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Cottage Industry

Cottage Industry

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Published by: dipak_pandey_007 on Mar 31, 2011
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10.2 Village and Small Industries
Small-scale and cottage industries play a very vital role in the country'seconomy despite the phenomenal growth in the large-scale sector. In fact,the small-scale sector is playing a vital role in the growth of nationaleconomies the world over and is considered to be the engine of growth inmost countries. The small-scale industries are labour - intensive and provideemployment to nearly 1.86 crores persons in the country.The emphasis on Village and Small-Scale Industries (SSIs) has alwaysbeen an integral part of the Indian Industrial strategy, more so after theSecond Five Year Plan. It was envisaged that Village and Small-ScaleIndustries would play an important role as producer of consumer goods andabsorber of surplus labour thereby addressing to the problems of poverty andunemployment. Other advantages of small industries are that they ensure amore equitable distribution of national income, enhance balanced regionalindustrial development, act as a nursery for entrepreneurship and facilitatemobilization of local resources and skills which might otherwise remainunutilized. Consequently, the Government of India had been encouragingand supporting the promotion of Small-Scale Industries through deliberatepolicies such as protection from large-scale industries, capital subsidies,differential tax treatment, reservation etc.The Government continues to provide protection to the small scalesector,
through the policy of reserving items for exclusivemanufacture in the small-scale sector. Industrial undertakings other than thesmall-scale industrial undertakings engaged in the manufacture of itemsreserved for exclusive manufacture in the small-scale sector are required toobtain an industrial licence and undertake an export obligation of 50 per centof the annual production. However, the condition of licensing is not applicableto such industrial undertakings operating under 100 per cent Export OrientedUndertakings Scheme, the Export Processing Zone and the Special EconomicZone Schemes.The reservation policy was introduced in 1967 an attempt to protectSMEs from competition from corporations and 44 goods were specified to beexclusively manufactured by SMEs (Large Corporations were allowed to enter this sector on condition that 50% of their produce would be exported). As aresult, SMEs dominated readymade garments, leather goods, autocomponents,electrical appliances and the hand tool industries. Over theyears, the number of items reserved for SMEs increased and it stood at over 800 in 1989. However, the Abid Hussain Committee set up by theGovernment of India which submitted its report in January 1997 observed thatthe reservation policy was inconsistent with the current trade reforms whichallow free import of a large majority of the goods and most of the remainingcan be imported under the special Import Licence. The number of reserveditems has, therefore, been coming down.Industrial undertakings with investment in plant and machinery up toRe. 1 crore qualify for the status as small-scale or ancillary industrial
10.2 Village and Small Industries
undertaking with effect from 24 December 1999. The investment limit for tinyunits is Rs. 25 lakh.The Small-Scale Industry sector has emerged as a dynamic andvibrant sector of the Indian economy in recent years, displaying phenomenalgrowth in the field of production, employment and dispersed development ingeneral and exports in particular. There are nearly 34 lakhs Small-ScaleIndustries in the county accounting for about 40% of the gross value of outputin the manufacturing sector and about 34% of the total exports of the country.It provides employment to nearly 186 lakhs persons, which is second only toagriculture.The Small-Scale sector contributes amply to other socio-economicaspects such as reduction in income inequalities, product diversification,dispersed development of small industries and linkage with other sectors of the economy.
Tamil Nadu Small Scale Industries – Profile
The small scale industries, which are defined in terms of value of productive machinery, made an early start in Tamil Nadu with the Governmentstepping in to create major industrial estates at Guindy and Ambattur inChennai. In 1973, Tamil Nadu had the largest number of SSIs in the countrywith 18,500 registered units and it has maintained this leadership, by andlarge. When the Second All India Census of SSIs was carried out in 1987-88,it was still the leader in terms of units and employment, though not in thegrowth rate.According to SIDBI (2000), in its Report on small-scale industriessector during 1988-89 to 1998-99, the Tamil Nadu SSI sector continued togrow fast. The average annual rate of growth (compound) of number of unitswas 12.8 per cent and of employment 10.9 per cent.As an important sector of the economy as a whole, Small ScaleIndustries sector accounts for 95 per cent of industrial units, 40 per cent of output in manufacturing sector, 35 per cent of exports and employment to 30lakhs persons in the State. There are nearly 4.20 lakhs registered SSI Unitsand total investment nearly Rs. 12,500 crores. The contribution of SmallScale Industries to employment generation is next only to Agricultural andallied sectors. The SSI sector has been considered as a powerful instrumentfor realizing the twin objectives:
`Accelerated Industrial Growth' 
and creatingadditional
`Productive Employment Potential',
in rural and backward areas.
Position as in 2000-2001
No. of Small-Scale Industries Units Rs. 33.70 lakhsProduction at current prices Rs. 6,45,496 croresEmployment 186 lakh personsExports Rs. 59,978 crores
10.2 Village and Small Industries
The Government departments/ agencies concerned with SmallIndustries comprise the Small Industries Department at the Secretariat, theDirectorate of Industries and Commerce, the Tamil Nadu Small IndustriesDevelopment Corporation (SIDCO) with 73 Small Industrial Estates, the TamilNadu Small Industries Corporation (TANSI) with 26 production units, the
Entrepreneur Development Institute and INCOSERVE, SAGOSERVE, TAICOBank and Industrial Co-operatives.The Village and Small Industries Sector comprises of five Sub-Sectorsviz., 1) Small Scale Industries (under the control of the Director of Industriesand Commerce), 2) Handlooms and Textiles, 3) Khadi and Village Industries,4) Handicrafts Development and 5) Sericulture.
Ninth Plan Outlay 
- As against an outlay of Rs. 600 crores for Villageand Small Industries in the Ninth Plan, the expenditure has been Rs. 385.45crores.The departmentwise activities and performance during the Ninth Planand the programs for Tenth Plan are outlined below:Small Industries - State Profile
No.of registered SSI Units 4.20 lakhs
Employment 30 lakhs
Total investment Rs. 12500 crores
Production Rs. 21537 crores
Predominant Industries
Textile, Food Products,
Non-Electrical machineries, tools andparts,
Cotton Textile
Paper and Printing.
Major Exports
Readymade Garments
Leather & leather goods
Gem and Jewellery, Cashew Kernal
Food products, Marine products.
Major issues
Need for modernisation andtechnological upgrdation,
Strengthening the system of information dissemination,
Need for availability of working capital
Need for infrastructure building
10.2 Village and Small Industries
I. Small Scale IndustriesDirectorate of Industries and Commerce - 
The Directorate of Industries and Commerce is the nodal agency for planning and implementingvarious schemes for the promotion of Small Scale Industries in Tamil Nadu. Itprovides various services through the District Industries Centres such asregistration of SSIs, training of entrepreneurs, Industrial guidance, promotesVillage and Small Industries by organising Industrial Co-operatives(particularly for match, tea & coir industries) and identifies and promotescraftsmen and artisans engaged in the handicrafts industry.The Department of Industries and Commerce also implements avariety of programmes to provide financial assistance, technical support andguidance service to the existing as well as new industries. These programmesare implemented with an accent on the development and modernisation of industries, up-gradation of technology and quality control. It operates through

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