Chapter- 1 || 2 || 3 || 4 || 5 || 6 || 7 || 8 || 9 || 10 || 11 || 12 || 13 || 14 || 15 || 16 || 17 || 18 || 19 || 20 || 21 || 22 || 23

Chapter 13:
VILLAGE AND SMALL INDUSTRIES

In the Third Plan, the main objectives of the small industries programmes were to improve the productivity of the worker to enlarge the availability of institutional finance and to pay special attention to the growth of small industries in rural areas and small towns. The progress was encouraging during the first two years of the Third Plan; then slowed down for various reasons Including the shortage of raw materials following the hostilities of 1962 and 1965; and has recently shown signs of revival.

13.2. Small Scale Industries.—The growth of modern small scale industries has taken place largely over the last decade, up to the end of 1968-69 about 140,000 small scale units had been registered with the States Industries Directorates, as compared to about. 36,000 unitsat the beginning of 1962. Machines worth Rs. 4.5 crores were supplied on hire-purchase terms to these industries in 1968-69, as compared to about Rs. 1.8 crores in 1960-61. The value of purchases by the Central Government departments from small industries increased from Rs. 6.5 crores in 1960-61 to about Rs.28.6 crores in 1968-69.

13.3. Over the period 1961 to 1969, the number of industrial cooperatives including handloom, handicrafts, and processing societies, increased from about 37,000 to about 51,000, membership from 2.92 million to 3.88 million and sales from Rs. 111.9 crores to Rs. 331.9 crores.

13.4. Apart from quantative growth, there has been significant improvement in the quality of the products of many small scale industries. This is reflected in the increased variety of items produced to the standards and specifications prescribed by the defence services, railways and several large scale industries. A number of small scale units supply parts and components to large industries engaged in the manufacture of machine tools, bicycles, automobiles, coach building, and other railway equipment, and electronics and electrical appliances and machinery. Products of some of these industries are exported. Production of a number of new items parts and components requring high technology and precision has been successfully undertaken in the small scale sector. Some of them were being imported till recently.

13.5. Industrial Estates.—About 346 industrial estates had been completed by the end of March 1969 as compared to 66 estates in 1960-61. Of about 8670 sheds provided, about 6600 sheds had been occupied. The small units set up in these estates provided employment to about 82,700 persons. Their annual production amounted to Rs. 99.25 crores. The programme generally was a success in urban areas. However a large number of industrial estates started in rural and semi-urban areas languished owing mainly to unsuitable location, lack of integrated planning and marketing facilities and shortage of raw materials. By the end of 1969, 125 co-operative societies had been registered for establishment of co-operative industrial estates.

13.6. Handloom and Powerloom.—On account of the adoption of various measures to assist the handloom industry including the reservation for it of certain lines of production and special measures to encourage cooperatives substantial progress had been made in the rehabilitation of the industry. The production in this sector was 2013 million metres in 1960, 3056 million metres in 1965 and 3530 million metres in 1968. As a share in the total production of cloth, this represents 30.4 per cent for 1960,40.0 per cent for 1965 and 44.7 per cent for 1968. The number of handlooms in the co-operative sector increased from 1.32 million in 1960-61 to 1.41 million in 1966-67 and the number ofpowerlooms from about 145,000 to 217,000. The handloom industry provided employment to nearly 3 million weavers. The value of exports of handloom fabrics and products increased from Rs. 5 crores in 1960 to about Rs. 12.6 crores in 1965 but declined to about Rs. 8.2 crores in 1968 owing mainly to shrinkage in the demand for 'Bleeding Madras'.

13.7. Khadi and Village Industries.—Against a programme of introducing 300,000 Ambar Charkhas during the Third Plan only 13,534 charkhas were distributed in the first two years. There was no significant increase in the number of Ambar Charkhas in the subsequent years. The Khadi and Village Industries Commission did not introduce more Ambar Charkhas mainly because it was engaged in designing and developing an improved model of the Charkha. The total production of all varieties of khadi including woollen and silk, increased from 53.76 million sq. metres in 1960-61 to 84.85 million sq. metres in 1965-66 but declined to 66 million sq. metres in 1968-69. The industry provided employment which was mostly part-time to nearly 1.34 million persons including about 1.20 million spinners. As regards village industries, production and employment data are available only in respect of the centres assisted by the Khadi and Village Industries Commission. Information regarding some industries shown in table 1.

The production of village oil industry went down owing to successive bad crops and competition fromexpellers. The centres for all industries assisted by the Khadi and Village Industries Commission provided full-time employment to 172,400 and part-time to 702,600 workers in 1965-66 as against 118,300 and 446,100 workers respectively in 1960-61. During 1968-69. the figures of full-time and part-time employment were 80,000 and 737,000 respectively.

Table 1  Production of the Centres Assisted by the Khadi and Village Industries Commission

(N.A. : Not Available).

13.8. Sericulture.—The programme for sericulture was directed towards reduction in the cost of production. creation of a suitable marketing organisation and increase in exports. There was a considerable rise in the production of raw silk except during the last two years owing mainly to unfavourable weather conditions. Production increased from 1.49 million kgs. in 1960-61 to 2.15 million kgs. in 1965-66, but declined to about 2.05 million kgs. in 1966-67. Estimates for 1968-69 are placed at 2.32 million kgs. The value of exports of silk fabrics and waste rose from Rs. 1.37 crores in 1960toRs.2.82crores.

13.9. Coir—During the Third Plan the production of coir fibre increased from 152 000 tonnes to 162,000 tonnes, coir yarn from 142,000 tonnes to 143,000 tonnes, coir products from 24,200 tonnes to 24,500 tonnes and coir rope from 14,250 tonnes to 15,000 tonnes. The production of coir fibre is expected to go up further as a result of the setting up of defibering plants in some States. The value of exports of coir fibre and products steadily increased from Rs. 8.7 crores in 1960-61 to Rs. 11.10 crores in 1965-66 and Rs. 14.50 cores in 1968-69 and the industry is estimated to provide employment to over 0.8 million persons.

13.10. Handicrafts.—The total gross output and value added by manufacture of handicrafts in 1966 were estimated at Rs. 317 cores and Rs. 173 crores respectively, as compared to Rs. 253 crores and Rs. 138 CBores in 1961. The sales through public emporia increased from Rs. 2.7 crores in 1960-61 to Rs. 3.5 crores in 1965-66 and further to about Rs. 4.0 crores in 1968-69. The exports increased from Rs. 19.34 crores in 1961-62 to Rs. 40.41 crores in 1966-67 and to nearly Rs. 76.5 crores in 1968-69. The broad composition of exports for 1968-69 was precious, semi-precious and synthetic stones and jewellery (Rs. 47.2 crores); carpets and druggets (Rs. 11.1 crores); and other crafts such as art metalware and hand-printed textiles (Rs. 18.2 crores).

13.11. Rural Industries Projects.—A Centrally sponsored scheme for Rural Industries Projects was taken up in 1962-63. To start with 45 areas were selected in the States and some Union Territories, each covering 3 to 5 Development Blocks with a population of 300-500 thousand for intensive development of small industries in rural areas. Later on, 4 more areas, near large scale projects of Durgapur, Bhilai, Bhadravati and Ranchi were added in 1965. The progress made so far in these projects varies considerably from one area to another. On the whole, of 45 areas which were selected initially progress in about one-third of these has been encouraging.

Approach

13.12. The objectives of the programmes in the Fourth Plan are : to improve progressively the production techniques of small industries so as to enable them to produce quality goods and to bring them to a viable level; to promote decentralisation and dispersal of industries; and to promote agro-based industries. In order to achieve these aims it would be necessary to improve skills and provide a combination to incentives and disincentives for securing decentralisation and dispersal of small industries. Fiscal and other measures are required to enable these industries to stand competition with large industries. The operation of the industrial licensing system has not been effective in preventing competition from the large industries and in providing the required degree of initial protection. Nor has it been possible to prevent concentration of industries in large cities and towns. Since a large number of industries is proposed to be delicensed during the Fourth Plan period, greater emphasis will have to be placed on a variety of positive- measures of assistance including liberal credit facilities, adequate supply of scaice raw materials, provision of technical assistance and improved appliances, tax concessions and differential excise duties. It will be necessary to assist mechanised small scale industries to grow into larger and more viable units. Further, in order to protect small scale and traditional idustries from undue competition, the existing reservations will be continued and modified in accordance with the requirements. This will have to be preceded by careful indentifi-cation of industries, parts, components and processes in which the large size of operation of a high degree of mechanisation has no pronounced impact on economics. This identification would have to be followed by fiscal and credit policies and measures to accelerate their development in the small sector, evolution of appropriate technology tor smaller units in different industries, introduction of quality control and formulation of well coodrinatcd programmes of assistance. Outside the designated field for small industries, the small and large industrial sectors would be developed wherever possible, as complementary to each other so as to facilitate growth of ancillary industries.

13.13. As regards the traditional sector represented by khadi and village industries, the problem is of a different character. . At their present technological level, these industries will not be able to sustain themselves without appropriate fiscal support. The whole subject has recently been studied by the Khadi and Village Industries Committee (Asoka Mehta Committee). One of the more important recommendations made by the Committee is that a seven-year programme for progressive improvement ot techniques should be worked out in respect of each of the traditional industries including khadi, with a view to bringing them to a viable level. The Committee recommends that additional production of traditional and Anibar Khadi '.n future should be on self-sufficiency basis, that the subsidy element should be reduced to the minimum and tliat there should be free scope for introduction of U chiiological improvements and power. It also recommends that the present Khadi and Village Industries Commission should be re-organised and transformed into a Rural Industries Commission. The other organisations concerned such a.s the Handloom Board, the Handicrafts Board, the Small Scale Industries Board, the Coir Board and the Central Silk Board should, according to the Committee, continue to function as expert bodies in their respective fields. These recommendations are under the consideration of Government.

13.14. The measures to promote and encourage dispersal of industries to small towns and suitable rural and selected industrially backward areas have been outlined in the chapter on Industry and Minerals. The financial as well as fiscal incentives to be given to establish medium and. large industries would be available to small industries as well. There are a number of industries, especially agro-industries, based on skills, demand and raw materials, which are largely local. These can be helped to be established by means of fiscal and technological support and organisation of credit facilities. Besides, in many rural areas, there is growing demand for repair and service facilities for agricultural machinery and other appliances; this offers considerable scope for small workshops and technically trained persons.

13.15. The cooperative form of organisation will be encouraged wherever appropriate. In small scale industries and handicrafts with a tradition of an independent entrepreneurship and craftsmanship the "Service" and "assembly" types of cooperative organisation and associations may be found more suitable than "production" type which has taken some roots in industri and s like the handloom, powerloom and coir. Recently, in pursuance of the recommendations of the Working Group appointed by the Reserve Bank to consider the question of ensuring adequate flow of funds for industrial financing through cooperative banks, it has been decided to advance loans to the State Cooperative Banks for financing 22 broad groups of small industries including coir, sericulture, handicrafts, tanning and flaying, leather goods, handpounding of paddy and cereals, oil crushing and general engineering. The Working Group has made other recommendations for stimulating the flow of funds to industrial cooperatives. These will be implemented and the position reviewed after two years.

Outlays

13.16. The Fourth Plan envisages a total outlay of about Rs. 293 crores in the public sector for the development of village and small industries. The distribution of the outlay is :

Table 2 Outlay for Village and Small Industries in Public Sector (Rs. crores)

The total outlay of about Rs. 293 crores is exclusive of the outlays on village and small industries made in certain other programmes such as those pertaining to selected industrially backward areas, displaced persons, cooperative processing and industrial areas. In addition to the outlay in the public sector, about Rs. 560 crores are expected to be invested from private sources including financial and banking institutions, as against about Rs. 275 crores in the Third Plan. Thus a total outlay of Rs. 850 crores is estimated to be available for the development of small industries under the Fourth Plan.

13.17. The khadi and village industries programmS is implemented directly by the Khadi and Village Industries Commission and the State Boards for these industries. Programmes of assistance like credit facilities under the State Aid to Industries Acts and Rules, technical improvements, training and common service facilities, quality marking and accommodation in industrial estates are largely administered by State Governments and the Administrations of Union Territories. These are supplemented by Central programmes for industrial extension services, research and supply of machines on hire-purchase terms. These developmental aids and measures of assistance will bs enlarged and reoriented so as to facilitate achievement of the principal aims.

13.18. Credit and Raw Materials.—In sanctioning loans under the State Aid to Industiies Acts and Rules, it is envisaged that State Governments and Union Territories would give preference to the requirements of entrepreneurs in semi-urban areas including rural and backward areas, units engaged in export, handicraft artisans, technically qualified persons and industrial cooperatives. Others will be assisted to obtain their requirements from financial and banking institutions which are expected to provide larger credit to small industries. For units engaged on production of priorty items—such as can be exported or help replace imports —efforts will be made to ensure regular and adequate supplies cf imported and scarce indigenous raw materials, including intermediates.

13.19. Technical Improvement and Research.—Facilities for research, improving production techniques, designs development, industrial extension services and testing facilities will be enlarged. It is a'so proposed to undertake analytical studies of the respective technologies used by the small and large sectors in selected industries, to work out the comparative costs, to identify technologies of an 'intermediate' character, and to disseminate the results of these studies and experiments. Training programmes for improvement in skills in selected trades particularly of rural artisans and for industrial management, industrial extension, area development and market analysis will be enlarged tor different small industries. Trade centres will be set up in large cities. The existing policy of price preference under Government's stores purchase programmes, will be continued.

13.20. Exports.-—The facilities for studying the market trends abroad, testing, quality marking, pre-shipment inspection, and publicity will be enlarged. Preference will be given in provision of credit and supply of raw materials to the units engaged in manufacturing export products. Steps will be taken to remove procedural difficulties in respect of drawback of duties on exports. Arrangements will be made to coordinate the activities of the organisations engaged in the exports of the products of various small industries. Public emporia for handicrafts would be assisted to provide production finance against export orders. They will be encouraged and assisted to build adequate reserves for the purpose.

Programmes

13.21. Small Scale Industries.—The main aim of the development programme for small scale industries would be fuller utilisation of the capacity already established, intensive development of selected industiies including anciliaries and industrial cooperatives and, subject to criteria of fsasibility, promotion of the industries in semi-urban, ruial and backward areas. As stated earlier, the existing reservations to protect small industiies from undus compstition from largo industries, will bs continued and suitably modified from time to time. A phased programma of modernisation of machinery and equipment will be undertaken initially fos a group of selected industries such as machine tools, foundry and re-rolling. Efforts will be made to encourage ths production of items which are now baing imported and other items required by priority industries including agio-industries. Schemes will be formulated for training and financial assistance to technically qualified parsons so as to enable them to set up industries.

13.22. For promoting the programmes outlined above, ths Small Scale Industries Development Organisation including ths Snull Industries Service Institutes will be strengthened with technical staff and provided with the equipment required for testing and other facilities. The State Industries Directorates and Small Industries Corporations will also bs adequately strengthened. The scheme for supply of machines on hire-purchase terms by the National Small Industries Corporation and States' Small Industries Corporations will be expanded with the assistance of banking institutions. Efforts will be continued to collect and disseminate information about the parts and components in demand by large units and to ensourage the large industries in the public and private sectors, to obtain their requiremenes to the maximum possible extent from small units. As regards new large industrial undertakings in the public and private sectors, project reports and applications will bs scrutinisad caiefully with a view to excluding from their capacity the items capable of being produced in the small sector.

13.23. Industrial Estates.—The programme of indus -trial estates will be consolidated. Ordinarily, no new estates will be set up in the vicinity of cities and large towns. However, in exceptional cases where there is an effective demand for them, the States will provide developed sites to small enterpreneurs or their cooperatives and joint stock companies, on which they could construct their own factory buildings. The programme of setting up industrial estates, complete with factory premises will, however, be pursued in small towns and promising rural and backward areas. Selection of sites for industrial development and industrial estates will be made on the basis of quick techno-economic surveys. The public sector undertakings will be encourged to establish estates for small ancillary units. The funds allotted for the industrial development areas would be used for promoting of small scale industries along with medium and large scale industries. Establishment of coopeiative industrial estates will also be encouraged.

13.24. Handloom and Powerloom.—Production of cotton cloth by the decentralised sector (viz., the hand-loom, powerloom and khadi industries) estimated at 3,596 million metres at present, is expec.ed to increase to 4250 million metres in 1973-74. Greater efforts will be made to enable haauloom cooperatives to obtain their credit requirements for working capital from the State Cooperative Banks. Steps will be taken to arrange regular supply of yarn of the counts needed by the societies and also other essential raw materials at reasonable rates, to train the weavers in improved equipment and appliances, to enforce more effectively restrictions on production of specified ,vaiities of cloth already reserved exclusively for the handloom sector, to concentrate on production of those varieties of cloth which provide higher earnings and are required for exports, and to set up common service facilities centres for improvement of quality. It is proposed to reduce the rebate on sale and to extend certain types of assistance and facilities to the weavers outside the cooperative fold. The value of the exports of the handloom products is estimated to increase from about Rs. 8.2 crores in 1968 to about Rs. 15 crores by 1973-74.

13.25. In puisuance of the recommendations of the Powerloom Enquiry Committee, 105,000 powerlooms weie allotted to the States and Union Territories in 1966, of which about 14,000 powerlooms had been installed by the end of June 1969. The scheme for financing production and marketing activities of the handloom societies through the State Cooperative Banks has recently been extended to the powerlooms in the coopeiative sector. It is proposed to liberalise patterns of assistance for powerlooms to accelerate the programme.

13.26. Khadi and Village Industries.—It is envisaged that additional production of traditional including Ambar khadi in future will be on self-sufficiency basis. As regards the new 2-spindle and sets of 6- and 7-spindle charkhas being tried on pilot basis, an Evaluation Team has recently been set up to make a detailed assessment of their working, to examine the economic and social justification and technical and organisational feasibility of their large-scale introduction and to suggest the future role of the traditional and Ambar charkha programmes during the Fourth Plan period. In order to undertake a large programme for development of village industries, it is proposed to utilise larger outlay to improve progressively their production techniques so as to bring them to a viable level, as recommended by the Asoka Mehta Committee. Accordingly, of the total Central outlay of Rs. 95 crores, about Rs. 59 crores are to be utilised for khadi and Rs. 36 crores for the development of village industries, including Rs. 22.50 crores for subsidy in, lieu of interest on loans for both khadi and village industries.

13.27. Sericulture.—The main problem of the sericulture industry continues to be a relatively high cost of production on account of shortage of food for silk worms, short supply of disease-free layings and inefficient reeling equipment. Under the programme of the Central Silk Board, priorty will be given to research to ascertain the relative merits of multivoltine and bivolline races so as to determine suitable combinations for large scale use in future. In the silk growing States efforts will be directed mainly towards increasing the production through greater use of feitilisers, larger assistance from financial institutions for sinking wells for irrigation, establishment of graft nurseries and seed stations, increasing the supply of healthy layings, construction (if grainages and larger assistance for cooperatives. For improving the quality of reeled silk, the programme of introducing cottage basins in place of the traditional charkhas will be intensified and efforts made for organising them into inexpensive cottage filatures with the use of power and steam. The value of exports of ^ilk fabiics and waste is expected to increase from about Rs. 6 cicres in 1968 to about Rs. lOcrorfcs by 1973-74. Production of raw silk is expected to increase from 2.32 million kgs. in 1968-69 to about 3.0 minion kgs. in 1973-74.

13.28. Coir.—A Study Group on Coir Industry has recently been set up to make a comprehensive review of progress since the beginning of the Third Plan period with particular reference to its export peifor-mance and to recommend suitable changes in the programme tor its development so bl to develop the industry on sound lines keeping in view the objectives of inc) easing the output ot coir yarn and other diversified products, improving their quality, and stepping up of their exports and internal sales. In the meantime, schemes formulated by the Coir Board for research into better methods of dyeing, bleaching and finishing of coir goods for improving quality and evolving new products for domestic and export markets, would be confined. Mechanisation of the mat weaving and spinning sectors will be assisted as also the establishment of mechanical de-fibering plants. It has recently been decided by the Reserve Bank to advance loans to State Cooperative Banks fcr financing coir cooperatives. It should be possible for the coir industry to avail itself ot these credit facilities as also those available undei the State Aid to Industries Acts. The value of the exports of coir industry is expected to increase from about Rs. 14.5 crores in 1968-69 to about Rs. 17 croies in 1973-74.

13.29. Handicrafts.—The programme of development for handicrafts will aim at improvement in the productivity of artisans through supply of improved appliances and introduction of new designs, quality control, promotion of organised production, preservation of skills, promotion of cooperatives and associations of craftsmen and expansion of exports and internal sales. Special efforts will be made for the development of those selected crafts which have an expanding demand in the export market. It is pioposedto setup model centres for stimulating the growth of well organised units in which new designs and improved tools would be used to produce quality handicrafts. For preservation of skills, facilities will ba provided for the training of young apprentices under master craftsmen. New emporia will be set up for expanding sales. The sales through public emporia are expected to increase from the present level of about Rs. 4 crores to Rs. 10 crores and the value of exports from about Rs. 76.5 crores to Rs, 100 crores by the end of the Fourth Plan.

13.30. Rural Industries Projects.—Jhs Centrally sponsored Rural Industries Projects in which progress has not been encouraging v/ill be wound up; the others will be continued. It is envisaged that the staff at the Centre and in the States will pay special attention to identification of the techonological and economic problems and possibilities revealed by progress of various industries in the project areas and arrange for research and investigation on them through appropriate agencies.

13.31. Collection of Statistics.—Under the Annual Survey of Industries, factoiies employing 50 or more workers and using power and 100 or more workers without using power are individually enumerated; the smaller factories are covered, not by census, but on a sample basis. It is proposed to collect annual statistics on a census basis for the smaller factories according to a phased programme. Under a Centially sponsoied scheme, data for non-household units below the factory level employng five or more workers will be collected on a sample basis for all States.