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EXECUTIVE SUMMARY AIMA 2 .
investment ceiling for the SSI sector and priority lending. However. low lobbying capacity. low market awareness. The hitherto protection of the SSI sector by way of reservations and quantitative restrictions have been removed.3 million people. there are about 3. Inspector-raj and infrastructural constraints. constraint of quality of human resources. The factors which AIMA 3 . credit constraint. There have been varied views which have been formed about the growth of the SSI sector post liberalisation and the features which have acted as contributors or inhibitors for the growth. does not offer much satisfaction in the immediate future. There is a need to introduce new tools and equipments for production. introduction of new designs and diversification. be other factors besides technology which have impacted the growth of the SSIs. low access to business services.6 million SSI units in India and these employ approximately 19. changes in manufacturing process. The economic reforms started in 1991 in India provided the opportunity to SSIs to grow big. These studies have suggested that competitiveness is possible only if there is a technology up-gradation and adoption of new technologies. There could. According to the latest statistics. There have been some sweeping changes which have taken place in the SSI sector in the last two years. use of new raw materials and usage of modern management and IT tools. Indian industry does not face any immediate threat from developed countries but faces serious competition from neighbouring countries particularly from Chinese manufacturers where productivity is 60-100% more than the Indian companies. improvement in the quality of products and quality assurance. the small-scale industrial (SSI) sector has acquired a prominent place in the socio-economic development of the country during the past 50 years. The higher rate of growth of SSIs during 1991-2000 period. difficulties in accessing technology. unless concrete remedial measures are taken. The vulnerable areas as experienced by the SSIs have been cited as low capital base. however. More than 160 items which were reserved for the SSI sector have been de-reserved. It has been concluded through previous studies on the SSI sector that Indian SSIs should remain competitive in the era of globalisation. the formation of WTO in 1995 has started posing a major challenge to the SSIs in India. This achievement has been possible due to the consistent and sustained policy support from the Government including policy of reservation. which is second highest next only to agriculture. This sector constitutes 95% of the industrial units and contributes 40% to the total industrial output of the country and 35% to direct export. compared to the overall industrial growth rate.Executive Summary Small Scale Industry in India Assessment of Growth after Liberalisation Introduction In India.
finance. Methodology Used The study has been undertaken in two phases in order to capture the views of all the stakeholders involved as well as of different industries in the SSI sector. It also ascertains whether there has been a difference in the growth pattern and factors helping and inhibiting growth with respect to the geographical region. technology. Financial Corporations. Industrial Development Authorities. The training needs felt by the SSI sector and the outlook for the sector has been enumerated. manufacturing or service or the size of the company. The scope of the present study is to identify the growth trend of the SSIs and map out the reasons for the growth or decline as the case may be. Phase One Qualitative Research with Policy makers and Institutions Phase Two Structured Survey The phase one consisted of interviews with Banks. human resources. The study provides an assessment of the SSI sector in terms of their current problems and means of overcoming those as suggested by the SSIs. multilateral trading rules under agreements of World Trading Organization (WTO). the type of industry. To identify the barriers and constraints that SSIs are facing To prioritize the growth challenges the SSIs are facing presently in the areas of marketing. Objectives of the Study To identify the growth pattern of the SSI sector and identify the reasons for success/failure To evaluate the impact of liberalisation measures on SSIs. rise in electronic commerce. AIMA 4 . mergers and acquisitions. identification of suitable opportunities etc. opinion makers like Industry Associations. Regulatory Bodies and Ministry of Small Scale Industry. alliances. The study also seeks to prioritize the factors which have helped the growth and those which have hampered the growth. liberalisation of services/ infrastructure and µsourcing out¶ of activities to outside firms. exports.Executive Summary Small Scale Industry in India Assessment of Growth after Liberalisation have been identified as aiding the growth of SSIs are advancement in generic technology of computers and telecommunications. The findings can be used as inputs by the policy makers and institutional mechanism which exist for the sector.
obsolete technology and management practices have been a major barrier for growth. Some salient views have emerged particularly on technology acquisition and adoption. This leads to low scale economies as well as low quality. The survey was conducted through face to face personal interviews with the owners of the SSIs or decision-makers in the firm. Whenever. it is felt that the limit in investment in plant and machinery should increase if technology has to be upgraded. the situation on technology upgradation is in fact to the contrary. the SSIs have a belief that they cater to only the low end of the market for which quality is not a major requirement. Technological awareness exists among the SSIs but they are not taking the advantage of the same because they do not feel that there is a market at that cost. The phase two consisted of a structured survey based on a questionnaire. Technology Acquisition. the SSIs feel the need. According to the spokesperson and opinion makers of the industry.Executive Summary Small Scale Industry in India Assessment of Growth after Liberalisation The information collected comprised of understanding the role of the institutions towards the development of the SSI sector and their views on the reasons for the growth or decline of the SSIs in India. 3 crore. Ancillarisation as a strategy for growth The Ministry of SSI feels that dependence of ancillary units on bigger companies results in their closure when a better technology AIMA 5 . In other words. Qualitative Research with Policy makers and Institutions The stakeholders were asked to identify the factors which were posing as constraints and those that were enabling the growth of the SSI sector. However. The SSIs feel that acquiring and applying technology is a costly exercise which pushes up the manufacturing cost of the product and makes the price unviable in the market to which the SSIs cater. Adoption and Upgradation According to the policy makers. The National Productivity Council believes that SSIs are not willing to invest in experimentation to identify parameters of attention and productivity improvement. The Technology Bureau of Small Enterprises also feels that SSIs have a tendency to compromise on quality but at the same time the entrepreneur should understand what his needs are before investing in an imported or indigenous technology. ancillarisation as a strategy for growth and market related barriers. It should increase from the present limit of Rs. 1 crore to Rs. they are quick to take up technology upgradation and adopt it.
The inputs from the qualitative research were used to frame the structured questionnaire in more detail. Hyderabad. Market related barriers The policy makers feel that the SSIs should be driven by market forces rather than reservation of items. 31% in the Southern region. Coimbatore. The Government could take a lead on developing these kinds of systems. The final number on which the analysis has been conducted is 872. Pune Bhubaneshwar. 23. the barriers have been removed and about 160 items have been de-reserved from SSI sector. Lucknow. Hosur. At times. The ownership pattern of the companies in the sample was as follows: AIMA 6 . Meerut Ahmedabad. Baroda. database. Delhi and NCR. Ludhiana. somewhat larger industries have been hindered in their growth plans because of the reservation of the product under small scale. Trivandrum The sample comprised of 81% companies in the manufacturing sector and 19% companies in the services sector. therefore the required sample size could not be achieved. The survey work was completed in a span of three months from February 2003 to April 2003.5% in the Western region and 14% in the Eastern region. The cities which were covered in each region were: Northern region Western region Eastern region Southern region Dehradun. Kolkata Bangalore. This relationship needs to be nurtured. Keeping this in mind. 31% of the sample comprises of companies in the Northern region. There is immense potential to be tapped towards ancillarisation that needs proper networking systems to be developed for exchange of information. Tirupur. Kanpur. However. Sample Profile of Structured Survey A sample of 1000 companies in the SSI sector had been planned for the quantitative survey. assignments and projects between bigger companies and SSIs. Mumbai. This would also make them more competitive. Jallandhar. Chennai. Jaipur. Guwahati. The companies in the Eastern region and the Northern region were not enthusiastic about the survey. Subcontracting has been the route for growth for most SSIs.Executive Summary Small Scale Industry in India Assessment of Growth after Liberalisation product is available.
The negative growth rate is primarily on account of the companies in the Northern and Eastern region. Chemical Industry and Products and Automobile & Auto Products/Services. Leather and Garments. consulting.18%). computer products and IT services. Packaging and Paper. Growth of SSI sector The cumulative growth rate for the 872 companies in the sample over the five year period 1998 to 2002 has been negative (5. 1999-2000 too the overall growth has been positive (8. The companies in the Southern region have recorded a growth rate of 25% in their turnover in the last five years. Plastic and Rubber. The apparent wide disparity in the growth pattern of the SSIs between the Southern region and the rest of India points to the fact that SSIs in South had exploited the market opportunities better than others. Among manufacturing companies the industry sectors which were covered are Textiles. In case of companies in the North. For the period. rather attitude of the people to learn.Executive Summary Small Scale Industry in India Assessment of Growth after Liberalisation Sole Proprietor Partnership Private Ltd Public Ltd 53% 22% 22% 3% The sample comprised of 45% companies belonging to the pre liberalization era (pre 1991) and 55% of companies belonging to the post liberalization era (post 1991). to upgrade the skills of the manpower. The kind of companies which were covered in the Services sector are office automation. Electrical and Electronic products. retailing and insurance services and beauty and health services etc. So free market per se is not inhibiting growth. it has been stagnant but the Southern region has reported a 24% growth.48%) but this is because of companies in the South alone. East and West. architecture. Printing. interior decoration. being flexible enough to adopt new technology and market practices are acting as hindrances. Machinery and Mechanical Products. This is based on a sample of 350 companies out of the 872 which have been interviewed who have provided information on their turnover figures for the last five years. The companies in the manufacturing sector have recorded a negative growth of 8.14% in the last five years while the companies in AIMA 7 .
In the period from 2000 to 2001 the growth increased to 11. The primary benefit offered by the local players is low price which is being eroded by the larger regional players as well as the multinationals which have penetrated the market with lower prices to match the regional players. The market barriers included low sales & less demand for products. many of the local players had to shut down because of competition from small bakeries on one hand and large regional players like Priyagold on the other and still larger national players like Britannia and Parle all of which offer similar products at almost the same prices. Accordingly. Barriers cited for growth of SSIs The main reasons cited by the SSIs for the non growth of the sector have been market related (70%). However. Marketing support for SSIs is essential for identifying their target markets ± SSIs are getting confused about the market they should serve.Executive Summary Small Scale Industry in India Assessment of Growth after Liberalisation the services sector have recorded a growth of 16. power (14%) and technical (14. there is the local regional unorganised player at one end selling cheap quality goods. which improved to -3. the years 1998-99 have witnessed a negative growth of -36. 19% felt that it had adversely affected the sector. 24% felt that liberalisation did not have an impact on the growth of the sector. The companies were asked to state their actual turnover for the last five years.5% opined that the market growth had become uncertain after liberalisation. As an example is the biscuit industry. This has been possible due to the economies of scale which enable the players with larger capacities to lower their prices.6%). The year-to-year growth was computed for the last four year period based on these figures.34% in the last five years. Government policies and regulations (12.82% in the following year. finance related (25%). Impact of liberalisation on growth of SSIs 70% of the companies could respond to this question after explaining the meaning liberalisation. 17% felt that it had brought in new opportunities while 9.67% among the companies in the sample. stagnancy and market fluctuations. competitive market.2%). The growth in the manufacturing sector has been slow but steady but in case of the services sector it has shown a cyclical trend. imported Chinese and Taiwanese goods on the other hand and the MNCs infiltrating into their domain on the other. the growth is more on account of the positive growth recorded consistently for the Southern region and for the Western region in the last two years.78%). worker inefficiencies (13.87% while it improved further in the year 2001 to 2002. AIMA 8 .
Infrastructure bottlenecks like power and transportation have been cited as more important barriers for growth by companies in the South. With better infrastructure facilities these companies are likely to fare even better. Companies in the South have been able to achieve higher sales volumes. They have also tried to increase the productivity by deploying generators and increasing shifts. Exploitation of market opportunity 53% of the companies have mentioned that they could exploit the opportunity presented to them. The services sector companies have deployed cost reduction measures. Measures adopted to overcome problems The companies have resorted to internal measures like reducing the costs of production and increasing the productivity of their existing workers or increasing the employee strength and also reducing raw material procurement and other costs. The manufacturing sector companies have primarily used measures of finance infusion or increasing manpower which is better trained. In the Southern region. the effort has been to move out and target beyond local needs. AIMA 9 . more demand for products and target growing markets much better than companies in other regions but they have been constrained by market fluctuations and uncertainties. market expansion measures and solving power problems and increasing working hours of existing employees much more in comparison to the manufacturing sector companies.Executive Summary Small Scale Industry in India Assessment of Growth after Liberalisation More companies in the Northern and Western region (nearly 75%) in comparison to companies in the South (65%) have mentioned market as a constraint to growth. In Eastern region government rules and regulations have been blamed much more than other regions while in the Western region the mind set is more towards solving the problem through finance. The remaining 47% could not avail of the opportunity because they could not face the market conditions of sluggish growth and competition. The companies in the Southern region have resorted to human resource measures as well as market expansion measures much more than the other regions. This has been through better utilisation of government policy and arrangement of funds.
The most pessimistic view has emerged from the East which is mainly due to their overdependence on Government policies to bail them out of their losses and their own inability to understand the market needs.Executive Summary Small Scale Industry in India Assessment of Growth after Liberalisation The companies in the Northern region have been slower in responding to opportunities in the environment. The optimism was backed by their own capabilities of market readiness. but 40% of the companies are pessimistic. In the remaining three regions the responsiveness has been nearly 15-20% higher. Factors which have helped growth The respondents were provided with a list of selected factors and asked to rate them on a five point agreement scale where 1= Completely disagree and 5 =Completely agree. AIMA 10 . which have contributed the most towards growth are market related factors and IT factors like rise in ecommerce and usage of Internet. 60% of the companies have expressed a capacity to survive in the next five years. The usage of subcontracting and ancillarisation or out sourcing has been deployed less by firms in the Southern region but has been predominantly in the Northern region. The companies in the Southern region have been able to find their own independent markets rather than depending on a parent company. Confidence Index The companies were asked to state to what extent they would be able to continue to perform in the present economic environment. The confidence index for the next ten years was strongest in the South. harnessing resources and encouragement by the regulatory and Government bodies. The strategy of subcontracting/ ancillarisation and sourcing out has enabled the companies to grow. Globalisation and Liberalisation policies have benefited the service sector more than the manufacturing sector. Maximum number of the companies in the South mentioned that they would be able to continue for the next 10 years. The common factors which have contributed towards manufacturing and service both are rise in e commerce and sourcing out. The ³Agree %´ has been computed using the sum total of the ³Agree somewhat´ and ³Completely Agree´ Among the factors.
The institutions which have been recognised as providing support to the sector have to be given further impetus to improve their systems and deliveries so that they can serve the sector better. therefore. The market constraints which have been experienced are increase in the cost of manufacturing on the one hand and influence of imported and Chinese goods on the other hand resulting in small markets to be addressed with lower margins and. NSIC. The present system seems to be more geared towards supporting manufacturing activities rather than service based companies. While cost of manufacturing is a concern for the manufacturing sector and lack of product standardisation is a concern for the service sector. Companies in South have been able to seize market opportunities despite competition. increasing the risk factor. The companies in the South have not been constrained as much due to competition from Chinese goods or lowering of import duties as in the case of other regions but they have attributed the increase in cost of manufacturing as the main reason for the lack of growth. Software Technology Parks. AIMA 11 . Preferential Purchase Policy. SIDBI have not lent much support to the growth of the sector. Marketing Constraints The respondents were provided with a list of marketing constraints and asked to rate them on a five point agreement scale where 1= Completely disagree and 5 =Completely agree. The SSI sector has used the Industrial Estates and Growth Centres and District Industry Centre the most. They were asked to state whether or not they have availed of these programs. They themselves have been unable to exploit global opportunities because of lack of consistency in products. Export Processing Zones. However. SISI. The manufacturing sector has received more support through cluster development schemes. State Financial Corporations and Cluster Development Schemes have also contributed towards the success of SSI sector.Executive Summary Small Scale Industry in India Assessment of Growth after Liberalisation Institutional Support The respondents were provided with different schemes and programs which have been offered through the institutional support mechanism for the SSI sector. preferential purchase policy. SIDC. SIDO. industrial estates and District Industries Centre as compared to the service sector. The services sector has received some financial support only from the State Financial Corporations.
However. In the Southern region human resources or lack of programs have not been considered as a constraint. In the Western region too it is the lack of programs for the SSIs which have been considered as an important constraint. In the Northern region. lack of collateral securities and delays in payments to ancillary are equally important. however. All the financial constraints including bank credit for working capital. documentation of bank loans. stringent labour laws and cost of human capital have emerged as the more important human resource constraints. There are regional differences as far the human resource constraints are concerned. Infrastructure Constraints The respondents were provided with few infrastructure constraints which have been identified by previous studies on the SSI sector and asked to rate them on a five point agreement scale. more companies in the West and South have mentioned finance as a constraint in growth. all the constraints are important but the lack of training programs for SSIs has emerged as more important. lack of collateral securities has been mentioned as more important by the manufacturing sector. Financial constraints have been identified as a major barrier towards growth more in the Eastern region. Inadequate programs for the SSIs is more of a concern among the services sector in comparison to the manufacturing sector while stringent labour laws as well as cost of human capital are barriers for growth in the manufacturing sector. These have been identified to be as important as finance and human resource constraints. In the Eastern region. This has been identified as much as an important barrier as finance. In the Southern region as many as 47% companies AIMA 12 . Infrastructure constraints like power and lack of physical infrastructure like roads have emerged as crucial.Executive Summary Small Scale Industry in India Assessment of Growth after Liberalisation Financial Constraints The respondents were provided with a list of financial constraints and asked to rate them on a five point agreement scale where 1= Completely disagree and 5 =Completely agree. This has been identified as the second most important constraint in the growth of SSIs. All the constraints are equally important to both the manufacturing and services sector. Human Resource Constraints The respondents were provided with human resource constraints which have been identified by previous studies on the SSI sector and asked to rate those on a five point agreement scale.
21. Regulatory Constraints The harassment of the industry by the Inspector visits has been mentioned as the primary constraint for growth (51. The technological constraints which have been identified as the main reason for non growth are technological upgradation. low productivity and lack of knowledge about technology sourcing. However.Executive Summary Small Scale Industry in India Assessment of Growth after Liberalisation consider power shortage to be important which implies that the Southern region could have fared better if these bottlenecks had been eliminated. 33% for financial training and remaining 21. Power has not emerged a main concern in the Western region implying that the policy of privatisation of power seems to be working. While technology up-gradation is a major constraint in both manufacturing as well as services sector. this is more rampant in North (78%) and East (61%) rather than West (53%) and lowest in South (19%) implying that a healthy business environment is vital for the growth of the sector. Training Needs 51% of the respondents have expressed a need for marketing training.2% for exports. low productivity and technology acquisition through licensing are more important constraints in case of the manufacturing sector. Technological Constraints 36% companies have mentioned technological constraints as a hindrance to growth. Companies in South are not concerned about technology being a constraint as they have been constantly upgrading. However. De-reservation of products has also been cited as a barrier for growth by 32% of the companies interviewed implying that nearly one third of the companies in the SSI sector would like to continue to thrive in a protected environment. Infrastructure constraints have impacted the manufacturing sector more significantly as compared to the services sector. those in the Northern and Western region have higher concern for technology upgradation and low productivity. AIMA 13 . The manufacturing sector is more troubled by the Inspector Raj in comparison to the Services sector.3% for information technology.6% for human resources and 21.46%). In the North and East there have been major problems due to power constraints.
their industry sector and for their own company after five years and asked to rate them on a five point survival scale where 1= More profitable than today and 5 =Cannot survive definitely. Programs to develop skills of knowledge management and data base.Executive Summary Small Scale Industry in India Assessment of Growth after Liberalisation The marketing training has been suggested for market development. improvement of employee performance. Internet and Internet based technology and improvement of communication can be introduced for training in Information Technology. each individual industry sector and the companies but it is inclined towards a status quo and somewhat more profitability rather than much more profitability. it has been suggested that programs addressing industrial and labour law. activity based costing and financial policies. No longer they will be AIMA 14 . multilateral free trade regimes the SSIs are now subject to the dictum of the market forces. Implications and Recommendations for the SSI sector In the light of the findings from the survey some areas which are important for policy thrust have emerged. The financial training has been identified as necessary for obtaining loans. global marketing and dealer development and network. Nearly 30% of the companies in the Southern region feel that they would be more profitable in the next five years. on the other hand nearly 6% feel that they will definitely not survive. Outlook for the Sector The respondents were provided an outlook scale for the SSI industry. With the advent of liberalisation. help in finding importers and Government assistance are needed. The companies in the Southern (83%) and Eastern (84%) regions are more upbeat about the outlook of SSI sector. In case of exports courses for legal procedures country wise. planning customer promotional activities. 14% of the companies within the sample have felt that they are likely to be more profitable in the next five years. The companies operating in the services sector are more positive in their outlook for their growth as well as the growth of their sector in comparison to those in the manufacturing sector. The ³Survive %´ has been computed using the sum total of the ³more profitable than today´ and ³Somewhat profitable than today´ and ³Same as today´ A positive outlook has emerged for the SSI sector. team work management and motivational techniques can be introduced. the industries sector and their companies. Among the companies in the North 65% have shown a positive outlook whereas in the West 61% have shown a positive outlook. In the area of human resources.
On the contrary. subsidy. The regional differences are stark. the growth in the SSI sector is led by the Southern region. There is also not much hindrance felt in the South from the regulatory point of view whereas in case of other regions. In the other regions there has been a clear mindset to blame the government policies and lack of support from the government as the reason for the dismal performance of the sector.18%) contrary to the popular belief that the sector is prospering. The foremost implication which has emerged is regarding the perception of the role that the Government should play in the growth of the SSI sector. particularly in the North the harassment caused by regulatory visits has been cited as a major bottleneck in growth. The overall growth of the SSI sector in the last five years has been negative (-5. in case of the entrepreneurs in the Southern Region no such complaints have been recorded. companies in the North and East have recorded a negative growth while the Western region has recorded a negligible positive growth. Some of the salient constraints are inability to find a target market for the products due to competition at either end of the quality spectrum.Executive Summary Small Scale Industry in India Assessment of Growth after Liberalisation able to get the preferential treatment. Market Constraints Though previous studies have highlighted technology awareness. There are major learnings which other regions can derive from the Southern success story. So if they want to survive and prosper in this New World order. which has shown a constant growth of 25% in the last 5 years. protection from the Government as well as from the institutional mechanisms. The state governments in the region other than South could take lessons from the support mechanism instituted by the state governments of the Southern states and apply it to their own conditions. acquisition and adoption as the main reason for the slow growth of the SSI sector. however. they are supportive of the government policies and feel that government has been a good facilitator. On the other hand. support. marketing related factors have been cited as the primary reason for the low performance of the sector according to the present survey. The implications for the SSIs which have emerged from this study are: Growth Pattern The striking learning that has emerged out of the study is the difference in the growth of the SSI sector across regions. This points towards the following measures to be introduced: AIMA 15 . they have to be competitive.
a need to educate them about the effect of WTO on their business. The consortium approach has also been successful in increasing the bargaining power of the SSIs and making them stronger. Subcontracting has emerged as the route to success for the SSI sector. In the leading textile zone of Tirupur in Tamil Nadu. AIMA 16 . These packs may be prepared and distributed among the SSIs letting them know the details of financing and other schemes available to them. new avenues for their products both domestically as well as abroad. It includes both the procedural hassles as well as availability constraints. There is. The recommendations which follow suggest introduction of a resource pack containing details of government policies regarding the financial norms. There should be close-knit coordination between large industrial houses and SSIs so as to reap the benefits of the small sectors in the production processes. therefore. Financial Constraints The second most important constraint identified by the study after the market-related barriers is the financial constraints. the hosiery manufacturers have approached the international labels like Benetton for procuring orders for manufacturing on their behalf. The consortium approach needs to be encouraged through the cluster schemes. This requires standards and code procedures to be available within easy reach of the SSIs. The emphasis should be on standardization. brand equity building and brand positioning strategy to develop a good market presence for these products. new production and business practices through trade fairs and workshops. This can be undertaken by introduction of common exchange platform of projects. They have assured them about the quality as well as delivery schedules as well as the cost effectiveness of manufacturing through them.Executive Summary Small Scale Industry in India Assessment of Growth after Liberalisation The SSI units need to be provided with market related information. This can be nurtured through better coordination and cooperation mechanisms between small and large companies. The industry forum and association should undertake publication and dissemination of such information in the form of bulletins and journals. The cost of manufacturing for the SSIs goes up due to poor understanding of the supply chain resulting higher costs of raw materials. The SSI owner is intrigued by the presence of Chinese and other cheap foreign goods in the market which lure their customer. Training on supply chain management needs to be introduced so as to reduce the intermediate cost of transaction and marketing the product at the targeted area.
Poor productivity of the labour force being a major concern can also be addressed through upgradation of skills. however. The SSIs in India are by and large viewed as units producing poor quality outputs using outdated technology.Executive Summary Small Scale Industry in India Assessment of Growth after Liberalisation Human Resource Constraints The human resource constraints ranked on par with financial constraints in terms of their importance. The growth and development of SSIs in India greatly depends on a change in this perception and the reform process should include a strategy to catalyze the change. Technology Constraints Technology has not emerged as the main concern of the SSIs. Develop project reports incorporating the latest proven technology for different sectors with buy back arrangements in order to inspire confidence among the entrepreneurs. Create awareness about the utility of technology upgradation and about the level when the entrepreneur should take a decision about the same. this is due to the fact that they are not aware of the ability of technology to translate into new markets or reduce costs. dealer networking and exports. AIMA 17 . There should be training program from the industry associations to upgrade the skill of the workers and to make them acquainted with the skills. To this end some of the areas which could be addressed are: Setting up of technology awareness & sourcing centres to enable entrepreneurs to access & buy the appropriate technology at a reasonable price. Training programs in marketing have been most demanded particularly in the areas of market development. They feel that technology is essentially an expensive proposition which should be deployed only if everything else stops working or if they are certain about the demand that it would generate. Some of measures which need to be adopted to reduce these constraints are: Labour laws should be made more flexible and simplified for the SSIs to give the entrepreneurs a free hand in the choice of labour hiring and firing. compatible with the new technology. This approach would be particularly feasible in case of clusters.
Power has not emerged as a main concern for the Western region implying that the policy of privatization power seems to be working. AIMA 18 . The policy makers and institutions require to give due consideration to these issues for optimising the potential of the SSI sector. The present research has been able to identify certain problems which occur at the ground level and are faced by the SSIs in their day to day working and progress. The cluster approach has worked well and has been appreciated by entrepreneurs in all the regions.Executive Summary Small Scale Industry in India Assessment of Growth after Liberalisation Infrastructure Constraints Improper roads and insufficient power supply have emerged as the leading infrastructure constraints. Power shortage stood out as the most important constraint in the Southern region. These need to be made stronger by increasing their capacity to cater to the needs of the SSI sector. the best performing SSI region. So a lot is needed to be done in the power sector reforms. Schemes and programs encouraging the use of clusters must be encouraged. District Industries Centres have also received a positive feedback from the SSI sector. mainly in the distribution of power.