STATE INDUSTRIAL
POLICIES
Dr. A. Mohamed Riyazh khan
DoMS
STATE INDUSTRIAL POLICIES
State / UT Govts. – Pursue central Govt. industrial policies
and get assistance under different centrally sponsored
schemes.
The central policy framework – guiding principle for states
Technical and other support services – through DIC,s
Main Areas of Support
To develop and manage industrial areas of respective
Industrial development and investment corporations
Financial Support services by SFC’s
Technical Support services by TCO’s
Human Resource development by a host of Training
Institutions
Infrastructure Development by small Industry and
Export corporation
Single window assistance by DIC’s
Other Incentives
Providing land and developed plots/ sheds on
concessional terms
Industrial infrastructural facilities
Subsidy on investment (in selected areas)
Sales tax and stamp duty exemptions
Water supply at reduced rates
Seed capital assistance for setting up units
The Policy of Protection / Reservation
To make SSI economically viable
Upward revision and expansion of definition of SSI’s
Identification and Reservation of products for exclusive
production
Identification and Reservation of products for exclusive
Purchase of Government (remaining products provided
price preference)
Trade policy restrictions on Import’s – through Licensing
system
Economic Reforms and SSI policy
A relatively open trade / exchange rate policy
Removal of controls on Foreign Investment flows
Financial sector reform – Deregulation &
De-licensing of industrial and infrastructural
sectors
Tax reforms
FDI’s in Small Scale Sectors
Since 1991 – equity participation – upto 24% of total
shareholding
If proposal to export 50% of production of items
reserved – higher equity participation
Non-SSI unit may also manufacture reserved items if
export is upto 50% and above
Infrastructural Facilities
Industrial Estate Programmes
Started in 1955 to encourage entrepreneurs to set up
small industries and to expand units
Facilities
1. Acquisition of suitable land and its development
2. Subsidy on rent for factory accommodation
3. Construction of factory shed – allotment of sheds
through sale / Hire-purchase
4. Provision of infrastructure – water, electricity, banks,
canteens, transport etc.,
5. Exemption from sales tax
6. Concessional charges for water and power supply
Main Objectives of Industrial Estate
Facilitate growth of SSI’s
Shift industries from congested areas to estate premises
Achieve decentralized development in small towns and
villages
Develop sub-contracting relationship with large
industries
Establish common facility services centers etc.,
Implementation – through state / UT Govts.
After 1979 – transferred programmes to State Industrial
Development Corporation
Development of EPZ / Industrial Parks
EPZ –
Special incentive to undertake manufacturing of export
items from India
Fall under Ministry of Commerce
Special areas designated for export production or
processing of manufactured products at a low cost
Basic infrastructural facilities are provided at reduced
rates – developed land sites, standard designated
factory buildings, roads, power, water, drainage,
banking, post-offices and custom clearing agents
Development of EPZ / Industrial Parks
EOU’s are permitted to sell upto 25% of value of
production in Domestic Traffic Area
7 EPZ’s established across the country
Kandla Free Trade Zone (1965)
SantaCurz Electronic EPZ (1974)
Falta EPZ (1984)
Chennai, Kochi, Visakapattinam, Noida
Industrial / Technical Parks
In 1984 – India Govt. formulated policy for computer
Hardware development – Electronics Hardware
technology parks
In 1986 – Computer software development – STP’s
Bio-tech parks, Leather Park etc.,
Private- public parternerships- Eg. IT park in Bangalore
by Tata Groups, Singapore and Karnataka Govts.
Integrated Infrastructural Development Scheme (IID)
Announced in March 7,1991
Till 1998 – 40 IID’s centers have been sanctioned
Objectives
To establish 60 IID centers in rural / backward districts
To promote SSI and tiny unit clusters – employment and exports
To promote stronger linkages between agriculture and industry
To provide common facilities and technological back up services
To create infrastructural facilities
Integrated Infrastructural Development Scheme (IID)
Size of center - 15 to 20 hectares – 450 SSI inits
Financing upto 50 million
Central Govt. – 20 million
Loan component – 30 million
State / UT Govts. Will meet cost in excess 50 million
Upgrading facilities – 40 % Govt. grant & 60 % SIDBI
loan
Small Industry Clusters
Defined as “a sectoral and geographical concentration of
enterprises”
“A local agglomeration of enterprises which produces
and sells a range of related and complementary
products and services”
Ex:
Sports Goods (Meerut)
Glass Products (Firozabad)
Foundries (Agra)
Easy availability of Raw materials, trained artisans /
proximity to market
Benefits of Clusters to SSI’s
Unique state of togetherness
Backward and Forward economic linkages
Business and social integration
Economies of agglomeration – network of suppliers
Specialization in the manufacturing process
Inter-firm relationships in production activities
Sharing of information and experiences
Develops network of subcontracting between firms
Classification of Clusters
Natural Clusters – Emerge for products produced in a
traditional manner and have no exposure to
technology changes, design and manufacturing
processes
Induced Clusters – Set up by Govt. or other agencies
through creation of infrastructure which is
accompanied by a range of technical services
Cluster Development Programmes
1. Product cum Process Development Centers(PPDC’s) –
Established by SIDo – technical support services
Functions – R&D, product design and innovation,
product and process improvements, improved
packaging techniques, etc.,
Ex:
Ceramic and Glass – Ranchi
Household electrical – Mumbai
Electronic – Ramnagar, UP
Oil & Perfume – Kannanj, UP
Cluster Development Programmes
2. Central Footwear Training Centers (CFTC’s) –
Training for new types of footwear to increase exports –
at Calcutta, Mumbai, Agra, Chennai
3. Integrated Technology Upgration & Modernization
Programms (UPTECH) –
In 9th five year plan – project cost – Rs. 62.5 million for
entire plan period
Cluster Development Programmes
This programme includes
i.
Studies on technical status and needs of identified clusters
in traditional skill based enterprises
ii. Identification of appropriate technologies and suppliers
iii. Facilitation of contract / need based research for adoption
of available technology
iv. Promotion of technologies among target groups of SSI’s
through demonstrations
Implemented in following centers
Pottery cluster at Khurja (UP)
Food Processing at Pune (Maharastra)
Forging Industries at Ludhiana
Auto components at Chennai, Indore
Toy industries at Delhi & Noida (UP)
Hosiery at Kanpur (UP)