Problems faced by small scale industry in Punjab in the light of recent national and global business environment

Dr. Anita Soni

3 million people.Small Scale Industry in India Assessment of Growth after Liberalisation  In India. This sector constitutes 95% of the industrial units and contributes 40% to the total industrial output of the country and 35% to direct export. the small-scale industrial (SSI) sector has acquired a prominent place in the socio-economic development of the country during the past 50 years.6 million SSI units in India and these employ approximately 19. According to the latest statistics. which is second highest next only to . there are about 3.

.25crores With the total production of Rs 41896.44.Small Scale Industry in PUNJAB Assessment of Growth after Liberalisation There are number of units in small scale industries in Punjab are 1.241 employees with fixed investment of Rs 5972.559Giving employment to 9.62.80crores which is much wider than large scale units .

4-Low capital intensive. 5-Potential for employment 6-Effective mobilisation rural resource .S.I 1-Shorter gestation period 2-Low cost of establishment 3-Widely dispersed building wider industrial base.Inherent advantage of S.

which have contributed the most towards growth are market related factors and IT factors like rise in ecommerce and usage of Internet.Factors which have helped growth Assessment of Growth after Liberalisation Among the factors. 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. . The common factors which have contributed towards manufacturing and service both are rise in e commerce and sourcing out.

Why S.S.I fails Inordinate delay in sanction of credit limit  Need based lending not extended  Big units deliberately promote ancillaries  Placed order in large nos of small ones  Gets payment on the whims & fancies of big units  Disadvantageous position of raising funds  .

Inherent weakness of S. Lacking basic infrastructure  Old/outdated technology  Poorly placed in market situation  Promoters lack specialisation  Weak capital base &lesser access to capital market  Lacking managerial&professional skills  .I.S.

Face resource crunch  Poor accounting system  No planning budgeting or monitoring  Short term fund are deployed for long term uses  Pre operative expenses are not considered in project appraisal  .Inherent weakness of SSI contd.

mainly in the distribution of power. Schemes and programs encouraging the use of clusters must be encouraged. So a lot is needed to be done in the power sector reforms. District Industries Centres have also received a positive feedback from the SSI sector. Power has not emerged as a main concern for the Western region implying that the policy of privatization power seems to be working.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. . The cluster approach has worked well and has been appreciated by entrepreneurs in all the regions. the best performing SSI region. These need to be made stronger by increasing their capacity to cater to the needs of the SSI sector.

Poor productivity of the labour force being a major concern can also be addressed through upgradation of skills. compatible with the new technology. There should be training program from the industry associations to upgrade the skill of the workers and to make them acquainted with the skills. .Resource Constraints    The human resource constraints ranked on par with financial constraints in terms of their importance. 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.

The SSIs in Punjab are by and large viewed as units producing poor quality outputs using outdated technology. however.Technology Constraints   Technology has not emerged as the main concern of the SSIs. this is due to the fact that they are not aware of the ability of technology to translate into new markets or reduce costs. . 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. 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.

These packs may be prepared and distributed among the SSIs letting them know the details of financing and other schemes available to them. The recommendations which follow suggest introduction of a resource pack containing details of government policies regarding the financial norms. .Financial Constraints  It includes both the procedural hassles as well as availability constraints.

This requires standards and code procedures to be available within easy reach of the SSIs. brand equity building and brand positioning strategy to develop a good market presence for these products. new avenues for their products both domestically as well as abroad. a need to educate them about the effect of WTO on their business. new production and business practices through trade fairs and workshops. There is. The emphasis should be on standardization. The SSI owner is intrigued by the presence of Chinese and other cheap foreign goods in the market which lure their customer. .Suggestions    The SSI units need to be provided with market related information. therefore.

  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.  Develop project reports incorporating the latest proven technology for different sectors with buy back arrangements in order to inspire confidence among the .

Role of Govt.B.I Banks should convey timely sanction  Loan applications to be timely disposed  Need based & timely credit to be extended  Simplified & uniform application form  Rejection of application form should be done with approval of higher authorities  Collaterals upto 1lac not to be insisted   .of India& R.

Role of GoI & R.  Target for financing priority sector where SSI is a constituent  . Contd. Financial assistance for meetig T/L&W/C be given  Interest on delayed payment to SSI and ancillary undertaking act 1993.B.I.

Thankyou .