•Introduction

-•Objectives of DICs

-•DIC - A Co-ordinating Agency

-•Financial Assistance of DICs

-Committees to Review the Working of DICs Central Co-ordination Committees Regional Co-ordination Committees State Level Co-ordination Committees District Advisory Committees

Chapter - IV

-> Monitoring Cells

-•Delegation of Powers

-•Organizational Set-up of DIC

-•Functions of DICs

-•Role of DICs

-•Other Facilities Price Preference Reservation of Items Industrial Estates

-•Performance of DICs Growth in Number of Units and Production Growth and Dispersal of SSIs in Karnataka Investment in SSIs Employment in the SSIs

- • Other National and State Level Programmes for SSIs PMRY Assistance to Handicraft Promotion Vishwa

Limitations

- • Conclusion

• Summary of the Chapter

CHAPTER - IV

DISTRICT INDUSTRIES CENTRES - A BRIEF PROFILE

4.1: Introduction

There has been a phenomenal growth of SSIs in the country during the

last 55 years after Independence. Yet, the government has not succeeded, in a

big way, in realizing its objectives of ensuring the entry of potential

entrepreneurs from varied social backgrounds into the manufacturing line. Till

1978, the Directorate of Industries was the principal agency in a state looking

after the development of this sector. District Industries Officers were

functioning at the district level. They used to process cases for the registration

of units and approval for registration was granted by the Directorate of

Industries. Generally, Joint Director of Industries used to be the in-charge of the

zone and he was to co-ordinate the activities of the district in the implementation

of industrial development programme1. There was a proliferation of agencies

and organisations which an entrepreneur had to contact in the course of setting

up of a unit. Due to this proliferation of agencies, an average rural and small

entrepreneur was often confused and discouraged. Besides, the remote distance

from the state head-quarters, where generally Directorate Offices happened to be

located, was also a problems faced by the rural entrepreneurs. Therefore, there

was a dire need that an agency should be established in each district which

would serve as a clearing house for all the problems and needs of entrepreneurs

1. Srivastava S.B., "A Practical Guide to Enterprenuers", New Delhi, Sultan Chand and Sons Publishers, 1985, p.302.

110

in the district. This would be in consistent with the objectives of dispersal of

industries to the semi-urban and rural area, generation of employment

opportunities, development of small, tiny and cottage industries, etc. It was

against this backdrop that the concept of District Industries Centres was

enunciated by the (Janata) Government in its Industrial Policy Statement of

December 1977.2

4.2: Objectives of DICs

In every district, a DIC has been established whicji is supposed to provide

all services and facilities to entiepreneurs at one place a} district and sub-district

levels so that they (i.e., entrepreneurs) may set up small| scale units. The broad

categories of services and facilities expected to be provided by the DICs include

the following:

a. Identification of suitable activities,

b. Preparation of feasibility reports,

c. Arrangement for the supply of machinery and equipments,

d. Provision for raw materials,

e. Liason with financial institutions,

f Entrepreneurial training, etc.

The total number of DICs in India as on March 31, 1999 was 422

covering 431 districts out of a total 436 districts in the country. The five left out

2. The DIC (District Industries Centre) programme was launched on May 1, 1978.

I l l

include the four metropolitan cities namely, Mumbai, Delhi, Chennai and

Kolkatta which are outside the purview of DIC programme, and Lakshadeep

Island whose administration is yet to submit a proposal for the setting up of DIC.

In Kamataka State, there are 27 DICs - one at the district head-quarters of each

district. It may be noted here that the DICs have been established in all the

districts in Kamataka. Besides the above six services and facilities that are

expected to be provided by the DICs, they are expected to achieve the following

objectives.3.

a. To identify and help new entrepreneurs.

b. To help the entrepreneurs in setting up of industries in rural areas.

c. DICs are the nodal agency to deal with all the requirements of small and village industries.

d. To educate the entrepreneurs about the importance of quality of their products for marketing and for selling at remunerative prices.

e. To undertake research, extension and entrepreneurial development programmes for the benefit of entrepreneurs.

f. DICs are also required to undertake economic investigation of the local resources.

The DICs are expected to prepare development programmes in

accordance with the direction given by the Development Commissioner, Small

Scale Industries. The development programmes incorporated in the 'Action

3. Reddeppa Reddy., 'Rural Industrialisation - Role of Districts Industries Centres', Khadi Gramodyog, Vol. XXXVI, No. 9, 1990, P. 14.

112

Plans' spell out the resources available, skills, demand, estimates of

requirements of credit, raw materials, industrial accommodation, etc. The action

plans also indicate the types of industries which can be encouraged to be taken

up by the entrepreneurs in an area, targets for new units to be set up, generation

of employment opportunities, production and investment in the new units. The

details of other programmes such as entrepreneurial development, training,

assistance to sick units, supply of raw materials, finance, technical and

technological inputs and marketing assistance are also incorporated in the action

plans.

4.3: DIC - A Co-ordinating Agency

The DICs which are envisaged essentially as co-ordinating agencies seek

guidance from other existing agencies and utilise the expertise so gained for the

promotion and service of small scale units. The DICs are, therefore, expected to

establish close linkage with various organisations at the national and the state

levels. Most of the lead banks have already deputed their officers to act as

managers (for credit) in DICs while arrangements have also been made in

several states to draw officers from state financial corporations who are acting as

managers (for credit). For instance, Rajasthan State Government has appointed

an assistant engineer (electrical).4 In each DIC and he has been authorised to

sanction power connections to industrial units up to 50 horse power (HP).

Managers (marketing) have also been deputed from State Small Scale Industries

4, Deputed by the Rajastan State Electricity Board.

113

Development Coiporation (SICOP). But in Karnataka State, DIC offices do not

have any officer on deputation from other agencies except manager (for

economic investigation) who is from Economic and Statistics, Planning and

Development Department (Karnataka).

In order to have a close co-ordination with the Small Industries

Development Organisation (SIDO), the staff of Small Industries Service

Institution (SISI) have been posted in groups of two or more officers at various

locations at the divisional head-quarters of the state so that they could be easily

accessible to the DICs for rendering consulting services.

From the above, it is obvious that DICs maintain a very close link with

state as well as national level organisations which work in close co-operation

with DICs, and provide all the necessary assistance to general mangers of DICs

so that all inputs of these organisations are made available to the entrepreneurs

under DIC scheme.

4.4: Financial Assistance to DICs

DIC programme continue to be centrally sponsored scheme. At the time

of initiation of the DIC programme in 1978, the pattern of the central assistance

envisaged was to provide a non-recurring grant of Rs. 5,00,000 per DIC for

construction of office buildings, purchase of furniture and other office

equipments including vehicles. The recurring grant for establishment

expenditure was given to the extent of 75 per cent of the actual expenditure

114

incurred subject to a maximum of Rs. 3,50,000 per DIC per annum. This pattern

of central assistance was, however, changed during 1979-80. According to the

pattern of central assistance approved by the National Development Council

which was effective from 1979-80 fiscal, the central and the state governments

share the expenditure on 50 : 50 basis on each financial component of the

programme viz., (a) one time non-recurring grant for capital expenditure, and (b)

recurring establishment grant for incentives and promotional schemes and loans.

The central assistance has been limited to Rs. 3,00,000 per DIC regarding both

recurring and non-recurring grants. However, this limit was enhanced to

Rs. 4,00,000 per DIC from 1985-86. In case of Union Territories, 100 per cent

assistance is provided by the central government subject to the approved

expenditure pattern and availability funds.5.

From the above, it can be observed that DIC scheme continued as a

centrally sponsored programme. However, it poses an important question about

the policy of the central government regarding the scheme in the subsequent five

year plans.

4.5: Committees to Review the Working of DICs

To review the DIC programmes, co-ordination committees at different

levels viz., Central, Regional, State and District levels are constituted as detailed

below.

5. Shetty K.S., 'District Industries Centres Programme - An Appraisal', Kurukshetra, Vol. XXXVII, April 1990, p.31.

115

Committees to Review the Working of

Review Committees

- • Central Co-ordination Committee

-> Regional Co-ordination Committees

•> State Level Co-ordination Committees

—• District Advisory Committees

Figure-4.1

4.5.1: Central Co-ordination Committee

This committee, at the national level, consists of both the official and the

non-official members. And it is empowered to review the policies and

programmes of DICs at the national level in the light of the experience gained

and on the basis of the working of DICs. This helps the committee to suggest

suitable modifications wherever necessary.

4.5.2: Regional Co-ordination Committees

Six regional committees have been formed in the country to co-ordinate

and exchange information among the different states in the region. For this

purpose, the entire country is divided into six regions as presented below.

a. Eastern Region : West Bengal, Orissa, Bihar, Sikkim, Andoman and Nicobar Islands.

b. Western Region : Gujarat, Maharashtra, Dadra Nagar Haveli and Goa.

116

c. Northern Region : Jammu and Kashmir, Punjab, Haryana, Delhi, Himachal Pradesh and Chandigarh.

d. Southern Region : Andhra pradesh, Kamataka, Kerala, Tamil Nadu, Pondicherry, and Lakshadeep.

e. North Eastern Region : Assam, Manipur, Tripura, Meghalaya, Nagaland, Amnachal Pradesh, and Mizoram.

f. Central Region : Madya Pradesh, Rajasthan and Uttar Pradesh.

4.5.3: State Level Co-ordination Committees

Under the DIC scheme, the states were advised to constitute state level

co-ordination committees. Accordingly, in Karnataka State, the state level co­

ordination committee was constituted in 1978 with Secretary of Industries and

Commerce as chairman. The committee reviews the functioning of DIC scheme

in the state and formulates programmes at the state level and report to the central

government on the progress, and also the problems encountered in the

implementation of DIC scheme and the solution identified to enable the central

government to review the progress of DIC scheme from time to time. The

committee meets once in six months.

State Level Inter-Institutional Committee has been set up in all states

including Kamataka State to look into the problems of sick units which are being

recommended by DICs for rehabilitation. A committee was also constituted by

the Kamataka State Government to examine the case of sick and closed units

registered under SSEP for recommending grant of assistance to such units.6.

6. Ibid., p.32.

117

4.5.4: District Advisory Committees

At district level, District Advisory Committee headed by the District

Development Commissioner was constituted in 1978 to provide suitable

arrangement for effective co-ordination between the DICs and other state

government departments, local bodies and non-official agencies. The committee

is to meet once in a month and in any case, not less than once in two months.

This committee has been formed to review the DIC programmes and to make

recommendation for implementation of DIC scheme.

It is important to note that single window committee was formed in

Karnataka State in order to provide all facilities to prospective entrepreneurs

under one roof at pre-investment stage. The main objective behind the

establishment of this committee is to cut short the procedural delays for the giant

of provisional registration to unit-holders. This committee was constituted in all

districts in the state during 1987-88.

The committee is headed by the Director of Industries and Commerce in

the districts of Bangalore (Urban and Rural), while the District Joint

Commissioner heads the committee in other districts in the state. The committee

takes on-the-spot decisions on the proposals of the prospective entrepreneurs

regarding their feasibility, requirement of finance, land, power and other

infrastructural facilities. Arrangements are made to the effect that after the

118

clearance is made by the "single widow committee", the provisional registration

to the approved entrepreneurs will be made within one months.7.

This way, various committees have been formed at district, state, regional

and national levels to review the policies and programmes implemented under

DIC scheme. It involves the review at different levels from district to national

levels.

4.6: Monitoring Cells

Besides the committees established by the governments to review the

working of DICs, the governments have also established monitoring cells at the

state head-quarters and at the offices of Development Commissioner, Small

Scale Industries for continuous monitoring and for reviewing the progress of the

DIC scheme. The activities monitoring cells are discussed briefly herein under.

4.6.1: Monitoring Cell at State Head-quarters

A special cell has been set up in the state with the main objective of reviewing

the progress of different DICs in the state, and for ensuring adequate exchange

of infonnation so that the experience gained by one DIC could be utilised by

other DICs. The cell has to test check the information regarding the promotional

activities as well as achievements of the DICs. The outstanding achievements

and problems are to be intimated to the state level co-ordination committee.

7. Stepanek J.E., "Managers for Small Industries", Bombay, Assian Publishing House, 1985, p.9.

119

4.6.2: Monitoring Cell at the Office of the Development Commissioner (Small Scale Industry)

This cell has been established at the national level with a view to watch

and guide the implementation of DIC scheme. The analysis of progress of DIC

scheme is made on basis of monthly and annual progress reports being sent by

the DICs. Proper guidelines are issued to the state governments to ensure the

satisfactory implementation of DIC scheme.

4.7: Delegation of Powers

In order to allow the DICs to perform effectively, arrangements are made

to delegate adequate powers from various agencies. For instance, the powers for

allotment of land, worksheds, etc., have been given to DICs. The state

government has ensured the delegation of administrative powers and some of the

financial powers of the Department or Industries. Some of the powers of other

departments are of regulatory nature and are not feasible to be delegated to the

o

Jomt Director of DIC. Such powers are being delegated to the concerned

officers at the district level of the department or vested in the Joint Director who

is also the chairman of the District Advisory Committee. Some of the important

powers delegated to the DICs are as follows.

8. Small Industries Development Organisation, 'Annual Report, 1999-2000', Government of Karnataka, Bangalore, p.21.

120

Financial Powers

a. Powers of head of office in respect of financial matters.

b. Powers for promotional and development activities.

c. Powers under the provision of import trade.

Control Powers

a. Powers under Indian co-operative societies.

b. Miscellaneous powers including those delegated and/or to be delegated by other departments.

Almost all the states have delegated administrative and financial powers

of head of office to the Joint Commissioners of DICs. However, the experience

reveals that the administrative and financial powers for the promotional and

development activities have not been delegated adequately and uniformly in all

the states.

4.8: Organisational Set-up of DIC

Though DIC scheme has been started as a centrally sponsored scheme,

the responsibility for its implementation has been entrusted to the state

governments. Under the organisational pattern for DIC, suggested by the

Government of India, each DIC is headed by a General Manager who is assisted

by five functional managers and other ministerial field staff.9. The number of

functional managers is flexible keeping in view the size, population and

potentialities of districts and this number ranges from four to seven.

9. Vasant Desai., "Institutional Framework for Industry", New Delhi, Himalaya Publishing House, 1997, p.265.

121

4.9: Functions of DICs

The important functions of DICs are summarised below.

a. Conduct motivation campaigns through out the district to encourage the people to take up the entrepreneurial tasks.

b. Selection of projects suitable to entrepreneurs.

c. Identification of entrepreneurs for setting up of industrial units in the small scale sector.

d. Provisional registration under small scale industries.

e. Assist the entrepreneurs to acquire land and buildings by sponsoring their loan applications.

f. Sponsoring applications for the purchase of plant and machinery to the NSIC, banks, etc.-

g. Sanction of margin money for the purchase of plant and machinery.

h. Obtain clearance from local bodies.

i. Issuing PMT/SSI certificate to industrial units as soon as they commence regular production.

j . Assess the requirement of raw materials and recommend to the supplying agencies.

k. Issue the essentiality certificate directly to the Joint Chief Controller of Imports and Exports for the import of machinery and raw materials.

1. Sponsoring applications from village artisans and handicrafts-men for financial assistance from banks.

m. Assist in availing of various subsidies from the different agencies.

n. Selecting rural persons for training under the Rural Artisans Programme (RAP) Scheme.

o. Proposing new industrial co-operative societies for providing employment to the rural people.

p. Recommending composite loan applications up to Rs. 2,00,000 to nationalised banks for sanction under Rozagar Yojana.

122

q. Extend general guidance to new entrepreneurs regarding small scale enterprises.

4.10: Role of DICs

The DICs are expected to play an important role, both at the pre-

investment stage and at the post-investment stage i.e., both prior to and after, the

establishment industrial units. The multifarious roles played by the DICs is

identified below followed by a brief analysis of each of the roles.

Assistance offered

during the pre-

investment stage

Assistance Provided in

the post-investment

stage

Role of DICs

— • Grant of Registration

Preparation of Feasibility Reports

->• Training Potential Entrepreneurs

- • Training Managers for SSIs

+ EDP

- • Provisional

->• Regular

->• Expansion/ Diversification

•>• Supply of Machinery on Hire-Purchase basis

- • Marketing Assistance

- • Exhibitions

Figure - 4.2

4.10.1: Assistance Offered during the Pre-investment Stage

With the formation of DICs, the mode of registration of SSIs has

undergone substantial changes. Because, the powers for registration have been 123

decentralised and at present, the registration is granted by the concerned DIC.

Besides, the DICs also provide a number of facilities as evident from the

following.

4.10.1.1: Grant of Registration

With the establishment of DICs, powers have been delegated to this

agency (viz., DICs) to make a registration. Therefore, the function of DIC is to

giant registration to the entrepreneurs so that entrepreneurs can avail of the

special incentives offered by the governments for the development of SSIs. The

registration of SSI is done in two stages. They are (a) Provisional Registration,

and (b) Regular Registration

4.10.1.1.1: Provisional Registration

Provisional registration is accorded in order to enable an entrepreneur to

take the necessary steps to bring the unit into existence. Provisional registration

is converted into a "Permanent or Regular Registration" after the unit provides

satisfactory proof of it having come into existence. Hence, the arrangements

have been made to issue the provisional registration to the approved prospective

entrepreneur within one week after the clearance is accorded by the single

window committee.10.

10. Bakal G.M., "Development of Small Scale Industries - New Schemes", New Delhi, Anmol Publication, 1st Edition, 1993, p.63.

124

The provisional registration is valid for one year which can be extended

for another two years by the intervals of six months. However, the extension of

period is subject to the production of satisfactory proof that the party is actually

taking steps to establish the unit but could not complete the same due to some

uncontrollable reasons. The total validity is three years, and helps in the

following.

a. Apply for a shed in Industrial Estate and for materials for construction of shed.

b. Apply to corporation/municipal authority for permission to construct the shed for establishment of unit

c. Apply for power connection.

d. Apply for financial assistance to banks and other financial institutions (on the basis of project report as may be required by them).

e. Apply to National Small Industries Corporation (NSIC) and other institutions for procuring machinery on hire purchase basis.

f. Obtain sales tax, excise duties registration etc., wherever required.

g. Take other steps that may be necessary for the establishment of the unit.

4.10.1.1.2: Regular Registration

When the party has taken all the steps to establish the unit (i.e., when the

factory building is ready, power connection has been given, the machinery has

been installed, etc.,), he may apply for the regular registration of the unit.

Powers have been delegated to the DICs for issuing the permanent registration

certificates. On the receipt of application from the unit-holder, the manager of

125

DIC inspects the unit and on being satisfied that the unit is capable of

undertaking production activities, a registration certificate is issued. It is

pertinent to mention here that DICs have been empowered to de-register the unit

if it fails to fulfil the requirements.

4.10.1.1.3: Grant of Registration for Units Intending to Expand/Diversify

The DICs have laid down a complete system of procedures for

introducing any kind of diversification or expansion in the units. Thus,

according to these norms, a unit which intends to expand by increasing the

production of the item for which it was already registered need not to obtain any

fresh registration or any endorsement on its registration certificate unless it

involves the additional plant and machinery, and consumption of additional

scarce and imported raw-materials. A unit which desires to diversify its

production by addition of one or more item for which it was not already

registered will have to get its registration certificate duly endorsed for such items

after technical inspection.

4.10.1.2: Preparation of Feasibility Reports

A feasibility report is an appraisal of the project based on certain

infonnation and factual data. Feasibility report enables an entrepreneur to know

the inputs required and if rightly prepared, conforms to the conviction that he is

proceeding in the right direction. To apprise the units, DICs perform the

126

different types of activities. A broad classification of these activities is given

below.

a. Economical and Commercial Analysis: To determine whether the

project is sound from the economic point of view and to assess the

demand for, and marketability of, the product.

b. Technical Feasibility: To determine whether the specifications of

technical parameters are realistic.

c. Miscellaneous Aspects: Depending upon the peculiarities of a

particular area where the project is to be undertaken.

It is generally believed by the financial agencies that the project reports

prepared by the DICs are not based on factual information and therefore, most of

cases are rejected by them though recommended by DICs. This lacunae became

very clear during the field survey when the Researcher had discussion with the

unit-holders. In this connection, it would be in the fitness of things to illustrate

the example of one unit-holder engaged in the manufacture of cattle and poultry

feed which is situated in Industrial Area, Davangere. The machinery required

for the said unit as per the project report prepared by concerned DIC, is as under.

a. Grinders (having capacity of 1,300 kgs per hour) costing Rs. 40,000.

b. Two mixers, 50 cubic feet (having capacity of 1,600 kgs per hour) costing Rs. 90,000.

However, the entrepreneur sought the advise of leading supplier (i.e., Iran

Engineering Works) regarding the requirement of machinery for the said unit.

The particulars of machineiy as advised by the supplier are as under: 127

a. Single grinder (having capacity of 1,500 kgs per hour) costing Rs. 32,000.

b. Single mixer, 50 cubic feet (having capacity of 2,000 kgs per hour) costing 65,000.

While comparing the two estimates, the latter was found to be most

economical and suitable regarding cost and capacity. From the above, one can

notice two important flaws in the project report prepared by the DIC for the unit

holder - one, the capacity of machines was understated and two, the costs were

overstated. This is one of the reasons as to why the financial institutions reject

the proposals from the potential entrepreneurs.

4.10.1.3:Training and Study Tour Programmes for Potential Entrepreneurs

Realising the fact that there are a number of persons who are interested in

the establishment of business units but are lacking the knowledge about it, the

DICs have made arrangements for training the potential entrepreneurs. The

entrepreneurs are sent to the already established units of the same nature for

training. Assistance is also provided to the entrepreneurs for acquiring necessary

technical know-how. During the course of training, the trainees are paid even

the stipend (ranging from Rs. 150 to Rs. 700 per month) by the concerned DIC.

Of course, the stipend is refundable in case the entrepreneur fails to set up the

industrial unit. However, the scheme is not attracting many as the amount of

stipend is trivial.

128

It would be pertinent to mention here that one of the reasons for refusal of

cases by financial agencies is that the entrepreneurs are not well trained about

the units they intend to establish. Therefore, it is necessary to make the scheme

attractive by enhancing the amount of stipend. And it should be made obligatory

for all the entrepreneurs to receive the training before the establishment of units

so that it can be ensured that right type of personnel with requisite skill, attitude

and aptitude are available to enhance productivity of industrial units.

4.10.1.4: Training of Managers for Small Scale Industries

In addition to the above, state government reimburses 50 per cent of the

expenses incurred to train managers, executives, and assistant executives for

small scale units provided such trainings are for permanent residents of

Kamataka State. Maximum training period to be covered for grant of stipend is

18 months inclusive of practical training. It is pertinent to note here that the

small units are mostly managed by owners of the units and some of them are

lacking the expertise in the field of management. They are over-enthusiastic

about their projects. Inefficient managers shift their responsibility and hold

external factors responsible for their failure. According to Mr. Singh, more than

60 per cent of the new units never last over 5 years and the majority of failui'es

due to the lack of proper organisation and management know-how.''. Therefore,

the Researcher is of the opinion that management courses should be organised

11. Singh Nau Nihal, "Organising Small Scale Industries", Bombay, Orient long Man Publication Ltd., 1997, p.9.

129

for potential unit-holders by DICs and other agencies like Small Industries

Service Institutes.

4.10.1.5: Entrepreneurial Development Programme (EDP)

Small Industries Service Institute (SISI) organises EDP with the help of

Directorate of Industries and Commerce, State Financial Corporations,

Commercial Banks and other agencies for creating awareness among the people

consisting of skilled, semi-skilled and educated and uneducated persons. The

DICs send the entrepreneurs to these programmes for seeking knowledge in

wide range of subjects. This is in addition to the EDP being organised by the

DICs in the state. DICs in Kamataka organised 17,049 such programmes in the

state during the study period 1995-2000.

The Department of Science and Technology, Government of India has

decided to establish EDP cells in a few educational institutions in various parts

of country including the one in a local college. The cells organise special

entrepreneurship awareness camps for Science and Technology students and also

for other interested persons.

A centre for EDP [Centre for Entrepreneurial Development in Kamataka

(CEDOK)] has been established in Dharwad and this has been functioning as the

Nodel Agency for entrepreneurial training in Kamataka. During the year 1999,

CEDOK has conducted 1,365 programmes in various parts of the state. During

the period, 35 skill development programmes, 935 three-day Entrepreneur

Awareness Programmes (EAP), 165 one-week EDPs, 114 six-week general 130

EDPs, 52 six week EDPs for tiny industries, 35 three-week faculty development

programmes and 29 performance improvement programmes for production

executives were organised. CEDOK has also organised seminars on agro-food

processing, software development and also hosted an All India Honey Festival to

promote Agriculture Industry. During the year, a sum of Rs. 60 lakh had been

released to CEDOK as grant-in-aid by the state government.12.

However, the discussion held by the Researcher with the entrepreneurs

revealed that the place and time of EDPs are not well propagated among the

entrepreneurs. As a result, many entrepreneurs fail to attend such programmes.

They are being conducted just to bring the same on record in the government

files and have, therefore, utterly failed to achieve the objective for which such

programmes are meant. Further, as complained by some entrepreneurs, the

programmes are not of much use as they are not exposed to various practical

problems being experienced by the entrepreneurs.

However, the government should lay emphasis on the capacity of the

small scale industrialists instead of number of SSIs. Because, entrepreneurship,

as opined by Dr. J.E. Stepanek, is the capacity to take risk, ability to organise

and desire to diversify and make innovations in enterprise13. Entrepreneurs

must have at least a few important qualities if the state wants to attain industrial

12. Department of Industries and Commerce, 'Annual Report of Small Scale Industries, 1999-2000', Government of Karnataka, Bangalore, pp. 32-3.

13. Stepanek J.E., Op.cit., p. 165.

131

growth. These qualities are psychological capacity to assume risk and self

confidence, management ability, willingness to accept challenges, ability to win

friends and overcome crises, technical knowledge, alertness to new opportunities

and above all, good character. It can rightly be said that the character is just like

a switch - if it is not functioning, there may be power but there will be no light.

4.10.2: Assistance Provided in the Post-Investment Stage

The DICs are providing a number of facilities to the units after their

establishment. They are presented below very briefly.

4.10.2.1: Supply of Machinery on Hire - purchase Basis

One of the major conclusions of International Planning Team, 1953-54,

was that deficiencies in SSIs arose from the prevailing methods of production.

The reluctance of small units to install modern and up-to-date machinery was

due to the paucity of funds. It is. against this background that the scheme for the

supply of machinery on hire purchase basis was formulated. The unit-holder

can procure the machinery from National Small Industries Corporation (NSIC)

on hire purchase basis. For this purpose, DIC also helps the entrepreneurs.

However, the procedure for procurement of machinery from NSIC is lengthy.

Due to this lengthy procedure, some entrepreneurs are frustrated and hence given

up the idea of procuring the machinery on hire purchase from NSIC which is

made available through the office of each DIC.

132

4.10.2.2: Marketing Assistance

Marketing of goods and services manufactured by the SSIs occupies an

important place in the performance of SSIs. Because, the veiy success of the

units, to a greater extant, depends upon the ability to promote the sale of their

goods and services at remunerative prices. Unfortunately, the SSIs in Karnataka

suffer much on account of their inability to sell the goods and services at

remunerative prices. One of the reasons for this is the fact that the state does not

provide a sellers' market and therefore, lot of efforts has to be made to sell

products. In this background, DICs have undertaken various programmes to

boost the sale of products of SSIs and the same are presented below.

a. Undertake market survey and conduct market development programme.

b. Organise market outlets.

c. Assist the small industries in developing and maintaining standards, quality control measures and liaisoning with testing centres.

d. Assist the small units for participation in purchase programme of state and central governments, local bodies and public undertakings.

However, lack of awareness about the procedure for participation, tedious

formalities, under-utilisation of production capacity, inadequate production

capacity, lack of entrepreneurial skills, etc., have continued to be the main

barriers in the way of their participation in the purchase programmes of

governments. Realising these difficulties, the authorities have revised the

procedure for participation in government purchase programmes and made easy.

133

Now, the units which have registered with NSIC would be treated on par with

those registered with the Director General of Supplies and Disposals (DGS&D).

The application form for registration can now be submitted to the Small

Industries Service Institute set up in Karnatka.

4.10.2.3: Exhibitions

In order to display the end products of small scale units and to project

achievements made in various other industrial fields, DICs organise the

exhibitions. These exhibitions help the entrepreneurs in identification of

potential avenues for marketing and also in the process of product development

and improvement. Additional advantage of exhibitions is that they provide a

platform for interaction among various unit-holders which augurs well for the

development of industrial culture.

4.11: Other Facilities

Besides the services provided by the DICs to small scale industries, the

governments are providing a number of other benefits through their agencies.

These benefits are analysed very briefly in the following paragraphs.

4.11.1: Price Preference

In order to make the SSIs price competitive with the large scale

industries, state government is giving 12.5 per cent price preference to all the

small scale units registered with the DICs. Small scale units have to pay only 50

134

per cent of the amount of earnest money/security deposit prescribed in the tender

notice subject to maximum or Rs. 5,000 per tender. Fuilher, the small scale

units are supplied tender documents at a cost which would not exceed Rs. 10 in

each case, if the prescribed cost is more than Rs. 10. The price preference by

state government continued up the end of 1999. The price preference at the

central level is 15 per cent. However, the price preference is subject to the

condition that quality of product in not inferior. In all the government

departments and public sector undertakings, the purchase committees have

representative nominated by the Industries and Commerce Department.

Decision of the Purchase Committee.14, if taken against the local small scale

unit/units, shall not be considered to be final unless opinion of the representative

from the Industries and Commerce Department is obtained. In this regard, it is

pertinent to note a few important instructions given by the government.

a. It is not necessary for any purchase department to conduct or to force the

concerned small scale unit to conduct additional quality tests for them if the

unit is registered with the Indian Standard Institutes (ISI) and supplies its

products with ISI mark.

b. If the Industries and Commerce Department supplies the raw-materials to

small scale unit for conversion only, then the conversion rates are worked out

after considering the price preference available to small scale unit as if the

unit was to supply the finished goods to the Department rather than taking

only the commission charges.

14. Administrative Council Decision No. 213, Dated November 28, 1995., and Order No. 318, G.R. of 1995 Dated November 30, 1995.

135

c. Small scale units are permitted to quote through SICOP or to seek supply

order through this corporation or to request or authorise this corporation to

present their cases before the Department. In such cases, this corporation is

treated in the same way as if it is a small scale unit.

d. The SICOP is registered with DGS&D for participation in the purchase

programme of the central government. Therefore, all the small scale units

registered with SICOP are treated as registered with DGS & D.

4.11.2: Reservation of Items

In order to assist the small scale units, 409 items have been reserved by

the central government for exclusive purchase from small scale units. Besides,

the government has reserved 863 items for exclusive manufacture by the small

scale units.

However, the purchase of its requirements by the government from small

scale units is possible only when the quality of products is good and supply is

sufficient. However, it has been observed that poor quality of goods produced

by small scale units is one of the barriers for participation in the government

purchase programmes.

Therefore, the role of DICs in this respect is significant. The DICs should

assure the regular supply of required quality and quantity of raw materials to the

SSIs. For this purpose, appropriate steps should be taken so that entrepreneurs

can avail of the concession available for marketing of their products. Further,

the DICs should extend assistance to SSIs in the area of exports. In this

136

connection, the activities of DICs should include dissemination of information

about the foreign markets, consultancy services in the matters of export

procedures and package of incentives being offered by the governments,

identification of small scale units already possessing necessary equipments and

skills to undertake production of items having export potential, organisation of

training programmes on export marketing, maintaining liaison with concerned

export development agencies, meetings and seminars on export promotion, etc.

The following table shows the details about the number products reserved

for manufacture exclusively by the SSIs. The initiation was made during 1967-

68 by reserving the products for SSIs. During the years 1977-78 and 1979-80,

324 and 333 products were reserved respectively. At present, 801 products are

reserved for small sector.

Table - 4.1: Number of Products Reserved for SSIs

Year

1967-68

1969-70

1970-71

1973-74

1976-77

1977-78

1979-80

1980-81

1981-82

1982-83

1983-84

1985-86

Number of products reserved (at the beginning of the

year)

-

47

55

124

177

180

504

837

831

837

881

882

Number of new products

reserved during the year

47

8

73

53

3

324

333

12

9

44

1

8

Number of products

de-reserved during the year

-

-

4

-

-

-

-

15

3

-

-

24

Number of products

reserved at the end of the

year. 47

55

124

177

180

504

837

831

"837

881

882

858

137

1986-87

1987-88

1988-90

1990-93

1993-94

1994-95

1995-96

1996-97

1997-98

1998-99

1999-00

Table-4.1 (contd) 858

845

844

834

834

834

834

834

834

819

811

-

-

-

-

-

-

-

-

-

-

-

13

1

10

-

-

-

-

-

15

8

10

845

844

834

834

834

834

834

834

819

811

801

Source: Ministry of Finance 'Economic Survey', 1990-91, 1995-96,1998-99,1999-00, and 2000-01 Government of India, New Delhi'

4.11.3: Industrial Estates

The entrepreneurs are finding it very difficult obtain the requisite factory

buildings with at least the minimum infrastructure to establish and start their

manufacturing and sales activities. Because, it is very difficult to find space

with the facilities like power, lighting, roads, banks, transport, post office, etc.

With the establishment of industrial estates, a solution to this problem has been

found. The Industrial Estate Programme was launched in India in 1955 with the

objective of encouraging the small scale units.

In Kamataka, the Industrial Estate Programme was introduced during the

second Five-Year Plan. It is pertinent to state here that there are various types of

industrial estates, Ancillary Industrial Estates, Flatted Industrial Estates, etc. But

in Karnataka State, only general purpose or composite type of industrial estates

138

exist. In such industiial estates, all types of small industries except those

causing pollution are accommodated.

It is worth to note that industiial sheds are constructed by the Directorate

of Industries and Commerce in Kamataka. All these sheds are under the control

of DICs. Further, 92 industrial sheds are under construction by the Directorate

of Industries and Commerce. Besides, there are eight industiial estates managed

by SICOP. And the Directorate of Industries and Commerce is acquiring more

land in all the districts in the state for the puipose of constructing some more

industiial estates. Consequently, Industiial Estates Programme has been

implemented in all the districts in the state. And most of the Industrial Estates in

the state are under the control of DICs.

Though the objective of Industiial Estates programme was to provide

factoiy accommodation to the entrepreneurs along with infrastructural facilities,

it is unfortunate to note that most of these estates in the state are lacking the

basic facilities such as drainage, dispensaries, raw material depots, banks, post

office, electricity, communication, street lights, etc. Industrial estates are also

facing the encroachment problem.

From the above, it is obvious that the industrial estates do not possess the

requirements of modem industiial estates and are deficient in many ways.

Hygienically, some industiial estates are posing a threat to the lives of workers.

Mere construction of industiial estates and providing facilities of

accommodation would not help a small industry to prosper. Therefore, steps are

139

required to be taken to provide infrastructural facilities within and outside these

industrial estates so that the objective behind the introduction of Industrial Estate

Programme is achieved.

4.12: Performance of DICs

In a bid to industrialise the country, the central as well as the state

governments have been taking series of measures from time to time in a planned

manner. The DIC system is an important step in this direction. With a view to

evaluate the impact of these centres on the industrial scenario of the state, an

analysis of the performance of DICs is made in the following paragraphs from

the view points of a few parameters.15.

4.12.1: Growth in Number of Units and Production

The details about the number of units in the small scale sector in the

country and their production are presented in the following table.

Table - 4.2: Performance of DICs SI. No 1

2

Indicators

Number of units (lakhs)

Production (Rs. crores at 1990-91 prices) a. Target b. Achievement

1995-96

27.24 (+6.0)

2,13,965 2,22,165

(+11.4)

1996-97

28.57 (+4.9)

2,33,436 2,47,311

(+11.3)

1997-98

30.14 (+5.5)

3,74,007 2,68,159

(+8.4)

1998-99

31.21 (+3.6)

NA 2,88,807

(7.7)

1999-2000

32.25 (+3.3)

NA 3,12,576

(8.2)

15. Government of Karnataka, 'Kaigarika Varthe', An Industrial News Magzine, August 1998, Bangalore, p.33.

140

Table - 4.2 (Contd) 3

4

5

Production (Rs. crores at current prices)

Employment (lakh persons) a. Target b. Achievement

Exports (Rs. crores) a. Target b. Achievement

3,56,213 (+21.2)

144.4 152.6 (4.1)

18,364 34.065

(+17.2)

4,12,636 (+15.8)

150.5 160.0 (14.8)

20,201 39,921

(+17.2)

4,65,171 (+12.7)

166.9 168.0

(+5.0)

47,905 43,946 (12.0)

5,27,575 (13.4)

-171.58 (+2.6)

NA 48,979 (11.5)

5,78,470 (9.7)

-178.50

(4.0)

NA 53,975 (10.2)

Source: Ministry of Industry (1998) "Hand Book of Statistics 1998, Small Scale Industries in India", New Delhi, Government of India.

SSIs contribution to the economy is very significant, its contribution to

the economy is about 40 per cent to exports, and about 45 per cent employment,

during the year 1999-2000.

4.12.2: Growth and Dispersion of SSIs in Karnataka

The emphasis of DICs has been on the growth of SSIs. As a result of

their efforts, the number of small scale units which was 1,75,380 with the

employment of 11,47,415 persons on March 31, 1996 in the state increased to

2,52,671 units with employment of 15,05,800 persons by the end of 1999-2000

fiscal. These figures pertain to the direct employment in small scale sector and

exclude those who are indirectly connected with it. Other beneficiaries include

traders, wholesalers, retailers, tiansporters, commission agents and other

intermediaries in selling the products of small scale sector. Further, the DICs are

concentrating on the dispersal of industrial activities even into the industrially

141

backward or underdeveloped districts.16. The contents of the following table

substantiate this point.

Table - 4.3; Division wise/District-wise Number of Units Registered with DICs Division

A. Bangalore

B. Mysore

C. Gulbarga

D. Belgaum

Districts

1. Bangalore Urban

2. Bangalore Rural

3. Chitradurga

4. Davangere

5. Kolar

6. Shimoga

7. Turnkur

Total (A)

1. Chikmagalore

2. D.Kannada

3. Udupi

4. Hassan

5. Kodagu

6. Mandya

7. Mysore

8. Chamarajnagar

Total (B)

1. Bellary

2. Bidar

3. Gulbarga

4. Raichur

5. Koppal

Total (C)

1. Belgaum

2. Bijapur

3. Bagalkot

4. Dharwar

5. Gadag

6. Haveri

7. U.Kannada

Total (D)

State Total

Number of Units on M4rch 31,

1995 34,638

7,184

6,376

-6,375

8,439

11,123

74,140

3,178

11,993

-3,823

1,836

3,767

14,845

-39,442

6,717

3,829

5,637

5,730

-21,913

15,271

6,505

-14,939

--

3,170

39,885

1,75,380

2000 46,437

10.925

8,246

384

9,600

11,459

15,035

1,02,086

4.307

16.372

361

6,658

2,607

5,866

21,277

241

57,688

10,237

5,798

9,347

8,526

165

34,073

23,783

8,579

312

20,086

342

200

5,521

58,823

2,52,671

% age of Units in the District / Division to total as on March 31,

1995 19.75

4.10

3.63

-3.63

4.81

6.34

42.26

1.81

6.84

-2.08

1.04

2.14

8.46

-22.47

3.83

2.18

3.21

3.26

-12.48

8.70

3.71

-8.59

--

1.80

22.8

100.00

2000 18.37

4.32

3.26

0.15

3.80

4.53

5.95

40.38

1.71

6.48

0.14

2.63

1.05

2.34

8.42

0.09

22.87

7.05

2.29

3.70

3.37

0.07

13.48

9.41

3.39

0.12

7.95

0.13

0.08

2.19

23.27

100.00

Annual Growth Rate

6.80

10.40

5.80

0.15

10.10

7.10

7.00

7.10

7.30

0.140

14.80

8.30

11.10

8.66

0.09

10.40

10.20

13.10

9.70

0.07

11.10

6.30

0.12

6.80

0.13

0.08

11.80

Note : The figures are the yearly average number of units registered by the DIC (from 1995-2000). Sources: Compiled on the basis of the extracts from 'Industrial Review of Karnataka State, 1998-99'.

Directorate of Industries and Commerce, Government of Karnataka. Bangalore.

16. Upal G.S., "Reservation Policy for SSIs", Laghu Udyog Samachar, New Delhi, 1991, p. 28.

142

From the table it is obvious that the number of units just at 1,75,380 on

March 31, 1995 increased to 2.52.671 by March 31, 2000. This growth in the

number of small scale units can be attiibuted to a number of measures taken by

the government to develop the SSIs in the state. However, this growth in the

number of units has not ensured the dispersion of units to all the districts in the

state uniformly. For instance, out of total number of units registered with DICs

as on March 31, 2000, four districts namely, Bangalore Urban, Mysore, Belgaum

and Dharwar account for 18.37 per cent, 8.42 per cent, 9.41 per cent and 7.95

per cent respectively. That means, these four districts put together account for

44.15 per cent of the units. The remaining 23 districts account for only 55.85

per cent. Therefore, there are wide differences in the industrialisation of

different districts. From the table, it can also be seen that the development of

industries is more in Bangalore district. However, the maximum concentration

of industries in the Bangalore division is justified on the ground that this division

is highly populated as compared to other divisions and also provides the

essential infrastructural facilities.

A comparison of the district-wise growth rates in the units registered with

the DICs from 1995 to 2000 surfaces the gloomy performance of DICs in

attracting more and more entrepreneurs towards small scale sector in some

districts. Bangalore Urban, Mysore, Gulbarga, Belgaum, Dharwar, Mangalore,

etc., are some of the districts which are attracting more entrepreneurs.

143

4.12.3: Investment in Small Scale Sector

There has been a substantial increase in the investment in the small scale

sector throughout the state. The following table furnishes more details about this

aspect.

Table 4.4: Year-wise Investment in SSIs in the State Year

1995-96

1996-97

1997-98

1998-99

1999-00

Total

Investment (Rs. In lakhs)

33,160

35,811

66,451

59,752

73,706

2,68,880

Source: Compiled on the basis of the information collected from die official records of Directorate of Industries and Commerce (Statistics and Planning Section), Bangalore.

The DICs have proved instrumental in stepping up the investment in the

small scale sector in the state. As against an investment of Rs. 33,160 lakh on

March 31, 1996, the investment in the SSIs increased to Rs. 73,706 lakh by

March 31, 2000 representing an increase by Rs. 40,546 crore or by 122.27 per

cent during this four-year period. The details about the district and division-wise

investment in SSIs are present below.

144

Table - 4.5: Division and District-wise Investment in Small Scale Units

Division

A. Bangalore

B. Mysore

C. Gulbarga

D. Belguam

Registered with DICs in

District

a. Bangalore Urban b. Bangalore Rural c. Chitradurga d. Davangere e. Kolar f. Shimoga g. Tumkur

Total (A) a. Chikmagalore b. D.Kannada c. Udupi d. Hassan e. Kodagu f. Mandya g. Mysore h. Chamarajnagar

Total (B) a. Bellary b. Bidar c. Gulbarga d. Raichur e. Koppal

Total (C) a. Belgaum b. Bijapur c. Bagalkot d. Dharwar e. Gadag f. Haveri g. U.Kannada

Total (D)

the State (1995-200 Investment (Rs. in

lakhs) 69276.86 16805.43 8145.35

735.5 16443.76 8009.97

13313.32

132730.19 2962.79

20065.62 1064.94 6587.9

2223.34 4765.08

16240.79 632.22

54542.68 15527.04 4052.97 7321.04 8650.59

934.06

36455.7 19597.88

607.94 1014.83 1025.21 720.45 421.67

6753.72

45241.7

0) % age to total

investment 25.76

6.25 3.02 0.27 6.11 2.97 4.95

49.33 1.10 7.46 0.39 2.45 0.82 1.77 6.04 0.23

20.26 5.77 1.50 2.72 3.21 0.34

13.54 7.28 2.30 0.37 3.91 0.26 0.15 2.51

16-79 Sources: 1. Data for 1995-96, 96-97, 98-99, and 99-2000 are collected from the official records of

Department of Industries and Commerce (Statistics and Planing), Government of Karnataka, Bangalore.

2. Economic Survey, 1999-2000, Government of Karnataka.

An analysis of the contents of the table reveals wide differences regarding

the investment in small scale units in different distiicts. Bangalore Urban (25.76

per cent), Mysore (6.04 per cent), Dakshina Kannada (7.76 per cent) and

Belgaum (7.28 per cent) districts account for 46.54 per cent of the total

145

investment and the remaining 23 districts account for only 53.46 per cent of the

total investment. Out of this, Davangere and Chitradurga districts account for

only 0.27 per cent and 3.02 per cent respectively.

4.12.4: Employment in the Small Scale Sector

Unemployment is a serious problem of not only the country but also of

Karnataka. In spite of industrial development in Karnataka, the marginal

workers and non-workers put together account for 35 per cent of population of

the state. They are either unemployed or under employed. Marginal workers are

those workers who work for less-than six months a year. However, the DICs

were set up to promote the expansion of small scale industrial units through out

the state thereby reducing unemployment. In this background, the statistics

pertaining to the number of employment opportunities generated by the small

scale units in the state are presented below.

Table - 4.6: Division-wise and District-wise Employment in Small Scale Units in the State

Division

A. Bangalore

District

a. Bangalore Urban

b. Bangalore Rural

c. Chitradurga

d. Davangere

e. Kolar

f. Shimoga

g. Tumkur

Total (A)

Number of employees in SSIs in the State as on March 31,

1995 3,13,754

37,458

35,146

45,437

37,583

63,948

5,33,326

2000 3,97,876

59,879

43,592

1,299

63,484

47,808

81,596

6,95,564

% of employees in each Division to total as on

March 31, 1995 27.34

3.26

3.06

3.96

3.27

5.57

46.46

2000 26.42

3.98

2.89

0.09

4.22

3.18

5.42

46.20

146

Table - 4.6 (Contd) B. Mysore

C. Gulbarga

D. Belguam

a. Chikma' galore

b. D.Kannada

c. Udapi

d. Hassan

e. Kodagu

f. Mandya

g. Mysore

h. Chamarajnagar

Total (B)

a. Bellary

b. Bidar

c. Gulbarga

d. Raichur

e. Koppal

Total (C)

a. Belgaum

b. Bijapur

c. Bagalkot

d. Dharwar

e. Gadag

f. Haveri

g. U.Kannada

Total (D)

Total

14,972

80,065

-

19,404

16,721

20,257

85,155

-

2,36,574

31,683

22,582

31,152

41,200

-

1,26,617

67,372

36,539

-

12,547

-

-

22,389

2,50,847

11,47,364

19,600

1,01,112

2,300

3,990

19,668

28,211

1,10,310

1,478

3,13,669

45,689

31,753

43,902

51,137

769

1,73,210

97,787

46,715

1,430

1,43,129

1,337

720

32,199

3,23,317

15,05,800

1.30

6.98

-

1.69

1.46

1.77

7.44

-

20.76

2.76

1.97

2.72

3.59

-

11.04

5.87

3.18

-

10.86

-

-

1.95

21.86

100.00

1.30

6.71

0.15

2.06

1.30

1.87

7.32

0.10

20.81

3.03

2.11

2.94

3.40

0.05

11.53

6.49

3.10

0.09

9.50

0.09

0.05

2.14

21.46

100.00

Sources: 1. Annual Report of Directorate of Industries and Commerce, Government of Karnataka, Bangalore.

2. Official records of Directorate of Industries and Commerce, Government of Karnataka, Bangalore.

The employment in the small sector which was 11,47,365 persons in the

state on March 31, 1995 increased to 15,05,800 persons by March 31, 2000. As

already pointed out, this figure represents the direct employment in small scale

sector and exclude those who are indirectly connected with it. The increase in

employment is found in all the districts in the state. However, one can notice

147

the difference among the districts and/or divisions. Five districts namely,

Bangalore Urban (26.42), Dakshina Kannada (6.71), Mysore (7.32), Dharwar

(9.50), and Belgaum (6.49) account for 56.44 per cent of the total employment in

the small scale sector in the State. Chitradurga and Davangere Districts account

for only 2.87 per cent and 0.09 per cent respectively.

4.13: Other National and State Level Programmes for SSIs

Besides the facilities provided by the governments through the DICs, a

few more programmes have been launched by the governments - both central

and states - to help the SSIs. A brief account of the same is presented below.

4.13.1: Prime Minister's Rojgar Yojana (PMRY)

This scheme (viz., Prime Minister's Rojgar Yojana) aims at providing

self-employment opportunities to educated unemployed youths and it was

launched as a centrally sponsored scheme during 1993-94. The target-

beneficiaries are educated unemployed youths in the age group of 18 - 35 years

having SSLC passed or failed or having undergone ITI or any other government

sponsored technical training course for a minimum duration of six months and

with family income not exceeding Rs. 24,000 per annum. There is a reservation

to the extent of 22.5 per cent of the fund for SC/ST, and 27 per cent for other

backward class educated youths. Preference is given to women and physically

handicapped applicants. Need-based financial assistance from commercial

148

banks up to Rs. 1 lakh is provided to the candidates selected for the

establishment of industrial units.

DICs in the state played a significant role in the implementation of

PMRY in Kamataka. The performance of DICs, as far as PMRY is concerned is

satisfactory which is evident from the following tables, (Tables - 4.7 and 4.8).

Table - 4.7; Target and Achievement of DICs under PMRy Scheme

Year

1995-96

1996-97

1997-98

1998-99

1999-00

Target (Number of Beneficiaries)

17,700

17,700

22,000

21,900

22,200

Achievement (Number of

Beneficiaries) 14,157

14,556

10,753

19,153

19,729

Amount (Rs. in crores)

71.68

76.41

56.67

100.62

211.01

Source: Directorate of Industries and Commerce, Government of Kamataka, Bangalore.

The table reveals that for the year 1995-96, the target beneficiaries were

17,700 but actual achievement was only 14,157 with the amount of sanctions

worth Rs. 71.68 crore. But for the year 1999-2000, the target beneficiaries were

22,200 and the actual achievement was 19,729 with the amount sanctions of Rs.

211.06 crore. It also reveals a significant increase in the achievement and the

amount sanctioned under the PMRY in the state. The ranking of DICs on the

achievement of target set under PMRY for the year 1999-2000 is presented in

the following table.

149

Table -SI. No 1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

11.

12.

13.

14.

15.

16.

17.

18.

19.

20.

21.

22.

23.

24.

25.

26.

27.

• 4.8: Ranking of DICs on the Achievement of PMRY

District

Udapi

Dharwad

Bellary

D. Kannada

Gadag

Mysore

Bangalore(R)

Mandya

Belgaum

Raichur

Shimoga

Chitradurga

U.Kannada

Koppal

Chamarajnagar

Tumkur

Bangalore(Urban)

Davangere

Bidar

Kolar

Bijapur

Hassan

Kodagu

Haveri

Gulbarga

Chikamagalur

Bagalkot

Target (Number of cases)

560

895

825

790

435

1,145

825

810

1,760

720

720

675

600

425

430

1,135

2,390

765

625

1,090

750

775

235

410

1,265

495

680

Sanctions (Number of cases)

596

925

852

804

437

1,123

798

743

1,609

649

649

579

600

425

430

1,135

2,390

765

625

1,090

750

775

235

410

1,265

795

680

1999-2000

Prcentage

106.42

103.35

103.27

101.77

100.45

98.07

96.72

91.72

91.42

90.13

90.13

89.76

89.16

87.52

86.07

85.46

85.23

84.96

84.32

83.94

93.60

83.48

83.87

80.73

17.62

72.72

71.76

Sources: 1. Compiled on the basis of the information extracted from the official records of Directorate of Industries and Commerce, Bangalore.

2. Economic Survey, 1999-2000, Department Economic and Statistics, Government of Karnataka, Bangalore.

The above table reveals that some DICs like Udupi, Dharwar, Bellary,

Dakshina Kannada and Gadag have sanctioned more than their targets to the

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beneficiaries. It indicates that the DICs play a significant role in the successful

implementation of PMRY.

4.13.2: Assistance to Handicraft Promotion

The Karnataka State Handicrafts Development Corporation (KSHDC) has

taken up major programmes like (a) construction of craft complexes, (b) supply

of sandal wood to artisans at concessional rate, (c) supply of silver and zinc to

bidriware artisans at concessional rate, (d) welfare schemes for crafts persons,

(e) celebration of Handicrafts week, etc. During the year 1999-2000, Rs.130

lakh had been released to the corporation and the following programmes were

implemented.

Table - 4.9: Performance of KSHDC, 1995-2000 SI.

No.

1.

2.

3.

4.

5.

6.

Scheme

Supply of sandal wood at concessional rate

Celebration of All India Handcrafts week

Supply of silver and zinc at concessional rate

Rebate on sale of Handicrafts

Rebate on sale of lesser known crafts

Renovation of Cauvery Emporium, New Delhi.

Number of Beneficiaries

1,000

1,500

340

-

100

-

Financial Assistance

(Rs. In lakh)

22.86

6.10

9.78

18.33

3.70

43.23

Source: Annual Report, 1999-2000, Department of Industries and Commerce, Government of Karnataka, Bangalore.

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KSHDC had organised refresher training programmes for 50 artisans in

crafts like, bronze ware, kinhal toys, rose wood, inlay work, lacquer ware and

artistic pottery, etc., under Vishwa Scheme.

4.13.3: Rural Industrialisation Programme- Vishwa

Vishwa programme aims at providing continuous productive employment

opportunities in rural area by promoting cottage and village industries to utilise

locally available resources for the manufacture of goods and services for mass

consumption. The scheme contemplates institutional support for training,

establishment of production units, supporting services like, supply of raw

materials, and marketing through state level boai'ds and corporations. The

training/skill development programmes are implemented through the DICs, State

Level Boards and Coiporations. A budgetary provision of Rs. 500 lakh was

made available during 1998-99 and out of this, a sum of Rs. 490.47 lakh was

spent up to the end of March 1999. The targets and achievements under Vishwa

programme in the state are as follows.

Table-4.10:1

Item

Organised Sector

Unorganised sector

Total

Beneficiaries Assisted up 1

Target

15,000

NA

15,000

to March 31,1999 Achievement up to March 31, 1999

Training

5,331

1,456

6,787

Production

15,783

1,456

16,722

Total

21,114

2,395

23,509

Source: Official Records of Department of Industries and Commerce, Government of Karnataka, Bangalore.

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From the above table, it is clear that the target fixed for the year was

15,000 beneficiaries and achievements in training through DICs were 1,456 and

state scheme that is organised sector was 5,331. The achievement of production

in case of organised sector was 15,783 and unorgnised sector was 1456. It

indicates that the DICs are playing important role in the implementation of

Vishwa Programme.

4.14: Limitations

Though the objectives behind the DIC system is a laudable one, the

beneficiaries are not reaping the full benefits. Because, the DICs have not been

able to provide all the facilities, assistance, etc., (to the SSIs) which they are

expected to provide. In this background, an attempt is made in the following

paragraphs to identify a few important limitations in the functioning of DICs.

a. The DICs do not adopt appropriate methodologies to carry out industrial

potential demand surveys. Any action credit plan based on such a survey

is bound to run into rough weather. The DICs functioning in Southern

Region have not lived up to the mark in the preparation of project

profiles.

b. The DICs do not have reliable and up to date information regarding the

inventory of human and material resources available. Also, units are

facing difficulties in obtaining inputs. It is clear that after 1985, many

artisan-based units failed to survive beyond a couple of years. The DICs

are not able to monitor and follow up sick artisan-entrepreneurs. The

prospective rural entrepreneurs need advice and assistance from

professionals as the DICs are not providing.

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c. The organisational set up of the DICs needs to be strengthened. Many

DICs do not have full fledged managers for raw materials. A few officers

who look after raw material requirements of the units lack professional

expertise. This explains the limited role of DICs in setting up the much

needed rural marketing and service centres (RMSCs). The National

Commission on Development of Backward Areas pointed out the tardy

progress in this direction. Because, against the country's requirement of

over 5,000 RMSCs, only about 400 were set up.

d. The project managers, assuming the promotional role, take up a wide

variety of responsibilities such as identifying, educating, persuading and

assisting rural entrepreneurs who are generally shy and tend to be over

cautious. However, most project managers or officers suffer from poor

project appraisal skill. They do not have sufficient training in this sphere.

e. It has been observed that more than 50 per cent of the functional

managers/officials at the middle level are promotees from the ministerial

positions. As a result, they are not in a position to guide the rural

entrepreneurs.

4.15: Conclusion

From the above analysis, it is obvious that DICs have been provided with

broad based organisational structure to promote and develop SSIs and carry out

various programmes and activities. DICs play the role of facilitator for

promoting the growth of small scale units. Viewed against this background, it

has a varied role for stepping up the pace of industrial activity which is analysed

in the next chapter.

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Summary of the Chapter

This chapter begins with the background in which the DICs were

established followed by its objectives and its role as a co-ordinating agency.

Then it makes an attempt to present briefly the review committees and also the

monitoring cells followed by delegation of power. Then the chapter makes a

detailed analysis of the different roles of DICs - both during the pre-investment

stage and during the post-investment stage. This is followed by the working of a

few other agencies and facilities and concludes with the short-comings in the

working of DICs.

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