’s life cycle
- Avoiding quotas and tariffs
- Making investments with strategic motives
- Ensuring symbiotic relationships
Even if economic compulsions drove the 1991 adjustment and reforms, this became possible mainly due to the political process. The government’s economic issues largely shaped liberalization rather than by development objectives for the long-term or the people’s economic priorities. Experience has validated the limitations in the design and conception of liberalization.
Right from the time economic liberalization started, problems like rising inequality, increase in unemployment and continued poverty started mounting. The economy was confronted with four crises 25 years later, in education, agriculture, industrialization and infrastructure. These problems were limitations on the future of the economy. To transform and sustain growth in the economy into meaningful development, resolving these issues has been important. This can be done by ensuring a developmental state for India’s market economy and enhance living conditions of its citizens.
Main aim of liberalization was to expand role of foreign and private investment and convert the economy into much more service-and-market oriented. Conditions laid down by the IMF – International Monetary Fund and the World Bank helped in making many of these changes. Accordingly in 1991 a 500 million dollar bail out was the government of India was the condition laid by the IMF and World Bank
- Market deregulation
- Import tariff reduction
- Increased foreign investment
Proponents have attributed liberalization for its high growth in 1990s and 2000s in India. However liberalization has been blamed by rivals for increase in economic degradation and inequality. Since then liberalization’s overall direction did not change irrespective of party that ruled. There has been a range of problems that were politically tough to solve, like reduction in agricultural subsidies and liberalizing laws related to labor, but no party has been able to achieve this. In India the debate on determining if the economic reforms could continue for a period of time and prove to benefit the people of the nation as a whole.
As compared to China, India’s growth was slower before the year 2015. The GDP growth of India outpaced that of China in 2015. Studies indicated that if major obstacles were removed then the economy of India would be free to grow at a faster pace like China.
However debate continues that liberalization is an inclusive strategy for economic growth. Since 1992 inequality in income increased with the financially weak having stable consumption while the richer generated consumption growth. For almost 10 years, the growth rate of GDP was lowest in 2012-2013. At this time the economic reforms of India were criticized. Export growth, nutritional value of food intake in calories and growth in employment was not well addressed by the economic reforms. As compared to the earlier reform, the current account deficit only worsened further.
India’s performance continues to remain poor in various aspects of development with higher number of youth without employment, higher corruption rates, poor security to women and large number of malnourished children
15. Industrial Problems of India
In the last few decades, India has achieved sufficient success in industrial development. In fact it is the 10th largest industrialized nation across the globe. However India is a huge country where industrialization is absent completely or inadequate and hence requires quicker industrial progress. A few issues industrialization in India faces are namely:
1. Industries Concentrated In Selected Regions
India is a huge country but industries are located in few regions only. Delhi, Mumbai, Kolkata etc are some metropolitan cities where concentration of industries is high while it is uneven in other regions which lag far behind. Regional disparity and imbalance is created due to this.
2. Imbalance In The Industrial Sector
With respect to industrial material, self sufficiency is yet to be attained by India, as it relies on foreign imports for transportation of machineries, equipments, paper, iron and steel etc. Import substitution continues to be a distant goal for the nation.
3. Public Sector Industries Running In Loss
During the 5 year plans, phenomenal increase was seen industries. However the government’s defective policy characterized by strained and inefficient management-labor relations and red tape caused loss in industries in the public sector. Obligations of paying employee wages and covering up losses are done by the government by incurring huge expenses. Social development, launching schemes and new industrial ventures becomes difficult as there is no surplus money.
4. Acute Capital Shortage
The economy has faced more harm than good with long term and short term loans taken from the Asian Development Bank, World Bank, etc. While paying loans, huge foreign exchange is being used. To pay old loans, fresh loans are taken. Foreign investors are not comfortable investing in industries requiring long gestation period, large capital etc.
5. Growing Number Of Sick Industries
One major problem is widespread sickness of industrial units. Underutilizaton of capacity due to shortage of transport, power, coal and raw materials, improper management, old machinery, fund diversion to new units, wrong choices of processes and products, trouble in product selling etc are some causes leading to sick industrial units.
6.Lack Of Demand
Due to poor living standards, recurring underdeveloped domestic market, weaker power of purchasing and low level of consumption, the demand for industrial products is low.
7. Inadequate Infrastructure
Industrial development and production is greatly affected by energy crisis. As compared to the actual demand for energy, the installed electricity capacity is quite low. Industrial production gets hampered by rostering and power cuts. National highways are not in good condition, road and rail transportation is plagued with issues and overburdened. Telecom facilities are found in big cities mostly.
8. Improper Industrial Establishment
In general no reference points have been taken while establishing industries. Decisions taken for locating industries are mostly politically motivated. Also most states want public sector industries established within their boundaries.
9. Raw Material Shortage
Monsoon failure, natural calamities like floods, famines, drought etc affect availability of raw material. Demand for industrial products and people’s purchasing power is also affected by monsoon failure.
Industrial development is hindered by red tape and excessive interference of states. Political leaders and ministers approve industrial installation at mainly electoral areas and pressurize industrialists.
11.Low Quality Goods And Higher Production Costs
Obsolete machines and labor is used in producing goods. Besides these industries are given protection from foreign industries and various concessions. Product quality goes down while production costs also increase. Not much effort is taken in quality improvement as these industries have virtual monopoly. Private industrialists sell products at higher products under whenever public sector increases their product prices. This makes it difficult for Indian products to find a bigger market abroad. People have low purchasing power thus reducing demand back at home.
16.Special Economic Zone (SEZ)
SEZs – Special Economic Zones in India are particular localities offering residential businesses with tax and other kinds of incentives. There were no SEZs in India up to the year 2000, but it did have various EPZs – Export Processing Zones. Structure wise these EPZs were same as the SEZs but they were not successful in attracting many firms to India.
In April 2000, the SEZ was introduced by the government. China was already successful in its SEZ model. Accordingly India too structured the SEZ on these lines to help stimulate domestic as well as foreign investment both. In the process India’s exports would increase and new opportunities for employment would be created.
The nation’s policy on foreign investment was amended by the Special Economic Zone Act, 2005. Accordingly the SEZs and EPZs were converted with important zones including Cochin (Kerala), Indore (Madhya Pradesh), Santa Cruz (Maharasthtra), Noida (Uttar Pradesh), Visakhapatnam (Andhra Pradesh), Surat and Kandla (Gujarat), Falta (West Bengal) and Chennai (Tamil Nadu).
Proposals for far smaller and additional SEZs were also accepted by the government of India, since promulgation of the Act, which the developers have to propose to the Board of Approval of India.
SEZ Rules, 2006
Complete procedure for establishing a unit in an SEZ and for developing a proposed SEZ was laid down by the SEZ Rules, 2006.
221 SEZs have been in operation as of September 2017. Approval for operation has been formally received for a massive 423 SEZs by January 2018.
SEZs are relatively new in India. As of today they have turned out to be vital manufacturing and sourcing destinations for foreign investors.
Advantages Of An Indian SEZ Set Up
- Duty free domestic goods procurement and imports become duty free, for maintenance, operation and development of the company concerned.
- Exemption from state imposed levies and GST – Goods and Services Tax. Under the IGST Act 2017, supplies to SEZs are zero rated that means no tax is charged.
- ECB – External Commercial Borrowing is permitted without restrictions up to 500 mn US dollars. On receiving approval of the government for providing the zone with infrastructural facilities, the ECB channel may be availed by SEZ developers. However, development of commercial real estate and integrated township within the SEZ is not allowed by the ECB.
- There is complete exemption on export income for the initial 5 years, fifty percent for 5 years thereon and fifty percent of the export profit that is invested again in the business for the following 5 years. As per the Sunset Clause (pending an extension) – of April 1, 2020, the incentives will be discontinued. The Clause is under discussion, currently.
- Foreign firms in India have increased exponentially due to benefits of the SEZ policy.
- Increase in exports has been since 2005 due to increase in manufacturing and sourcing platforms.
- Consent is provided to produce goods directly as long as the produced goods fall within a sector that allows 100% FDI.
SEZ Location Selection
The website of the Department of Commerce provides a list of SEZs which an interested company can select from, thus making the process less stressful and less difficult. Companies interested in manufacturing or sourcing in India directly, must place their platform well for raw material procurement for production. The region should be best suited for exports as well. Application can be made to the Indian Board of Approval for SEZ establishment by the developers. The SEZ establishment should be at a location where one does not exist, currently.
17.Public Sector Undertaking
A public sector company in India, is one in which 51% share or more is owned by the Territorial Government, State Government or Union Government. Explosive material, Atomic Energy and Railways are the 3 sectors remaining reserved only for the government, currently. Private players / sectors are disallowed from operating in these three sectors.
In India, there were not many public sector companies before independence. There were just a few major public sector enterprises including the Ordinance Factory, All India Radio, Indian Railways, Post and Telegraphs and the Posts and Telegraphs. However, to develop the country’s socio-economic status, some policies were planned out after independence by visionary leaders. The plan was ensure vigorous growth of the economy by utilizing the public sector as a tool.
The second five year plan was based on developing various industries. Many valuable natural resources were lost and India was gripped by severe economic issues till the 1990s as many sectors in the economy were reserved for the government only. However, under the leadership of Mr.P.V.Narsimha Rao and Mr.Manmohan Singh, a new economic policy was launched in July 1991.
Objectives Of The New Policy
- Ensuring gainful employment
- Making India poverty free
- Utilizing human resources to the optimum
- Maintaining continued growth in production
- Exposing the economy of the world across the globe and transforming it into a main partner and player on the global platform
- Results of the new policy
- Private players got an entry into reserved sectors. Public sectors found it difficult to operate at its optimum pace.
Objectives Of The Public Sector In Objective Achievement
- Creating employment opportunities
- Promoting balanced growth in regions and redistribution of wealth and income
- Generating financial resources for development
- Expanding and creating infrastructure to promote quicker economic development
- Encouraging small scale and ancillary industrial development
- Accelerating substitution of imports and promoting exports
Issues Faced By The Public Sector
- Increased operating costs
- Imperfect policy making and execution
- Inadequate motivation for self improvement
- Excessive staffing
- Underutilization or wastage of resources
- Improper price policy
Fulfilling goals of India including achieving self reliance, eradicating poverty, speeding up pace of industrial and agricultural development, reducing income inequality, minimizing concentration of ownership, creating technological, professional and managerial cadres, preventing growth of monopolistic tendencies, removing imbalances in regions, making India self reliant in terms of modern technology etc are some of the reasons of expanding the public sector so that finally India does not have to depend on foreign help. However achieving these objectives, as desired was not possible. Hence privatizing these enterprises is one option the government has resorted to.
One solid engine for generating employment and economic growth is tourism. In India, the biggest service industry is the tourism sector. Remote parts of the nation have attained significant economic development and generated employment due to the tourism sector. The number of jobs has increased to great numbers since the past few years.
During the 12th Plan period various challenges including improving growth of the current tourism sector, improving infrastructure facilities for tourism like way side amenities, facilitation centres, hotels, transport vehicles, roads, etc have been undertaken. Besides this, improving connectivity from main market sources, training manpower, etc has also been undertaken. On 23rd June, 2011 a presentation was made by the Ministry of Tourism to the Prime Minister, for creating awareness about the huge potential tourism has for generating employment and development of economy. Discussions were undertaken about tourism development during the 12th Plan. Different Sub Groups of the Working Group on Tourism set up by the Planning Commission, also deliberated on the presentation’s content. Strategies for tourism development were accordingly recommended by the Working Group after detailed discussion.
Targets For The Tourism Sector
- During the 12th Five Year Plan, growth targets of the tourism sector and service sector of the country have to be linked.
- By the end of the 12th Five Year Plan, the share of international tourist arrivals needs to increase.
- Adequate facilities have to be provided for domestic tourism, to ensure sustained growth.
Conclusion Of The Targets
- Estimates have been made to increase number of FTVs – Foreign Tourist Visits and FTAs – Foreign Tourist Arrivals.
- Projections made to increase the number of DTVs Domestic Tourism Visits.
- Additional FEE – Foreign Exchange Earnings to be earned from the tourism sector.
- Increase in the number of jobs in the tourism sector is expected in the coming years.
- Enhancing infrastructure of Hospitality Education Institutions
- Starting new FCI – Food Crafts Institutes and IHM – Institutes of Hotel Management
- Enlarging the current IHM / FCI capacity
- Facilitating investments in the private sector
- Broad based hospitality education to cover polytechnics, colleges, universities, vocational education at colleges and Industrial Training Institutes.
- Developing infrastructure
- Ensuring proper sanitation and hygiene
- Promoting, branding and marketing, new tourism products on the domestic and international front
- Help attain dividends to the maximum from tourism related taxes
- Promote tourism at state and central level by constituting Committees at national and state levels
- Involving states and Union Territories in developing tourism
- Allotment of land for hotels, theme parks, composite heats, exhibition centres, convention centres etc.
- Land to be allotted on the basis of revenue sharing
In tourism, one entirely new approach is Eco-tourism. Eco-tourism involves protecting the natural environment, not disturbing the ecosystem’s integrity, creating new opportunities in the economy to protect and conserve the natural resources of the country. This helps in appreciating the natural and cultural history of the environment and also proves to be advantageous to the local people.
- Eco-tourism helps in promoting conservation.
- Eco-tourism is an ecologically sustainable and nature based tourism programme, in a way that local people benefit and interpretation and education are major constituents.
- It is an environmentally responsible visitation and travel to natural regions that are relatively undisturbed, so that nature can be appreciated, studied and enjoyed.
- An Eco-tourism venture cannot be termed as real if any of these constituents are not satisfied by the travel.
- Tourism destinations offer opportunities for rejuvenation and de-stressing
- Mother Nature can be enjoyed in the most pristine way
- Treasured wealth can be enjoyed at a number of places like northeast India, the Andaman and Nicobar Islands, Himalayan Region and Lakshdweep Islands to name a few.
- In India the first destination for planned eco-tourism has been Thenmala in Kerala that catered to lovers of nature and eco-tourists.
Concerns Related To Eco-Tourism
- Conserving ethics and worshipping nature has been an inseparable part of traditions and thoughts, since ages in India. Philosophy and oneness of life was nurtured by ancient civilizations of India. However nature has been exploited in all aspects in the quest for economical progress and obtaining materials. Now, the realization has come to awaken new beginnings about responsibility of mankind towards nature.
- In the past hunting was the main cause for reduced wild life. With proper laws in place now, wildlife sanctuaries in India remain protected. India has around 441 sanctuaries and 80 national parks working towards conserving and protecting wildlife resources.
- The topography of India is abundant in flora and fauna, with huge number of endangered and rare species in the surroundings. Wildlife resources have been seeing significant growth after many national parks and wildlife areas have been protected by laws.
- The ecosystem is being enhanced by various Botanical and Zoological Gardens in India. Discontinuation of poaching has helped in greatly. Illegal traders and hunters as well as poachers of animals and trees are punished severely.
- Many of the plants and animals rights organizations do fight for the rights of plants and animals.
- Environmental education is provided at grass root level to the common people by a number of NGOs and organizations that have come up in India.
- Eco-tourism has assisted well being of environments and local cultures for generations in the future.
- Host areas are provided with viable economic opportunities.
- Involving local communities in the decision making process of the eco-tourism industry. As profitable tourism is implemented, the success rate too is much higher.
- The promotion of Heritage Hotels by Rajasthan and eco-tourism drive launched by Kerala state for example are initiatives directed towards the increasing popularity of eco-tourism in the country.
In the economy of any country, an important part is the industrial complexes of business groups which play a vital role as major contributor to the economy of the country. Different business groups are indentified in developing economies in the industrial scenario. It was during the latter half of the 19th century that industrial activity made an appearance. Around ninety percent of the businesses in India are owned by families. These industries play a vital role in the Indian economic development by addressing gaps created by sluggish institutions and markets.
Main Business Houses In India
Reliance Industries Limited
In 1966 Dhirubhai Ambani founded Reliance India Limited as Reliance Commercial Corporation, a conglomerate holding company in India. After he and his brother Anil Ambani split, the company whose headquarters is in Mumbai, is headed by Mukesh Ambani. In India, it is the most profitable business house. Total revenue of the government amounting to 5% is contributed by Reliance, from excise and customs duty. Reliance is operational in sectors of telecommunications, energy, retail, petrochemicals, natural resources and textiles.
In 1868, Jamshedji Tata established a global enterprise called the Tata Group with headquarters in India. It comprises of more than 100 companies with independent operations. It is operational in more than 100 nations across the globe. The primary promoter and investment holding company of Tata companies is Tata Sons. Tata Communications and Indian Hotels, Tata Steel, Titan, Tata Motors, Tata Teleservices, Tata Consultancy Services, Tata Chemicals, Tata Power, Tata Global Beverages are the Tata companies with significant scale.
Headquarters of Adani Group a well known commodity trading business house is Gujarat. It was founded in 1988 with Gautam Adani being the first generation entrepreneur, chairman and founder. This multinational amalgamate works in a range of business sectors including energy, resources, agribusiness and logistics sectors. Adani Power, Adani Gas Ltd, Adani Ports & SEZ Limited are subsidiaries of Adani Group.
Sunil Bharti Mittal founded Bharti Enterprises in 1976. Headquarters of the company is in New Delhi with operations spreading across Asia and Africa. The company has its presence in various sectors including manufacturing, telecommunications, financial services and agribusiness. The telecom industry however provides the largest revenue. Key partners currently are international companies like Alcatel-Lucent, Singtel, Ericsson, Nokia Siemens and IBM. The education sector is being revolutionized across 13 states in India by engaging 8000 teachers to reach out to 240,000 students by Bharti Foundation, the charitable arm of Bharti Enterprises.
Reliance ADA Group
Reliance ADA group has its headquarters in Navi Mumbai. After Anil Ambani and Mukesh Ambani, his elder brother separated, this group came into existence. While net assets of the group are 28 billion dollars, market capitalization is 14 billion dollars. It operates in around 450,000 villages and 20,000 towns in India. Various businesses Reliance ADA Group is engaged in include, financial services, transportation, construction, aviation, entertainment, defense, power, manufacturing, healthcare and telecom.
Aditya Birla Group
This is one of the finest business houses founded in 1857 by Seth Narayan Birla. Headquarters of the group is in Worli, Mumbai. The group with its thousands of employees functions in around 40 nations across the globe. In USA, the largest MNC is Aditya Birla Group with employees of America engaged in manufacturing operations. IT and BPO services, viscose staple fiber, financial services, metals, telecom, filament yarn, insulators, branded apparel, cement (largest in India), chemicals and carbon black are some of the sectors, this group is active in.