Development of Small Industries | Industrial Engineering

After reading this article you will learn about the role of important institutions in the development of small industries.

National Small Industries Corporation:

This Corporation was established in 1955 with a capital of Rs. 10 lakhs, subsequently raised to Rs. 50 lakhs, entirely subscribed by the Central Government.

Objectives:

(a) To secure a reasonable share of Government orders for small-scale units by accepting contracts from procurement department of the Government and issuing subcontracts to small-scale units and by assisting small-scale units to obtain direct contracts by the tender system.

(b) To provide such units with loans and technical assistance necessary for fulfilling such orders and for manufacturing articles of the type and the standard required.

(c) To try to secure coordination between large-scale and small-scale industries so as to enable the latter to manufacture ancillaries, components and other articles required by the former.

(d) To conduct marketing operations through mobile vans, research on marketability of consumer goods produced by small scale units and provision of other marketing facilities.

(e) To supply machinery on hire-purchase scheme.

The Corporation is also authorised to underwrite and guarantee loans from banks and other institutions to small scale units.

The Corporation has five divisions viz. Stores Purchase, Marketing, Hire purchase. Industrial Estates, Administration and Accounts.

The most significant assistance rendered by this Corporation is the arrangement it makes for hire-purchase of machinery and equipment, the bona fide purchasers have to send their requests through ‘Regional Small Industries Service Institutes’ and the Corporation places orders with the manufactures on receipt of 20 per cent of price as advance if it is a general purpose machine and 40 per cent if it is a special purpose machine. The balance is payable in specified installments.

The Corporation since its inception up to the end of March 1978 has assisted nearly 14,280 small units on hire-purchase scheme by supplying machinery worth Rs. 86 crores. The machines supplied related to industries like plastics, leather printing, readymade garments, automobile components, electronic equipment etc.

The value of orders secured from Government stores purchase agencies rose to Rs. 58 crores in 1977-78. Total value of contracts secured since inception up to March 1978 totalled Rs. 539 crores.

The Corporation has conducted extensive surveys for studying the possibilities of development of small units in backward areas.

It has been imparting training to entrepreneurs of small industries. In 1977-78, 598 persons received training. The Prototype Development and Training Centres are set up at Rajkot, Okhla, Howrah and recently at Madras for prototype growth of specific industries.

In 1988-89 itself, the corporation supplied machinery under hire-purchase sand lease worth Rs. 21.59 crores and it provided training to 1780 persons.

Government purchases from NSIC units under government purchase programme was of the order of Rs. 740 crores.

Small Industries Development Organisation:

This organisation provides a number of services designed to promote the growth of small industries by extending guidance and common facilities.

The purpose of this organisation is to provide technical advice and assistance to small-scale manufacturers.

It also provides common service and tool room facilities in workshops attached to ‘small industries service institutes and extension centres’. It conducts courses in management and technical disciplines

It has a network of 27 service institutes, 31 branch institutes, 37 extension centres, 4 production centres and 2 training centres.

Two new centres, namely the Central Institute of Tool Designs, Hyderabad and the Institute for Design Electrical Measuring Instruments, Bombay are providing technical guidance and training to entrepreneurs.

Four Regional Testing Centres are set up at New Delhi, Calcutta, Bombay and Madras for providing testing facilities in mechanical, metallurgical, chemical and electrical trades. Besides, two new tool rooms at Calcutta and Ludhiana have been set up.

Industrial Estates:

Industrial estates are the important institutional arrangements for building up infra structural set-up for orderly development of small industries in specified areas. Industrial estate is an attempt to provide on a rental basis good accommodation and other basic common facilities to groups of small entrepreneurs who could otherwise find it difficult to secure these facilities at a reasonable price.

They seek to provide accommodation in the form of sheds, stalls, sites for locating or housing the small projects. They provide common facilities or services like supply of electricity, gas steam, railway-sidings etc. They also provide houses, schools and other social amenities for workers.

Launched two decades ago, today there are over 800 industrial estates in the country. Not all of them are functioning. Nearly Rs. 100 crores have been spent till now on the construction of government- sponsored industrial estates and plan allocation from Rs. 10 crores in the first plan to nearly Rs. 75 crores now.

Industrial Cooperatives:

Industrial cooperatives are organisations voluntary of artisans, craftsmen, small entrepreneurs formed on principles of cooperation. They undertake production activities in common and arrange for marketing the products.

These cooperatives increase the bargaining power of small units in acquiring raw materials, finance and market orders. They have provided employment to numerous personnel. They occupy an important place in the field of village and small industries, agro-industries and handicrafts.

As on 31-3-1988 there were 42,470 industrial cooperatives with a membership of 25 lakhs. These societies provided employment to about 7.46 lakh persons directly in the production during the year ending 1988. The sales of these societies were of the order of Rs. 566.5 crores during 1987-88.

The National Federation of Industrial Cooperatives was set up with a view to assist the marketing efforts of member societies. By 1980 June-end, it had 70 members with a paid-up capital of Rs. 25.67 lakhs. The total turnover of the federation was Rs. 162.24 lakhs in 1979-80.

District Industries Centres (DICs):

The Industrial Policy Resolution, 1977, envisaged the formation of District Industries Centres to help in the promotion of small and rural industries. It aimed at removing employment, reduction of disparities between urban and rural areas and mitigating the incidence of industrial sickness.

These centres were to undertake economic investigation of the potentials for development of the district including raw materials and other resources, supply of machinery and equipment, credit arrangements, marketing assistance, quality control, research and training.

The purpose of forming these centres was to make them as centres of operational mechanism for according sanction and other facilities for setting up small units in rural areas and ensuring their continued viable operation, by developing close linkage with rural development blocks and specialised development institutions.

Institutions like Khadi and Village Industries Commission, All India Handicrafts Board, All India Handloom Board, the Coir Board, Central Silk Board would operate through the District Industries Centres.

The first set of District Industries Centres went into operation in 1978. There have been 7 managers to cater to specific needs of small industries, viz., economic investigations, machinery and equipment, raw materials, research and development, credit, marketing, cottage Industries.

Within first 6 months of their establishment 60,000 new entrepreneurs were identified; 18,000 project profiles were prepared, 44,000 new units were registered providing additional employment to 1.46 lakh persons. By march 1980, there were 382 DICs covering 392 districts.

However, the Industrial Policy Resolution, July 1980 has observed that DICs have “not produced benefits commensurate with the expenditure involved” and therefore more effective alternative has to be explored.

The total number of DICs at present (March 1990) is 422 covering 431 districts out of 436 districts in the country. The four metropolitan cities name Delhi, Bombay, Calcutta and Madras are outside the purview of this programme. DICs assisted 1.25 million artisans during 1985-89 reserved to 0.43 million small scale units and provided credit assistance to them amounting Rs. 2,095 crores.

DICs also assisted educated unemployed such falling in the age groups 18-35 years and having passed matriculation and above to get self-employment through industry, service and business routes.

SIDBI:

In accordance with the 1989 Act., SIDBI commenced operation from April 2, 1990. Promoted as a subsidiary of IDBI, with an authorised capital of Rs. 250 crore, SIDBI will be managed by a board of directors consisting of experts and representatives of Government and non-government bodies.

The primary objective of this organisation will be to function on the principal functional institution for prompting, financing and developing small-scale including and also coordinating activities of other such institutions.

As per the Act, SIDBI may take up the following business to fulfill its objectives:

1. Assisting the existing financing institutions through refinance, lines of credit, shares, debentures and bond support.

2. Assisting the small-scale industries through bills, loans and advances, shares, bonds, underwriting support and guarantees.

3. SSI exports would be a major thrust area. Assisting by way of loans and advances, letters of credit, lease, correspondent banking and other foreign exchange dealings.

4. Providing factoring services to any industrial concern in the SSI sector.

5. Leasing, sub-leasing, hire-purchase activities.

6. Providing technical, financial, consultancy, merchant banking services and other administrative assistance.

7. Undertaking promotional activities such as entrepreneurship, development programmes, raw material purchase, marketing support, research and development studies.

SIDF:

IDBI set up Small Scale Industries Development Fund in May 1986. The principal objective of the Fund is to step up flow of assistance to small scale sector and to provide a focus point to coordinate at the apex level the availability of both financial and non-financial inputs required for the orderly and healthy growth of the sector.

The sanctions of assistance through the various schemes operated under SIDF recorded a growth of 29.6 per cent from Rs. 1,150.5 crores during July 1988-March 1989.

In association with the government, IDBI has constituted National Equity Fund for providing equity type of support to tiny and small-scale industrial units which are engaged in manufacturing activities. The government of India has provided a sum of Rs. 5 crores towards the Fund and IDBI has provided an equal amount.

Through assistance sanctioned under the scheme till the end of March 1989 at Rs. 1 crore covering 230 units looks modest, the scheme is expected to pickup in the coming months in the light of recently introduced measures and role assigned to banks.