Economics Project
Economics Project
Economics Project
Submitted By:
Name
Aman Rai
CONTENT
1) ACKOWLEDGMENTS..II
2) DECLARATION.....III
3) INTRODUCTION1
4) OBJECTIVES...2
5) RESEARCH METHODOLOGY.3
Chapter: 1Importance of SSI in India..5-9
Chapter: 2 Contribution to GDP..10
Chapter: 3 Problems In India.11-15
Chapter: 4 Measures to remove.....16-17
Chapter: 5 Competitiveness in India.18
Chapter: 6 Market Survey.....19-20
6) CONCLUSION.....21
7) REFERENCES.22
II
ACKNOWLEDGMENTS
I Aman Rai, would like to humbly present this project to Ms. Eritriya Roy. I would first of all
like to express my most sincere gratitude to Ms. Eritriya Roy for her encouragement and
guidance regarding several aspects of this project. I am thankful for being given the opportunity
of doing a project on Competitiveness of Small Scale Industries in India
I am thankful to the library staff as well as the IT lab staff for all the conveniences they
have provided me with, which have played a major role in the completion of this project.
I would like to thank God for keeping me in good health and senses to complete this
project.
Last but definitely not the least; I am thankful to my seniors for all their support, tips
and valuable advice whenever needed. I present this project with a humble heart.
III
Declaration
I, Aman Rai, hereby declare that, this project report entitled, Competitiveness of Small
Scale Industries in India submitted to Hidayatullah National Law University, Raipur is
record of an original work done by me under the guidance of Ms. Eritriya Roy , Faculty
Member, H.N.L.U., Raipur and that no part of this work has been plagiarized without
citations.
Introduction
The Small-Scale Industries (SSI) gathered momentum along with industrialization and
economic growth in India. It started growing due to the vision of our late Prime Minister
Jawaharlal Nehru who sought to develop core industry and have a sustaining sector in the
form of small-scale enterprises. Being a labour-intensive sector, they offer a higher
productivity of capital than capital-intensive enterprises due to low investment per worker.
The SSI today constitutes a very important segment of the Indian economy as they help in
dispersal of industries, rural development, and the decentralization of economic power. The
central discussion of this project highlights the importance of small industries and their role
in the economy and the impact of economic reforms on growth pattern and productivity
performance of small-scale industries and the Competition of small scale industries.
OBJECTIVES
NATURE OF RESEARCH
This research work is descriptive and Analytical in nature. It constitutes an important segment
of the Indian economy as they help in dispersal of industries and rural development.
SOURCES OF DATA
This study is done with the help of secondary data. This secondary information has been
obtained from published sources such as books, journals, newspapers, official websites,
government publications and surveys etc.
MODE OF FOOTNTES
A uniform mode of citation has been adopted and followed consistently throughout this
project.
1 http://msme.gov.in/mob/ActsRule.aspx
2 http://planningcommission.gov.in/plans/planrel/fiveyr/12th/pdf/12fyp_vol2.pdf
development. The IPR 1956 for small-scale industries aimed at Protection plus
Development. In a way, the IPR 1956 initiated the modem SSI in India.
3. Industrial Policy Resolution (IPR) 1977:
During the two decades after the IPR 1956, the economy witnessed lopsided industrial
development skewed in favour of large and medium sector, on the one hand, and increase in
unemployment, on the other. This situation led to a renewed emphasis on industrial policy.
This gave emergence to IPR 1977.
The Policy Statement categorically mentioned:
The emphasis on industrial policy so far has been mainly on large industries, neglecting
cottage industries completely, relegating small industries to a minor role. The main thrust of
the new industrial policy will be on effective promotion of cottage and small-scale industries
widely dispersed in rural areas and small towns. It is the policy of the Government that
whatever can be produced by small and cottage industries must only be so produced.
The IPR 1977 accordingly classified small sector into three broad categories:
1. Cottage and Household Industries which provide self-employment on a large scale.
2. Tiny sector incorporating investment in industrial units in plant and machinery up to Rs. 1
lakh and situated in towns with a population of less than 50,000 according to 1971 Census.
3. Small-scale industries comprising of industrial units with an investment of upto Rs. 10
lakhs and in case of ancillary units with an investment up to Rs. 15 lakhs.
The measures suggested for the promotion of small-scale and cottage industries included:
(i) Reservation of 504 items for exclusive production in small-scale sector.
(ii) Proposal to set up in each district an agency called District Industry Centre (DIC) to
serve as a focal point of development for small-scale and cottage industries. The scheme of
DIC was introduced in May 1978. The main objective of setting up DICs was to promote
under a single roof all the services and support required by small and village entrepreneurs.
What follows from above is that to the earlier thrust of protection (IPR 1948) and
development (IPR 1956), the IPR 1977 added promotion. As per this resolution, the small
sector was, thus, to be protected, developed, and promoted.
(iv) A new scheme of Central Investment Subsidy exclusively for small-scale sector in rural
and backward areas capable of generating more employment at lower cost of capital had been
mooted and implemented.
(iv) With a view, to improve the competitiveness of the products manufactured in the smallscale sector; programmes of technology up gradation will be implemented under the umbrella
of an apex Technology Development Centre in Small Industries Development Organisation
(SIDO).
(v) To ensure both adequate and timely flow of credit facilities for the small- scale industries,
a new apex bank known as Small Industries Development Bank of India (SIDBI) was
established in 1990.
(vi) Greater emphasis on training of women and youth under Entrepreneurship Development
Programme (EDP) and to establish a special cell in SIDO for this purpose.
(vii) Implementation of delicencing of all new units with investment of Rs. 25 crores in fixed
assets in non-backward areas and Rs. 75 crores in centrally notified backward areas.
Similarly, delicensing shall be implemented in the case of 100% Export Oriented Units
(EOU) set up in Export Processing Zones (EPZ) up to an investment ceiling of Rs. 75 lakhs.
Years
19992000
20002001
20012002
20022003
20032004
Total industries
production
39.74
39.71
6.04
39.12
5.77
38.89
5.91
38.80
5.28
3 http://msme.gov.in/mob/home.aspx
10
4 http://home.hiroshima-u.ac.jp/hindas/Data/Abstruct20111210.pdf
11
Firstly, adequate funds are not available and secondly, entrepreneurs due to weak economic
base have lower credit worthiness. Neither they are having their own resources nor are others
prepared to lend them. Entrepreneurs are forced to borrow money from money lenders at
exorbitant rate of interest and this upsets all their calculations.
After nationalisation, banks have started financing this sector. These enterprises are still
struggling with the problem of inadequate availability of high cost funds. These enterprises
are promoting various social objectives and in order to facilitate then working adequate credit
on easier terms and conditions must be provided to them.
(2) Raw Material:
Small scale industries normally tap local sources for meeting raw material requirements.
These units have to face numerous problems like availability of inadequate quantity, poor
quality and even supply of raw material is not on regular basis. All these factors adversely
affect t e functioning of these units.
Large scale units, because of more resources, normally corner whatever raw material that is
available in the open market. Small scale units are thus forced to purchase the same raw
material from the open market at very high prices. It will lead to increase in the cost of
production thereby making their functioning unviable.
(3) Idle Capacity:
There is underutilisation of installed capacity to the extent of 40 to 50 percent in case of small
scale industries. Various causes of this under-utilisation are shortage of raw material problem
associated with funds and even availability of power. Small scale units are not fully equipped
to overcome all these problems as is the case with the rivals in the large scale sector.
(4) Technology:
Small scale entrepreneurs are not fully exposed to the latest technology. Moreover, they lack
requisite resources to update or modernise their plant and machinery Due to obsolete methods
of production, they are confronted with the problems of less production in inferior quality and
that too at higher cost. They are in no position to compete with their better equipped rivals
operating modem large scale units.
12
(5) Marketing:
These small scale units are also exposed to marketing problems. They are not in a position to
get first-hand information about the market i.e. about the competition, taste, liking, disliking
of the consumers and prevalent fashion.
With the result they are not in a position to upgrade their products keeping in mind market
requirements. They are producing less of inferior quality and that too at higher costs.
Therefore, in competition with better equipped large scale units they are placed in a relatively
disadvantageous position.
In order to safeguard the interests of small scale enterprises the Government of India has
reserved certain items for exclusive production in the small scale sector. Various government
agencies like Trade Fair Authority of India, State Trading Corporation and the National Small
Industries Corporation are extending helping hand to small scale sector in selling its products
both in the domestic and export markets.
(6) Infrastructure:
Infrastructure aspects adversely affect the functioning of small scale units. There is
inadequate availability of transportation, communication, power and other facilities in the
backward areas. Entrepreneurs are faced with the problem of getting power connections and
even when they are lucky enough to get these they are exposed to unscheduled long power
cuts.
Inadequate and inappropriate transportation and communication network will make the
working of various units all the more difficult. All these factors are going to adversely affect
the quantity, quality and production schedule of the enterprises operating in these areas. Thus
their operations will become uneconomical and unviable.
(7) Under Utilisation of Capacity:
Most of the small-scale units are working below full potentials or there is gross
underutilization of capacities. Large scale units are working for 24 hours a day i.e. in three
shifts of 8 hours each and are thus making best possible use of their machinery and
equipments.
13
On the other hand small scale units are making only 40 to 50 percent use of their installed
capacities. Various reasons attributed to this gross under- utilisation of capacities are
problems of finance, raw material, power and underdeveloped markets for their products.
(8) Project Planning:
Another important problem faced by small scale entrepreneurs is poor project planning.
These entrepreneurs do not attach much significance to viability studies i.e. both technical
and economical and plunge into entrepreneurial activity out of mere enthusiasm and
excitement.
They do not bother to study the demand aspect, marketing problems, and sources of raw
materials and even availability of proper infrastructure before starting their enterprises.
Project feasibility analysis covering all these aspects in addition to technical and financial
viability of the projects, is not at all given due weight-age.
Inexperienced and incomplete documents which invariably results in delays in completing
promotional formalities. Small entrepreneurs often submit unrealistic feasibility reports and
incompetent entrepreneurs do not fully understand project details.
Moreover, due to limited financial resources they cannot afford to avail services of project
consultants. This result is poor project planning and execution. There is both time interests of
these small scale enterprises.
(9) Skilled Manpower:
A small scale unit located in a remote backward area may not have problem with respect to
unskilled workers, but skilled workers are not available there. The reason is Firstly, skilled
workers may be reluctant to work in these areas and secondly, the enterprise may not afford
to pay the wages and other facilities demanded by these workers.
Besides non-availability entrepreneurs are confronted with various other problems like
absenteeism, high labour turnover indiscipline, strike etc. These labour related problems
result in lower productivity, deterioration of quality, increase in wastages, and rise in other
overhead costs and finally adverse impact on the profitability of these small scale units.
14
(10) Managerial:
Managerial inadequacies pose another serious problem for small scale units. Modern business
demands vision, knowledge, skill, aptitude and whole hearted devotion. Competence of the
entrepreneur is vital for the success of any venture. An entrepreneur is a pivot around whom
the entire enterprise revolves.
Many small scale units have turned sick due to lack of managerial competence on the part of
entrepreneurs. An entrepreneur who is required to undergo training and counselling for
developing his managerial skills will add to the problems of entrepreneurs.
The small scale entrepreneurs have to encounter numerous problems relating to
overdependence on institutional agencies for funds and consultancy services, lack of creditworthiness, education, training, lower profitability and host of marketing and other problems.
The Government of India has initiated various schemes aimed at improving the overall
functioning of these units.5
5https://www.google.co.in/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF
15
16
COMPITATIVENESS IN INDIA
7 http://msme.gov.in/mob/PlanBudget.aspx
17
Gandhi ji once said the poor of the world cannot be helped by mass production; it can be
achieved only through production by the masses. If large number of producers were to exist
for wider markets, the entities that produce should necessarily be small. The focus of this
project is involved in making the Small Scale Industries sector in India more competitive in
the changing global environment. Global competitiveness is considered by all countries to be
a prerequisite for maintaining high levels of income, employment and sustainable growth.
Greater competitiveness allows diversifying from a traditional commodity exports and
moving up the skills, technology ladder and permitting greater economies of scale in
production. Competitiveness is not only dependent on macroeconomic parameters and
adjustments or natural endowments but al soon the ability to achieve high productivity by
effectively utilizing the factors of production.8
8 http://msme.gov.in/WriteReadData/DocumentFile/Outcome_Budget-2007-08-SSI.pdf
18
19
attractive advertisement can considerably influence consumers to buy a particular brand and
thus helps to boost up sales of brand.
As Fedrick R. Gamble, former President of an American Association of advertising Agencies
rightly mentions that Advertising is the greatest accelerating force in distribution reaching
many people rapidly with low cost, advertising speed. Therefore, advertising has the greatest
opportunity and responsibility for finding consumers in an economy with mass production
and high consumption.
CONCLUSION
20
The small-scale industry is a key to India's growth and alleviation of poverty and
unemployment in the country Therefore, promotion of such enterprises in developing
economies like India is of paramount importance since it brings about a great distribution of
income and wealth, economic self-dependence, entrepreneurial development employment and
a host of other positive, economic uplifting factors. Moreover, in a country like India with an
adverse Balance of Payment situation, the growing contribution of the SSI sector in India's
export portfolio goes a long way in generating forex and smoothening out the adverse BoP
situation. This study, therefore, analyses the impact on the Indian economy caused due to the
growth of this sector and the factors responsible for its growing contribution towards the
export performance of India.
REFRENCE
21
https://www.google.co.in/#q=restitution+of+conjugal+rights+meaning
https://www.google.co.in/#q=economic+policy+for+small+scale+industries+in+india
http://home.hiroshima-u.ac.jp/hindas/Data/Abstruct20111210.pdf
https://www.google.co.in/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-8#q=ministry%20of
%20small%20scale%20industries
http://msme.gov.in/mob/home.aspx
http://msme.gov.in/mob/PlanBudget.aspx
http://planningcommission.gov.in/plans/planrel/fiveyr/12th/pdf/12fyp_vol2.pdf
http://msme.gov.in/WriteReadData/DocumentFile/Outcome_Budget-2007-08-SSI.pdf
http://msme.gov.in/mob/ActsRule.aspx
http://msme.gov.in/mob/ActsRule.aspx