Islamia Collage of Science and Commerce

Hawal, Srinagar Kashmir, 190002

Project Report
On
“INDUSTRAIL PERFORMANCE”

Submitted By:
Mohammad Rayyan Sofi (Roll No. 20660503)
Section - D

Submitted to:
Mr. Suhail Sir
Faculty of Commerce and Management Studies

Islamia Collage of Science and Commerce, Hawal Srinagar .

 DECLARATION
I Mohammad Rayyan Sofi, B.Com Honours
student of Islamia collage of Science and
Commerce hereby declare that we have duly
completed project on “Industrial Performance” for
the academic year 2020-21.
 CERTIFICATE
This is to certify that the project report titled
“Industrial Performance” is the work carried out by
Rayyan Sofi under the supervision and guidance of
Mr. Suhail Sir submitted in partial fulfilment for the
award of Bachelor’s Degree in
Commerce Honours (B. Com Honours 2nd
semester). This project report was completed
within the stipulated time as prescribed under the
statues of collage.
It is further certified that this work has not been
submitted earlier in this college or any other
collage for any degree.

Prof.Dr.Seema Bashir Prof.Mr. Suhail

Sir
H.O.D of Commerce Asstt. Professor
ACKNOWLEDGEMENT
First and foremost thanks to Almighty Allah, the most
merciful, the most beneficent who has always been with
us, who provided us strength and zeal in completion of
the project. All our success comes only from Him, in Him
we trust and unto him we turn.
We deeply express our sincere gratitude to the
honourable Head of Department of commerce
Dr.Seema Bashir for allowing us to accomplish our
project work in the department and availed us all the
facilities for the completion of the project.
We owe our deepest gratitude to our respected teacher
and guide Mr Suhail Sir assistant professor in
department of commerce, whose valuable guidance,
extraordinary help, empathetic nature kind assistance
were of incredible importance in completion of our work,
We are highly grateful to our guide for making this
herculean task easy and interesting.
For expressing our heartfelt gratitude to our parents, we
feel short of words whose love, patience, emotional
support and understanding has enabled us to complete
this endeavour. We owe them a lot than the mere word
thanks.
Once again we thank the deepest core of our heart to
those who stood by us and provided us with emotional
support and made us confident enough to complete the
project.

Rayyan Sofi
CONTENTS
Chapter 1 Introduction

Chapter 2 Setup of Industry in India

Chapter 3 Classification of Industries

Chapter 4 Distribution
Chapter 5 Objectives

Chapter 6 Industrial Performance

Chapter 7 Investment in Industrial Sector

INTRODUCTION
An industry is a group of companies that are related based on their
primary business activities. ... Individual companies are generally
classified into an industry based on their largest sources of revenue.
Ever wondered where your smartphone came from? You purchased it
from a shop sure, but the shopkeeper purchased it from his distributor,
the distributor purchased it from the manufacturer. And, the
manufacturer produced a final product, your smartphone, from the raw
materials available to him. Thus, the manufacturer is the origin of your
smartphone. An industry is a group of organizations involved in
producing/manufacturing or handling the same type of product and
service. So, a group of smartphone manufacturers is known as an
industry.
Setup of Industry in India
Cotton Textile Industry: In 1818, the first cotton mill was established in
Fort Gloster which was unsuccessful. In 1854, the first succesfull cotton
mill set up in Mumbai by Kavasji Davar. Jute Industry: It was first set up
in Rishra (near Kolkata) in 1855. Therefore, the real beginning of the
modem industry in India is recognised with the establishment of cotton
textile industry at Mumbai in 1854. This industry grew tremendously in
1870s due to a spurt in demand in the wake of the American Civil War.
By 1875-76, the number of cotton textile mills rose to 47

The services sector is the largest sector of India. Gross Value Added
(GVA) at current prices for the services sector is estimated at 96.54 lakh
crore INR in 2020-21. The services sector accounts for 53.89% of total
India's GVA of 179.15 lakh crore Indian rupees

Industries are part of the secondary activity. Secondary activities or

manufacturing converts raw material into products of more value to
people. Industry refers to economic activities concerned with the
production of goods, extraction of services and provision or
services.
Hence we can say that Industries are concerned with:

• Production of good (steel energy)

• Extraction of minerals (coal mining)

• Provision for services (tourism)

• There are also Emerging Industries: ‘Sunrise Industries’

Classification of Industries
1. Raw material

• Agro-based industries: These industries use plants and animal-based

products as their raw materials. Examples, food processing,
vegetable oil, cotton textile, dairy products, and leather industries.
• Mineral based industries: Mineral-based industries are based on
mining and use ‘mineral ore‘ as raw material. These industries also
provide to other industries. They are used for heavy machinery and
building materials.
• Marine-based industries: Marine-based industries use raw materials
from sea or ocean. Examples, fish oil.
• Forest-based industries: These industries use raw materials from the
forest like wood. The industries connected with forest are paper,
pharmaceutical, and furniture.

2. Size

Size of industries are measured by how much money is invested,

employee count and goods produced.

• Small-scale industries: Small-scale industries have less capital and

technology invested in them. There is often manual labour noticed
here. Example, Basket weaving, pottery, and handicrafts.
• Large-scale industries: Largescale industries are the exact opposite
of small-scale industries. Here the capital invested is large and
advanced technology is in use here. Example, Automobiles and
Heavy Machinery.
3. Ownership

• Private sector: Private industries are businesses that are owned and
operated by an individual or group of individuals.
• Public sector: Public industries are owned and managed by the
government. Example, Hindustan Aeronautics Limited (HAL)
• Joint sector industries: These industries are jointly operated by the
state and individuals. Example, Maruti Udyog.
• Cooperative sector industries: Cooperative industries are operated by
the suppliers, producers or workers of raw material. Example, Amul
India.

Industrial Systems
Industrial systems are made up of input, processes, and output. The
input of raw materials, labour, land, power, and other infrastructure. The
process is the plan the manufacturer has of how to turn raw materials
into finished products of value. And finally, the output is the end of the
product from which the income earned it.

Industrial Clusters
Industrial clusters occur when many industries are located close to each
other and share the benefits of their closeness. Major industrial clusters
in India are:

• Mumbai-Pune cluster
• Bangalore-Tamil Nadu region
• Hugli region
• Ahmedabad-Baroda region
• Chottanagpur industrial belt
• Vishakhapatnam-Guntur belt
• Gurgaon-Delhi-Meerut region
• Kollam-Thiruvananthapuram industrial cluster

Distribution of Major Industries

As we learned how industries were classified according to raw material,
size, and ownership. Here we will learn the distribution of some major
industries, which are iron and steel industry and textile industry are the
oldest industries that have had their role in Indian industrialization.
Information technology is an emerging industry.

Iron and steel industries have their firm hold in countries like Germany,
USA, China, Japan, and Russia. While textile industries are flourishing
in India, Hong Kong, and South Korea. The new emerging information
technology has their concentration in Silicon Valley of California and
Banglore of India.
Iron and Steel Industry

Iron and Steel industries are famously known as the feeders of

all the other industries. The products of these industries are
used as raw materials in other industries. As we learned the
industrial system, this industry comprises of various inputs,
processes, and outputs. The input includes raw material such
as iron ore, labor, capital, and other infrastructure. Iron ore is
then converted into steel by various processes like smelting
and refining.

Finally, the output is steel. Steel and iron can be called as the
basic material needed in every other industry. No doubt, they
are the backbone of the modern industry. In a developing
country like India, Iron and Steel industry has taken the
advantage of the cheap labor, raw material, and the ready
market.

Textile Industry
Textile is a fabric that is woven from fibres. It takes raw material like
cotton or wool and the process called spinning turns it into yarn that is
later used to create the fabric. Fibres can be natural or are man-made.
Natural fibres are – cotton, jute, linen, wool, and silk. Man-made fibres
are – nylon, rayon, and polyester.

The man has been wearing and using fabric since ancient times. The
textile industry is one of the oldest industry in the world. And until the
industrial revolution, the textile industry used wheels and looms to weave
fibre. During the revolution, power looms were introduced first in Britain.

After that, textile industry expanded in Mumbai because of its warm,

moist climate, facility of port for importing machinery and exporting the
output and above all the availability of cheap labour. Some of the well
known and highly demanded fibres are, Muslins from Dhaka Chintzes
from Masulipatnam and Calicos of Calicut, Gold wrought cotton from
Surat, Burhanpur, and Vadodara.
Information Technology

Information technology deals with the storage, processing and

distribution of information. During the decade, the industry has gained
global attention due to a series of political, technological and
socioeconomic events. India is witnessing the emergence of information
technology hubs in Bangalore, Mumbai, Hyderabad and Chennai.

The Silicon Valley and Bangalore both share many same aspects in the
development of Information technology such as pleasant climate, skilled
workforce, presence of high quality educational, technological and
scientific centers and access to markets.

Objectives of Industries
Ethiopia's industrial development objectives are based on the overall
economic development strategy of the country, that is the Agricultural
Development Led Industrialization (ADLI) which aims achieving an
optimum utilization of the country's human and material resources. The
major objectives of the ADLI are the following---

1. Promote economic efficiency and growth.

2. Bring about a structural shift in the economy in favor of industry.

3. Promote inter and intra-sectoral linkages.

4. Develop domestic technological capability for the production of

intermediate inputs, outputs and capital goods.

5. Create a sound base for the transfer, adaptation and development of

technology.

6. Develop and achieve international competitiveness in areas of clear

comparative advantages in industrial exports.

7. Promote the use of labour intensive technology and of local resources.

8. Promote balanced regional development.

INDUSTRIAL DEVELOPMENT STRATEGY
In order to achieve the above objectives, it is important to formulate a
suitable industrialization strategy, the major elements of which comprise
the following.

1. Create and develop appropriate institutions to promote

industrialization.

a. Promote and efficient utilization of existing support institutions and

encourage their expansion and development in both the public and
private sectors.

b. Upgrade the quality of vocational education, and training in existing

institutions in the short run and promote an extensive development of
vocational education and training in medium and long terms.

c. Establish extension services to promote SMIs and rural industries

as well as informal and micro-enterprises in the various regions of the
country and expand and upgrade them on a continuous basis.

d. Encourage private investors; promote cooperation and

coordination between private and public activities and the mobilization of
resources for industrial development.

e. Effectively utilize existing capacities in the short run and develop

such capacities in the long run.

f. Encourage the development of cooperatives through various policy

measures and incentive mechanisms.

2. Create a conducive environment for industrial development.

a. Ensure a speedy and smooth implementation the investment code

and other policy measures that have been enacted and review and
revise them as necessary.

b. Support the development of SMIs and local private capital.

c. Create the necessary legal and institutional framework for fully

implementing the privatization of public enterprises.

d. Promote full capacity utilization of public enterprises.

e. Create additional production capacity in SMIs.

f. Promote a diversified industrial structure.

g. Utilize various policy instruments and incentive systems to promote

environmental protection.

3. Promote inter and intra-sectoral linkages.

a. Utilize various policy instruments and incentive systems to promote

inter- and intra-sectoral linkages; utilize labor intensive technologies
and local resources.

b. Rehabilitate existing engineering industries with a view to achieving

full capacity utilization.

c. Promote basic industries with multiple effects:

-- by establishing an appropriate institutional framework;

--by carrying out studies regarding measures to be taken to promote

them;

--by encouraging private investment, both domestic and private; and

--by encouraging public investment where private sector investment

proves inadequate to overcome bottlenecks.

d. Encourage the development of agro-industries through the utilization

of various policy instruments and incentive systems.

e. Encourage the development of ancillary industries.

f. Promote the exploration and exploitation of industrial mineral

resources.

g. Promote efficiency in industries supplying inputs to other industries by

introducing appropriate policy instruments.

4. Create an appropriate financial environment.

a. Make an effective use of the Agricultural and Industrial
Development Bank for encouraging investment in the sector.

b. Use various policy instruments and incentive systems to optimally

utilize savings generated in the sector.

c. Enhance the sector's efficiency, profitability, and competitiveness

by using various policy instruments and incentive systems.

d. Encourage the establishment of financial institutions that can

address the needs of rural cottage industries, informal and micro
enterprises in different regions.

e. Encourage the development of informal financial institutions for

participation in investment activities.

5. Promote balanced regional industrial development.

a. Expand infra-structural services for the development of industry.

b. Create industrial extension services in all regions.

c. Utilize various incentive systems to attract investment to the various

regions.

d. Create public awareness in the various regions regarding the need for
industrial development.

e. Utilize various policy measures and incentive systems to promote

resource based SMIs in all regions.

f. Encourage the participation of regional development-oriented

associations in industrial development.

g. Develop the institutional capability for the formulation and promotion of

viable investment opportunities in all regions.

6. Establish a close coordination between industry and other sectors of

the economy, especially agriculture and mining.

a. Introduce various incentive mechanisms for the production of

industrial raw materials.
b. Promote private sector investment in agriculture and mining, to be
complemented by public sector investment where private sector is
inadequate.

c. Develop the institutional capability for monitoring and coordinating

the development of industry vis-à-vis linkages with other sectors of the
economy, especially agriculture and mining.

7. Develop infrastructure.

a. Improve the efficiency of existing infra-structural facilities.

b. Undertake extensive public investment for the development of roads,

energy, communications and water supply.

c. Where appropriate encourage private sector investment in

infrastructure.

d. Promote the development of basic rural infrastructure through

community participation in all regions so as to complement public
investment.

8. Promote industrial exports

a. Effectively utilize existing industrial export potentials and diversify

industrial exports.

b. Introduce various policy instruments and incentive systems to

maximize foreign exchange earnings.

c. Ensure an internationally competitive industrial sector, especially in

areas of comparative advantage in the long run.

d. Use various policy measures and incentive systems to promote

private investment in export-oriented industries.

e. Create a conducive environment for the development of industrial

exports.

9. Develop national technological capability

a. Strengthen national capability for the transfer and adaptation of

technology and promote the diffusion and development of technology.
b. Promote and coordinate R&D activities between vocational and
high level technical training institutions.

c. Create an institutional capability for the identification and selection

of suitable technologies.

d. Promote technological adaptation and innovation by introducing

appropriate legal and incentive mechanisms

Industrial Performanance
Post 2008-09, the industrial sector, consisting of manufacturing,
mining, electricity, and construction, showed remarkable recovery and
steady growth for three years but lost momentum thereafter owing to a
combination of supply-side and demand-side constraints. Industrial
performance in 2013-14 remained lackluster for the second
successive year. The latest gross domestic product (GDP) estimates
show that industry grew by just 1.0 per cent in 2012-13 and slowed
further in 2013-14, posting a modest increase of
0.4 per cent. While these f igures may see upward revision once
Annual Survey of Industries (ASI) data is available, there is no denying
that industrial revival may take longer and needs stronger initiatives to
emulate the peak growth achieved in the recent past. Further, it will be
a daunting task to meet the projected Twelfth Plan targets of 10 per
cent for the manufacturing sector and 5.7 per cent for the mining
sector in the remaining three years.
Sector-wise analysis of industrial performance (see Figure 9.1)
Figure 9.1 : Sector- wise Growth of Industry GDP (per cent)

shows that the key reasons for poor performance have been
contraction in mining activities and deceleration in manufacturing
output. Manufacturing and mining sector GDP declined by 0.7 per cent
and 1.4 per cent respectively in 2013-14. The underlying cause of the
poor performance of these two sectors has been considerable
deceleration in investment particularly by the private corporate sector
during 2011-12 and 2012-13, a trend that appears to be continuing as
the overall gross f ixed capital formation.
Further, slowdown in construction activities has resulted in capacity
underutilization in the steel and cement sectors. Steel and cement
consumption rose by just 0.6 per cent and 3.0 per

cent respectively in 2013-14. Also, for the f irst time since 200102,
diesel consumption contracted by 0.3 per cent during the year.
Demand- side constraints, along with a combination of other factors,
have resulted in contraction in output of the capital goods and
consumer durables sectors. The two key manufacturing sub-sectors
that had hitherto shown steady growth, namely the automotive and
export- oriented gems and jewellery sectors, have posted negative
growth rates during 201314. The positive highlights of 2013-14 were
robust growth in textiles and electrical equipment as well as electricity
generation notwithstanding capacity underutilization owing to fuel
supply bottlenecks.
 In the sections that follow, the performance of key industrial sectors
and sub-sectors is examined, based on the latest index of industrial
production (IIP) estimates. IIP-based estimates are meant to serve as
quick estimates of industrial performance and are not seasonally
adjusted, therefore the data tends to overlook
fluctuations or calendar effects. These estimates are not strictly
comparable to annual ASI-based estimates or monthly HSBC India
Manufacturing Purchase Managers’ Indices (PMI).

INVESTMENT IN THE INDUSTRIAL SECTOR

Gross capital formation in industrial sector

As per provisional estimates of GDP at current market prices for the
year 2013-14, the rate of GFCF has declined from 31.8 in 2011- 12 to
28.3 in 2013-14. Even though detailed estimates of GFCF are not
available for 2013-14, the overall decline in growth rates of f ixed
investment hints at further deceleration in investment in key segments
of industry during the year. As per the latest data available on gross
capital formation (GCF) by industry of use at constant (2004-05) prices,
a sharp decline in the growth rates of f ixed investment in mining,
manufacturing, and the private corporate

sector has been estimated. The decline is far steeper in unregistered

manufacturing, pointing to paucity of funds available to informal
manufacturing, pointing to paucity of funds available to informalsector
businesses. Sector–wise share in overall GCF shows that the share of
unregistered manufacturing in overall GCF has declined from about 5.7
per cent in 2010-11 to 1.9 per cent in 2012-13. The share of registered
manufacturing in total GCF has also declined from 29.6 per cent to
21.9 per cent during the same period as shown in the below table
 2009-10 2010- 2011-12 2012-13
11
Rate of growth of GCF in 24.2 20.2 -7.6 -8.5
industry (percent)
Sector wise share in overall
GCF
1.Mining 3.6 3.6 3.5 3.2
2.Manufacturing 32.9 35.3 27.4 23.7
a.Registered 27.8 29.6 23.5 21.9
b.Unregistered 5.1 5.7 3.9 1.9
3.Electricity 6.2 7 7.3 7.4
4.Construction 4.8 4.4 5.4 5.4

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