“ENGINES FOR GROWTH & EMPLOYMENT”

PRESENTED BY :-Prakash Sharma

PGDM/ MBA, 2nd Sem.IMM, New Delhi

DEFINITION OF SMALL INDUSTRIES

Year 1950

Size of Gross Investment in fixed assets in plant and

machinery, land, building etc. (not exceeding Rs. 5 lakhs and

strength of workforce (employment less than 50 workers / day

using power or less than 100 workers / day without use of

power).

“Eligibility criteria based on investment in Machinery and Equipment only.”

SSI – THE MOST VIBRANT & POTENTIAL GROWTH SEGMENT

A recent World Bank Report states: “There is now widespread recognition within India that vibrant SMEs are potentially a key engine of economic growth, job creation and greater economic prosperity”.

10th Plan Document of Govt. of India states: “Growth as planned will come from a sharp step-up in industrial and services growth, spurred by SMEs”.

SSI SECTOR – SIGNIFICANCE IN INDIAN CONTEXT

SSIs are generally less capital-intensive and more labour-intensive.

Are best suited for countries like India, China and most of the developing world having abundant supply of low-cost manpower and bountiful natural resources

Have provided seed bed for Enterprise Development in the country

Provide large scale employment, ensure equitable distribution of income and facilitate effective mobilization of resources of capital and skills, which would otherwise remain unutilized, particularly in rural and backward areas.

India has already established a niche in SME Development Strategy and providing excellent support in product development, R&D, financial instruments, Infra-structure, marketing and export development

Consequently, India is fast emerging as a global hub for labour-intensive manufacturing and knowledge-oriented businesses.

PERFORMANCE OF SSI SECTOR IN INDIA

Year No. of Registered SSI working Units

(Million)

No. of Unregistered SSI working

Units (Millions)

Total SSI working Units

(Millions)

Production (Rs. Billion)Employment

(Million Persons)At current

pricesAt constant

prices (1993-94 prices)

1990-1991 0.79 6.00 6.79 635.18 682.95 15.834

1991-1992 0.87 6.19 7.06 730.72 791.80 16.599

1992-1993 0.99 6.36 7.35 855.81 935.23 17.484

1993-1994 1.06 6.59 7.65 988.04 988.04 18.264

1994-1995 1.16 6.80 7.96 1222.10 1091.16 19.140

1995-1996 1.16 7.12 8.28 1482.90 1216.49 19.793

1996-1997 1.20 7.42 8.62 1684.13 1353.80 20.586

1997-1998 1.20 7.77 8.97 1891.78 1478.24 21.316

1998-1999 1.20 8.14 9.34 2129.01 1594.07 22.055

1999-2000 1.23 8.48 9.71 2342.55 1707.09 22.910

2000-2001 1.31 8.80 10.11 2612.89 1844.28 23.909

2001-2002 1.37 9.15 10.52 2822.70 1956.13 24.909

2002-2003 1.59 9.36 10.95 3119.93 2106.36 26.021

2003-2004 1.70 9.70 11.40 3514.27 2265.81 27.142

2004-2005 1.85 10.11 11.86 4182.63 2515.11 28.257

2005-2006 1.87 10.47 12.34 4762.01 2776.68 29.491Source : SIDO’s Half Century y DCSSI, Govt. of India, 2004, and Economic Survey, Govt. of India, 2006-2007, Feb. 2007

COMPARATIVE GROWTH RATES OF SSI SECTOR AND TOTAL INDUSTRIAL SECTORYear SSI Sector Growth Rate Total Industrial Sector

Growth Rate

1993-94 5.65 6.00

1994-95 10.44 9.10

1995-96 11.49 13.00

1996-97 1.29 6.10

1997-98 9.19 6.70

1998-99 7.84 4.10

1999-2000 7.09 6.70

2000-01 8.04 5.00

2001-02 6.06 2.70

2002-03 7.68 5.70

2003-04 8.06 6.09

2004-05 9.96 8.04

Source: SIDO Half Century by DCSSI, Govt. of India 2004 and Annual Report of the Ministry of SSI 2005-06

TRENDS OF LENDING BY BANKING SECTOR TO SSI

Rs. in Crores

As at end March Total advances by Banking Sector

Total Advances to SSI Sector

Proportion of SSI to Total Advances

1999 246203 42674 17.30

2000 292943 45788 15.63

2001 469153 56002 1.94

2002 536727 57199 10.66

2003 669534 60394 9.02

2004 764383 65855 8.62

2005* 972587 76114 7.83

Source : RBI Report on Trend and Progress of Banking in India

* Provisional

INDIAN SSI SECTOR – AT A GLANCESSI units : 12.3 million

Employment generated in SSIs : 29.5 million

Production : At current Princes Rs. 4762.01 billion

Exports : Rs. 1215 billion

SSIs account Industrial Production : 40%Exports : 35% (50% of

Direct & Indirect)GDP Share : 7%

Ownership pattern : Proprietorships : 78% Partnerships : 16%Corporate & Others : 6%

Industrial Units : 96%

Service Enterprises : 3%

Ancillary Units : 1%

Produces Diverse range of products (more than 8000- consumer items, capital goods and intermediates)

Contribution Of SSI In India

AIMA –Impact AssessmentAIMA –Impact AssessmentIMPEDIMENTS TO GROWTHIMPEDIMENTS TO GROWTH

Problems Faced by SSIs as Barriers to Growth

Market Related 70%Market Related 70%

Finance Related 25%

Government Policy Related 12.78%

Power Related/Infrastructure 14.0%

Technology 14.60%

FUTURE ASPECTS OF SSITo facilitate growth of this sector with changing economic

scenarioTo facilitate growth within the framework of social and

economic policy of the countryTo encourage technology modernizationTo promote entrepreneurship among technically qualified

personsTo improve product standardsTo create opportunities for in house R&DTo provide greater export thrust

OPPORTUNITIES FOR SSIHEALTH TECHNOLOGY INFORMATION TECHNOLOGY Personal Health Care Preventive Health Care Yoga & Naturopathy Herbal Therapies Environmental Health Food Supplements Food, Inspection and Testing

etc. Medical Waste Management Hospital Supplies & Staffing

Services

     Media & Entertainment     Contents,     Animation,     Games, Gaming.

Contd….FASHION TECHNOLOGY DESIGN TECHNOLOGY

Personal Embellishment (Face, Hair, Hands, Feet, Cosmetics, Perfumes etc.)

Glamour & LimelightCreative Fashion Accessories (purses, bags,

carryon, watches etc.)

• Interiors - (Furniture & Furnishing – homes, work places, community, hospitals, schools, shopping places, recreation, sports) • Exteriors - (Architectural)• Dies and tools• Watches • Jewellery• Hospital equipments

INDIA: ECONOMIC ENABLERS FOR SSI

10th largest economy in the world - 4th in terms of PPP Will overtake Japan in PPP terms by 2010, to be 3rd

largest in the world Large entrepreneurial base and diversified manufacturing

structure Large reservoir of skilled labour at internationally

competitive cost Vast pool of scientifically and technically qualified

manpower of 20m A large domestic market - 300 m + strong middle class

population having substantial purchasing power Largest democratic set - up A broad based and transparent legal framework including

arbitration

CONTD….. Vast network of bank branches, financial

institutions and well-organized capital and money markets A network of technical and management institutes

of highest International standards for development of

human resources India has a record of meeting its international

financial obligations as Per schedule and has never been a defaulter No communication barrier, as English is the most

prevalent business Language Strong and vibrant small scale sector that is keen

to establish Strategic alliances with their foreign counterparts

CONCLUSIONS It can be seen that the policy framework is consistent since

independence

The specific definition for medium enterprises augurs well for graduation of micro enterprises to small and small enterprises to medium enterprises

With more budgetary allocation to service sector, SSIs will be able to generate more employment opportunities to educated unemployed youth

The launching of Technology Mission will facilitate the Government to work out a long term action plan to ensure organized growth of this sector to face competition in liberalized services sector and knowledge based economic scenario