3. • POST INDEPENDENCE HAS EXPERIANCED
UNPRECEDENCE INDUSTRIAL GROWTH
• INDUSTRIAL SECTOR HAS BECOME MORE
DIVERSIFIED
4. INDUSTRIAL POLICY RESOLUTION
1948
• DEFENCE & STRATEGIC INDUSTRIES – GOVT.
MONOPOLY
• BASIC & KEY INDUST. WERE TO REMAIN WITH
EXISTING PRIVATE SECTORS
• 20 IMPORTANT INDUST. TO BE PRIVATE SECTOR
BUT UNDER GOVT. CONTROL
• THE RESIDUAL INDUST. TO BE RUN BY PRIVATE
ENTERPRISE
5. THERE AFTER INDUSTRIAL
POLICIES WERE MODIFIED IN YEAR
1956, 1977, 1980, & 1991 AND TIME
TO TIME BY THE GOVT. KEEPING IN
VIEW THE OBJECTIVE OF
INDUSTRIAL DEVELOPMENT IN
INDIA
7. INDUSTRIAL SICKNESS
MARCH 1990 – 2,18,828 SMALL
SCALE & 1,455 LARGE & MEDIUM
WERE SICK UNIT – RS 6,965.76
CRORES RS BANK CREDIT WAS
GIVEN
COMPETITION & POOR
MANAGEMENT
8. CASE STUDY OF METAL BOX
• METAL BOX IS A BRITISH COMPANY AND
HAS 11 PLANTS IN INDIA.
• THEY ARE MANUFACTURER OF METAL
CAN FOR PACKAGING.
• IN 1987 ,THIS COMPANY HAD GONE TO
BIFR AND BECAME SICK UNIT
9. REASONS FOR BEING A SICK
COMPANY
• DIVERSIFICATION FROM THE CORE AREA
TO BALL BEARING
• CHANGE IN PACKAGING TECHNOLOGY
FROM METAL TO PAPER AND PLASTIC.
• MANAGEMENT FAILURE
• LOW PLANT PRODUCTIVITY
10. MEASURES BY GOVT. TO
DEAL WITH SICK UNITS
• GOVT TAKE OVERS
• MERGER OF SICK UNIT WITH HEALTHY
UNIT
• INDUSTRIAL RECONSTRUCTION CORP.
• INDUSTRIAL DEVELOPMENT BANK - IDBI
• BOARD OF INDUSTRIAL & FINANCIAL
RECONSTRUCTION - BIFR
11. SMALL SCALE UNIT IS DEFINED IN
TERMS OF INVESTMENT CEILINGS
ON THE ORIGINAL VALUE OF THE
INSTALLED PLANT AND MACHINERY
SMALL SCALE INDUSTRIES
12. THE INDIAN SSI SECTOR
– THE SCENE
•APRIL 2001 – ALL QUANTITATIVE RESTRICTIONS
(QRs) REMOVED
• THIS SECTOR ACCOUNTS FOR 40% OF TOTAL
INDUSTRIAL OUTPUT
•ABOUT 35% OF INDIA’S TOTAL EXPORTS ARE BY
THE SMALL SCALE SECTOR. HENCE, INDIAN
SMALL UNITS ARE COMPETITIVE.
•LOWER OVERHEADS AND HIGHER OPERATIONAL
FLEXIBILITIES IN SMEs MAY BENEFIT THEM, AT
LEAST IN NICHE ENVIRONMENTALLY FRIENDLY
AND LOW-TECH PRODUCTS
•GREATER PROPENSITY TOWARDS INNOVATION
13. THE INDIAN SSI SECTOR
– THE IMPACT
INCREASING USE OF
OUTSOURCING, JOB WORK,
ANCILLARY DEVELOPMENT BY
LARGE ENTERPRISES/MNCs
COULD SUSTAIN SMEs DESPITE
TRADE LIBERALIZATION
INCREASING USE OF
ELECTRONIC & MOBILE
COMMERCE COULD REDUCE THE
COMPETITIVE DISADVANTAGE
OF SMEs
16. Indian Scenario
•COMPETITION IS BECOMING INCREASINGLY
INTENSE
•MANUFACTURING COMPANIES NEED TO LOWER
COSTS AND IMPROVE QUALITY
•MATERIALS ARE A SIGNIFICANT PART OF COST
OF PRODUCTION FOR A MAJORITY OF
INDUSTRIES
•OUTSOURCING OF COMPONENTS IS A MEANS OF
LOWERING COSTS AND REDUCING RISK
•INDUSTRY HAS DEVELOPED IN A PROTECTED
AND CONTROLLED ECONOMIC ENVIRONMENT
–IN THE PAST, COST, QUALITY AND CUSTOMER
SERVICE WERE NOT CRITICAL PARAMETERS
INDIAN INDUSTRIAL SCENERIO
17. •MOST SUPPLIERS ARE SMALL OR MEDIUM
SCALE UNITS
•SMALL INDUSTRY HAS ALWAYS BEEN GIVEN
SPECIAL PROTECTION BY THE GOVERNMENT
(RESERVATION POLICY, EXCISE CONCESSIONS)
•CONSEQUENTLY, MOST SUPPLIERS DID NOT
GROW OR INCREASE INVESTMENTS TO
IMPROVE TECHNOLOGY, AS WELL AS
PRODUCTION AND QUALITY CONTROL SYSTEMS
•IN THE PAST, PRICING WAS ONLY ON COST
PLUS BASIS
INDIAN INDUSTRIAL SCENERIO
(CONTD)
18. •TO REDUCE/AVOID TAX PAYMENTS, MOST
INDUSTRIES DECLARED LOW PROFITS
–CONSEQUENTLY NO INTERNAL RESOURCES
WERE GENERATED
•THERE WERE NO LONG TERM CONTRACTS OR
RELATIONSHIPS WITH BUYERS
•NOW COMPETITIVE ENVIRONMENT REQUIRES
SUPPLIERS TO MEET STRINGENT QUALITY
STANDARDS, REGULARLY IMPROVE TECHNOLOGY
AND BE COST COMPETITIVE
INDIAN INDUSTRIAL SCENERIO
(CONTD)
19. THE STATUS SO FAR..
POST 2001
•GROWTH RATE - 7 – 7.5% p.a
•EMPLOYMENT - 3.5 – 4% p.a
•EXPORTS - 33 – 35% share
•SECTORAL SUCCESSES – TOYS, MACHINE TOOLS,
READYMADE GARMENTS, HOSIERY, LEATHER,
BICYCLE PARTS
•OCCASIONAL FEARS STILL HEARD
26. CONCERNS VARY BY COUNTRY
Under-
developed
countries
Developing
countries
Newly
Industrialized
Advanced
countries
Infrastructure
Issues
Operational
Issues
Management and
Control Issues
Strategic Issues
(from Palvia and Palvia, 1996)
27. AND WHAT ABOUT COMPANIES THAT OPERATE IN
ALL ENVIRONMENTS?
Issue 1991 Rank 1994 Rank
Strategic Planning 1 1
Organization Alignment 2 2
Information Architecture 5 3
Competitive Advantage 3 3
Data as a Resource 8 3
Human Resources 6 3
Security and Control 14 3
Integrating Technology 12 8
Software Development 10 9
Role and Contribution 3 9
