IMPACT OF GLOBALISATION ON MSMEs IN KERALA WITH …€¦ · sector in Kerala on the basis of number...

IMPACT OF GLOBALISATION ON MSMEs IN KERALA WITH

SPECIAL REFERENCE TO KOZHIKODE DISTRICT

Minor Research Project Report

Submitted to the University Grants Commission, New Delhi

In partial fulfilment of the requirements for the

Completion of Minor Research Project

By

VINEETHAN. T

Assistant Professor of Commerce

POST GRADUATE AND RESEARCH DEPARTMENT OF COMMERCE

GOVERNMENT COLLEGE MADAPPALLY

VATAKARA-2

KOZHIKODE

DECLARATION

I hereby declare that the project report entitled “ Impact of Globalisation

on MSMEs in Kerala with Special Reference to Kozhikode District” is a

bonafide Minor Research Project work done by me and I further declare that this

report has not been submitted anywhere for the award of any degree or other

recognition.

Place: Madappally VINEETHAN. T

Date:

CERTIFICATE

This is to certify that Minor Research Project report titled “Impact of

Globalisation on MSMEs in Kerala with special Reference to Kozhikode

District” is an original work done by Vineethan T, Assistant Professor, Post

Graduate and Research Department of Commerce, Government College Madapplly.

He is permitted to submit the report to the University Grants Commission.

Place: Madappally Principal

Date :

Acknowledgement

I have completed this minor research project with a sense of achievement

and pride. This has been done by vigorous support of many people. Though the

depth of my gratitude cannot be expressed in words, I take this opportunity to

convey my formal thanks to them.

I express my sincere gratitude to the Principal, Govt. College Madappally

and faculty members of Post Graduate and Research Department of Commerce for

their immense co-operation and valuable suggestions.

I greatly indebted to the University Grants Commission for sanctioning this

minor research project and allotting fund for the same.

I am deeply indebted to my parents, wife and son for their unending moral

support and inspiration in my academic pursuits.

Above all I am thankful to God, the Almighty who has given me the strength

and opportunity to complete this project work successfully.

VINEETHAN T

CONTENTS List of Tables

List of Figures

Chapter Descriptions Page No.

1 Introduction 1-8

1.1. Introduction to the study 1.2. Statement of the problem 1.3. Significance of the study 1.4. Objectives of the study 1.5. Scope of the study 1.6. Methodology 1.7. Scheme of Chapterisation 1.8. Limitations of the study

1 3 4 4 5 5 6 7

2 Literature Review 9-23

3 An Overview of SSI/MSME Sector in India and Kerala 24-41

3.1. Small Scale Industrial Sector : A Global Perspective 3.2. Small Scale Industrial Sector in India 3.3. Definition of SSI Unit 3.4. MSMED Act 2006 3.5. Present Scenario of MSME Sector in India 3.6. MSME Sector in Kerala 3.7. State Budget 2015-16 : Announcements for MSMEs 3.8. Kerala Perspective Plan 2030 – Vision and Initiatives 3.9. State Profile of MSME sector 3.10. Problems of MSME Sector 3.11. Impact of Globalisation on SSI/MSME Sector 3.12. Globalisation and SSI/MSME Sector in Kerala

24 25 27 31 34 35 37 37 38 39 40 40

4 Profile of Kozhikode District 42-53

4.1. Kozhikode District: General Profile 4.2 Industrial Profile of Kozhikode District

4.2.1 Existing Industrial Scenario 4.2.2 Working MSME units in Kozhikode District 4.2.3 Gender wise Distribution of MSMEs in Kozhikode. 4.2.4 MSMEs filed EM Part II 4.2.5 Sector wise Distribution of MSMEs in Kozhikode 4.2.6 SWOT Analysis.

42 44 45 46 49 49 50 51

5 Analysis of Performance of SSI/MSME Sector in India, Kerala and Kozhikode District

54-107

5.1 Performance of MSME Sector in India during pre globalisation period from 1982-83 to 1989-90

5.2 Performance of MSME Sector in India during post globalisation period from 1990-91 to 1997-98

55

59

Chapter Descriptions Page No.



5.5 Comparison of performance SSI Sector in India in terms of selected parameters

5.6 Performance of SSI Sector in Kerala during pre globalisation period from 1982-83 to 1989-90

5.7 Performance of SSI Sector in Kerala during post globalisation period from 1990-91 to 1997-98

5.8 Performance of SSI Sector in Kerala during post globalisation period from 1998-99 to 2005-06

5.9 Performance of SSI Sector in Kerala during post globalisation period from 2006-07 to 2013 14

5.10 Comparison of performance of SSI sector in Kerala State during pre and post globalisation periods on the basis of selected variables

5.11 Performance of SSI Sector in Kozhikode district during pre globalisation period from 1982-83 to 1989-90

5.12 Performance of SSI Sector in Kozhikode district during post globalisation period from 1990-91 to 1997-98

5.13 Performance of SSI Sector in Kozhikode district during post globalisation period from 1998-99 to 2005-06

5.14 Performance of SSI/MSME Sector in Kozhikode district during post globalisation period from 2006-07 to 2013 14

5.15 Comparison of performance of SSI sector in Kozhikode district during pre and post globalisation periods on the basis of number of registered units

5.16 Comparison of performance of SSI sector in Kozhikode district during pre and post globalisation periods on the basis of employment generation

5.17 Comparison of performance of SSI sector in Kozhikode district during pre and post globalisation periods on the basis of selected parameters

5.18 Comparison of performance of SSI/MSME sector in Kerala State and Kozhikode District during pre and post globalisation periods.

62

65

68

70

73

77

80

84

88

91

95

98

102

103

104

105

6 Findings, Suggestions and Conclusion 108-113

6.1 Findings

6.2 Suggestions

6.3 Conclusion

108

111

113

Bibliography 114-120

LIST OF TABLES

Table No.

Title Page No.

4.1 Existing industrial scenario of Kozhikode District 45

4.2 Medium Scale Industries in Kozhikode District 45

4.3 Working MSMEs in Kozhikode District (Manufacturing) 46

4.4 Working MSMEs in Kozhikode District (Service) 47

4.5 Working MSMEs in Kozhikode District (Manuf. and Service) 48

4.6 Distribution of MSMEs in Kozhikode District on the basis of gender 49

4.7 Number of MSME units filed EM Part II in Kozhikode District 49

4.8 Sector-wise distribution of MSMEs in Kozhikode District 50

5.1 Number of registered SSI Units in India during pre globalisation period 55

5.2 Number of employment generated by SSI sector in India during pre globalisation period from 1982-83 to 1989-90

56

5.3 Production of SSI units in India during pre globalisation period 57

5.4 Number of registered SSI Units in India during 1990-91 to 1997-98 59

5.5 Number of employment generated by SSI sector in India during 1990-91 to 1997-98

60

5.6 Production of SSI units in India during 1990-91 to 1997-98 61

5.7 Number of registered SSI Units in India during 1998-99 to 2005-06. 62

5.8 Number of employment generated by SSI sector in India during 1998-99 to 2005-06.

63

5.9 Production of SSI units in India during 1998-99 to 2005-06. 64

5.10 Number of registered SSI Units in India during 2006-07 to 2013-14. 65

5.11 Number of employment generated by SSI sector in India during 2006-07 to 2013-14.

66

5.12 Production of SSI units in India during 2006-07 to 2013-14. 67

5.13 Comparison of performance of SSI/MSME sector in India during pre and post globalisation periods based on selected parameters.

68

5.14 Number of SSI units in Kerala during pre globalisation period. 70

5.15 Number of employment provided by SSI sector in Kerala during pre globalisation period.

72

5.16 Number of SSI units in Kerala during 1990-91 to 1997-98 74

5.17 Number of employment provided by SSI sector in Kerala during 1990-91 to 1997-98.

75

5.18 Number of SSI units in Kerala during 1998-99 to 2005-06 77

Table No.

Title Page No.

5.19 Number of employment provided by SSI sector in Kerala during 1998-99 to 2005-06

79

5.20 Number of SSI/MSME units in Kerala during 2006-07 to 2013-14 81

5.21 Number of employment provided by SSI/MSME sector in Kerala during 2006-07 to 2013-14

83

5.22 Comparison of pre and post globalisation performance of SSI/MSME sector in Kerala on the basis of number of units

85

5.23 Comparison of pre and post globalisation performance of SSI/ MSME sector in Kerala on the basis of number of employment provided

86

5.24 Comparison of pre and post globalisation performance of SSI/MSME sector in Kerala on the basis of selected parameters

86

5.25 Number of SSI units in Kozhikode district during 1982-83 to 1989-90 88

5.26 Number of employment provided by SSI sector in Kerala during 1982 -83 to 1989-90

90



93



97

5.31 Number of SSI/MSME units in Kozhikode district during 2006-07 to 2013-14

99

5.32 Number of employment provided by SSI/MSME sector in Kerala during 2006-07 to 2013-14

100

5.33 Comparison of pre and post globalisation performance of SSI/MSME sector in Kozhikode district on the basis of number of Units

102

5.34 Comparison of pre and post globalisation performance of SSI/MSME sector in Kozhikode district on the basis of number of employment provided

103

5.35 Comparison of pre and post globalisation performance of SSI/MSME sector in Kozhikode district on the basis of selected Parameters

104

5.36 Comparison of pre and post globalisation performance of SSI/MSME sector in Kerala State and Kozhikode district on the basis of selected parameters in terms of CAGR

106

5.37 Comparison of pre and post globalisation performance of SSI/MSME sector in Kerala State and Kozhikode district on the basis of selected parameters in terms of Overall Growth Rate.

106

LIST OF FIGURES

Figure No.

Title Page No.

5(i) Annual growth rate in number of units, number of employment and volume of production during the period from 1982-83 to 1998-90

58

5(ii) Compound annual growth rate of selected parameters SSI sector in India during pre and post globalisation periods

69

5(iii) Number of registered units in Kerala during 1982-83 to 1989-90 71

5(iv) Number of employment generated by SSI sector of Kerala during 1982-83 to 1989-90

73

5(v) Number of registered SSI units in Kerala during 1990-91 to 1997-98 75

5(vi) Number of employment provided by SSI sector of Kerala during 1990-91 to 1997-98

76

5(vii) Number of registered SSI units in Kerala during 1998-99 to 2005-06 78

5(viii) Number of employment provided by SSI sector of Kerala during 1998-99 to 2005-06

80

5(ix) Number of registered/working SSI/MSME units in Kerala during 2006-07 to 2013-14

82

5(x) Number of employment generated by SSI/MSME sector of Kerala during 2006-07 to 2013-14

84

5(xi) Comparison of pre and post globalisation performance of SSI/MSME sector in Kerala on the basis of selected parameters in terms of CAGR

87

5(xii) Total number of registered SSI units in Kozhikode district during 1982-83 to 1989-90

89

5(xiii) Number of employment provided by SSI sector of Kozhikode district during 1982-83 to 1989-90

91

5(xiv) Number of registered units in Kozhikode district during 1990-91 to 1997-98

93

5(xv) Number of employment provided by SSI sector of Kozhikode district during 1990-91 to 1997-98

94

5(xvi) Number of registered units in Kozhikode district during 1998-99 to 2005-06

96

5(xvii) Number of employment provided by SSI sector of Kozhikode district during 1998-99 to 2005-06

98

5(xviii) Number of units in Kozhikode district during 2006-07 to 2013-14 100

5(xix) Number of employment provided by SSI/MSME sector of Kozhikode district during 2006-07 to 2013-14

101

5(xx) Comparison of pre and post globalisation performance of SSI/MSME sector of Kozhikode district on the basis of selected parameters in terms of CAGR

105

Chapter I

INTRODUCTION

1.1. Introduction

Micro, Small and Medium Enterprises play a remarkable role in the growth of

any economy. They have been considered as the growth engine of economies across

the world. MSME sector is the backbone of every economy irrespective of its type

(i.e.; developed, developing or under developed). They perform a key role in

accelerating the rates of growth, employment generation, industrial production and

exports.

Well planned and systematic measures taken by the Governments have

brought about a substantial growth in the national income of the country. Even

though the country attained progress in various sectors, it failed to find a solution to

the problem of poverty. Unemployment is the root cause of mass poverty in India.

The only panacea to abolish poverty is to generate quality employment opportunities.

But the quality employment opportunities can be ensured through rapid

industrialisation. So, the focus of the Governments was on the development of basic

and heavy industries. But such a strategy of the Government could not generate

adequate employment opportunities as needed by the economy. In other words,

large scale industries have failed to solve the unemployment problem of the nation.

The intensity of unemployment was too high in rural areas. Therefore, attention has

been paid for the eradication of unemployment problem in rural sector of India.

Since economic development is possible only through industrial growth,

various policies have been framed for the promotion of industries in public and private

sectors. When industrial sector is expanded, natural resources have been exploited

greatly. Consequently, goods and services are produced largely and in turn

employment opportunities are generated enormously. All these bring improvement in

the living standard of the people.

Introduction 2

In India, since the problem of unemployment is largely concentrated in rural

sector, special emphasise have been put on Small Scale Industrial units/MSMEs for

the development of the sector. The development of SSIs/MSMEs has been widely

considered as the most appropriate way for achieving equitable growth.

The importance and contribution of SSIs/MSMEs to economic growth and

prosperity is well established. Their role in terms of employment generation,

encouraging entrepreneurial spirit and innovation has been crucial in fostering

competitiveness in the economy. It can lead the State economy by acquiring exports

through quality production techniques and products. The main advantage of this

sector is its employment potential with low investment. Statistics shows that nearly

45% of the total work force of India is generated by MSMEs. The fact that the

MSMEs contribute 37.5% of India’s GDP, is a strong indication that the sector has a

crucial role in boosting industrial growth and ensuring success of “Make in India”

programme.

In Kerala, MSME sector produces large varieties of products ranging from

traditional to modern. It contributes largely towards domestic needs, export

marketing, employment generation, income generation and foreign exchange

earnings. In addition to increased volume of production; quality of products, product

diversification, energy consumption, environmental effects, etc. are always been

concern of MSME/SSI sector.

As per the MSME survey of 4th census, 5.62% of all India share of MSMEs

is in Kerala. Government of Kerala provides manifold schemes in MSME sector,

targeting various social groups such as Scheduled Castes, Scheduled Tribes,

Women, Youth, Physically Challenged, etc. the sector produces more than 6,000

products ranging from traditional to high tech items. The sector has shown a

constant growth of 11% till 2010-11 whereas, growth rate was 19% in 2011-12 and

14% in 2012-13.

Introduction 3

1.2. Statement of the Problem

Kozhikode, with all its achievements in physical quality of life of people, quality

of infrastructure, availability of qualified manpower, natural and agricultural resources,

and good climate present a paradox in the industrial front. It remains industrially

backward compared to other districts such as Ernakulam, Thiruvananthapuram,

Thrissur, Palakkad, etc. Not only had a good part of its manpower went outside the

state for employment, but its entrepreneurship also went outside Kerala for

investment. In order to promote investment and employment, an aggressive

repositioning strategy has become the need of the hour. The government has taken a

series of measures in this regard. The industrial policy of the government aimed at

making the state an investor friendly one. On one hand, the available capital, skilled

man power, and other resources are not being tapped adequately. On the other, there

is a large educated unemployed youth. This is a paradox. To reduce the size of

unemployment by exploiting the local resources to the maximum extent, the only

way is the growth of MSME sector.

No doubt, the phenomenon of globalization impacted every sector of

economies across the world. The Micro, Small and Medium Enterprises were not an

exception. During the period prior to economic liberalisation (i.e.; the period before

July 1991), the Government provided many facilities such as incentives, subsidies,

concessions, etc. for the development of SSI/MSME sector because of its

remarkable contribution in the growth of the economy. But with the implementation

of economic liberalisation policy in July 1991, the government has started to curtail

such amenities one by one. Since then, the sector is facing hyper competition from

large domestic firms and multi-national companies. It is in this milieu the researcher

wants to make an investigation about the impact of globalisation on MSMEs in

Kerala with special reference to Kozhikode District.

Introduction 4

1.3. Significance of the Study

In India, SSI/MSME sector has continuously acted as the rampart for our

economy by providing capacity to defend against global economic adversities. It

contributes a share of 37.5 percent to the country’s GDP, 45 percent of the

manufacturing output and 40 percent of the exports. There are 346.12 lakh units

spread across the country which provide employment to 805.24 lakh workers.

SSIs/MSMEs contribute the second largest share of employment after agriculture. Our

former Prime Minister Dr. Manmohan Singh once stated ‘the key to our success in

employment lies in the success of manufacturing in the small scale sector’. This

sector, in addition to play a crucial role in providing employment opportunities at

comparatively lesser capital cost, helps in industrialization of rural and backward

areas. This results in reducing regional imbalances and ensures more equitable

distribution of national wealth. Moreover, by performing as ancillaries to large

industries, MSMEs contribute to the socio-economic development of the country to a

large extent. Entrepreneurship is the key element to accelerate the industrial growth of

a nation. MSME sector is an effective means for the progress of entrepreneurship.

This research work has undertaken to determine the extent of influence that

globalisation exerted on the performance of MSMEs in Kozhikode district.

1.4. Objectives of the Study

Following specific objectives are formulated for the purpose of this study:

1. To study the impact of globalisation on SSIs/MSMEs in Kozhikode

District in terms of growth rate of number of units and employment

generation.

2. To examine the growth and development of MSMEs in Kozhikode District.

3. To identify the important threats faced by MSMEs in Kozhikode District.

4. To analyse the opportunities exploited by MSMEs in Kozhikode District

as a result of globalisation.

Introduction 5

1.5. Scope of the Study

The scope of the present study is confined to the Small Scale/MSME Sector

in Kozhikode District. It studies the impact of globalisation on Small Scale / MSME

Sector on the basis of growth in number of registered units and number of

employment provided.

1.6. Methodology

1.6.1. Source of Data

The entire data required for the present study have been collected from

secondary sources only.

1.6.2. Secondary data used for the study

The secondary data needed for the present study were collected from various

publications of Directorate of Industries and Commerce (DIC), Thiruvananthapuram;

Kerala State Planning Board, Thiruvananthapuram; Department of Economics and

Statistics, Thiruvananthapuram; RBI; National Planning Commission; and Small

Industries Service Institute. Books, Reports, Journals, Periodicals, Published and

unpublished research reports and Working papers are also used as the valuable

sources of data. The data collected from these sources are mainly used to analyse

the trend in growth of SSI/MSME sector, using parameters such as number of units,

employment, and investment for a period of 32 years from 1882-83 to 2013-14.

1.6.3. Variables used for the study

Two variables are used for analysing the growth of SSI/MSME sector in

Kozhikode district. They are:

1. Number of Registered SSIs/MSMEs

2. Number of Employment Generated

Introduction 6

1.6.4. Period of Study

The study covers a period of 32 years for knowing the impact of

globalisation in terms of the growth in the number of registered units, employment

and investment in SSI/MSME Sector in Kozhikode District. Out of the thirty two

years period, 8 years from 1982-83 to 1989-90 is selected for studying the pre

globalisation situation and the remaining 24 years period from 1990-91 to 2013-14

is drawn for analysing the post globalisation effects. The post globalisation period is

further divided into three phases.

The entire period of study is divided as follows:

I. Pre-globalisation Period : 1982-83 to 1989-90 (8 years)

II. Post globalisation Period :

a.) First Phase : 1990-91 to 1997-98 (8 years)

b.) Second Phase : 1999-00 to 2005-06 (8 years)

c.) Third Phase : 2006-07 to 2013-14 (8 years)

1.6.5. Tools used for data analysis

The statistical tools used for analysis and interpretation of data include

simple percentages, compound annual growth rate, charts and student’s t-test.

1.7. Scheme of Chapterisation

The report of the present study is arranged in the following sequence:

Chapter 1: Introduction: Statement of the problem, Importance of the study,

Objectives, Scope of the study, Research methodology and Limitations

of the study are included.

Chapter 2: Review of Literature: This chapter includes review of past studies

about SSIs/MSMEs and the impact of globalisation on SSIs/MSMEs in

Kerala.

Introduction 7

Chapter 3: An Overview of SSI/MSME Sector in India and Kerala: This

includes Small scale industrial sector – a global perspective, SSI in

India, Definition of SSI unit, MSMED Act 2006, Present scenario of

MSME sector in India, MSME sector in Kerala, Announcement for

MSMEs in State budget, Kerala perspective plan 2030 – Vision and

Initiatives, State profile of MSME sector, Problems of MSME sector,

Impact of globalisation in SSI/MSME sector, Globalisation and

SSI/MSME sector in Kerala.

Chapter 4: Profile of Kozhikode District: This chapter includes general profile of

Kozhikode district, industrial profile of Kozhikode, existing industrial

scenario, working MSME units in Kozhikode district, gender-wise

distribution of MSMEs in Kozhikode, sector wise details of MSMEs in

Kozhikode district, SWOT analysis.

Chapter 5: Analysis of Performance of SSI/MSME Sector in India, Kerala and

Kozhikode District: This chapter deals with Performance of

SSI/MSME sector in India, Kerala and Kozhikode district during pre

and post globalisation periods in terms of growth rate of number of

registered SSI/MSME units and employment generation.

Chapter 6: Findings, Suggestions and Conclusion: This chapter include findings of

the study, suggestions and conclusion.

1.8. Limitations of the Study

The study is thoroughly based on secondary data obtained from publications

of various government agencies such as Directorate of Industries and Commerce

(DIC), Thiruvananthapuram; Kerala State Planning Board, Thiruvananthapuram;

Department of Economics and Statistics, Thiruvananthapuram; RBI; National

Introduction 8

Planning Commission; Small Industries Service Institute, etc. So, there is no

ambiguity regarding the authenticity of data. For attaining the objectives of the study,

it was mandatory to have district level figures and data during pre-globalisation era.

Certain documents which contain pre-globalisation data were tattered due to passage

of time. However, the researcher has made utmost care to obtain accurate figures and

data to make the outcome of the study fruitful, scientific and logical.

Chapter 2

LITERATURE REVIEW

Lots of studies have been conducted from time to time on various aspects of

MSMEs. Studies have also been made about the effects of globalisation on various

sectors of our country. To validate the need of present study, a review of some

important literatures is presented below:

Pillai (1988) attempted to examine the problems faced by small scale

industry in Kerala. For getting a better focus on the problems, the case of

pharmaceutical industry in Kerala was taken into consideration. The study also

examined the sources of finance and performance of the units financed by various

financial institutions. The study concluded that the significant features of the pattern

of financing was the predominance of non- institutional sources in meeting the

financial needs of small scale Industries among the institutional sources,

commercial banks were in the forefront and the role of co-operatives in lending of

small industries sector has been negligible in Kerala.

Abraham (1991) reported that the success or failure of any small enterprises

depends mainly on entrepreneurs, support system and the environment. He

structured that the success or failure is determined mostly by the human element

involved in industrial enterprise.

Xaviour (1992) discussed the socio-educational related factors influencing the

success and failure of the entrepreneurs in his study on ‘Entrepreneurship in SSls in

Trichur town and its environs’. The study identified successful and unsuccessful

entrepreneurs and behavioral factors influencing the success or failure of

entrepreneurs. The study concluded that entrepreneurial development was essential

not only to solve the problem of economic development but also to solve the

problem of unemployment, concentration of economic power and diversion of profit

Literature Review 10

from traditional avenues of investment. Most of the promotional activities were

directed around the financial and physical facilities with the expectation that would

be automatic flow of entrepreneurs.

In 1992 the Development Commissioner of SSls, Govt. of Kerala, conducted

a survey of SSI units registered in the Directorate of industries in the state Union

territories. The main object of the survey was to update the frame of working units

and to assess the present level of contribution made by registered small scale units

in terms of employment, investment and production. The study revealed that the

reason for closure of business with the financial problem (38 %), marketing problem

(15 %), availability of raw materials (6 %) and all contributions (14 %) and the rest

closed as account of other reasons other than those said above.

Venugopal (1993) observed that Government agencies set up for promoting

village and cottage industries are inactive and their performance is below the level

of expectation. He argues that the survival of village and cottage industries depends

on their activity to become competitive. Their efforts should be to reduce cost and to

improve quality through technology upgradation.

Resia (1993) found that shortage of working capital and high rate of interest

charged by banks were two major problems of women entrepreneurs. Shortage of

long term capital, scarcity of raw materials and under utilization of production

capacity were the other problems faced by women entrepreneurs in Kerala. Only a

negligible portion of the products of women enterprises are used for export. The

study suggested for operating these units on modern lines.

Venkiteswaran (1993) attempted to analyze the major problems faced by the

entrepreneur in running their units. Shortage of raw materials was the main problem

in Ernakulam and Kannur districts. The other problems were shortage of working

capital, competition from similar units, labour problems, power shortage and lack of

demand.


An integrated study conducted by James Manalel (1994) on various

programmes of assistance available to the SSl units in Kerala, revealed that the growth

rate of SSls in Kerala was higher than in more developed states. But the role played by

the incentive packages generally had not been adequate in meeting their objectives.

Harikumar (1994) examined the sickness in Small Scale Industries in Kerala.

The researcher examined the magnitude and the causes of sickness. The socio

economic profile of the entrepreneurs of the SSI units and its relatives with the success

or failure of the human was also studied. The study reported that industrial sickness

was spreading in the century at an alarming rate both in terms of the number of units

and the amount of bank over dues. Compared with other sectors the incidence of

sickness was significantly higher in SSl sector. The study also revealed that working

Capital was one of the major problems of SSI sector. This problem of the sick units did

not mainly stem from the shortage of supply of assistance for the commercial banks

but from the delay in realizing it and from the manufacturing of the units.

Subramanian and Mohananpillai (1994) examined the growth, structural

changes, current status and problems of small industry. A detailed profile of the Kerala

small scale Industry was also given. The study concluded that the major strategic

question in Kerala was how to induce organizational forms, whereby small firms could

overcome the limitations imposed by industrial structure, tiny size and technological

backwardness. For inducing organizational behaviour, the study suggested that

government would have to play a market friendly role towards SSl units. This would

ensure co-operation between organizations and would lead to the growth of

employment, output and export by the modern small scale industry in Kerala.

Rao (1995) reported that the potential for investment related to technology

requisition and transfer in small scale and medium sector has assumed considerable

significance in their interest to face the challenges of liberation and globalization of

markets.


The International Perspective Planning Team (1995) which made an

extensive study on Indian small scale industries was of the opinion that Government

efforts for the promotion of this sector were largely scattered and dealt with only

isolated segment of the problem.

Charu. (1996) describes the growth of SSI with some policy issues. He made

a comparative analysis between large scale and small scale industries taking into the

industrial policy resolutions.

Mohan (1997) analyzed the marketing problems of small enterprises of food

processing industry in Kerala. The researcher examined the working of the units,

problems faced by SSl units, pricing methods, promotional aspects and distribution

aspects. The study concluded that the small enterprises in the food processing

Industries in the state were having a number of grave marketing issues like poor

capacity utilization, small investment in plant and machinery and working capital,

slow growth rate in sales and profit. It clearly indicates that the small enterprises in

the food processing industry are faced with some chronic problems.

Mali, (1998) observed that MSMEs have to face increasing competition in

the scenario of globalization and they have to improve themselves in many fields

especially in the field of management, marketing, product diversification,

infrastructural development, technological up gradation, etc. Moreover, new small

and medium enterprises may have to move from slow growth area to the high

growth area and they have to form strategic alliance with entrepreneurs of

neighbouring countries.

Salim (1998) proved that, in most categories of industries there is more

number of high performing units followed by moderate performing units. High

performing units have more market orientation than low performing Units. There is

a strong positive correlation between market orientation and business performance.


Gunasekaran, Forker and Kobu (1998) Small & medium enterprises (SMEs)

play a vital role in modern economics because of their flexibilities & ability to

innovate. In every economy, SMEs play a significant role in providing employment

opportunities & supporting large scale manufacturing firms. The study narrates the

experience of a small company to highlight how productivity can be improved with

limited resources.

Raje (2000) states that credit is an essential input for the working of small

scale industries. Any delay or inadequate supply of credit is detrimental to the

growth of the SSl units. Therefore, timely and adequate availability of credit is of

crucial importance for setting up and for expanding the existing SSl units.

Koshy and Joseph (2000) reported that there was a considerable increase in

the number of women entrepreneurs due to various support measures extended by

Governmental and non- governmental agencies and the changing attitude towards

woman entrepreneurships. However, woman entrepreneurships register low level in

backward districts of Wynad, Kannur and Kasargod, so they suggest that specific

programmes may be implemented in these areas to increase the level of

entrepreneurship.

George (2000) observed that the policy of protection with privileges for SSIs

induced this sector to remain small, and to become more inefficient with poor

product quality. It is not protection but competition that should be the rule of the

day.

Henny (2001) analyzed the approaches towards technology support for small

scale manufacturing enterprises in developing countries since the early 1970s.

According to him, early programmes tended to suffer from a number of weaknesses,

stemming for limited conceptualization of technology and an inadequate

understanding of the role of small scale sector in Industrial development more

broadly. Linking producers to new markets is an important precondition. Facilitating


access to information, especially through interactions with other parties, is another

aspect.

Batra (2002) highlighted the emerging issue of entrepreneurship

development and management of small scale industry. The researcher stated that in

a developing economy, small scale industries play a very significant role in

economic development of the country. These industries mostly represent a stage in

economic transition for traditional to modern technology. The study pointed out the

need for the development of entrepreneurship in small scale sector to provide

gainful employment, equitable distribution of national income, mobilization of local

resources and for balanced regional development.

Reji (2004) observed that the growth rate of SSl units in Kerala shows a

declining trend. The average annual growth rate during the study period was 11.86

percent. The district wise analysis indicates that more number of units could be seen

in Ernakulam District. The study conducted that small scale Industry in India and

Kerala are not able to sustain their growth rate in the post liberalization era unless

adequate steps are taken for its development and growth.

Bala Subramanya (2004) concluded that small scale industries in India are

serving in a global competitive environment after liberalisation and the removal of

protective measures. As a result, the growth of the sector in terms of number of

units, employment, output, and export has relatively declined. He further proposed

that the sector is in need of financial, and market support to overcome the taut

competition.

Mathew (2004) probed the reason for consternation in all India census report

on small-scale industries. The study observed that the vitality and vibrancy of the

Small scale sector anticipated under an era of post liberalisation remaining mostly

unrealized. The study stated that a well-built policy exclusively for small and

medium scale industrial sector is inevitable to fulfil its international commitments.


Sudan (2005) examined the challenges in the development of Micro and

Small Scale Enterprises by arising various questions. It described the meaning,

advantages, problems and policy options of micro and small enterprises sector. The

study concluded that the policies adopted by Govt. of India were the efforts to form

a dynamic MSE sector providing expanded employment opportunities to absorb all

new labour force.

Gopakumar (2005) observed that SSls in India have been shown a significant

progress in respect of number of units, production employment generation and export.

The Kerala economy also witnessed the same progress. The socio economic factors

such as educational qualification of the entrepreneurs, previous experience of the

entrepreneurs, heritage of the entrepreneurs and financial background of the

entrepreneurs play a vital role in the running of SSI units in a successful manner.

Anand and Murugaiah (2006), examined the performance of SSIs during the

post-liberalisation period. He observed that employment intensity, low factor cost

and equity size are important factors that make SSIs more competitive to meet the

competition.

Madanan (2006) discussed the impact of subsidies towards the growth of

SSIs in Kerala. He found that all stake holders of SSI sector consider SSI as a

critical one as it is one of the biggest employment providers in the state. The study

concluded that the withdrawal of subsidies was intricately related to ensuring

infrastructure, opportunity, amicable climate and other forms of support for SSIS.

He suggests that current administration of subsidies can be improved in through

reducing procedural delays, adopting single window mechanism and simplification

of procedures.

Rathod (2007), described the importance of small scale industrial sector, and

also the contribution of Indian small scale Entrepreneurs in world economy. This

study concluded that both opportunities and challenges were raised as the impact of


globalization on Indian Industry as a whole and the small scale sector in particular.

This study found that a major portion of our exports would have to gear up to the

new era of boundary-less economy. The study has suggested that there is need for

simplified legal and regulatory frame work, good governance, stuffiest and

accessible finance, suitable infrastructure.

Valsalachandran (2007) examined the various factors of Entrepreneurship in

SSI sector. The study concluded that there was continuous growth in SSI sector till

2000-2001, after that a decline in the overall growth is felt. The finding of the study

also reveal that the entrepreneurs in Kerala have been facing a number of social,

economic, managerial, technological and marketing problems in their units.

Bodla and Verma (2008) compared the performance of MSME in India on

the basis of cumulative annual growth rate (CAGR) during the pre- and post-

globalisation periods. The study compares performance of MSMEs during the pre-

liberalisation and post-liberalisation periods on the basis of parameters such as

export, output, sick units and percentage of net credit. The outcome revealed that the

overall CAGR performance was better during the post-liberalisation period, but not

so impressive.

Bargal et al. (2009) analysed the causal relationship among the three

variables GDP, SSI output and SSI exports. He also compared the performance

parameters of SSIs in the pre and post liberalization periods. The study found that

the annual average growth rate of different parameters of SSIs have declined in the

period of nineties in comparison with those during the pre-liberalisation era.

Sonia and Kansai (2009) analysed the situation of MSME sector before and after

the era of liberalization. They studied the MSMEs on the basis of growth in the number

of units, total output, employment generation and exports. Their study concluded that

the MSME sector has shown a better growth rate in the pre liberalization era as

compared to post liberalization era in respect of all these parameters.


Bhavani (2010) highlighted the subject of quality employment opportunities

generated by the MSME sector. He focussed on the point of quality employment,

and not short term employment. He underlined that MSMEs may contribute a high

percentage towards employment generation but that is more quantitative in nature,

rather than being qualitative. He also stressed on the use of technology for the

MSMEs which in turn would improve remuneration, create quality employment

opportunities and improve skills. Even though the use of technology may reduce the

rate of employment growth in the short run, it would ensure sustainable

employment opportunities for the MSME sector in the long run.

Shastri, et al. (2011) analysed the effects of globalisation on small scale

industrial sector and studied its growth performance in terms of number of units,

employment, output and export.

Venkatesh and Muthiah (2012) found that the role of small and medium

enterprises in the industrial sector is growing rapidly and they have become a

driving force for future growth. They also emphasised that fostering MSME sector

is essential for the economic well-being of the country.

Singh, et al. (2012) analyzed the performance of Small scale industry in

India and focused on policy changes which have opened new opportunities for this

sector. Their study concluded that SSI sector has made good progress in terms of

number of SSI units, production & employment levels. The study recommended the

emergence of technology development and strengthening of financial infrastructure

to boost SSI and to achieve growth target.

Lahiri (2012) has analyzed the definitional aspects of MSMEs and explored

the opportunities enjoyed and the constraints faced by them in the era of

globalization. Annual Average Growth rate (AAGR) has been used as the major

statistical tool to compare the performances of MSMEs during pre and post-

liberalization period with the help of four economic parameters, namely, No. of

units, production, employment and export. The study results show that except


marginal increase in growth rate in employment generation, the growth rate in other

parameters is not encouraging during the liberalization period. In the study it has

also been highlighted that MSMEs in India face a tough situation due to extreme

competition from large industries due to withdrawal of subsidy, lack of

infrastructure, anti dumping policy, challenges on product Standardization, total

quality management etc.

Srinivas, (2013) has studied the performance of micro, small and medium

enterprises, and analysed the contribution of MSME sector to economic growth of

India. He concluded that MSMEs play a significant role in inclusive growth of

Indian economy.

Karthika (2013) examined the problems of MSMEs in the era of worldwide

economy. The study also analysed the factors affecting MSMEs and the socio-

economic conditions of MSMEs. The study revealed that the MSMEs can overcome

all the problems and challenges by standardising their business process. They can

also adopt latest technology to improve the productivity. It was said that banks can

hold the industry by providing the credit facilities at low interest rate. The

Government and other related machineries should take effective measures to

improve the export performance of MSMEs in order to develop economy.

Thornton and FICCI, (2013) accentuated that in the face of emerging

challenges and to strengthen global outreach, the MSME sector has to play a crucial

role by demonstrating greater competitiveness and strategic positioning along the

value chain. The study put forth specific models and approaches that MSMEs could

explore to exploit new market opportunities. The report also suggests some innovative

marketing tools, along with the ways in which traditional strategies could be

sharpened so that the sector becomes globally competitive. Today it is not individual

enterprises that compete against each other, but global value chains that are mostly

competing at a global level. To attain the objective of becoming a preferred supplier

in the global value chain, the study suggests that the MSME sector would have to


comply with international standards and norms. Again the study says that to improve

competitiveness, the enterprises have to concentrate on core competencies and

outsource non-core activities. This would lead global companies to increasingly

outsource non-core activities to MSMEs across the world.

Chandraiah (2013) focused on economic policy introduced by government

of India in 1991 that gave thrust towards globalization process. Globalization in

India was adopted to integrate Indian economy with global economy. The policy

shift at the behest of International Monetary Fund and World Bank has led to

unequal competition between multinational companies and small Indian enterprises.

As MSME sector is a vital constituent of overall industrial sector of any country

particularly India, the promotion of this sector is a necessity.

Spithoven, et al. (2013) emphasised upon Open Innovation (OI) practices in

small and medium-sized enterprises. The lack of resources is an important barrier

for SMEs to engage in Open Innovation. But at the same time, the shortage of

resources is alluded as a drive for looking beyond organizational boundaries for

technological knowledge. The study analysed how Open Innovation (OI)

dimensions influence the innovative performance of SMEs in comparison to big

enterprises. One of the important findings of the study is that the effects of Open

Innovation (OI) practices in SMEs often differ from those in large organisations.

Vasu and Jayachandra (2014) observed that MSME sector pays a significant

role in term of balanced and inclusive growth. They also highlighted the prospects of

this sector in India.

Final Report of Fourth All India Census of MSMEs, gives a sound, accurate

and comprehensive database of MSMEs for sound policy formation.

The present study is an endeavour to describe the impact of globalisation on

MSMEs in Kozhikode district.


References:

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for Industrial sickness among small scale industry in Kerala. School of

Management Studies, Cochin, University of Cochin.

3. Xavior, V.M. (1992). Entrepreneurship in SSls in Trichur Town and to its

environs. Ph.D Thesis, University of Calicut.

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summary. New Delhi: Office of the Directorate commissioner (SSIs), Ministry

of Industries.

5. Venugopal, S.A. (1993). Study on village of cottage Industries in Kerala, problems

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9. Harikumar, V. (1994). A study on sickness in SSIs in Kerala. Ph.D Thesis,

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Kerala: A review of structural changes and growth performances. CDS,

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Laghu Udyog Samachar, April, p. 3-6.


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17. Gunasekaran, A., Forker, L., & Kobu, B. (2000). Improving operations

performance in a small company: A case study. Management Decision, 20(3).

18. Raje, V. (2000). Taking SSI towards new millennium message of hope. Laghu

Udyog Samachar, April – September.

19. Koshy, M., & Joseph, M. (2000). Women entrepreneurship in small scale

industrial units: A study of Kerala. Bangalore: Southern Economist.

20. George, S. (2000). Small scale industries and economic liberalisation: A micro

view. Bangalore: Southern Economist.

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countries: A review of concepts and projects practices. Oxford Development

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globalisation: Implications, performance and prospects. Economic and Political

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Some policy issues. Synergy: I.T.S. Journal of IT and Management, 3(2).

27. Gopakumar, B. (2005). Role of institutional finance in the development of SSIs

in Kerala. Ph. D Thesis, University of Kerala.

28. Anand, S., & Murugaiah, V. (2006). Small scale industries in India: An

evaluation of performance in post-liberalisation scenario. ICFAI Journal of

Managerial Economics, 4,(4).

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Kerala. Ph. D Thesis, University of Kerala.

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economic growth in India–Opportunities and challenges in global economy.

Prabanth – Journal of Management and Research, 23, 1-12.

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Ph. D Thesis, University of Kerala.

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era of globalisation. The ICFAI University Journal of Managerial Economics, 6(3).

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small scale industries-A study of pre-liberalization and post-liberalization

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industries in India. PCMA Journal of Business, 1(2).


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Industries in India. International Journal in Multidisciplinary and Academic

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industries. International Journal of Vocational and Technical Education, 2(7).

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contribution. Asian Journal of Management Research, 2(2).

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Enterprises in India in the era of Globalisation. Retrieved from

http://www.rtc.bt/Conference/201210_15/6-RajibLahiri-MSMEs in India.pdf

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(IJCBM), 3(4).

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Medium scale Enterprises in textile Exports with special reference to Tirupur &

Coimbatore districts. IJAMBV, 1(1).

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medium enterprises with special reference to India. Innovative Journal of

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practices in SMEs and large enterprises. Small Business Economics, 41(3).

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India: Prospects and problems. Indian Journal of Applied Research, 4(5), 40.

Chapter 3

AN OVERVIEW OF SSI/MSME SECTOR

IN INDIA AND KERALA

3.1. Small Scale Industrial Sector - A Global Perspective

Small Scale business organisations have attained popularity in almost all

economies. The basic features of this type of business units and their objectives are

similar to a great extent, across the world. Their role is imperative in most of the

countries.

Rao

emphasised that the small scale sector has witnessed a dramatic

expansion in almost all parts of the world. It is not only in developing countries that

have experienced such a phenomenon, but a similar experience has also been

gathered by a large number of industrially developed countries like Japan, UK,

Germany, USA and Switzerland. Even in the developed countries of Western

Europe, United Kingdom and USA, there is recognition that small and rural

industries play a significant role in complementing the large industry and in

providing opportunities for creative energies of the skilled people.

Steven observed that in USA about 98 per cent of the businesses were

started as small, and a majority of them was concentrated on retail and service

related business. Small industries are labour intensive, and employ 35 percent of the

USA’s private sector workforce even though they posses less than one fourth of

USA’s business assets. Small business generates more jobs for the residents more

than twice that the industries generate and produce more than 38 per cent of USA’s

GNP and account for 42 per cent of business sales. Small industries create more

innovations than medium and large scale industries.

Guide describes the main reasons which make small business units in

Europe less dynamic. They include the smaller base of European industry and

An Overview of SSI/MSME Sector in India &Kerala

25

capitalism as compared to USA, the smaller size of the European market and no

start up at large scale for any innovations, rigid labour market in Europe, and lower

investment climate due to low saving and lower salaries in Europe as compared to

USA.

According to Singer “even in terms of productivity small industries (less

than 100 employees) produce about 90 per cent of the average industrial out per

person in the United States and about 85 per cent in the United Kingdom.

According to the ILO /JASPA African Employment Report, the promotion

of SSEs and especially, of those in the informal sector, is viewed as a viable

approach to sustainable development because it suits the resources in Africa.

An article in “The Times of India” reports that in Taiwan small firms see

MNCs as an opportunity, not a threat. Small firms are much more flexible and

simple than a limbering giant, they are able to produce components more cheaply

and shift constantly to new lines of production. Small industries face problems in

infrastructure and marketing. The Taiwan government helps the small industries to

overcome problems faced in infrastructures and marketing.

Korea and Indonesia have focussed more attention on the growth of the SSI

by reserving items exclusively for manufacturing under Small Scale Sector.

China has biggest SSI sector contributing largely to the national economy.

China is said to continue to rely on Mao’s saying of walking on two legs - “one

small and the other large”.

3.2. Small Scale Industrial Sector in India

India is an economy having scarce resource and idle manpower. So, it

identified that the small scale industrial sector can play a crucial role in bringing

economic development throughout the country. Our former Prime Minister Rajiv


26

Gandhi, in his speech at the national convocation on small scale industries of India,

organised by the Federation of Association of Small Industries of India in New

Delhi on 17th September 1986, asserted the need for the development of small scale

sector. He articulated that small scale sector is one of the main legs of our industrial

development.

V.P. Singh, former Prime Minister of India, at the concluding session of

National Development Council meeting on June, 19th

1990 also stated the need for

development of small sector by saying “it is the small scale sector which has given a

large volume of employment and also boosted our exports”.

Mahatma Gandhi once said: “the poor of the world cannot be helped by

mass production, only by the production by the masses. If large number of

producers were to exist for wider markets, the entities that produce necessarily be

small. It is only the earth that is large. All else is small”.

In the words of Nanjappa, Small scale industry is a “golden mean” which

can bring the benefits of modern technology and economic production and can

emerge as an important plank to tackle the problems of unemployment,

underemployment, regional disparities and economic backwardness.

Vyas opined that small scale industries have the capacity to achieve

economic growth faster in view of their small gestation period, high employment

potential and relatively limited financial requirements. In a developing nation like

India, where population is high and income are low, it is inevitable to develop the

small industrial sector, which absorbs more men with low capital.

Vyas observed that balanced regional growth is a socio economic

requirement for all round development of the nation. Large industries have a

tendency to cluster around big cities. It creates economic and social evils like

pollution, slumps and shortage of civic facilities. It can be eliminated by setting up

of SSI Units in under developed areas and by providing employment to local people.


27

In the case of small scale units the gestation period is lesser than large scale

industrial units. Harrison observed that SSI units are less dependent on imported

machinery and raw materials. They usually use locally available raw materials.

3.3. Definition of Small Scale Unit

The definition of Small Scale Units varies from one period to another

depending upon the pattern of economic development and policy of the

government. As per Industrial Policy resolution 1948, a logical Small Scale

Industrial Unit had an upper limit of investment of Rs: 5 lakhs. The Fiscal

Commission constituted in 1950 defined a Small Scale Industry as one, which is

operated mainly with hired labour of usually 10 to 50 people. The Small Scale

Industry Board at its first meeting held on 5th and 6th January 1955 adopted the first

working definition of small scale unit. It was as follows:

“A Unit employing less than 50 persons, with using power, and less than 100

persons, without the use of power, and with capital assets not exceeding Rs: 5

lakhs.” Since the working definition did not serve the purpose of maximum

utilisation of equipment and of capital outlay, the Ministry of Commerce and

Industry modified the definition w.e.f. 04-01-1960. Since then all industrial units

with a capital investment of not more than Rs 5 Lakhs, irrespective of the number of

persons employed, are included in SSIs. Again in 1962, the definition of SSI was

enlarged to cover all small scale units with capital assets ranging from Rs: 5 lakhs

to Rs: 10 lakh.

Definition based on Investment in Plant and Machinery

In 1966, the Ministry of Industries defined a Small Scale Unit on the basis of

investment in plant and machinery. It was as given below:

Small Scale Industries will include all industrial units with a capital

investment of not more than Rs: 7.5 lakhs, irrespective of the number persons

employed. The capital investment for this purpose will mean investment in plant

and machinery only. This definition was more specific about the nature of assets in


28

which capital investment should be made. The value of plant and machinery is

calculated on the basis of original price paid by the owner.

In 1974, the above definition was revised as follows:

(1) Small Scale Industries: Undertakings having investments in fixed assets in

plant and machinery not exceeding Rs: 10 lakhs.

(2) Ancillary Industries : Undertakings having investments in fixed assets in

plant and machinery not exceeding Rs: 15 lakhs and in:

(a) the manufacture of parts, components, sub-assemblies, tooling or

intermediates; or

(b) the rendering of services and supplying or rendering or proposing to

supply or render 50% of their products or the total services as the case

may be, to other units for the production of other articles

Provided that no such undertaking shall be a subsidiary of, or owned or

controlled by any other undertaking.

In the year 1977 the Industrial Policy Resolution created a new sector called

Tiny Sector. It was defined as “All industries with a capital investment of Rs: 1 lakh

in plant and machinery located in rural areas and small towns are included in the

Tiny Sector.”

In the year 1980, the government redefined the limits of tiny units, ancillary

units and small scale units as given below:

(1) Tiny Units: The limit of investment increased from Rs: 1 lakh to Rs: 2 lakh.

(2) Ancillary Units: The limit of investment increased from Rs: 15 lakh to Rs:

25 lakh.

(3) Small Scale Units: The limit of investment increased from Rs: 10 lakh to

Rs: 12 lakh.


29

In the year 1985-86 the Government again changed the investment ceiling of

small scale units and ancillary units. Accordingly, an undertaking having an

investment in fixed asset in plant and machinery not exceeding Rs: 35 lakhs will be

a small scale unit, and an undertaking having an investment in fixed asset in plant

and machinery not exceeding Rs: 45 lakhs will be ancillary unit.

The Government modified the definition of tiny unit in the year 1988 and

thus “all industries with a capital investment of Rs: 2.5 lakh in plant and machinery

and located in rural areas and small towns will be tiny units.”

A major change was made in the definition of Small Scale Industries,

Ancillary Industries and Tiny Enterprise in the year 1991:

(1) Small Scale Industry:

(A) An industrial undertaking in which investment in fixed asset in plant and

machinery, whether held on ownership terms or on lease or by hire

purchase, does not exceed Rs: 60 lakhs.

(B) In case of undertaking referred to in (A) above, the limit of investment in

fixed asset in plant and machinery shall be Rs: 75 lakhs, provided the unit

undertakes to export 30% of the annual production by the end of the third

year from the date f commencement of production.

(2) Ancillary Industry:

An undertaking which is engaged in or proposed to be engaged in the

manufacture of or production of parts, components, sub-assemblies, tooling or

intermediates, or the rendering of services, and the undertaking supplies or render or

proposes to supply or render not more than 50% of its production or service, as the

case may be, to one or more other industrial undertakings and whose investment in

fixed asset in plant and machinery, whether held on ownership terms or on lease or

on hire purchase, does not exceed Rs: 75 lakhs.


30

(2) Tiny Enterprise: The limit of investment in plant and machinery is increased to

Rs: 5 lakh, irrespective of location of the unit.

In the year 1997, based on the recommendations of Expert Committee, under

the chairmanship of Dr. Abid Hussain, the Government of India raised the ceiling

for all Small Scale Industries including Ancillary Units and export oriented units to

Rs 3 crore and that of Tiny Units was increased to Rs:25 lakhs. However, in

December 2000 the Government has reduced the investment limit in Plant and

Machinery from Rs 3 crore to Rs: 1 crore as per the recommendations of Study

Group under the chairmanship of Dr. S. P. Gupta. But the limit for investment in

Tiny Units has been retained as Rs:25 lakhs.

Till October 2006, when Micro, Small, Medium Enterprises Act, 2006 was

implemented, the investment ceiling of Small Scale Industries were as follows:

i) Small Scale Industrial Units: Units having investment in plant and

machinery up to Rs.1 crore.

ii) Ancillary Industrial Units: Units having investment in plant and machinery

up to Rs.1 crore. Such an undertaking must sell not less than 50 percent of

its output to other industrial undertakings.

iii) Export-oriented Units: Units having investment in plant and machinery up to

1 crore. The unit must export at least 30 percent of its output by the end of

three years from the date of commencement of production.

iv) Tiny Units: Units having investment in plant and machinery up to Rs.25

lakhs irrespective of location.

Definition of SSIs in India – A Bird’s Eye View

Following table shows chronological revision of investment ceiling in case

of Small Scale Industrial Unit (SSIs) in India from 1950 to 2006:


31

Year Investment Limits Additional Conditions

1950 Up to Rs 5 lakhs in fixed assets

Employment of less than 50 with using power OR, less than 100 persons without using power

1960 Up to Rs 5 lakhs in Plant & Machinery

Employment condition was dropped

1966 Up to Rs 7.5 lakhs in Plant &Machinery

No condition


No condition


No condition


No condition


No condition

1997 (Dec) Up to Rs.3 crores in Plant &Machinery

No condition

1999(Dec) to 2006

Up to Rs 1 crore in Plant & Machinery

No Condition

3.4. MSMED Act, 2006

A comprehensive act for the development and regulation of small enterprises

had been a long outstanding demand of the Sector so as to free it from a plethora of

laws and regulations. The need has been emphasized from time to time by stake

holders at different corners. In addition, recommendations to provide for a proper

legal framework for small sector to relieve it of the requirements to comply with

multiple rules and regulations were made by the Committees such as the Abid

Hussain Committee (1997) and Study Group under Dr. S.P. Gupta (2000). While the

small scale industries continued to be important for the economy, in the recent years


32

the small scale services have also emerged as a significant sector contributing

substantially to the economy and employing millions of workers. Therefore, it

became necessary, across the world, to address the concerns of both the small scale

industries and services together and recognize them as small enterprises. In a fast

growing economy like ours, the natural mobility of small enterprises to medium

ones has to be facilitated through appropriate policy interventions and legal

framework. With these objectives in view, the Government came with an exclusive

legislation for micro, small and medium enterprises known as the Micro, Small and

Medium Enterprises Development Act, 2006.

With the enactment of the MSMED Act, 2006, which came into force on 2nd

October 2006, the system of SSI registration has been done away with and the new

system of filing Entrepreneurs Memorandum (EM) has been introduced. Also the

earlier concept of “Industries” has been changed to “Enterprises.”

Classification of Enterprises under MSMED Act includes:

The Micro, Small and Medium Enterprises Development Act, 2006 defines

the Micro, Small and Medium Enterprises based:

(i) on the investment in plant and machinery for those engaged in

manufacturing or production, processing or preservation of goods

(Manufacturing Sector); and

(ii) on the investment in equipment for enterprises engaged in providing or

rendering of Services (Service Sector)

The guidelines with regard to investment in plant and machinery or

equipment as defined in the MSMED Act, 2006 are:


33

Nature of Enterprise Manufacturing Enterprises Service Enterprises

Micro Not exceeding Rs.25.00 Lakhs Not exceeding Rs.10.00 Lakhs

S(Manufacturing Sector)mall

More than Rs.25.00 lakhs but does not exceed Rs.500.00 lakhs


Medium More than Rs.500.00 lakhs but does not exceed Rs.1000.00 lakhs


Features of Small Scale Industries

The following are the features that are particular to small scale industries.

1. In Small Scale Units, generally, a single individual occupies all the key

business positions. Many often SSIs are one-man show. Even though they

are formed as partnerships or companies, the activities are mainly carried

out by one of the partner’s or directors.

2. The management of Small Scale Industrial Units is always vested in the

hands of owner himself. He has the direct contact with the business

activities.

3. In Small Scale Industrial Units, the gestation period is always less than

that of large scale industrial units.

4. The scale of operation of Small Scale Units is mostly localised. They

cater the needs of local people.

5. Since the Small Scale Industries use the indigenous resources (both

human and non-human) and technologies, they can be set up any place

subject to the availability of material and human resources.

6. Small Scale industrial units are more flexible and reactive to the socio-

economic conditions prevailing in the society.


34

There are many economic activities, which are not suited to large scale

enterprises. Small scale industries can specialise in such activities. An efficient

small scale industrial sector can substantially enhance the efficiency of large

enterprises by relieving them of the necessity of making certain operations, which

for some reasons or the other the small units can produce at a lower cost.

Technical ground is also favourable to scale small industries. Harrison stated

that the cheapest and quickest way of spreading appropriate technology widely is to

encourage small scale enterprises.

According to the Economic Survey 2001-02, the small scale sector has

played a very important role in the socio economic development of the country

during the past 50 years. It has significantly contributed to the overall growth in

terms of GDP, employment generation and exports. The performance of small scale

sector therefore has a direct impact on the growth of the overall economy.

3.5. Present Scenario of MSME Sector in India

The MSME sector in India is diverse in terms of its size, level of

technology used and range of products and services produced. The range of

products of MSME sector varies from tradition industries to electronic devices,

microprocessors, medical instruments, etc. the sector shows a constant growth of

11% till 2010-01, whereas growth rate was 19% in 2011-12 1nd 14% IN 2012-13

(Economic Review of Kerala, 2015).

As per the Fourth All India Census of micro, small and medium

enterprises were 3.61 crore, of which 0.16 crore were registered enterprises. They

play a crucial role in enhancing industrial growth by contributing 37.5% of

India’s GDP. A number of schemes are being implemented by the Ministry of

MSMEs, Govt of India, for the establishment of new units and development of

the existing units. These include:


35

1) Prime Minister’s employment generation programme

2) Micro and Small Enterprises- Cluster Development Programme

3) Credit Guarantee Fund Scheme for micro and small enterprises

4) Performance and Credit Rating Scheme

5) Assistance to Training Institutions

6) Scheme of Fund for Regeneration of Traditional Industries.

During 12th Five Year Plan, an outlay of Rs: 24,124 crore has been

allocated for Ministry of MSME which represents an increase of 133.53% over

the 11th Five year Pan allocation of Rs: 10,330 crore. The Ministry has been

allocating outlays of Rs: 2,251 crores, Rs: 2,610 crores and Rs: 2,612.51 crores

for the years 2013-14, 2014-15 and 2015-16 respectively under Plan for

promotion of MSMEs in the country. India is one amongst very few countries

which has a legal frame work for the MSME sector in the form of MSMED Act,

2006.

Udyog Aadhar Memorandum (UAM)

In September 2015, the Ministry of MSMEs has notified that every micro,

small, medium enterprise shall file Udyog Aadhar Memorandum (UAM). This is

a path breaking step to promote ease of doing business for MSMEs in India as the

UAM replaces the filing of Entrepreneurs Memorandum (EM part-I and II) with

the respective States or Union territories. The entrepreneurs in the MSME sector

can file UAM on http://udyogaadhaar.gov. in online, if they have an Aadhaar

Number and will instantly get a unique Udyog Aadhaar Number (UAN). The

UAM can be filed in offline mode with the General Manager of the concerned

District Industries Centre (DIC).

3.6. MSME Sector in Kerala

In Kerala, MSME sector contributes to the process of economic growth,

employment generation and balanced regional development. It has the potential to


36

emerge as a strong, vibrant and globally competitive sector in the State’s

economy. Kerala, with its excellent connectivity, communication net work and

availability of manpower, is the best suited for the growth of MSME sector.

The potential of IT industry in the MSME sector is big as the State offers

best connectivity with broadband reach in almost all parts of the State. I is

estimated that the share of Tier- III cities in the IT industry in India is expected to

grow up rom 10% now to 80%. Cosulting firm KPMG has suggested that the

State can become an economic growth driver of the country by tapping its SME

sector and IT sector.

The MSME sector targets mainly the various social groups in rural areas

like SC, ST, Women, Youth, Physically Challenged, etc. This helps to reduce the

social and regional imbalances and thereby ensures more equitable distribution of

income and wealth.

The MSME sector contributes very much for the socio economic

development of the State. As per the MSME Survey and Quick Results of the

Fourth Census, of the total number of MSMEs in India, 5.62% is in Kerala. Ming

under this sector include handicrafts, handloom, khadi, food processing

industries, garment making and textile industries, industries related to

coir/wood/bamboo/ plastic/rubber/leather/clay/electronic/ electronic components,

etc.

The Directorate of Industries and Commerce of Government of Kerala

acts as a facilitator for industrial promotion and sustainability of MSME sector

and traditional industrial sector in the State with the help of Directorate of

Handloom and Textile, Directorate of Coir and Khadi & Village Industries Board.

A total amount of Rs:2,373.74 crore have been provided for the development of

industry and minerals during the first four years of 12th Five Year Plan.


37

3.7. State Budget 2015-16: Announcements for MSMEs

The highlights of 2015-16 State budget announcements in industry sector

are:

1) Encouraging entrepreneurship in the State is one of the seven themes

focussed on State budget 2015-16.

2) The State budget 2015-16 given priority on new initiatives for the

development of a culture of entrepreneurship and establishment of

business incubation centres to co-ordinate entrepreneur promotion

activities for creating more employment opportunities in the industry

sector.

3) It is proposed to establish Trade Facilitation Centres in selected District

Industries Centres to promote trade in products like handloom,

handicraft, coir, etc. to enhance traditional industries.

3.8. Kerala Perspective Plan 2030- Vision and Initiatives

The Mission obtained in Kerala Perspective Plan 2030 under Micro, Small,

Medium sector is “Kerala’s evolution into knowledge driven competitive economy

with spirit of entrepreneurship, innovation, social inclusion, tolerance and

diversity.” The measures and schemes initiated in integration with perspective plan

are:

A.) Improving infra structure in existing DA/DPs, construction of multi storied

industrial estates and Assistance for promoting industrial areas/plots in private

sector:

Infra structure investment on PPP mode

Promoting mutual trust between government and entrepreneurs through

partnerships


38

Involve real world entrepreneurs

Promote private investments

Develop eco-friendly parks

B.) Entrepreneur Support Scheme and Start Up subsidy for creation of new

employment opportunities:

Encourage technology up gradation

Promotion of micro finance

C.) Business Incubation Centre in Hand loom, Power loom and DIC:

Involve real world entrepreneurs

Promote entrepreneurial earning in an informal learning environment.

Increase visibility and emphasise the role of entrepreneurship in creating

new jobs.

3.9. State Profile of MSME Sector

The number of new MSMEs filed Memorandum under MSMED Part II in

Kerala during the year 2014-15 was 15455, 3.05% more than that of previous year

which was 14997. Out of 15455; 600 (4%) MSMEs were registered by SCs, 85

(0.5%) by STs and 3735 (24%) by women.

Investment on the sector was increased by7.57% to Rs:2,38,794.75 lakhs

from Rs; 2,22,412.30 lakhs in the previous year while employment generated

decreased by 5% from 87,789 to 83,500 numbers. The value of goods and services

produced in 2014-15 increased by 5.4% to Rs: 7,11,975.39 lakhs from 6,75,597.11

lakhs in the previous year.

In Kerala, during 2014-15, 6915 new entrepreneurs have filed memorandum

with an investment of Rs: 1,57,799.62 lakhs to provide employment to 38,280

persons. As on 31st March 2015, the total number of working SSI/MSMEs

registered in Kerala is 2,49,696. Of these, 4% have promoted by Scheduled Castes,


39

0.7% by Scheduled Tribes and 25% by women entrepreneurs. The total investment

was Rs: 16,73,851.70 lakhs while the total value of goods and services produced

was Rs: 64,44,288.56 lakhs which indicates an increase of 26% over Rs: 50,848.27

lakhs of previous year. The total number of employment generated was 12,74,385 as

on 31.03.2015.

3.10. Problems of MSME Sector

It is a global fact that the development of an economy mainly depends on the

growth of its MSME sector. In India, MSME sector is the backbone of our

economy. However, the sector is facing a lot of internal and external problems.

Even though the problems differ from industry to industry, they are generally

occurred due to faulty management practices, marketing strategy, technological,

financial, government policy level, globalisation and competition from other units.

The important problems faced by MSME sector can be listed as follows:

1. Lack of raw material

2. Under utilisation of capacity

3. Inadequate labour

4. High cost of production

5. Lack on marketing strategies

6. Lack of proficiency in management

7. Lack of finance

8. Out dated technology

9. Lack of proper assessment of market situations

10. Problems related with the change of economic policies.

As MSME sector is imperative for the economic development of the

country, utmost care must be taken for proper handling the sector in Kerala in the

era of globalisation.


40

3.11. Impact of Globalisation on SSI/MSME Sector

Globalization is the process of integration national economies with

economies across the world. In the Indian context it is connecting the economy of

India with the world economy. Globalisation has played a crucial role in making

SSI/MSME sector to be competitive to face the challenges placed by large business

organisations within and outside the country.

As a result of globalisation, better quality products of foreign markets get

opportunities to enter into our economy. At the same time, as the marketing

operations of SSI/MSME sector in our country is already weak, the entry to foreign

markets become a great threat to them. So policy frame work and assistance are

being done by the government authorities for the promotion of MSME sector in

India.

3.12. Globalisation and SSIs/MSMEs in Kerala

Any potential impact of globalisation depends upon in what way the

government and the entrepreneurial community would respond or reorient

themselves, to an externally determined environment. Competition between the

MSME sector and large scale sector is severe. It is quiet natural that MNCs produce

a large volume of goods to meet the global requirements. So they enjoy the benefits

of economies of scale. On the other hand, as an important employment generating

sector in the State, the MSME should also be protected in accordance with their role

in the economy.


41

References:

1) Rao, S. (2001). Entrepreneurship and small business management.

Bombay: Discovery Publishing House.

2) Solomon Steven (1986) “Small Business” – USA, (Crown Publishers).

3) Guide, V.J.C. (1999) “to small scale industries policies, procedure and

practice”, Bharat publishing house, New Delhi.

4) Singer, H. (1964). International Development: Growth and Change. New

York: McGraw Hill.

5) ILO, JASPA. (1988). African Employment Report. Geneva, Switzerland:

ILO.

6) Times of India. (1997). Create small scale Multinationals. March 23rd.

7) Nanjappa, K.R. (2000). Industries in the rural economy- A review of

progress and prospects. Yojana, 15, 15.

8) Vyas, J. (1973). Small scale industry handbook. Ahammadabad:

N.K.Vyas Publications.

9) Vyas, J. (1986). Small scale industry hand book. Ahammadabad:

N.K.Vyas Publications.

10) Harrison, P. (1979). Small is appropriate. New Scientists, 82, 1149.

Chapter 4

PROFILE OF KOZHIKODE DISTRICT

4.1. Kozhikode District : General Profile

Kozhikode district is situated in the southwest coastal region of Kerala

state. The headquarters of the district is located in the Kozhikode city which was

earlier called as Calicut. The district got its name from the two terms namely

‘koyil’ meaning palace and ‘kota’ meaning fort. Both the terms together means

"A place of fortified palace". During the ancient period of time the Kozhikode

city had trade relations with Europeans. Vasco De Gama, a Portuguese

navigator, found the Kozhikode district in 1498 through the sea route to India.

On 1st January, 1957 the Kozhikode district was emerged as a separate district in

the map of Kerala state.

Geographically, the district lies at 11°26'N latitude, 75°78'E longitude and 1 m

Altitude. The district covers an area of 2,345 sq km and it is bounded by Kannur

district on the north, Wayanad district on the east, Malappuram district on the south

and the Arabian Sea on the west. The climate of the district is characterised as the hot

and humid. The actual rainfall in the district was 2869.2 mm in the year of 2015-16.

For administrative purpose, the district is divided into 3 sub-districts, 51

towns and 51 villages. There are 3 Parliamentary constituencies and 11 Assembly

constituencies in the district.

According to 2011 census the district has a population of 30,86,293 (Person)

out of which 14,70,942 are males and 16,15,351 are females. The district has a sex

ratio of 1098 females for every 1000 males. In the year 2001-2011 the population

growth rate in the district was 7.2% (Person) including 5.12% are males and 9.16%

are females.

Profile of Kozhikode District 43

The economy of the district is mainly dependent on agriculture. More than

half of its population are engaged in agriculture in order to earn their livelihood. The

chief agricultural products in the district are Banana, coconut, paddy, nuts, pepper,

ginger, turmeric, cashew, rubber, tapioca, areca nut, etc. The adoption of the new

agricultural technologies amongst the famers of the district helps to increase the

production of various agricultural items. Every year a huge amount of revenue

comes from these agricultural products, and thus the economy of the district is being

helped by the agricultural sector to a great extent. The district is industrially

backward when comparing with other districts of the State. In the year 2014-2015

the GDP of the district was Rs: 37,30,678 lakhs at current price.

The district is well known as a home of several reputed educational

institutions. The Calicut University situated about 24 km in the southern part of

Kozhikode in the Malappuram district was established in 1968 and most of the

colleges in the Kozhikode district are affiliated to this university. Some of its

recognised colleges are Government Engineering College, Malabar Christian

College, Zamorin's Guruvayurappan College, St. Joseph's College, Farook College,

Government Arts and Science College, Providence Women's College, Government

Homeopathic Medical College, Government Law College, Government College of

Teacher Education, Kerala School of Mathematics, etc. As per 2011 census the

literacy rate in the district is 95.08% (Persons) including 97.42% are males and

92.99% are females.

C.H. Mohammed Koya, an eminent Indian politician and the tenth Chief

Minister of Kerala from 12th October, 1979 to 1 st December, 1979 was born on 15th

July, 1927 at Atholi in the Kozhikode district.

The district has several centres which attracts numerous travellers from

different parts of the country as well as world. Sweat Meat Street, popularly known

as SM Street, is the one of the busiest shopping spots of Kozhikode. The street got

this name because of the presence of numerous sweet meat stalls. Beypore town,


situated near to the Beypore River at a distance of 9.65 km from the Kozhikode.

Beypore is one of the significant fishing ports of the Kerala. Thusharagiri, also

known as the 'Green Splendor' is situated 55 km away from the Kozhikode city. The

mesmerising scenery creates by the four waterfalls in the heart of the forest and

streams in the hilly region attract the tourists from far off places. Some other notable

places of interest in the district are Kallai, Kappad, Kirtads, Mananchira Square,

Science Centre & Planetarium, Kadalundi, Kozhikode Beach, Vadakara, Kuttichira

Mosque, Krishna Menon Museum, etc.

S K Pottekkatt, a distinguished Malayalam writer and author of nearly sixty

books was born on 14 March, 1913 at the Kozhikode city. He was honoured by

many prestigious awards including Kerala Sahithya Academy award in 1961, the

Jnanpith Award in 1980 and many more.

4.2. Industrial Profile of Kozhikode District

Kozhikode District has a total land area of 2,344 sq.km. and a coastal line of

about 71 km. Kozhikode, with all its achievements in physical quality of life of

people, quality of infrastructure, availability of qualified manpower, natural and

agricultural resources, good climate presents a paradox in the industrial front. It

remains industrially backward, compared to Ernakulam, Thiruvananthapuram,

Thrissur, Palakkad, etc. in spite of vast unemployed educated manpower and high

saving rates. Not only had a good part of its manpower went outside the state for

employment but its entrepreneurship also went outside Kerala for investment. In

order to promote investment and employment, an aggressive repositioning strategy

has become the need of the hour. The government has taken a series of measures in

this regard. The Malabar Spinning Mill, Kerala Soap Factory, Steel Complex, etc.

are revitalised by the appropriate action of government in the right time. The

industrial policy aimed at, to make the state an investor friendly one. On the other

hand, the available capital, skilled manpower and resources are not being tapped


adequately, to reduce the size of unemployment, to utilise the existing resources to

the maximum extent possible, to increase the production, income and employment;

the only way is the growth of MSME sector.

4.2.1. Existing Industrial Scenario

The following table gives a summary about the existing industrial scenario

of Kozhikode district:

Table No. 4.1: Existing Industrial Scenario of Kozhikode District

Sl. No. Particulars Size

1 Registered working SSI/MSME units as on 31/03/2014 (Nos.) 15,982

2 Employment generated by the above SSIs 78,471

3 Investments in plant and machinery (Rs: in lakh) 95,173.4

4 Employment in large and medium industries 560

5 Number of industrial land (DA/DP) 2

6 Number of mini industrial estates 12

Source: Industrial potential survey 2014, Kozhikode District, Department of Industries and Commerce, Kerala

Following are the seven medium scale industries in the district:

Table No. 4.2: Medium Scale Industries in Kozhikode District

Sl. No. Name of Unit Product Manufacturing

1 M/s. Peekay Rerolling Mills, Cheruvannur Steel

2 M/s. Peekay Steel Casting, Nallalam Steel

3 M/s. Uniroyal Marine Exports Ltd., Vengalm Marine products

4 M/s. Steel Complex, Cheruvannur Steel

5 M/s. Parisons Agro Tech, West Hill Maida, Dalda

6 M/s. VKC Group, Cheruvannur Foot wear

7 M/s. P K Floor Mill Flour Mill

8 Thiruvannur Cotton Mill Clothes



4.2.2. Working MSME Units in Kozhikode as on 31st December 2014

The following table shows the details of working MSMEs in Kozhikode

district which are coming under manufacturing sector:

Table No. 4.3: Working MSMEs in Kozhikode (Manufacturing Enterprises)

Area Type No. of Units

Investment (Rs in lakh)

No. of Employment

Kozhikode Taluk

Micro 4,115 25,374.08 25,230

Small 194 13,667.54 4,314

Medium 2 1,350.00 103

Total 4,311 40,391.62 29,647

Koyilandy Taluk

Micro 1,074 4,392.48 4,871

Small 23 2,066.56 803

Medium 0 0 0

Total 1,097 6,459.04 5,674

Vatakara Taluk

Micro 957 4,690.59 4,314

Small 26 2,041.87 284

Medium 0 0 0

Total 983 6,732.46 4,598

Kozhikode District

Micro 6,146 34,457.15 34,415

Small 243 17,775.97 5401

Medium 2 1,350.00 103

Total 6,391 53,583.12 39,919

Source: Industrial Potential Survey of Kozhikode 2014, Department of Industries and Commerce, Kerala

The following table shows the details of working MSMEs in Kozhikode

district which are coming under service sector:


Table No. 4.4: Working MSMEs in Kozhikode (Service Enterprises)

Area Type No. of Units Investment (Rs in lakh)

No. of Employment

Kozhikode Taluk

Micro 471 996.12 2779

Small 58 2,410.88 265

Medium 1 300.00 3

Total 530 3707.00 3,047

Koyilandy Taluk

Micro 115 259.77 760

Small 10 254.00 86

Medium 0 0 0

Total 125 513.77 846

Vatakara Taluk

Micro 121 226.22 1,939

Small 10 221.00 31

Medium 0 0 0

Total 131 447.22 1970

Kozhikode District

Micro 707 1524.51 5,478

Small 78 2,885.87 382

Medium 1 300.00 3

Total 786 4,710.38 5,863

Source: Industrial Potential Survey 2014, Kozhikode District, Department of Industries and Commerce, Kerala

The following table shows the details of all working MSMEs in Kozhikode

district which are coming under manufacturing and service sector:


Table No. 4.5: Working MSMEs in Kozhikode (Manufacturing and Service Enterprises)

Area Type No. of Units Investment (Rs in lakh)

No. of Employment

Kozhikode Taluk

Micro 4,586 26,370.20 28,009

Small 252 16,078.42 4,579

Medium 3 1650.00 106

Total 4,841 44,098.60 32,694

Koyilandy Taluk

Micro 1,189 4,652.25 5,631

Small 33 2,320.56 889

Medium 0 0 0

Total 1,222 6,972.81 6,520

Vatakara Taluk

Micro 1,078 4,916.81 6,253

Small 36 2,262.87 315

Medium 0 0 0

Total 1,114 7,179.68 6,568

Kozhikode District

Micro 6,853 35,939.26 39,893

Small 321 20,661.85 5,783

Medium 3 1,650.00 106

Total 7,177 58,251.11 45,7822


The above tables reveal that out of the total 7,177 working MSME/SSI units

in Kozhikode district, 4841 (67.45%) are situated in Kozhikode taluk. Of the

remaining MSMEs 1222 (17.03%) are in Koyilandy taluk and 1114 (15.52%) are in

Vatakara taluk. When we consider the total employment opportunities provided by

MSMEs in Kozhikode district, 71.41% is generated by Kozhikode taluk; and 14.24 %

and 14.35% are generated by Koyilandy and Vatakara taluks respectively. The total

investments in the MSME sector of Kozhikode district is spread over Kozhikode,

Koyilandy and Vatakara taluks as 75.75%, 11.97% and 12.33% respectively.

Of the total MSMEs in Kozhikode district, 95.49% (6853) are micro

enterprises, 4.47% (321) are small enterprises and 0,04% (3) are medium enterprises.


Out of the total, 6391 MSMEs (89.05%) are coming under manufacturing

sector and the remaining 786 MSMEs (10.95%) are service enterprises.

4.2.3. Gender wise Distribution of MSMEs in Kozhikode District

The following table shows the gender wise distribution of MSMEs in

Kozhikode District as on 31st December 2014:

Table No. 4.6: Distribution of MSMEs in Kozhikode District on the Basis of Gender

Gender Micro Small Medium Total Total Investment (Rs: in lakh)

Male 5,755 289 3 6,047 53,152.78

Female 1,098 32 0 1,130 5,140.72

Total 6,853 321 3 7,177 58,293.50


The table shows that out of the 7177 MSME units, 6047 (84.26%) are owned

by male and the remaining 1130 units (15.74%) are owned by female entrepreneurs.

4.2.4. MSME Units Filed Part II From 2007-2014

Following table shows the number of MSME units filed part II from 2007-08

to 2013-14:

Table No. 4.7: Number of MSME Units Filed Part II in Kozhikode District

Year Number of

Units Investment

(Rs: in lakhs) Number of

Employment

2007-08 380 2,895.34 2,701

2008-09 406 1,650.11 2,240

2009-10 602 3,281.05 2,395

2010-11 875 4,642.00 6,551

2011-12 817 11,372.93 5,082

2012-13 1,067 15,731.62 6,790

2013-14 948 14,364.98 6,092

2014-15 (Up to Jan 2015) 886 15,440.40 4,985

Total 5,981 69,378.43 36,836



4.2.5. Sector wise Details of MSME Units in Kozhikode District

Following table shows the distribution of MSMEs in Kozhikode district on

28th December 2015, on the basis of sector in which they falling:

Table No. 4.8: Sector-wise Distribution of MSMEs in Kozhikode District as on

28-12-2015

Sl. No.

Sector No. of Units

Investment (Rs: in lakhs)

No. of Employment

1 Agro & Food based 1,374

(18.98%) 9,350.27 6,328

2 Textile, Readymade Garments 562

(7.76%) 2,555.28 4,699

3 IT Industries 224

(3.09%) 1357.71 1,674

4 Wood/Wooden based Furniture

1,136 (15.70%)

5,771.16 6,239

5 Paper & Paper Products 143

(1.98%) 3,498.49 998

6 Rein/leather based 222

(3.07%) 4,063.52 3,989

7 Chemical based 402

(5.56%) 3,181.38 2,457

8 Rubber & Plastic Products 359

(4.96%) 4,535.11 2,383

9 Glass & Ceramics 488

(6.74%) 2,841.04 3,048

10 Mining & Quarrying 56

(0.77%) 2,375.70 426

11 General Engineering 680

(9.39%) 2,875.53 3,924

12 Service Activities 572

(7.90%) 5,135.46 4,056

13 Printing & Publishing 329

(4.55%) 5,476.24 1,714

14 Machinery & Equipment 343

(4.74%) 2,783.24 1,717

15 Miscellaneous 348

(4.81%) 2,640.50 2,430

Total 7,238

(100%) 58,440.63 46,082



The above table tells us, out of the total MSMEs in Kozhikode District, the

agro and food industries sector holds the maximum number of MSMEs (18.98%).

Wood based furniture industries and general engineering industries occupy

respectively second and third places.

4.2.6. SWOT Analysis

The attraction of Kozhikode has been growing, especially among the

residential and commercial developers seeking opportunities in the greater

Kozhikode area. The developments such as ULCC Cyber Park and Kozhikode

Cyber Park; and the investments in residential and commercial developments are

solid indicators of aggressive growth of the district.

Kozhikode is one of the main commercial centres of Kerala. The economy is

mainly business oriented. A large portion of the male population is employed in the

Middle Eastern countries, and their remittances to home are an important part of the

local economy. Kozhikode has witnessed a building boom in recent years. This is

particularly evident in the number of malls recently built in the District.

Real estate sector has witnessed heightened activity due to perceptible

demand in many sectors such as hospitality, residential, retail and office space.

Traditionally, the demand from leisure travellers to tourist destinations to Wayanad

and northern region of Kerala has been fuelling the growth and development of

hospitality industry.

The availability of low cost highly skilled manpower, high literacy, female

IT professionals, low cost of living, etc. are expected to attract many IT companies

and other knowledge based industries to Kozhikode in the next 5 years.

The industrial scenario reveals the following are the strengths, weaknesses,

opportunities and threats of the district:


a) Strengths:

1. Availability of good infrastructure

2. Availability of agricultural and natural resources

3. Very good tradition in industry, trade and commerce

4. Presence of unemployed educated youth

5. Presence of technical and high end institutions (IIM, NIT, etc)

6. People having entrepreneurial culture

7. Good climate

8. Availability of banking facilities

9. Potential of NRIs

10. Availability of industrial estates, industrial parks, mini industrial estates, etc.

11. Good market prospects for all consumer goods

12. Availability of skilled labour at comparatively low cost

13. LSGDs are showing keen interest for the promotion of MSMEs

b) Weaknesses

1. Absence of large scale industries

2. Non availability of land at reasonable rates

3. Scattered input resources

4. Inadequate work culture

5. Seasonal availability of input resources

6. Most of the industrial units are micro units having poor economic viability

7. Non availability of highly skilled labour

8. Irregular power supply

9. High density of population

10. Inadequate availability of technical consultants

c) Opportunities

1. Investment climate

2. Growth in tourism sector


3. Global market due to liberalisation, privatisation and globalisation

4. Reduction in Gulf opportunities

d) Threats

1. Lack of standardisation of products

2. Competition from outside state and outside the country

3. Lack of technology training facilities

4. Lack of co-ordination between line departments and financial institutions

5. Lack of confidence among entrepreneurs

6. Lack of professional managers and project consultants

7. High cost of land

8. Lack of awareness about industrial opportunities and technology

9. Inability to achieve technical standards and scale

10. Lack of entrepreneurship training facilities

By identifying the strength and weaknesses; and to face threats and exploit

the opportunities, following programmes are planned by the authorities;

1. Sensitisation programmes are to be conducted to impart the importance of

standardisation of the products

2. It is proposed to conduct various awareness programmes and entrepreneurship

development programmes including skill development programmes to

motivate and improve the confidence level of entrepreneurs

3. It is proposed to motivate the entrepreneurs to produce competitive products

through various technology development programmes.

4. Continual improvement in the Single Window Clearance System.

Chapter 5

ANALYSIS OF PERFORMANCE OF SSI/MSME

SECTOR IN INDIA, KERALA AND

KOZHIKODE DISTRICT

This chapter deals with analysis of performance of SSI/MSME sector in

India, Kerala and Kozhikode District on the basis of selected parameters such as

number of registered units, number of employment generated and volume of

production during pre-globalisation period and three phases of post globalisation

period. For this purpose, the data in respect of these variables for pre-globalisation

period of eight years from 1982-83 to 1989-90 and post globalisation period of 24

years (three phases of 8 years duration each) from 1990-91 to 2013-14 are analysed,

using certain statistical tools. A comparison of the performance between pre

globalisation period and various phases of post globalisation period is also made in

this chapter.

I. ANALYSIS OF PERFORMANCE OF SSI/MSME SECTOR IN INDIA

The performance of SSI sector in India is analysed by dividing entire period

of study of 32 years from 1982-83 to 2013-14 into two parts, namely; (A) pre-

globalisation era (from 1982-83 to 1989-90) and (B) post globalisation era (from

1990-91 to 2013-14). Post globalisation era is further divided into three phases of 8

years duration each as detailed below:

i) First phase of post globalisation period (from 1990-91 to 1997-98)

ii) Second phase of post globalisation period (from 1998-99 to 2005-06)

iii) Third phase of post globalisation period (from 2006-07 to 2013-14)

Analysis of Performance of SSI/MSMESector in India... 55

5.1. Performance of SSI Sector in India during pre-globalisation

period from 1982-83 to 1989-90

The performance of SSI/MSME sector in India is analysed on the basis of

three variables namely, number of registered units, number of employment provided

and the amount of output produced.

(a) Number of Registered SSI Units:

In India, Small Scale Industrial Sector plays a central role in the economic

development of the country. It recorded a high growth rate since independence in

spite of stiff competition from the large scale sector. There were only 16,000

registered small scale units in India in the year 1950-51. It jumped to 36,000 units in

1961-62 and 10.6 lakh units in 1982-83. By the year 1989-90, the total number of

registered SSI units became 18.2 lakh.

The number of units is an important parameter for measuring the performance

of SSIs in India. The number of Small Scale Units registered in India during pre-

globalisation period from 1982-83 to 1989-90 is shown in the following table:

Table No. 5.1: Number of Registered SSI Units in India during 1982-83 to

1989-90

Year No. of Units (in lakhs) % change over previous year

1982-83 10.6 --

1983-84 11.6 + 9.43

1984-85 12.4 + 6.90

1985-86 13.5 + 8.87

1986-87 14.6 + 8.15

1987-88 15.8 + 8.22

1988-89 17.1 + 8.23

1989-90 18.2 + 6.43

Overall Growth Rate + 71.70 %

Compound Annual Growth Rate (CAGR) + 8.03 %

Source: Reports of Ministry of Micro, Small and Medium industries, Govt. of India.


The table shows that there is a continuous increase in the number of SSIs

units registered in India during the pre-globalisation period from 1982-83 to 1989-

90. In the year 1982-83 the number of registered SSI units in India was 10.6 lakhs

which increased to 18.2 lakhs in 1989-90 with an overall growth of 71.70% and

compound annual growth rate of 8.03%. The annual growth rate was highest

(9.43%) in the year 1983-84 and was lowest in the year 1989-90 (6.43%).

(b) Employment Generated:

The Small Scale Industrial Sector plays an imperative role in

generating employment opportunities across our economy. The growth in

employment potential of Small Scale Units in India during pre-globalisation period

from 1982-83 to 1989-90 is shown in the following table:

Table No. 5.2: Number of Employment Generated by SSI Sector in India During

1982-83 to 1989-90

Year No. of Employment provided

(in lakhs) % change over previous year

1982-83 79.00 -

1983-84 84.20 + 6.58

1984-85 90.00 + 6.89

1985-86 96.00 + 6.67

1986-87 101.40 + 5.63

1987-88 107.00 + 5.52

1988-89 113.00 + 5.61

1989-90 119.60 + 5.84




It is seen from the table that there is continuous increase in the number of

employment generated by SSI units in India during the pre-globalisation period


from 1982-83 to 1989-90. In the year 1982-83 the number of employment generated

by SSI sector was 79 lakhs which increased to 119.6 lakhs in 1989-90 with an

overall growth of 51.39% and compound annual growth rate of 6.11%. The annual

growth rate was highest (6.89%) in the year 1984-85 and was lowest in the year

1987-88 (5.52%). The overall figures during the whole period show that the SSI

sector has a crucial role in providing employment across our economy.

(c) Volume of Production

In India, SSI sector is engaged in the production of different types of

products. Today, more than 6,000 products, ranging from traditional to high tech

items, are manufactured by SSI sector. The sector contributes nearly 45% to the

manufacturing output of the country. The following table shows the volume of

production made by small scale sector during pre globalisation period from 1982-83

to 1989-90:

Table No. 5.3: Volume of production made by SSI sector in India during 1982-

83 to 1989-90

Year Production – Current Prices

(Rs: in crores) % change over previous

year

1982-83 35,000 -

1983-84 41,600 + 18.86

1984-85 50,500 + 21.39

1985-86 61,200 + 21.19

1986-87 72,300 + 18.14

1987-88 87,300 + 20.75

1988-89 1,06,400 + 21.88

1989-90 1,32,300 + 24.34




It is obvious from the table that the production of SSI sector in India is

increased year after year during the pre

In the year 1982-83, the amount output produced by India’s SSI sector was Rs: 35,000

crores which increased to Rs:1,32,300 crores in 1989

278% and compound annual growth rate of 20.92 %. The annual growth rate was

highest (24.34%) in the year 1989

The following figure sho

units, number of employment provided and volume of production during the pre

globalisation period from 1982

Figure 5(i): Annual growth rate in number of units, number of employment and

volume of production during the period from 1982

The figure (i) shows a comparison in annual growth rate of number of units,

number of employment created and the amount of production made by SSI sector of

India during pre-globalisation period fr

the amount of production is too high when comparing with that of other two. When

comparing the annual growth rate in number of units and number of employment

0

5

10

15

20

25

Analysis of Performance of SSI/MSMESector in India


increased year after year during the pre-globalisation period from 1982

83, the amount output produced by India’s SSI sector was Rs: 35,000

ich increased to Rs:1,32,300 crores in 1989-90 with an overall growth of


highest (24.34%) in the year 1989-90 and was lowest in the year 1986

The following figure shows the annual growth rate in number of registered

units, number of employment provided and volume of production during the pre

globalisation period from 1982-83 to 1989-90:

Annual growth rate in number of units, number of employment and

e of production during the period from 1982-83 to 1998



globalisation period from 1982-83 to 1989-90. The growth rate in



growth rate in number of units

growth rate in number of employment generated

growth rate in volume of production

Sector in India... 58


globalisation period from 1982-83 to 1989-90.

83, the amount output produced by India’s SSI sector was Rs: 35,000

90 with an overall growth of


90 and was lowest in the year 1986-87 (18.14%).

ws the annual growth rate in number of registered

units, number of employment provided and volume of production during the pre-

Annual growth rate in number of units, number of employment and

83 to 1998-90



90. The growth rate in



growth rate in number of

growth rate in number of employment generated

growth rate in volume of production


provided, the performance in terms of employment potential is more than that in

terms of number of registered units.

5.2. Performance of SSI Sector in India during Post Globalisation

Period from 1990-91 to 1997-98 (First Phase)

The performance of SSI sector in India during first phase of post

globalisation period is analysed in the same way that was done in respect of pre-

globalisation period. The variables used for this purpose are number of registered

units, number of employment provided and the amount output produced.


The number of registered units is an important criterion for analysing the

growth of SSI sector in India during post globalisation period also. The total number

of registered SSI units in India during first phase of post globalisation period from

1990-91 to 1997-98 are given in the following table:

Table No. 5.4: Number of Registered SSI Units in India During the Period

from 1990-91 to 1997-98


1990-91 67.9 -

1991-92 70.6 + 3.98

1992-93 73.5 + 4.11

1993-94 76.5 + 4.08

1994-95 79.6 + 4.05

1995-96 82.8 + 4.02

1996-97 86.2 + 4.11

1997-98 89.7 + 4.06






units registered in India during the first phase of post globalisation period from

1990-91 to 1997-98. In the year 1990-91 the number of registered SSI units in India

was 67.9 lakhs which increased to 89.7 lakhs in 1997-98 with an overall growth of

32.11% and compound annual growth rate of 4.06%. The annual growth rate was

highest (4.11%) in the years 1992-93 and 1996-97 and it was lowest in the year

1991-92 (3.98%).

(b) Employment Generation:

Since the employment potential is a crucial factor in the economic

development of the nation, the same is taken as a parameter for analysing the

performance of the SSI sector. The number of employment provided by Small Scale

Units in India during the first phase of post globalisation period from 1990-91 to

1997-98 is shown in the following table:

Table No. 5.5: Number of employment provided by SSI sector in India during

1990-91 to 1997-98

Year No. of Employment (in lakhs) % change over previous year

1990-91 158.30 -

1991-92 165.99 + 4.86

1992-93 174.84 + 5.33

1993-94 182.64 + 4.46

1994-95 191.40 + 4.80

1995-96 197.93 + 3.41

1996-97 205.86 + 4.01

1997-98 213.16 + 3.55

Annual Growth Rate + 34.66 %


Source: Reports of Ministry of Micro, Small and Medium Industries, Govt. of India.


The table shows that there is a continuous increase in the number of

employment generated by SSI units in India during the first phase of post

globalisation period from 1990-91 to 1997-98. In the year 1990-91 the number of

employment provided by SSI sector was 165.99 lakhs which increased to 213.16

lakhs in 1997-98 with an overall growth of 34.66% and a compound annual growth

rate of 4.34%. The annual growth rate was highest (5.33%) in the year 1992-93 and

was lowest in the year 1995-96 (3.41%).


The following table shows the production performance of small scale sector

in India during first phase of post globalisation period from 1990-91 to 1997-98:

Table No. 5.6: Volume of Production of SSI sector in India during 1990-91 to

1997-98

Year Production-Current prices

(Rs: in crores) % Change Over Previous Year

1990-91 78,802 -

1991-92 80,615 + 2.30

1992-93 84,413 + 4.71

1993-94 98,796 + 17.04

1994-95 1,22,154 + 23.64

1995-96 1,47,712 + 20.92

1996-97 1,67,805 + 13.60

1997-98 1,87,217 + 11.57




It is clear from the table that the production of SSI sector in India is

increased year after year during the first phase of post globalisation period from

1990-91 to 1997-98. In the year 1990-91, the amount of output made by India’s SSI


sector was Rs: 78,802 crores which increased to Rs: 1,87,217 crores in 1997-98 with

an overall growth of 137.58% and a compound annual growth rate of 13.16 %. The

annual growth rate was highest (23.64%) in the year 1994-95 and was lowest in the

year 1991-92 (2.3%).

5.3. Performance of SSI sector in India during post globalisation

period from 1998-99 to 2005-06 (Second Phase)

The performance of SSI sector in India during second phase of post

globalisation period is analysed in the same manner it has been done in respect of

pre-globalisation period and first phase of post globalisation period. So the same

variables are used for analysis.


The total number of registered SSI units in India during second phase of post

globalisation period from 1998-99 to 2005-06 are given in the following table:

Table No. 5.7: No. of Registered SSI Units in India during 1998-99 to 2005-06


1998-99 93.4 -

1999-00 97.2 + 4.07

2000-01 101.1 + 4.01

2001-02 105.2 + 4.06

2002-03 109.5 + 4.09

2003-04 114.0 + 4.11

2004-05 118.6 + 4.04

2005-06 123.4 + 4.05





The table shows that the annual growth rate in the number of registered SSIs

units in India during the second phase of post globalisation period from 1998-99 to

2005-06 is almost constant throughout the period. In the year 1998-99 the number of

registered SSI units in India was 93.4 lakhs which increased to 123.4 lakhs in 2005-

06 with an overall growth of 32.12% and a compound annual growth rate of 4.06%.

The annual growth rate was highest (4.11%) in the years 2003-04 and it was lowest

in the year 2000-01 (4.01%).

(b) Employment Generated

The number of employment provided by Small Scale Units in India during

the second phase of post globalisation period from 1998-99 to 2005-06 is shown in

the following table:

Table No. 5.8: Number of Employment Generated by SSI Sector in India

during 1998-99 to 2005-06


1998-99 220.55 -

1999-00 229.10 + 3.88

2000-01 239.09 + 4.36

2001-02 249.09 + 4.18

2002-03 260.13 + 4.43

2003-04 271.42 + 4.34

2004-05 282.57 + 4.11

2005-06 294.91 + 4.37



Source: Reports of Ministry of Micro, Small and Medium Industries, Govt. of India.

The table shows that there is almost constant rate of growth in the number of

employment generated by SSI units in India during the second phase of post



employment provided by SSI sector was 220.55 lakhs which increased to 294.91

lakhs in 2005-06 with an overall growth of 33.72% and a compound annual growth

rate of 4.24%. The annual growth rate was highest (4.43%) in the year 2002-03 and

was lowest in the year 1999-00 (3.88%).


The performance of SSI sector in India in volume of production during

second phase of post globalisation period from 1998-99to 2005-06 is detailed

below:

Table No. 5.9: Volume of production of SSIs in India during 1998-99 to 2005-06

Year Production–Current prices

(Rs: in crores) % change over previous year

1998-99 2,10,454 -

1999-00 2,33,760 + 11.07

2000-01 2,61,297 + 11.78

2001-02 2,82,270 + 8.03

2002-03 3,14,850 + 11.54

2003-04 3,64,547 + 15.78

2004-05 4,29,796 + 17.90

2005-06 4,97,842 + 15.83





increased year after year during the second phase of post globalisation period from

1998-99 to 2005-06. In the year 1998-99, the amount output of India’s SSI sector

was Rs: 2,10,454 crores which increased to Rs: 4,97,842 crores in 2005-06 with an

overall growth of 136.56% and a compound annual growth rate of 13.09 %. The

annual growth rate was highest (17.9%) in the year 2004-05 and was lowest in the

year 2001-02 (8.03%).


5.4. Performance of SSI/MSME Sector in India during post

Globalisation Period from 2006-07 to 2013-14 (Third Phase)

The performance of SSI/MSME sector in India during third phase of post

globalisation is analysed in the same manner as it has been done in respect of pre-

globalisation period; and first and second phases of post globalisation periods. So,

for the purpose of analysis, the same variables are used here also.


The total number of registered SSI/MSME units in India during the third

phase of post globalisation period from 2005-06 to 2013-14 is given in the

following table:

Table No. 5.10: No. of registered SSI/MSME units during the period 2006-07 to

2013-14


2006-07 261.1 -

2007-08 272.8 + 4.48

2008-09 286.2 + 4.91

2009-10 298.1 + 4.16

2010-11 311.5 + 4.50

2011-12 447.6 + 43.69

2012-13 467.5 + 4.45

2013-14 488.5 + 4.49




The table shows that the annual growth rate in the number of registered

SSI/MSME units in India during the third phase of post globalisation period from

2006-07 to 2013-14 is almost same throughout the period, except for the year 2011-


12. In the year 2006-07 the number of registered SSI units in India was 261.1 lakhs

which increased to 488.5 lakhs in 2013-14 with an overall growth of 87.09% and a

compound annual growth rate of 9.36%. During the period, the annual growth rate is

highest (43.69%) in 2011-12 and it is lowest (4.16%) in 2009-10.

(b) Employment potential

The number of employment provided by SSI/MSME sector in India during

third phase of globalisation period is given in the following table:

Table No. 5.11: Number of Employment Provided by SSI/MSME Sector in

India during 2006-07 to 2013-14


2006-07 595.66 -

2007-08 626.34 + 5.15

2008-09 659.35 + 5.27

2009-10 695.38 + 5.46

2010-11 732.17 + 5.29

2011-12 1,011.69 + 38.18

2012-13 1,061.40 + 4.91

2013-14 1,114.29 + 4.98




The table shows that there is a continuous growth in the number of

employment generated by SSI/MSME units in India during the third phase of post


employment provided by SSI/MSME sector was 595.66 lakhs which increased to

1,114.29 lakhs in 2013-14 with an overall growth of 87.07% and a compound

annual growth rate of 9.36%. The annual growth rate was highest (38.18%) in the

year 2011-12 and was lowest in the year 2012-13 (4.91%).



The production performance of SSI/MSME sector in India during third

phase of post globalisation period from 2006-07 to 2013-14 is given below:

Table No. 5.12: Volume of Production of SSI/MSME sector in India during

2006-07 to 2013-14

Year Production-Current prices

(Rs: in crores) % change over previous

year

2006-07 5,85,112 -

2007-08 14,35,179 + 145.28

2008-09 15,24,235 + 6.21

2009-10 16,19,356 + 6.24

2010-11 17,21,553 + 6.31

2011-12 18,34,332 + 6.55

2012-13 NA -

2013-14 NA -




increased year after year during the third phase of post globalisation period from

2006-07 to 2011-12. In the year 2006-07, the amount output of India’s SSI sector

was Rs: 5,85,112 crores which increased to Rs:18,34,332 crores in 2011-12 with a

compound annual growth rate of 25.67 %. As the researcher has failed to collect the

figures in respect of production of SSI/MSME sector for the years 2012-13 and

2013-14, the same has not been added in the table. During the year 2007-08, the

sector has attained a very high growth rate of 145.28% in respect of SSI/MSME

production.


5.5. Comparison of performance of SSI sector in India in terms of

Number of Units, Employment generation and Volume of

production during pre globalisation period

The following table shows a comparison of the performance of SSI/MSME

sector in India during pre and post globalisation periods in respect all the selected

parameters (using Compound Annual Growth Rates):

Table No. 5.13: Comparison of Performance of SSI/MSME Sector in India

during Pre and Post Globalisation Periods Based on Selected

Parameters

Parameter

Compound Annual Growth Rate (CAGR)

Pre-globalisation period

Post globalisation periods

Phase I Phase II Phase III

1982-83

to

1989-90

1990-91

to

1997-98

1998-99

to

2005-06

2006-07

to

2013-14

Number of Units 8.03 % 4.06 % 4.06 % 9.36 %

Employment provided 6.10 % 4.34 % 4.24 % 9.36 %

Production 20.92 % 13.16 % 13.09 % 25.67 %

The table shows the Compound Annual Growth Rates (CAGR) in respect of

number of units, number of employment provided and amount of production during

pre and post globalisation periods. The CAGR in respect of number of units in India

during pre-globalisation period is 8.03%. During the first and second phases of post

globalisation period, it has reduced to 4.06%. But during the third phase, it shows an

extensive increase of 9.36%.

The CAGR of number of employment generated in India is 6.1% during the

pre-globalisation period. It shows a decrease during the first and second phases of

post globalisation. The CAGR for the period are 4.34% and 4.24% respectively.

During the third phase of post globalisation, the rate increased to 9.36%.

The CAGR in respect of amount of SSI production in India during the pre

globalisation period is 20.92%. It shows a decrease during the first and second

phases of post globalisation periods. The CAGR for these periods are 13.16% and

13.09% respectively. During the third phase of post globalisation, the rate shows an

extensive increase of 25.67%.

The comparison of CAGR of number of registered units, number of

employment provided and volume of production for pre globalisation period and

three phases of post globalisation periods is depicted in the following figure:

Figure 5(ii): Compound

Sector in India during

From the figure, it is seen that the performance of SSI/MSME sector in India

in respect of the selected parameters is declined significantly during

of post globalisation period. During the second phase, the sector maintains the same

performance as it was during the first phase. But the performance has improved

extensively during the third phase of post globalisation period.

0

5

10

15

20

25

30

Pre-glob Post glob


The CAGR in respect of amount of SSI production in India during the pre

ion period is 20.92%. It shows a decrease during the first and second



25.67%.




ompound Annual Growth Rate of Selected Par

in India during Pre and Post Globalisation Periods


in respect of the selected parameters is declined significantly during



extensively during the third phase of post globalisation period.

Post glob-I Post glob-II

Post glob-III

CAGR - number of units

CAGR - number of emmployment

CAGR - Volume of production


The CAGR in respect of amount of SSI production in India during the pre-

ion period is 20.92%. It shows a decrease during the first and second






Selected Parameters SSI

Post Globalisation Periods


in respect of the selected parameters is declined significantly during the first phase



number of units

number of emmployment

Volume of production


II. ANALYSIS OF PERFORMANCE OF SSI/MSME SECTOR IN KERALA

Even though Kerala has less scope for large scale industries because of

various factors, its environment is so good for starting small scale industries. This

section deals with analysis of performance of SSI/MSME sector in Kerala during

pre and post globalisation periods on the basis of two important parameters, namely;

(1) number of registered units and (2) number of employment generated.

5.6. Performance of SSI sector in Kerala during pre-globalisation

period from 1982-83 to 1989-90

The performance of SSI sector in Kerala during pre-globalisation period

from 1982-83 to 1989-90 is examined on the basis of two important parameters,

namely; (1) number of registered units, and (2) number of employment generated.

(a) Number of Registered Units

The total number of registered SSI/MSME units in Kerala during pre-

globalisation period from 1982-83 to 1989-90 is given in the following table:

Table No. 5.14: No. of Registered SSI Units in Kerala during 1982-83 to 1989-90

Year No. of Units % change over previous year

1982-83 24,884 -

1983-84 28,117 + 12.99

1984-85 31,499 + 12.03

1985-86 35,365 + 12.27

1986-87 40,342 + 14.07

1987-88 47,191 + 16.98

1988-89 55,427 + 17.45

1989-90 63,698 + 14.92



Source: Compiled from Various Issues of Economic Review, State Planning Board, Kerala


units registered in Kerala during the pre

90. In the year 1982-83 the total number of registered SSI units in Kerala was

24,884 which increased to 63,698 in 1989

and compound annual growth rate of 14.37%. During the pre

the annual growth rate was highest (17.45%) in the year 1988

the year 1984-85 (12.09%).

The total number of registered SSIs/MSMEs during pre

from 1982-83 to 1989-90 is depicted graphically in the following figure:

Figure 5(iii): Number of registered units in Kerala during 1982

The figure shows a continuous increa

during the pre-globalisation period of 1982

(b) Employment Generation

The following table shows the

in Kerala during pre-globalisation period from 1982

0

10000

20000

30000

40000

50000

60000

70000

1982-83 1983



units registered in Kerala during the pre-globalisation period from 1982

83 the total number of registered SSI units in Kerala was

sed to 63,698 in 1989-90 with an overall growth of 155.98%

and compound annual growth rate of 14.37%. During the pre-globalisation period,

the annual growth rate was highest (17.45%) in the year 1988-89 and was lowest in

85 (12.09%).

al number of registered SSIs/MSMEs during pre-globalisation period

90 is depicted graphically in the following figure:

Figure 5(iii): Number of registered units in Kerala during 1982

The figure shows a continuous increase in the total number of SSI units in Kerala

globalisation period of 1982-83 to 1989-90.

Employment Generation

The following table shows the number employment provided by

globalisation period from 1982-83 to 1989-90:

1983-84 1984-85 1985-86 1986-87 1987-88 1988-



globalisation period from 1982-83 to 1989-

83 the total number of registered SSI units in Kerala was

90 with an overall growth of 155.98%

globalisation period,

89 and was lowest in

globalisation period


Figure 5(iii): Number of registered units in Kerala during 1982-83 to 1989-90

se in the total number of SSI units in Kerala

provided by SSI sector

-89 1989-90


Table No. 5.15: Number of Employment Provided by SSI sector in Kerala

During 1982-83 to 1989-90

Year No. of Employment % Change Over Previous Year

1982-83 87,906 -

1983-84 1,16,674 + 32.73

1984-85 1,40,274 + 20.23

1985-86 1,67,848 + 19.66

1986-87 1,97,710 + 17.79

1987-88 2,35,955 + 19.34

1988-89 3,66,373 + 55.27

1989-90 3,82,000 + 4.27



Source: Compiled from Various Issues of Economic Review, State Planning Board, Kerala.

The table tells us the fact that there is a continuous improvement in the employment

potential of SSI sector in Kerala during the pre-globalisation period from 1982-83 to

1989-90. In the year 1982-83 the number of employment generated by SSI sector

was 87,906 which increased to 3,82,000 in 1989-90 with an overall growth of

334.56% and compound annual growth rate of 23.35%. During pre-globalisation

period from 1982-83 to 1989-90, the annual growth rate was too high (55.27%) in

the year 1988-89 and was too low in the year 1989-90 (4.27%).

The total number of employment provided by SSIs/MSMEs during pre-

globalisation period from 1982-83 to 1989-90 is depicted graphically in the

following figure:

Figure 5(iv): Number of employment generated by SSI sector in Kerala during

1982-83 to 1989

The figure shows a forward movement in the employment potential of SSI

sector in Kerala during pre

increase in number of employment generation was steep during the year 1988

5.7. Performance of

period from 1990

The performance of SSI sector in Kerala during first phase of post

globalisation is analysed in the same way which has been followed for analysing the

pre-globalisation performance. The variables used for this purpose are number of

registered SSI units and


The total number of registered SSI/MSME units in India during 1990

1997-98 is given in the following table:

0

50000

100000

150000

200000

250000

300000

350000

400000

1982-83 1983


Number of employment generated by SSI sector in Kerala during

83 to 1989-90


sector in Kerala during pre-globalisation period from 1982-83 to 1989

increase in number of employment generation was steep during the year 1988

Performance of SSI sector in Kerala during post globalisation

period from 1990-91 to 1997-98 (First Phase)



globalisation performance. The variables used for this purpose are number of

registered SSI units and the number of employment created by SSI sector of Kerala.

Number of Registered Units

The total number of registered SSI/MSME units in India during 1990

98 is given in the following table:

1983-84 1984-85 1985-86 1986-87 1987-88 1988-89


Number of employment generated by SSI sector in Kerala during


to 1989-90. The

increase in number of employment generation was steep during the year 1988-89.

SSI sector in Kerala during post globalisation



globalisation performance. The variables used for this purpose are number of

the number of employment created by SSI sector of Kerala.

The total number of registered SSI/MSME units in India during 1990-91 to

89 1989-90


Table No. 5.16: No. of Registered SSI Units in Kerala During 1990-91 to

1997-98


1990-91 73,552 -

1991-92 84,440 + 14.80

1992-93 95,851 + 13.51

1993-94 1,10,384 + 15.16

1994-95 1,26,220 + 14.35

1995-96 1,43,123 + 13.39

1996-97 1,60,544 + 12.17

1997-98 1,80,091 + 12.18





units registered in Kerala during first phase of post globalisation period from 1990-

91 to 1997-98. In the year 1990-91 the number of registered SSI units in Kerala was

73,552 which increased to 1,80,091 in 1997-98 with an overall growth of 144.85%

and compound annual growth rate of 13.65%. During the first phase of post

globalisation period, the annual growth rate is highest (15.16%) in the year 1993-94

and is lowest in the year 1996-97 (12.17%).

The total number of registered SSIs/MSMEs during first phase of post


following figure:

Figure 5(v): Number of registered SSI units in Kerala during 1990

The figure shows a continuous increase in the total number of registered SSI units in

Kerala during the first phase of post globalisation period from 1990


The total number of employment generated by SSI sector of Kerala during

1990-91 to 1997-98 is detailed

Table No. 5.17: Number of

During

Year No. of Employment

1990-91

1991-92

1992-93

1993-94

1994-95

1995-96

1996-97

1997-98

Overall Growth Rate

Compound Annual Growth Rate

Source: Compiled from Various Issues

0

20000

40000

60000

80000

100000

120000

140000

160000

180000

200000

1990-91 1991


Figure 5(v): Number of registered SSI units in Kerala during 1990


Kerala during the first phase of post globalisation period from 1990-



detailed in the following table:

Number of Employment Provided by SSI Sector

During 1990-91 to 1997-98

No. of Employment % change over previous year

4,24,881 -

5,17,992 + 21.91

5,68,598 + 9.77

6,29,543 + 10.72

7,03,161 + 11.69

7,74,936 + 10.21

8,39,596 + 8.34

9,09,859 + 8.37

+ 114.14 %


Various Issues of Economic Review, State Planning Board, Kerala.

1991-92 1992-93 1993-94 1994-95 1995-96 1996-97


Figure 5(v): Number of registered SSI units in Kerala during 1990-91 to 1997-98


-91 to 1997-97.


Sector in Kerala

over previous year

-

+ 21.91

+ 9.77

+ 10.72

+ 11.69

+ 10.21

+ 8.34

+ 8.37

+ 114.14 %

+ 11.49 %

of Economic Review, State Planning Board, Kerala.

97 1997-98

The table reveals that there is a continuous enhancement in the total number

of employment provided by the SSI sector of Ke


employment generated by SSI sector was 4,24,881 which increased to 9,09,859 in

1997-98 with an overall growth rate of 114.14% and compound a

of 11.49%. During the first phase of post globalisation period from 1990

1997-98, the annual growth rate is highest (21.91%) in the year 1991

lowest in the year 1996

The total number of employment provided by


following figure:

Figure 5.(vi): Number of employment provided by SSI sector in Kerala during

1990-91 to 1997

The figure shows a continuous

generated by SSI sector of Kerala during first phase of post globalisation period

from 1990-91 to 1997-98.

0

100000

200000

300000

400000

500000

600000

700000

800000

900000

1000000

1990-91 1991



of employment provided by the SSI sector of Kerala during the first phase of post



98 with an overall growth rate of 114.14% and compound annual growth rate

of 11.49%. During the first phase of post globalisation period from 1990

98, the annual growth rate is highest (21.91%) in the year 1991

lowest in the year 1996-97 (8.34%).

The total number of employment provided by SSIs during first phase of post


5.(vi): Number of employment provided by SSI sector in Kerala during

91 to 1997-98

The figure shows a continuous increase in the total number of employment


98.

1991-92 1992-93 1993-94 1994-95 1995-96 1996-97



rala during the first phase of post

91 the number of


nnual growth rate

of 11.49%. During the first phase of post globalisation period from 1990-91 to

98, the annual growth rate is highest (21.91%) in the year 1991-92 and is

SSIs during first phase of post

98 is depicted graphically in the

5.(vi): Number of employment provided by SSI sector in Kerala during

increase in the total number of employment


97 1997-98


5.8. Performance of SSI sector in Kerala during post globalisation

period from 1998-99 to 2005-06 (Second Phase)

The performance of SSI sector in Kerala during second phase of post

globalisation is analysed in the same way which has been used in pre-globalisation

period and first phase of post globalisation period. The variables used are number of

registered SSI units and the number of employment generated by the SSI sector.


The following table describes the total number of registered SSI units in

Kerala in each year of the second phase of post globalisation period from 1998-99 to

2005-06

Table No. 5.18: Number of registered SSI Units in Kerala during 1998-99 to

2005-06


1998-99 1,99,827 -

1999-00 2,19,833 + 10.01

2000-01 2,39,896 + 9.13

2001-02 2,58,010 + 7.55

2002-03 2,70,344 + 4.78

2003-04 2,75,649 + 1.96

2004-05 2,80,584 + 1.79

2005-06 2,86,210 + 2.01

Overall Growth Rate +43.23 %



The table describes that there is a continuous increase in the total number of

SSIs units registered in Kerala during the second phase of post globalisation period

from 1998-99 to 2005-06. In the year 1998-99 the total number of registered SSI

units was 1,99,827 which increased to 2,86,210 in 2005

rate of 43.23% and compound annual growth rate of 5.27%. During the second

phase of post globalisation period, the annual growth rate is highest (10.01%) in the

year 1999-00 and is lowest

The total number of registered SSI units during pre


Figure 5(vii): Number of registered units in Kerala during 1998

The figure shows that the total number of registered SSI units in Kerala is increasing

year after year during the period. But the growth rates in second half is less than that

of first half.


The total number of employment generated

second phase of post globalisation period is detailed in the following table:

0

50000

100000

150000

200000

250000

300000

1998-99 1999


99,827 which increased to 2,86,210 in 2005-06 with an overall growth



00 and is lowest (1.79%) in the year 2004-05.

The total number of registered SSI units during pre-globalisation period


Figure 5(vii): Number of registered units in Kerala during 1998






1999-00 2000-01 2001-02 2002-03 2003-04 2004-05


06 with an overall growth





Figure 5(vii): Number of registered units in Kerala during 1998-99 to 2005-06



by SSI sector of Kerala during


05 2005-06


Table No. 5.19: Number of employment provided by SSI sector in Kerala

during 1998-99 to 2005-06

Year No. of Employment % change over previous year

1998-99 9,81,491 -

1999-00 10,53,533 + 7.34

2000-01 11,14,495 + 5.79

2001-02 11,73,474 + 5.29

2002-03 12,15,532 + 3.58

2003-04 12,37,422 + 1.80

2004-05 12,60,007 + 1.83

2005-06 12,88,135 + 2.23




The table shows that there is a continuous enhancement in the total number

of employment provided by the SSI sector of Kerala during the second phase of post

globalisation period from 1998-99 to 2005-06. In the year 1998-99 the total number

of employment generated by SSI sector was 9,81,491 which increased to 12,88,135

in 2005-06 with an overall growth rate of 31.24% and compound annual growth rate

of 3.96%. During the second phase of post globalisation period from 1999-00 to

2005-06, the annual growth rate is highest (7.34%) in the year 1999-00 and is lowest

in the year 2003-04 (1.80%).

The total number of employment provided by SSIs during the second phase

of post globalisation period from 1998-99 to 2005-06 is depicted graphically in the

following figure:

Figure 5(viii): No. of employment provided by SSI sector of Kerala during

1998-99 to 2005

The figure shows that th

of Kerala during the second half is comparatively less than that during the second

half of the period.

5.9. Performance of


The performance of SSI sector in Kerala during third phase of post

globalisation is analysed in the same way that has been done in pre

period and first and second phases of post globalisation period. The two parameters

used here for analysis are number of registered SSI units and the number of

employment generated by the SSI/MSME sector in Kerala.


The total number of registered SSI/MSME units in Kerala during the third

phase of post globalisati

following table:

0

200000

400000

600000

800000

1000000

1200000

1400000

1998-99 1999


No. of employment provided by SSI sector of Kerala during

99 to 2005-06

The figure shows that the growth rate of employment potential of SSI sector


Performance of SSI/MSME Sector in Kerala

globalisation period from 2006-07 to 2013-14 (Third Phase)


globalisation is analysed in the same way that has been done in pre


sed here for analysis are number of registered SSI units and the number of

employment generated by the SSI/MSME sector in Kerala.



phase of post globalisation period from 2006-07 to 2013-14 is given in the

1999-00 2000-01 2001-02 2002-03 2003-04 2004-05


No. of employment provided by SSI sector of Kerala during

e growth rate of employment potential of SSI sector


during post

14 (Third Phase)


globalisation is analysed in the same way that has been done in pre-globalisation


sed here for analysis are number of registered SSI units and the number of


14 is given in the

05 2005-06


Table No. 5.20: Number of registered SSIs/MSMEs in Kerala during 2006-07

to 2013-14


2006-07 1,95,960 -

2007-08 2,88,869 + 47.41

2008-09 2,04,381* --29.25

2009-10 2,13,740 + 4.58

2010-11 1,94,908* -- 8.81

2011-12 2,05,987 + 5.68

2012-13 2,19,444 + 6.53

2013-14 2,34,441 + 6.83




*Total number of working SSIs/MSMEs in Kerala (not the total number of registered units)

The table shows that there is an increase in the total number of SSIs/MSMEs

in Kerala in each year (except 2008-09 and 2010-11) during the third phase of post


registered SSI units in Kerala was 1,95,960 which increased to 2,34,441 in 2013-14

with an overall growth of 19.64% and compound annual growth rate of 2.59%.

During the third phase of post globalisation period, the annual growth rate is highest

(47.41%) in the year 2007-08. The minus figure in growth rate (2008-09 and 2010-

11) is occurred as the effect of taking number of working SSI units instead of total

number of registered SSI units.

The total number of registered/working SSIs/MSMEs during the third phase


following figure:

Figure 5(ix): Number of registered/working SSI/MSME units in Kerala during

2006-07 to 2013

The figure shows that there is a very high growth in the total number

SSI units in Kerala in the first year of the phase. But there is a steep decline in the

very next year. This is not due to decline in the total registered units, but only an

effect of taking working number of units instead of total number of registered

units.


The number of employment provided by SSI/MSME sector of Kerala

during the third phase of post globalisation period is mentioned in the following

table:

0

50000

100000

150000

200000

250000

300000

2006-07 2007


5(ix): Number of registered/working SSI/MSME units in Kerala during

07 to 2013-14

The figure shows that there is a very high growth in the total number




Employment Generated



2007-08 2008-09 2009-10 2010-11 2011-12 2012-13


5(ix): Number of registered/working SSI/MSME units in Kerala during

The figure shows that there is a very high growth in the total number of






13 2013-14


Table No. 5.21: Number of employment generated by SSI/MSME sector in

Kerala during 2006-07 to 2013-14

Year No. of Employment % change over previous year

2006-07 12,91,209 -

2007-08 13,00,487 + 0.72

2008-09 13,48,598 + 3.70

2009-10 14,09,474 + 4.51

2010-11 14,94,352 + 6.02

2011-12 15,73,533 + 5.30

2012-13 16,55,497 + 5.21

2013-14 17,43,286 + 5.30

Overall Growth Rate +35.01



The table shows that there is a continuous enhancement in the total number

of employment provided by the SSI sector of Kerala during the second phase of post

globalisation period from 2006-07 to 2013-14. In the year 2006-07, the number of


2013-14 with an overall growth rate of 31.24% and compound annual growth rate of

3.96%. During the second phase of post globalisation period from 1999-00 to 2005-

06, the annual growth rate is highest (7.34%) in the year 1999-00 and is lowest in

the year 2003-04 (1.80%).

The total number of employment provided by SSIs/MSMEs during the

second phase of post globalisation period from 1998-99 to 2005-06 is depicted

graphically in the following figure:

Figure 5(x): Number of employment generated by SSI/MSME Sector in Kerala

during 2006

The figure shows that the number of employment generated by SSI/MSME sector of

Kerala is increased throughout the period from 2006

5.10. Comparison of

State during Pre

of Selected Variables

After analysing the performance of SSI/MSME sector in Kerala during pre

and post globalisation periods separatel

presented in following table

(a) On the basis of number of units:

The following table shows the performance of SSI/MSME sector in Kerala

on the basis of number of registered

globalisation period:

0

200000

400000

600000

800000

1000000

1200000

1400000

1600000

1800000

2006-07 2007



during 2006-07 to 2013-14


Kerala is increased throughout the period from 2006-07 to 2013-14.

.10. Comparison of Performance of SSI/MSME Sector in Kerala

during Pre and Post Globalisation Periods

Selected Variables


and post globalisation periods separately, on the basis of selected variables,

presented in following tables so as to facilitate comparison:

On the basis of number of units:


on the basis of number of registered SSI/MSME units during pre and post

2007-08 2008-09 2009-10 2010-11 2011-12 2012-13




14.

of SSI/MSME Sector in Kerala

Periods on the Basis


selected variables, they are


SSI/MSME units during pre and post

13 2013-14


Table No. 5.22: Comparison of Pre and Post Globalisation Performance of

SSI/MSMS Sector in Kerala on the Basis of Number of Units

Pre Globalisation Period


1982-83

to

1989-90


1990-91

to

1997-98

1998-99

to

2005-06

2006-07

to

2013-14

Year A G R Year A G R Year A G R Year A G R

82-83 - 90-91 - 98-99 - 06-07 -

83-84 +12.99 91-92 +14.80 99-00 +10.01 07-08 +47.41

84-85 +12.03 92-93 + 13.51 00-01 +9.13 08-09 --29.25

85-86 +12.27 93-94 +15.16 01-02 +7.55 09-10 +4.58

86-87 +14.07 94-95 +14.35 02-03 +4.78 10-11 --8.81

87-88 +16.98 95-96 +13.39 03-04 +1.96 11-12 +5.68

88-89 +17.45 96-97 +12.17 04-05 +1.79 12-13 +6.53

89-90 +14.92 97-98 +12.18 05-06 +2.01 13-14 +6.83

OGR + 155.98 OGR + 144.85 OGR + 43.23 OGR + 19.64

CAGR + 14.37 CAGR + 13.65 CAGR + 5.27 CAGR + 2.59

a) On the basis of number of employment generated


on the basis of number of employment provided during pre and post globalisation

period:


Table No. 5.23: Comparison of Pre and Post Globalisation Performance of SSI/

MSMS Sector in Kerala on the basis of Employment Generation

Pre Globalisation Period Post Globalisation Periods

1982-83

to

1989-90


1990-91 to

1997-98

1998-99 to

2005-06

2006-07 to

2013-14


82-83 - 90-91 - 98-99 - 06-07 -

83-84 +32.73 91-92 +21.91 99-00 +7.34 07-08 +0.72

84-85 +20.23 92-93 +9.77 00-01 +5.79 08-09 +3.70

85-86 +19.66 93-94 +10.72 01-02 +5.29 09-10 +4.51

86-87 +17.79 94-95 +11.69 02-03 +3.58 10-11 +6.02

87-88 +19.34 95-96 +10.21 03-04 +1.80 11-12 +5.30

88-89 +55.27 96-97 +8.34 04-05 +1.83 12-13 +5.21

89-90 +4.27 97-98 +8.37 05-06 +2.23 13-14 +5.30

OGR + 334.56 OGR + 114.14 OGR + 31.24 OGR + 35.01

CAGR + 23.35 CAGR + 11.49 CAGR + 3.96 CAGR + 4.38


based on selected parameters (number of registered units and number of

employment generated) during pre and post globalisation period in terms of CAGR:

Table No. 5.24: Comparison of performance of SSI/MSME sector in Kerala during

pre and post globalisation periods on the basis of selected parameters

Parameter





1982-83 to

1989-90

1990-91 to

1997-98

1998-99 to

2005-06

2006-07 to

2013-14

No. of Units + 14.37 % + 13.65 % + 5.27 % + 2.59 %

Employment provided + 23.35 % 11.49 % 3.96 % 4.38 %

The table shows that the CAGR in respect of number of units

during pre-globalisation period is 14.37%. During the first, second and third phases

of post globalisation, it declined to 13.65%, 5.27% and 2.59% respectively.

The CAGR in respect of number of employment provided was 23.35%

during the pre-globalisation period. But it has reduced to 11.49% and 3.96 %

respectively during the first and second phases of post globalisation era. However, it

shows a slight increase during the third phase of post globalisation.

The comparison of CAGR in respect of number

employment provided for the pre

globalisation period is depicted graphically in the following figure:

Figure 5(xi): Comparison of pre and post globalisation performance of SSI/

MSME

terms of CAGR.

The figure shows that the compound annual growth rate of both the selected

parameters during all the three phases of post globalisation period are less than that

during pre-globalisation period.

To conclude, the overall performance of SSI/MSME sector in K

post globalisation period is less than that during the pre

0

5

10

15

20

25

Pre-glob. Post


The table shows that the CAGR in respect of number of units

globalisation period is 14.37%. During the first, second and third phases



isation period. But it has reduced to 11.49% and 3.96 %


shows a slight increase during the third phase of post globalisation.

The comparison of CAGR in respect of number of units and number of

employment provided for the pre-globalisation period and three phases of post

globalisation period is depicted graphically in the following figure:

Comparison of pre and post globalisation performance of SSI/

MSME sector in Kerala on the basis of selected parameters in

terms of CAGR.



globalisation period.

To conclude, the overall performance of SSI/MSME sector in K

post globalisation period is less than that during the pre-globalisation period.

Post-glob.I Post-glob.II Post-glob.III

Number of units

number of employment


The table shows that the CAGR in respect of number of units in Kerala

globalisation period is 14.37%. During the first, second and third phases



isation period. But it has reduced to 11.49% and 3.96 %


of units and number of

globalisation period and three phases of post

Comparison of pre and post globalisation performance of SSI/

sector in Kerala on the basis of selected parameters in



To conclude, the overall performance of SSI/MSME sector in Kerala during


Number of units

number of employment


III. ANALYSIS OF PERFORMANCE OF SSI/MSME SECTOR IN

KOZHIKODE DISTRICT

Even though there are quality infrastructure, qualified manpower, materials,

good climate, etc., the district of Kozhikode remains industrially backward as

compared to Ernakulam, Thiruvananthapuram, Thrissur, Palakkad, etc. However,

nearly 6,000 MSMEs have filed Entrepreneurship Memorandum part II as per

MSME Act. This section deals with analysis of performance of SSI/MSME sector in

Kozhikode district during pre and post globalisation periods on the basis of two

important parameters, namely; (1) number of registered units and (2) number of

employment generated.

5.11. Performance of SSI Sector in Kozhikode District during Pre-

Globalisation Period from 1982-83 to 1989-90


The total number of registered SSI/MSME units in Kozhikode district during

pre globalisation period from 1982-83 to 1989-90 is detailed in the following table:

Table No. 5.25: Number of Registered SSI Units in Kozhikode District During

1982-83 to 1989-90

Year No. of units registered

during the year % change over previous year

Total No. units as on 31st March

% change over previous year

1982-83 254 -- 2,241 --

1983-84 266 + 4.72 2,507 + 11.87

1984-85 249 -- 6.39 2,756 + 9.93

1985-86 375 + 66.27 3,131 + 13.61

1986-87 392 +4.53 3,523 + 12.52

1987-88 455 +16.07 3,978 + 12.92

1988-89 674 +48.13 4,652 + 16.94

1989-90 970 +43.92 5,622 + 20.85

Overall Growth Rate for the period from 1982-83 to 1989-90 + 150.87 %

CAGR for the period from 1982-83 to 1989-90 (CAGR) + 14.04 %


The table shows that

registered SSI/MSME units in Kozhikode district during pre globalisation period

from 1982-83 to 1989-90. In the year 1982

Kozhikode district was 2,241 which inc

growth of 150.87% and a compound annual growth rate of 14.04%. During the

period, the annual growth rate is highest (20.85%) in the years 1989

lowest (9.93%) in the year 1984

The total number of


Figure 5(xii): Total Number of Registered Units in Kozhikode during 1982

to 1989-

The figure shows an upward movement in the

units in Kozhikode district during


The number of employment generated in each year and the total number of

employment provided

period is given in the following table:

0

1000

2000

3000

4000

5000

6000

1982-83 1983


The table shows that there is a continuous increase in the total number of


90. In the year 1982-83 the number of registered SSI units in

Kozhikode district was 2,241 which increased to 5,622 in 1989-90 with an overall


period, the annual growth rate is highest (20.85%) in the years 1989

lowest (9.93%) in the year 1984-85.

The total number of registered SSIs/MSMEs during pre-globalisation period


5(xii): Total Number of Registered Units in Kozhikode during 1982

-90

The figure shows an upward movement in the total number of registered SSI

units in Kozhikode district during pre globalisation period from 1982

Generated


employment provided by SSI sector in Kozhikode district during pre

period is given in the following table:

1983-84 1984-85 1985-86 1986-87 1987-88 1988-89


there is a continuous increase in the total number of


83 the number of registered SSI units in

90 with an overall


period, the annual growth rate is highest (20.85%) in the years 1989-90 and it was



5(xii): Total Number of Registered Units in Kozhikode during 1982-83

number of registered SSI

from 1982-83 to 1989-90.


in Kozhikode district during pre-globalisation

1989-90


Table No. 5.26: Number of Employment Provided by SSI Sector in Kozhikode

District during 1982-83 to 1989-90

Year No. of Employment




1982-83 1,187 -- 9,076 --

1983-84 1,474 +24.18 10,550 +16.24

1984-85 2,409 +63.43 12,959 +22.83

1985-86 2,304 --4.36 15,263 +17.78

1986-87 2,352 +2.08 17,615 +15.41

1987-88 2,275 --3.27 19,890 +12.92

1988-89 3,370 +48.13 30,750 +54.60

1989-90 3,641 +8.04 34,391 +11.84




The table shows that the total number of employment in Kozhikode district

is increased year after year during the pre-globalisation period of 1982-83 to 1989-

90. In the year 1982-83, 1,187 new employment opportunities are created and the

total number of employment became 9,076. By the end of the pre-globalisation

period, the total number of employment became 34,391 with an overall growth rate

of 278.92% and a Compound Annual Growth Rate of 20.96%. The annual growth

rate in total number of employment is highest (54.6%) in the year 1988-89 and it is


The total number of employment generated by SSI sector in Kozhikode

district during pre-globalisation period from 1982-83 to 1989-90 is depicted


Figure 5(xiii): Number

during 1982

The figure describes, though the total number of employment is increased

throughout the pre-globalisation period from 1982

too high in the year 1988

5.12. Performance of

Globalisation Period


The total number of registered SSI units in Kozhikode district during

phase of post globalisation period from 19

following table:

0

5000

10000

15000

20000

25000

30000

35000

1982-83 1983


Number of Employment Provided by SSI Sector in Kozhikode

during 1982-83 to 1989-90


globalisation period from 1982-83 to 1989-90, the growth rate is

in the year 1988-89.

Performance of SSI sector in Kozhikode District

Globalisation Period from 1990-91 to 1997-98 (First Phase)


The total number of registered SSI units in Kozhikode district during

globalisation period from 1990-91 to 1997-98 is detailed in the

1983-84 1984-85 1985-86 1986-87 1987-88 1988-89


of Employment Provided by SSI Sector in Kozhikode


90, the growth rate is

during Post-

(First Phase)

The total number of registered SSI units in Kozhikode district during first

is detailed in the

89 1989-90


Table No. 5.27: No. of Registered SSI Units in Kozhikode District during

1990-91 to 1997-98

Year No. of units

registered during the year




1990-91 604 --62.27 6,226 +10.74

1991-92 620 + 2.65 6,846 +9.96

1992-93 651 + 5.00 7,497 +9.51

1993-94 733 + 12.60 8,230 +9.78

1994-95 1,221 + 66.58 9,451 +14.84

1995-96 1,136 --6.96 10,587 +12.02

1996-97 1,275 + 12.24 11,862 +12.04

1997-98 1,550 + 21.57 13,412 +13.07





registered SSI/MSME units in Kozhikode district during first phase of post


registered SSI units in Kozhikode district was 6,226 which increased to 13,412 in

1990-91 with an overall growth of 115.42% and a compound annual growth rate of

11.59%. The annual growth rate is highest (14.84%) in the years 1994-95 and it is


The total number of registered SSIs/MSMEs during first phase of post


following figure:

Figure 5(xiv): Number of Registered Units in

to 1997

The graph shows a continuous increase in the total number of employment during

the first phase of post globalisation period from 1990



employment provided by SSI sector

globalisation period is given in the following table:


District

Year No. of units Registered

During the Year

1990-91 2,398

1991-92 2,312

1992-93 2,277

1993-94 3,199

1994-95 7,429

1995-96 5,136

1996-97 4,204

1997-98 3,855

Overall Growth Rate for the

CAGR for the period from 1990

Source: Compiled from Various Issues of Economic Review,

0

2000

4000

6000

8000

10000

12000

14000

1990-91 1991


5(xiv): Number of Registered Units in Kozhikode District During 1990

to 1997-98

shows a continuous increase in the total number of employment during

the first phase of post globalisation period from 1990-91 to 1997-98.

Generated


by SSI sector in Kozhikode district during first phase of post


Number of Employment Provided by SSI Sector


Registered Year

% Change Over Previous Year

Total No. Units as on 31st March

--34.14 36,789

--3.59 39,101

--1.51 41,378

+40.49 44,577

+132.23 52,006

--30.87 57,142

--18.15 61,346

--8.30 65,201

Overall Growth Rate for the period from 1990-91 to 1997-98

CAGR for the period from 1990-91 to 1997-98 (CAGR)

Compiled from Various Issues of Economic Review, State Planning Board, Kerala

1991-92 1992-93 1993-94 1994-95 1995-96 1996-97


Kozhikode District During 1990-9

shows a continuous increase in the total number of employment during

98.


first phase of post

Sector in Kozhikode

% Change Over Previous Year

--6.97

+6.28

+5.82

+7.73

+16.67

+9.88

+7.36

+6.28

+ 77.23 %

+ 8.52 %

State Planning Board, Kerala

97 1997-98


is increased year after year during the first phase of post globalisation period from

1990-91 to 1997-98. In the year 1990

were created and the total number of em

first phase of post globalisation period, the total number of employment became

65,201 with an overall growth rate of 77.23% and a Compound Annual Growth

Rate of 8.52%. The annual growth rate in total number of emp

(16.67%) in the year 1994


district during first phase of post globalisation period from 1990

depicted graphically in the following figure:

Figure 5(xv): Number of Employment Provided by SSI Sector in Kozhikode

District during 1990

The figure shows an upward movement

by SSI sector in Kozhikode distr

from 1990-91 to 1997-98.

0

10000

20000

30000

40000

50000

60000

70000

1990-91 1991


The table shows that the total number of employment in Kozhikode district


98. In the year 1990-91, 2,398 new employment opportunities

were created and the total number of employment became 36,789. By the end of the



Rate of 8.52%. The annual growth rate in total number of employment is highest

(16.67%) in the year 1994-95 and it is lowest (5.82%) in the year 1993


district during first phase of post globalisation period from 1990-91 to 1997




The figure shows an upward movement in the total number of employment provided

by SSI sector in Kozhikode district during first phase of post globalisation period

98.

1991-92 1992-93 1993-94 1994-95 1995-96 1996-97


the total number of employment in Kozhikode district


91, 2,398 new employment opportunities

ployment became 36,789. By the end of the



loyment is highest

95 and it is lowest (5.82%) in the year 1993-94.


91 to 1997-98 is


in the total number of employment provided

during first phase of post globalisation period

97 1997-98


5.13. Performance of SSI Sector in Kozhikode District during Post-

Globalisation Period from 1998-99 to 2005-06 (Second Phase)



second phase of post globalisation period from 1998-99 to 2005-06 is detailed in the

following table:

Table No. 5.29: No. of Registered SSI Units in Kozhikode District during

1998-99 to 2005-06


during the year


Total No. units as on 31st

March

% change over previous

year

1998-99 1,510 --2.58 14,922 +11.26

1999-00 1,516 +0.40 16,438 +10.16

2000-01 1,390 --8.31 17,828 +8.46

2001-02 1,159 --16.62 18,987 +6.50

2002-03 908 --21.66 19,895 +4.78

2003-04 477 --47.47 20,372 +2.40

2004-05 448 --6.08 20,820 +2.20

2005-06 272 --39.29 21,092 +1.31

Overall Growth Rate for the period from 1998-99 to 2005-06 + 41.35




registered SSI/MSME units in Kozhikode district during second phase of post


registered SSI units in Kozhikode district was 14,922 which increased to 21,092 in


5.07%. The annual growth rate is highest (11.26%) in the year 1998

lowest (1.31%) in the year 2005

The total number of reg

phase of post globalisation period from 1998

in the following figure:

Figure 5(xvi): Number of Registered Units in Kozhikode District During 1998

99 to 2005

The figure shows that the increase in total number of employment is too small

during the ending years of the

1998-99 to 2005-06.

(b) Employment Potential


employment provided

post globalisation period is given in the following table:

0

5000

10000

15000

20000

25000

1998-99 1999


5.07%. The annual growth rate is highest (11.26%) in the year 1998


The total number of registered SSI units in Kozhikode district during second

phase of post globalisation period from 1998-99 to 2005-06 is depicted graphically

in the following figure:

5(xvi): Number of Registered Units in Kozhikode District During 1998

99 to 2005-06

that the increase in total number of employment is too small

during the ending years of the second phase of the post globalisation period from

Employment Potential


employment provided by SSI sector in Kozhikode district during


1999-00 2000-01 2001-02 2002-03 2003-04 2004-05


5.07%. The annual growth rate is highest (11.26%) in the year 1998-99 and it is

istered SSI units in Kozhikode district during second

06 is depicted graphically

5(xvi): Number of Registered Units in Kozhikode District During 1998-

that the increase in total number of employment is too small

second phase of the post globalisation period from


in Kozhikode district during second phase of

05 2005-06


Table No. 5.30: Number of Employment Provided by SSI Units in Kozhikode


Year No. of employment provided during the

year


year

Total No. of employment provided

as on 31st March


year

1998-99 3,389 --12.09 68,590 +5.20

1999-00 4,243 +25.20 72,833 +6.19

2000-01 5,350 +26.09 78,183 +7.35

2001-02 2,840 --46.92 81,023 +3.63

2002-03 2,671 --5.95 83,694 +3.30

2003-04 1,799 --32.65 85,493 +2.15

2004-05 1,673 --7.00 87,166 +1.96

2005-06 986 --41.06 88,152 +1.13




The table shows that the growth rate in the total number of units during

second phase of globalisation period is too low during the ending years. In the year

1998-99, 3,389 number of new employment opportunities were created and the

total number of employment became 68,590. By the end of the second phase of post

globalisation period, the total number of employment became 88,152 with an

overall growth rate of 28.52% and a Compound Annual Growth Rate of 3.65%. The

annual growth rate in total number of employment is highest (7.35%) in the year

2000-01 and it is lowest (1.13%) in the year 2005-06.


district during second phase of post globalisation period from 1998-99 to 2005-06 is


Figure 5(xvii): Number of Employment Provided by SSI sector in Kozhikode

District during 1998

The figure describes that the total number of employment is increased every year,

but the annual growth in the employment potential

5.14. Performance of

during Post-

(Third Phase)



third phase of post globalisation period from

following table:

0

10000

20000

30000

40000

50000

60000

70000

80000

90000

1998-99 1999





but the annual growth in the employment potential is only nominal.

Performance of SSI/MSME Sector in Kozhikode District

-globalisation Period from 2006-07

(Third Phase)



globalisation period from 2006-07 to 2013-14

1999-00 2000-01 2001-02 2002-03 2003-04 2004-05




Kozhikode District

07 to 2013-14


14 is given in the

05 2005-06


Table No. 5.31: Number of registered SSI Units in Kozhikode District during

2006-07 to 2013-14

Year No. of units

registered during the year


year

Total No. working units as on 31st

March


year

2006-07 230 --15.44 15,620 --25.94

2007-08 380 +65.22 16,000 +2.43

2008-09 406 +6.84 16,406 +2.54

2009-10 602 +48.28 17,008 +3.67

2010-11 941 +56.31 17,949 +5.53

2011-12 818 --13.07 18,767 +4.56

2012-13 1041 +27.26 19,808 +5.55

2013-14 925 --11.14 20,733 +4.67




The table describes that there is a continuous increase in the total number of

registered SSI/MSME units in Kozhikode district during third phase of post

globalisation period from 2006-07 to 2013-14. In the year 2006-07, the number of

working SSI units in Kozhikode district was 15,620 which increased to 20,733 in


4.13%. The annual growth rate is highest (5.55%) in the year 2012-03 and it is


The total number of SSIs/MSMEs in Kozhikode district during third phase


following figure:

Figure 5(xviii): Number of units in Kozhikode District during 2006

The figure shows an upward movement in the number of SSIs/MSMEs in

Kozhikode district during the third phase of the post globalisation period from 2006

07 to 2013-14.

(b) Number of Employment


employment provided by SSI sector



District


during the year

2006-07 1,106

2007-08 2,701

2008-09 2,243

2009-10 2,395

2010-11 6,551

2011-12 5,082

2012-13 6,790

2013-14 6,092

Overall Growth Rate for

CAGR for the period from 2006

Source: Compiled from Various Issues of Economic Review,

0

5000

10000

15000

20000

25000

2006-07 2007


Figure 5(xviii): Number of units in Kozhikode District during 2006


Kozhikode district during the third phase of the post globalisation period from 2006

Number of Employment


by SSI sector in Kozhikode district during third phase of post


Number of Employment Provided by SSI Units in Kozhikode


No. of units registered during the year



+12.17 89,258

+144.21 91,959

--16.96 94,202

+6.78 96,597

+173.53 1,03,148

+77.58 1,08,230

33.61 1,15,020

--10.28 1,21,112

Overall Growth Rate for the period from 2006-07 to 2013-14

CAGR for the period from 2006-07 to 2013-14 (CAGR)

Compiled from Various Issues of Economic Review, State Planning Board, Kerala

2007-08 2008-09 2009-10 2010-11 2011-12 2012-13


Figure 5(xviii): Number of units in Kozhikode District during 2006-07 to 2013-14


Kozhikode district during the third phase of the post globalisation period from 2006-


third phase of post

Units in Kozhikode


+1.25

+3.03

+2.44

+2.54

+6.78

+4.93

+6.27

+5.30

+ 35.69 %

+ 4.46 %

State Planning Board, Kerala

13 2013-14


SSIs/MEMEs is increased every year during the third phase of post globalisation

from 2006-07 to 2013

opportunities were created and the total number of employment bec

the end of the third phase of post globalisation period, the total number of

employment became 1,21,112 with an overall growth rate of 35.69% and a

Compound Annual Growth Rate of 4.46%. The annual growth rate in total number

of employment was highest (6.78%) in the year 2010

in the year 2006-07.


district during third phase of post globalisation period from 2006


Figure 5(xix): Number of employment provided by SSI/MSME sector in

Kozhikode district during 2006

The figure shows an upward

by SSI/MSME sector in Kozhikode district during the third phase of post


0

20000

40000

60000

80000

100000

120000

140000

2006-07 2007


The table shows that the total number of employment provided by


07 to 2013-14. In the year 2006-07, 1,106 new employment

opportunities were created and the total number of employment bec




s highest (6.78%) in the year 2010-11 and it was lowest (1.25%)


district during third phase of post globalisation period from 2006-07 to 2013

ly in the following figure:


Kozhikode district during 2006-07 to 2013-14

upward movement in the total number of employment provided


globalisation period from 2006-07 to 2013-14.

2007-08 2008-09 2009-10 2010-11 2011-12 2012-13


the total number of employment provided by


07, 1,106 new employment

opportunities were created and the total number of employment became 89,258. By




11 and it was lowest (1.25%)


07 to 2013-14 is


movement in the total number of employment provided


13 2013-14


5.15. Comparison of Performance of SSI/MSME Sector in

Kozhikode District during Pre and Post Globalisation Periods

on the Basis of Number of Units

A Comparison of performance of SSI/MSME Sector in Kozhikode District

during pre and post liberalisation periods on the basis of number of units is given in

the following table:

Table No. 5.33: Comparison of performance of SSI/MSME Sector in

Kozhikode District during pre and post globalisation periods

on the basis of number of units

Pre Globalisation Period


1982-83

to

1989-90


1990-91 to

1997-98

1998-99 to

2005-06

2006-07 to

2013-14


1982-83 -- 1990-91 +10.74 1998-99 +11.26 2006-07 --25.94

1983-84 +11.87 1991-92 +9.96 1999-00 +10.16 2007-08 +2.43

1984-85 +9.93 1992-93 +9.51 2000-01 +8.46 2008-09 +2.54

1985-86 +13.61 1993-94 +9.78 2001-02 +6.50 2009-10 +3.67

1986-87 +12.52 1994-95 +14.84 2002-03 +4.78 2010-11 +5.53

1987-88 +12.92 1995-96 +12.02 2003-04 +2.40 2011-12 +4.56

1988-89 +16.94 1996-97 +12.04 2004-05 +2.20 2012-13 +5.55

1989-90 +20.85 1997-98 +13.07 2005-06 +1.31 2013-14 +4.67

OGR +150.87 OGR +115.42 OGR +41.35 OGR +32.73

CAGR 14.04 CAGR 11.59 CAGR +5.07 CAGR +4.13

OGR = Overall Growth Rate, CAGR = Compound Annual Growth Rate

The table shows that the overall growth rate in number of registered units in

Kozhikode District during pre globalisation was 150.87%, which reduced to

115.42% during the first phase of post globalisation period. Overall growth rate in

respect of number of registered units again decreased to 41.35 % during the second


phase and became 32.73% during the third phase of post globalisation period. The

table further reveals that the CAGR in respect of number of units are declining

throughout the post globalisation period. So, we may conclude that globalisation has

a great negative impact on the SSI/MSME sector in Kozhikode district.

5.16. Comparison of performance of SSI/MSME Sector in

Kozhikode District State during pre and post globalisation

periods on the basis of number of employment generation

A Comparison of performance of SSI/MSME Sector in Kozhikode District

during pre and post liberalisation periods on the basis of number of employment

potential is given in the following table:

Table No. 5.34: Comparison of performance of SSI/MSME Sector in Kozhikode

District during pre and post globalisation periods on the basis

of number of employment generated

Pre Globalisation Period Post Globalisation Periods

1982-83

to

1989-90


1990-91

to

1997-98

1998-99

to

2005-06

2006-07

to

2013-14


1982-83 -- 1990-91 +6.97 1998-99 +5.20 2006-07 +1.25

1983-84 +16.24 1991-92 +6.28 1999-00 +6.19 2007-08 +3.03

1984-85 +22.83 1992-93 +5.82 2000-01 +7.35 2008-09 +2.44

1985-86 +17.78 1993-94 +7.73 2001-02 +3.63 2009-10 +2.54

1986-87 +15.41 1994-95 +16.67 2002-03 +3.30 2010-11 +6.78

1987-88 +12.92 1995-96 +9.88 2003-04 +2.15 2011-12 +4.93

1988-89 +54.60 1996-97 +7.36 2004-05 +1.96 2012-13 +6.27

1989-90 +11.84 1997-98 +6.28 2005-06 +1.13 2013-14 +5.30

OGR +278.92 OGR +77.23 OGR +28.52 OGR +35.69

CAGR +20.96 CAGR +8.52 CAGR +3.65 CAGR +4.46


The table shows that the overall growth rate in the employment potential of

SSI/MSME sector in Kozhikode District during pre globalisation was 278.92%,

which decreased to 77.23% during the first phase of post globalisation period.

Overall growth rate in respect of employment potential further decreased to 28.52%

during the second phase of post globalisation. It showed a slight increase during the

third phase and thus it became 32.73% at the end of the period. It is also seen from

the table that the CAGR in respect of employment potential are also declining

throughout the post globalisation period, except during the third phase. During the

third phase of post globalisation, both the CAGR and overall growth rate showed a

slight increase. They are increased to 35.69% &and 4.46% respectively.

5.17. Comparison of performance of SSI/MSME sector in

Kozhikode District during pre and post globalisation periods

based on selected parameters

A comparison of compound annual growth rates in number of registered

units and number of employment of SSI/MSME sector in Kozhikode district during

pre and post globalisation periods is given in the following table:

Table No. 5.35: Comparison of Growth Rates in Respect of Selected Parameters

of SSI/MSME Sector during Pre and Post Globalisation Periods

Parameter





1982-83 to

1989-90

1990-91 to

1997-98

1998-99 to

2005-06

2006-07 to

2013-14

No. of Units + 14.04 % + 11.59 % + 5.07 % + 4.13 %

Employment provided + 20.96 % + 8.52 % + 3.65 % + 4.46 %

The comparison of performance of SSI/MSME sector in Kozhikode district on the

basis of CAGR in respect of number of units and number of employment provided

during pre globalisation p


Figure 5(xx): Comparison of

SSI/MSME sector in Kozhikode District

parameters in terms of

The figure shows that the compound annual growth rates in respect of both the

parameters are decreasing during all the three phases of post globalisation period

except the number of employment during the third phase of post globalisation which

shows a slight increase. The performance of SSI/MSME sector in Kozhikode

District is almost same as that of Kerala state.

5.18. Comparison of the performance of SSI/MSME sector in Kerala

and Kozhikode District during pre and post globalisation

periods

Following table shows a comparison of performance of SSI/MSME sector in

Kerala state and Kozhikode district

pre and post globalisation periods

0

5

10

15

20

25

1982-83 to 1989-90

19901997


during pre globalisation period and three phases of post globalisation period


Comparison of pre and post globalisation performance

SSI/MSME sector in Kozhikode District on the basis of selected

parameters in terms of CAGR





District is almost same as that of Kerala state.

Comparison of the performance of SSI/MSME sector in Kerala



Kerala state and Kozhikode district on the basis of the selected parameters during

pre and post globalisation periods in terms of CAGR:

1990-91 to 1997-98

1998-99 to 2005-06

2006-07 to 2013-14

Number of registered units

Number of employment provided


riod and three phases of post globalisation period is

pre and post globalisation performance of

on the basis of selected





Comparison of the performance of SSI/MSME sector in Kerala



of the selected parameters during

Number of registered units

Number of employment provided


Table No. 5.36: Comparison of performance of SSI/MSME sector in Kerala


periods in terms of CAGR

Parameter Area Covered

(Kozhikode/ Kerala)





1982-83 to

1989-90

1990-91 to

1997-98

1998-99 to

2005-06

2006-07 to

2013-14

Number of Units

Kozhikode 14.04 % 11.59 % 5.07% 4.13 %

Kerala 14.37 % 13.65 % 5.27 % 2.59 %

Number of employment

Kozhikode 20.96 % 8.52 % 3.65 % 4.46 %

Kerala 23.35 % 11.49 % 3.96 % 4.38 %

The table shows that there is significant difference in the performance of

SSI/MSME sector in Kerala and Kozhikode district during pre and post

globalisation periods. The compound annual growth rate in respect of number of

units and number of employment opportunities during all the three phases of post

globalisation period are too less than those during the pre globalisation period.


Kerala state and Kozhikode district on the basis of the selected parameters during

pre and post globalisation periods in terms of OGR:

Table No. 5.37: Comparison of Performance of SSI/MSME Sector in Kerala

and Kozhikode District During Pre and Post Globalisation

Periods in Terms of OGR

Parameter

Area Covered

(Kozhikode/ Kerala)

Overall Growth Rate (OGR)




1982-83 to

1989-90

1990-91 to

1997-98

1998-99 to

2005-06

2006-07 to

2013-14

Number of Units Kozhikode 150.87 % 115.42 % 41.35 % 32.73 %

Kerala 155.98 % 144.85 % 43.23 % 19.64 %

Number of employment

Kozhikode 278.92 % 77.23 % 28.52 % 35.69 %

Kerala 334.56 % 114.14 % 31.24 % 35.01 %


The table shows that there is significant difference in the performance of

SSI/MSME sector in Kerala and Kozhikode district during pre and post

globalisation periods. The overall growth rate in respect of number of units and

number of employment opportunities during all the three phases of post

globalisation period are too less than those during the pre globalisation period. It is

seen that, during third phase there is a slight increase in overall growth rate of

employment over that during second phase of post globalisation period.

Chapter 6

FINDINGS, SUGGESTIONS AND CONCLUSION

6.1. Findings

The study has been undertaken to examine the impact of globalisation on

MSMEs/SSIs in Kerala. The comparative analysis of compound annual growth rates

in respect of number of SSIs/MSMEs and employment generation during pre and

post globalisation periods show that the globalisation had a negative impact on the

MSME/SSI sector in Kerala. The fall in growth rate of number of units and

employment generation in all the three phases of post globalisation period is a

matter of serious discussions for policy-makers, administrators and planners.

The major findings of the study are:

The Compound Annual Growth Rate of number of MSME/SSI units in

Kozhikode District during pre-globalisation period from 1982-83 to 1989-90

was 14.04%. The rate has been declined during all the three phases of post

globalisation period. During the first phase it became 11.59 %. This has been

further declined to 5.07% and 4.13 % during second and third phases

respectively. The CAGR in respect of MSME/SSI units in Kerala State was

14.37% during pre-globalisation period. This declined to 13.65%, 5.07% and

4.13 % during first, second and third phases of post globalisation respectively.

The Overall Growth Rate (OGR) of number of MSME/SSI units in

Kozhikode District shows continuous decline during all the three phases of

post globalisation period. During pre –globalisation period from 1982-83 to

1989-90, it was 150.87%. It has been declined to 115.42%, 41.35% and

32.73% respectively during the first, second and third phase of post

globalisation period. For the whole Kerala, the OGR was 155.98% during


pre-globalisation period; and it was declined to 144.855, 43.235 and 19.64%

respectively during the three phases of post globalisation period.

The performance of MSME/SSI sector in respect of employment generation

also shows the negative impact of globalisation. The CAGR of employment

generation in Kozhikode district was 20.96% during pre-globalisation

period. During the first phase of post globalisation, it became 8.52%. This

was again declined to 3.65% and 4.46% respectively during the second and

third phases of post globalisation. For the Kerala State, the CAGR of

employment generation was 23.35% during pre-globalisation period; and

then declined to 11.49%, 3.96% and 4.38% respectively during the three

phases of the post globalisation period.

The OGR in respect of employment generation in Kozhikode district has

also declined continuously during the three phases of post globalisation

period. During pre-globalisation period, the OGR of employment creation

was 278.92%. Then, it has been declined as 77.23%, 28.52% and 35.69%

during the three phases of post globalisation respectively. The OGR for

Kerala state was 334.56% during the pre globalisation period. Then it

declined to 114.14%, 31.24% and 35.01% respectively during the three

phases of post globalisation period.

The overall performance of MSME/SSI sector in Kerala, in terms of number

of units and employment generation, during all the three phases of post

globalisation period are too poor than those during the pre-globalisation era.

Of the total 7,177 number of working MSMEs/SSIs in Kozhikode district,

4841 units (67.45%) are situated in Kozhikode taluk. The number of units in

Koyilandy and Vatakara taluks are 1222 (17.03%) and 1114 (15.52%)

respectively.

Of the total number of employment generated by MSME sector in Kozhikode

district, 71.41% is generated by MSMEs in Kozhikode taluk. The contribution

of Koyilandy and Vatakara taluks are only 14.24% and 14.35% respectively.


Of the total investment in MSME sector of Kozhikode district, 75.7% are in

Kozhikode taluk, 11.97% are in Koyilandy taluk and 12.33% are in Vatakara

taluk.

Of the total MSME units in Kozhikode district, 95.49% (6853 Nos.) are

micro units, 4.47% (321 Nos.) are small units and only 0.04% (3 Nos.) is

medium enterprises.

In Kozhikode district, 89.05% of the total MSMEs are manufacturing

enterprises (6391 Nos.) and remaining 10.95% are service enterprises (786

Nos.).

Of the total number of MSMEs in Kozhikode district, 6047 units (84.26%)

are run by male and 1130 units (15.74%) are owned by female.

Out of the total investment in MSMEs in Kozhikode district, Rs: 53152.78

lakhs (91.18%) are invested in the units run by male and Rs: 5140.72 lakhs

(8.82%) are invested in units run by females.

Majority of MSMEs in Kozhikode District are falling under agro and food

industries sector (18.98%). Wood based furniture industries (15.7%) and

General engineering industries (9.39%) hold the second and third places

respectively.

The strength of MSME sector in Kozhikode district includes availability of

good infrastructure; availability of agricultural and natural resources; very

good tradition in industry, trade and commerce; presence of unemployed

educated youth; presence of technical and high end institutions; people

having entrepreneurial culture; good climate; availability of banking

facilities; potential of NRIs; availability of industrial estates, industrial

parks, mini industrial estates, etc.; good market prospects for all consumer

goods; availability of skilled labour at comparatively low cost; and keen

interest of LSGDs for the promotion of MSMEs.

The important weaknesses of MSME sector in Kozhikode district are absence

of large scale industries; non availability of land at reasonable rates; scattered


input resources; inadequate work culture; seasonal availability of input

resources; non availability of highly skilled labour; irregular power supply;

high density of population, inadequate availability of technical consultants.

The important opportunities available to MSME sector in Kozhikode district

are investment climate; growth in tourism sector; global market due to

liberalisation, privatisation and globalisation; and reduction in Gulf

opportunities.

The major threats of MSME sector in Kozhikode district are lack of

standardisation of products; competition from outside state and outside the

country; lack of technology training facilities; lack of co-ordination between

line departments and financial institutions; lack of confidence among

entrepreneurs; lack of professional managers and project consultants; high

cost of land; lack of awareness about industrial opportunities and

technology; inability to achieve technical standards and scale; and lack of

entrepreneurship training facilities.

To conclude, both the parameters show the negative impact of globalisation

on Kerala’s MSME/SSI sector. The growth rates during all the three phases of post

globalisation are very low when comparing with the growth rates during pre-


6.2. Suggestions

For removal of the negative impact of globalisation and for overall

promotion of MSME sector in Kerala, following measures are suggested:

Consumer awareness camps may be organised in rural and semi urban areas

of Kerala for familiarising the products of MSME sector.

More number of MSME units may be promoted among weaker sections like

women, Scheduled Caste, Scheduled Tribe, minorities, backward castes, etc.

in order to streamline the society.


Entrepreneurship Development Clubs may be established in Schools,

Colleges and other educational institutions to spread the message on

entrepreneurship among young blood.

Measures may be taken to reopen sick/closed units by adding partners or by

changing management or by diversification of activities, or through

modernisation, or through bank support.

District level exhibition cum trade fair may be conducted at regular intervals.

Financial support to entrepreneurs may be granted through Entrepreneurs’

Support Scheme (ESS) and Prime Minister’s Employment Generation

Programme (PMEGP).

To improve the performance of their distribute system the MSME units may

be entered into tie-ups with the organised retail stores.

The information dissemination system may be strengthened so as to

propagate the benefits of various schemes and incentives of DIC and other

departments playing in the field of MSME sector, self employment sector

and in entrepreneurship sector to the entrepreneurs and public and thereby

attract them towards MSME sector.

Measures may be taken to make access to all entrepreneurs to avail the

eligible grants, subsidies and other services of the DIC, other state and

central departments and agencies and institutions playing in the field of

MSME sector.

Measures may be taken to join the hands of all MSMEs in Kerala with

national and international MSMEs.

Proper human management techniques may be implemented By MSMEs to

acquire, train, motivate and retain the employees.

The MSME units in Kerala should acquire knowledge about taxation and

regulatory measures by way of training. They should use budgetary control

system for financial planning.


6.3. Conclusion

Micro, Small Medium sector in India finds itself in an extremely competitive

environment since 1991, due to globalization and economic liberalization policies of

the government. Therefore, the growth of the sector in terms of number of units and

employment generation has come down. Consequently, its contribution to national

income has become less remarkable. But at the same time, national and international

policy changes have thrown new opportunities to Indian MSME sector. Concerted

efforts of government departments and MSME sector itself are needed to exploit all

these opportunities. The crucial role of technological up-gradation, in-house

technological innovations and inter-firm linkages should be emphasised consciously

in the light of dimensions of global competition and its negative fallouts as well as

positive opportunities. Measures should be taken for making the entrepreneurs

aware in this respect through seminars and workshops at local level. No doubt, the

joint efforts of all the various agencies in the field of MSME sector can make the

sector as one bringing sustainable contribution to national income, employment and

exports.

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