Chapter No.2

OVERVIEW OF AGRO-BASE INDUSTRIES

36 | P a g e

Chapter No.2

OVERVIEW OF AGRO-BASE INDUSTRIES

2.1 WORLDWIDE TERMINOLOGY OF SMALL SCALE INDUSTRIES

The definition of a small enterprise varies across countries, industries, agencies and authors. The “small enterprise” itself is used by different countries witth different nomenclatures such as small business, small firm and small industries and so on. Vepa (1988)6 has listed the various terminologies used in some countries (see Table 2.1). TABLE NO. 2.1 TERMINOLOGIES AND SCOPE OF SMALL INDUSTRY IN SELECT COUNTRIES Sr. Country Terminology Scope No. 1 Japan Small Manufacturing, Mining, Services, Enterprise Trading (Wholesale and Retail) 2 India Small Industry Manufacturing, Repair and Servicing 3 Korea Small Manufacturing, Mine, construction, Enterprise commerce 4 USA/Canada Small Manufacturing, services, trading Business 5 UK Small Firms Manufacturing, Commerce (Both retail and Wholesale) 6 Indonesia Small Industry Manufacturing, Servicing

(Source : Vepa, R..K, (1988) Modern Small Industry in India, Sage Publications, New Delhi.)

6 Vepa, R..K, (1988) Modern Small Industry in India, Sage Publications, New Delhi.

37 | P a g e

Atkins and Lowe (1997)7 noted that as many as 40 different definitions of small firms have been reported in the literature, and generally there appears to be very little consistency in criteria used to define small enterprises. The criteria are many, such as number of employees, annual sales revenue, value of fixed assets/plant and machinery and the management structure.

In United States founds, the Small Business Administration, established in 1953, provided financial, technical and management assistance to help Americans to start, run and grow their businesses. The size standards of Small Business administration define whether a business entity is small, and thus eligible for government assistance reserved for small business concerns. Small Business Administration establishes size standards considering economic characteristics, comprising the structure of industry, including degree of competition, average firm size, start-up costs and entry barrier and distribution of firm by size. It also considers technological change, competition from other industries, growth trends, and historical activity within an industry. As reported in homepage of Small Business Administration, America’s 25 million small businesses employ more than 50 percent of the private workforce, generate more than half of the nation’s gross domestic product, and are the principal source of new jobs in the US economy. Bolton Committee Report in UK indicates that a small firm is defined by the number of persons employed, (less than 200 for manufacturing, less than 25 for construction and less than 5 vehicles for transport) and by turnover for retail trade (less than

7 Atkins M. H. and Lowe, J F, Sizing up small firm: UK and Australian experience, International Small Business Journal, 15(3), 1997, p. 42-55.

38 | P a g e turnover￡50,000) and wholesale trade (less than turnover of ￡200,000). According to European Union (Blackburn, 2001)8 approach the businesses are classified as micro firms (less than 10 people); small firms (10–49 employees); and medium–sized firms (50– 249 employees). Frequently, researchers combine small and medium firms in a single category i.e., small and medium-size enterprises. Those with 250 or more employees were classified as the large firms. Besides the statistical definition of small enterprises in different countries, Atkins and Lowe argue that the structure and decision making process of an organization should be the primary indicator of a small firm. They explain that statistical definition of smallness such as number of employees or annual receipts may omit significant dimensions of small firms. They refer to the involvement of the business owners in the strategic planning, forecasting, and performance comparison of small firms. Resnik (1988)9 argues that one of the defining criteria of small firms is the involvement of the owner manager in setting the business priorities, objectives, and standards. This argument suggests that a firm may be classified as small, based upon the role of the owner managers and the extent to which their direct participation in the management of the business. Alternatively, the small enterprises can be defined using qualitative approach. Bolton Committee Report in UK provided one of the best- known approaches. This was in the form of an ideal type combining three elements. First, in economic terms, a small firm is one that has a relatively small share of market. Secondly, an essential characteristic

8 Curran J. and Blackburn R.A, (2001) Researching the small enterprise, Sage Publications. 9 Resnik, P, (1988) The Small Business Bible: The make or break factors survival and success, John Willey, New York.

39 | P a g e of a small firm is that its owners or part-owners manage it in a personalized way, and not through the medium of formalized management structure. Thirdly, it is also independent in the sense that it does not form part of a larger enterprise and that the owner managers should be free from outside control in taking their principal decisions. The summary of Haksever incorporates the guidelines established by the US Small Business Administration, (Guide to SBA: Definitions of Small Business, 1996) and arguments of Atkins and Lowe. Haksever defines a small business as one with fewer than 500 employees and exemplifying the following characteristics: 1. Management is independent; usually the manager is also owner. 2. Capital is supplied and ownership is held by an individual or a small group. 3. The area of operations is mainly local; workers and owners tend to be in one home community, although markets need not be. 4. The business is small, compared to the biggest units in the field. Nolan used the above definition in his doctoral research on small business performance.

2.2 SMALL SCALE INDUSTRIES IN INDIA To appreciate small scale entrepreneurship in India, a basic understanding of the definition and scope of the terminology “small enterprise” is very necessary. In India, the small industry is defined in terms of investment ceiling. Also the small industry sector enjoys a special reservation policy in terms of items of manufacture. The investment limit ceiling was revised by the central government from time to time, depending on the industrial and economic development

40 | P a g e and needs of entrepreneurs. The evolution of investment limits of small industries in India is shown in Table 2.2.

TABLE NO. 2.2 . EVOLUTION OF INVESTMENT LIMIT FOR SMALL SCALE INDUSTRIES IN INDIA Year Investment Additional Condition Less than 50 employees 1950 Up to Rs.5 lakhs in fixed asset with power or 100 Employees without power 1960 Up to Rs.5 lakhs in fixed asset No Condition Up to Rs.7.5 lakhs in plant and 1966 No Condition Machinery Up to Rs.10 lakhs in plant and 1975 No Condition Machinery Up to Rs.20 lakhs in plant and 1980 No Condition Machinery Up to Rs.35 lakhs in plant and 1985 No Condition Machinery Up to Rs. 60 lakhs in plant and 1991 No Condition Machinery Up to Rs. 3 crore in plant and 1997 No Condition Machinery Up to Rs.1 Crore in plant and 1999 No Condition Machinery Rs. 25 Lakhs to Rs.5 Crore in plant and Machinery for manufacturing enterprise and Rs. 10 Lakhs to Rs. 2 crore in No Condition 2006 equipments required for Service Enterprise ( Source : K. Lavanya Latha, Small Scale Entrepreneurship In India, Serbian Journal of Management 3 (2) (2008) 171 – 187)

Initially, there was an additional condition limiting number of persons employed, the same was deleted in 1960. Further, the investment ceiling was linked to plant and machinery only, excluding investment

41 | P a g e in other fixed assets i.e., land and building. The reason was to define small industry with respect to such investments mainly in productive assets. The investment limit was raised to Rs. 30 million based on the recommendations of the report of the Expert Committee on Small Enterprises, with Dr. Abid Hossain as Chairman. The report, submitted to the Central Government in July 1997, recommended that the definition of small scale industries be broadened to small scale enterprises and allowing incentives, credit facilities, and promotional facilities to flow to all small enterprises. On line with this, it was recommended that the investment limit of small scale enterprise be raised to Rs. 30 million. But later, it was felt that this raise in investment limit up to Rs. 30 million did not truly result in accelerated investments in small enterprises. Large majority of small enterprises still belong to the lower investments up to Rs. 1 million. There was also an apprehension that with the increased investment limit up to Rs. 30 million, some of the medium scale may roll back to small scale thus bringing in unhealthy competition. Therefore, the investment ceiling was, for the first time in 1999, reduced from Rs. 30 million to Rs. 10 million. It was in 1977, the Central Government introduced a new category namely “Tiny Sector Industries” with the small scale industry category, particularly to provide promotional measures and incentives to such of the small industries having much lower investment limits. For the purpose of this study, the tiny sector is also considered as part of small enterprises. In Indian context, Chachadi (1988)10 defined small scale industry in his doctoral research work on ‘Decision Making in Small Industry’, as it incorporates managerial aspects like ownership and control. The

10 Chachadi A. H., (1988) Decision making in Small Industry, Unpublished doctoral thesis, Karnataka University, Dharwad.

42 | P a g e definition of Government of India only refers to ceiling on investment in plant and machinery, which relates to economic aspects, because financial and capital resources of small enterprises are not so abundant, as in developed countries. The definition of Haksever has added significance to the present study, as it does not ignore local area of operation and local owners and employees. In an attempt to formulate qualitative definitions of small firms, a key assumption made, was that small firms were fundamentally different from large firms. In one of the classics of small business theorizing (Penrose, 1959) this assumption was summed up in the analogy that small and large firms were fundamentally different from each other as caterpillars are from butterflies. It was noted that even if one metamorphosis into other, it would not be simply larger version of the other, and in case of small firms, the chance of metamorphosis is also not certain. Many small firms may never grow beyond a small size, as most of the ‘caterpillars’ may never become butterflies (Blackburn, 2001).

Regarding size, Burrows and Curran (1989)11 argue as “ Size, whether measured in terms of number of employees, turnover, market share whatever, is not sufficiently robust criterion to allow ‘ small firms ’ to be isolated and analyzed as having an economic and social specificity”. These authors continue their arguments that smallness is not technically a necessary characteristic of an organization but a contingent one. Smallness has the same status as other characteristics such as legal form of organization, type of economic

11 Burrows R. and Curran, (1989) J, Sociological research on service sector small business: some conceptual considerations work, Employment and Society, 3(4), p. 527–531.

43 | P a g e activity engaged, the technology employed, region or local economy, the age, gender, ethnicity and educational level of the owners or workers of the firm etc. Phansalkar (1996), a consultant to small industries in India, argues that there is no firm, indisputable and yet defensible criterion for delimiting terms such as small or large industry. What in India considered being a giant, say automobile manufacturing companies, may be possibly small in the eyes of a global player in auto industry. He further states that, in Indian situation, basis of categorization on sales turnover, or investment in fixed assets could also pose problems, because there are instances of one man-show in an oil mill, where the sales turnover could be over Rs.1500 lakhs (150 Million). Small enterprises may employ a few people, and the management levels may be of simple structure. On the other hand, small enterprises having low capital investment, according to the statistical definition, could be involved in complex business. In his opinion, the only possible and defensible ground for categorization of small, medium and large industry in Indian context is by differentiating their management problems. This means that amount of complexity involved in management of enterprises becomes a key parameter for differentiating enterprises as small or large. Parameters such as sales turnover, investment in fixed assets, or number of employees are simply surrogates for complexity.

Therefore, the paradox that by definition, the small enterprises management ought to be simpler, but seldom, it is based on the above arguments on defining the small enterprises. It would be unrealistic to demand uniformity of approach in small business research.

44 | P a g e

When India attained Independence, the new government began to realize the need for accelerating industrial development and a general protectionist system was introduced. Consequently, the various Industrial Policies provided major guidelines for industrial development and at the same time the government started to provide various incentives and concessions in the form of capitalist, technical know – how, markets and land to the potential entrepreneurs to establish industries in the industrially potential areas to remove the regional imbalances in development. The Five Year Plans provided the necessary frame work through their specific programme for economic development of the nation. Several institutions like Small Industries Development Organization, National Small Industries Corporation, Small Industries Service Institutes at the Central Government and Directorate of Industries, Financial Corporations, Small Scale Industries Board, District Industries Centres were also established by the State Government to facilitate the new entrepreneurs in setting up their enterprises. Expectedly, the Small Scale Units emerged very rapidly in India witnessing a tremendous increase in their number from 121,619 in 1966 to 190,727 in 1970 registering an increase of 17,000 units per year during the period under reference. The family entrepreneurship units like Tatas, Birlas, Mafatlals, Dalmias, Kirloskars, Ambanies, Brijmohanlals, Narayana Murthy, Azim Premji and others grew beyond the normally expected size and also established new frontiers in business in this period. District Industries Centres at the district level functioned as nodal centres for development of small scale entrepreneurship in rural and semi urban areas. District Industries Centres operated as ‘single window’ agency through which all assistance needed for small scale entrepreneurship

45 | P a g e were streamlined. List of products reserved for small industries increased dramatically from 180 to 540 and later to 812.

The Third Census of small scale industries reveals that the total number of small scale industries has increased from 79.6 lakhs in 1994-95 to 110.10 lakhs in 2002-03, indicating an annual average growth rate of 4.1 percent, 12.4 percent production and exports recorded a growth rate of 14.5 percent (Dutt and Sundharam, 2006). On the other hand, industrial licensing, price controls, administrative restrictions and regulations, and a highly progressive tax rate on income and wealth hampered domestic entrepreneurship. Small scale entrepreneurship also facilitated removal of regional disparity in business.

The items from a paper pin to technology–based products were manufactured in the sector and the units were dispersed in districts, towns and villages all over the country. Thus there was a significant growth of small scale enterprise population, their production and employment, besides contributing to a major share of country’s exports. The total number of SSI units has increased from 79.6 lakhs in 1994- 95 to 110.1 lakhs in 2002-03 indicating an annual average growth rate of 4.1 percent, but their production (at 1993-94 prices) increased from Rs.1,09,116 crores in 1994- 95 to Rs.2,72,134 crores in 2005-06 i.e., an annual average growth of 8.6 percent. As a consequence of the increase in SSI units, especially more in the unregistered sector, employment increased from 191.4 lakhs in 1994- 95 to 294.9 lakhs in 2005-06, recording an average growth rate of 4.5 percent annum. So, as far as exports by the SSI sector are concerned, they were increased from Rs.29,068 crores in 1994-95 to Rs.1,50,242

46 | P a g e crores in 2005-06, recording a growth rate of 14.1 percent per annum and of employment by 4.5 percent. The share of exports from the small scale industries represents about 34.3 percent of total exports in 2005-2006.

The Ministry of Small Scale Industries has taken an initiative for the introduction of Small and Medium Enterprises Development Bill in 2005 which was stabled in Lok Sabha on 12th May. Despite such positive evidence in favour of reserve items, the Union Budget (1997- 98) de reserved 14 items hitherto manufactured by SSI sector. These items included ice-cream, biscuits, synthetic soups, a variety of automobile parts, corrugated paper and boards, vinegar, poultry feed, rice milling, dal milling etc., The small industry is being perceived as vital sub-sector of the economy. Small industry generates large employment, removes regional imbalance by contributing to the economic development.

MSMED Act was notified in 2006 to address policy issues affecting MSMEs as well as the coverage and investment ceiling of the sector. The salient features of the Act include: • Setting up of a National Board for MSMEs • Classification of enterprises • Advisory Committees to support MSMEs • Measures for promotion, development and enhancement of MSMEs • Schemes to control delayed payments to MSMEs • Enactment of rules by State Governments to implement the MSMED Act, 2006 in their respective States On 9 May 2007, subsequent to an amendment of the Government of India (Allocation of Business) Rules, 1961, the Ministry of Small Scale

47 | P a g e

Industries and the Ministry of Agro and Rural Industries were merged to form the Ministry of Micro, Small and Medium Enterprises (MSME). This Ministry now designs policies and promotes/facilitates programmes, projects and schemes and monitors their implementation with a view to assisting MSMEs and help them scale up.

The primary responsibility of promotion and development of MSMEs is of the State Governments. However, the Government of India, supplements the efforts of the State Governments through different initiatives. The role of the Ministry of Micro, Small and Medium Enterprises (M/o MSME) and its organisations is to assist the States in their efforts to encourage entrepreneurship, employment and livelihood opportunities and enhance the competitiveness of MSMEs in the changed economic scenario. The schemes/programmes undertaken by the Ministry and its organizations seek to facilitate/ provide: i) adequate flow of credit from financial institutions/ banks; ii) support for technology upgradation and modernization; iii) integrated infrastructural facilities; iv) modern testing facilities and quality certification; v) access to modern management practices; vi) entrepreneurship development and skill upgradation through appropriate training facilities; vii) support for product development, design intervention and packaging; viii) welfare of artisans and workers; ix) assistance for better access to domestic and export markets and x) cluster-wise measures to promote capacity building and empowerment of the units and their collectives. The majority of people living in rural areas draw their livelihood from agriculture and allied sectors. However, the growth and balanced development of other sectors such as industry and services is also necessary to sustain the growth of Indian economy in an inclusive manner. The Government of India is striving to improve the economic and social conditions of rural

48 | P a g e population and non-farm sector through a host of measures including creation of productive employment opportunities based on optimal use of local raw materials and skills as well as undertaking interventions aimed at improving supply chain; enhancing skills; upgrading technology; expanding markets and capacity building of the entrepreneurs/ artisans and their groups/collectives. In India, the enterprises have been classified broadly into two categories: (i) Manufacturing; and (ii) Those engaged in providing/rendering of services.

Both categories of enterprises have been further classified into micro, small and medium enterprises based on their investment in plant and machinery (for manufacturing enterprises) or on equipments (in case of enterprises providing or rendering services). The present ceiling on investment to be classified as micro, small or medium enterprises is as under:. TABLE NO. 2.3 INVESTMENT LIMIT OF MICRO, SMALL & MEDIUM ENTERPRISE Investment Ceiling for plant & machinery or Classification equipments Manufacturing Enterprise Service Enterprise Micro Upto Rs. 25 Lakh Upto Rs. 10 Lakh Above Rs.10 Lakh upto Small Above Rs.25 Lakh upto Rs. 5 crore Rs. 2 crore Above Rs.2 crore upto Medium Above Rs.5 crore upto Rs. 10 crore Rs. 5 crore Source: The Micro, Small & Medium Enterprises Development (MSMED) Act, 2006

49 | P a g e

2.3 MEANING OF SMALL SCALE AGRO-BASE INDUSTRY Agro-based industries are those, which are involved in supplying the farm with agricultural inputs besides handling the products of the farm.12 Agro-based industries are those industries which have either direct or indirect links with agriculture. 13 According to Union Development Commissioner, for small scale industries, all enterprises connected with the processing of agriculture produce and farm waste, Industry related to canning and processing of fruits and also those providing cold storage facilities, Industries producing chemicals needed in the processing operation of plant, fibers, forest produce, and some marine based ventures are categories as agro-base industries. Besides manufacturing of farm implements of various types including power, tillers, threshers, poultry equipments, and accessories of dairying and formulations of pesticides have been listed as Agro- industries in this list.

According to reserve bank of India industries which mainly depend for their raw materials on Agricultural products including plantations, animals, and husbandry products but excluding forest products are brought under agro-base industries. It has further classified agro-base industry into food excluding salts, beverages, tobacco, textiles products leather and leather products and rubber and rubber products industries. 14 As per the MSME act 2006 the small scale industries defined as “the manufacturing enterprises having investment ceiling in plant and machinery is above Rs. 25 lakhs &

12 INDIA, Famine Enquiry Commission, 1944 13 S N Bhattacharya, Rural Industrialization in India, B R Publishing Corporation, Delhi, 1980, p 192 14 Reserve bank of India, “Agro- Industries in Maharashtra”, Reserve Bank of India Bulletin, Vol. 22 10 oct 1969

50 | P a g e upto Rs. 5 crore is called small scale industry.15 Thus the small scale agro-base industries is defined as those industries which have either direct or indirect links with agriculture having investment ceiling in plant and machinery is above Rs. 25 lakhs & upto Rs. 5 crore.

2.4 CATEGORIZATION OF AGRO- BASE INDUSTRIES

The Agro-base industry is classified based on raw material or final product. Classification of Agro-Processing industry based on raw material is shown TABLE NO. 2.4 CATEGORIZATION OF AGRO- BASE INDUSTRIES Sr. Type Category (Based Finished Products No on Raw Material) a) Wheat Flour Cereals Based b) Biscuit Manufacturing Industry c) Confectionary and Bakery Items d) Rice (puffed and flaked) e) Rice Bran and Rice Bran Oil 1 Food f) Corn flakes based g) Canned Baby Corn h) Starch Material Pulses Based a) Gram Flour (Basen) Industry b) Namkeens (ready to eat snacks) c) Papad d) Whole or Split Dal Fruits & a) Frozen fruits & Vegetables Vegetables Based b) Chips & Wafers (Ready to Eat Industry snacks) c) French Fries (Ready to Eat snacks)

15 The Micro, Small & Medium Enterprises Development (MSMED) Act, 2006

51 | P a g e

d) Dehydrated Vegetables e) Ketchups, Purees & Concentrates f) Juices g) Pickles Spices Based a) Pastes & Powders Industry b) Oleoresins c) Aromatic Extractions Fisheries Industry a) Fish Processing b) Fish meal c) Fish / Prawn Pickle

Oilseed Based a) Edible Oil Industry b) Animal Feed c) Processed Seed (Sesame) 2 Dairy Dairy Based a) Milk, Skimmed Milk Powder, Industry Ghee, Curd etc 3 a) Processed Poultry Products Poultry Livestock & b) Meat Gravy Concentrates Poultry c) Mutton & Lamb Processing 4 Medicinal Herbs a) Medicinal Products Based Industry Others Cotton & Jute b) Fibres processing Based Industry Sugarcane Based a) Jaggery Industry b) Confectionary & Bakery Products Plantation Crops a) Tea Powder based Industry b) Coffee Powder Others a) Honey b) Mushrooms Floriculture Based a) Fresh & Dried Flowers Industry

52 | P a g e

Agriculture is the process of producing food, feed, fiber and other desired products by the cultivation of certain plants and the raising of domesticated animals (livestock). The practice of agriculture is also known as "farming", while scientists, inventors and others devoted to improving farming methods and implements are also said to be engaged in agriculture. More people in the world are involved in agriculture as their primary economic activity than in any other, yet it only accounts for twenty percent of the world's Gross Domestic Product (GDP).

Food processing is the methods and techniques used to transform raw ingredients into food for human consumption. Food processing takes clean, harvested or slaughtered and butchered components and uses them to produce marketable food products.

2.5 AGRICULTURE RESOURCES IN INDIA

Agriculture in India has a significant history. Today, India ranks second worldwide in farm output. Agriculture and allied sectors like forestry and fisheries accounted for 16.6% of the GDP in 2009, about 50% of the total workforce.16 The economic contribution of agriculture to India's GDP is steadily declining with the country's broad-based economic growth. Still, agriculture is demographically the broadest economic sector and plays a significant role in the overall socio- economic fabric of India.

16 CIA Factbook: India". CIA Factbook. Central Intelligence Agency. Archived from the original on 11 June 2008. Retrieved 2008-06-10

53 | P a g e

Fig. No. 2.1 Map of India with major crops

Vedic literature provides some of the earliest written record of agriculture in India. Rigveda hymns, for example, describes plowing, fallowing, irrigation, fruit and vegetable cultivation. Other historical evidence suggests rice and cotton were cultivated in the Indus Valley, and plowing patterns from the Bronze Age have been excavated at Kalibangan in Rajasthan. Bhumivargaha, another ancient Indian Sanskrit text, suggested to be 2500 years old, classifies agricultural land into twelve categories: urvara (fertile), ushara (barren), maru (desert), aprahata (fallow), shadvala (grassy), pankikala (muddy), jalaprayah (watery), kachchaha (land contiguous to water), sharkara (full of pebbles and pieces of limestone), sharkaravati (sandy), nadimatruka (land watered from a river), and devamatruka (rainfed). Some archaeologists believe rice was a domesticated crop along the banks of the Indian river in the sixth millennium BC. Other crops cultivated in India 3000 to 6000 years ago, include sesame, linseed,

54 | P a g e safflower, mustards, castor, mung bean, black gram, horse gram, pigeonpea, field pea, grass pea (khesari), fenugreek, cotton, jujube, grapes, dates, jackfruit, mango, mulberry, and black plum. Indian peasants had also domesticated cattle, buffaloes, sheep, goats, pigs and horses thousands of years ago. Some scientists claim agriculture in India was widespread in the Indian peninsula, some 3000–5000 years ago, well beyond the fertile plains of the north. For example, one study reports twelve sites in the southern Indian states of Karnataka and Andhra Pradesh providing clear evidence of agriculture of pulses millet-grasses, wheat, barley, hyacinth bean, pearl millet, finger millet, cotton, linseed, as well as gathered fruits of Sisyphus and two Cucurbitaceous.

The middle ages saw irrigation channels reach a new level of sophistication in India and Indian crops affecting the economies of other regions of the world under Islamic patronage. Land and water management systems were developed with an aim of providing uniform growth. Despite some stagnation during the later modern era the independent Republic of India was able to develop a comprehensive agricultural program.

Over 50 years since its independence, India has made immense progress towards food security. Indian population has tripled, but food-grain production more than quadrupled: there has thus been substantial increase in available food-grain per capita.

Prior to the mid-1960s India relied on imports and food aid to meet domestic requirements. However, two years of severe drought in 1965 and 1966 convinced India to reform its agricultural policy, and that India could not rely on foreign aid and foreign imports for food security. India adopted significant policy reforms focused on the goal of foodgrain self-sufficiency. This ushered in India's Green Revolution.

55 | P a g e

It began with the decision to adopt superior yielding, disease resistant wheat varieties in combination with better farming knowledge to improve productivity. The Indian state of Punjab led India's green revolution and earned itself the distinction of being the country's bread basket.17

The initial increase in production was centred on the irrigated areas of the Indian states of Punjab, Haryana and western Uttar Pradesh. With both the farmers and the government officials focusing on farm productivity and knowledge transfer, India's total food grain production soared. A hectare of Indian wheat farms that produced an average of 0.8 tons in 1948, produced 4.7 tons of wheat in 1975 from the same land. Such rapid growths in farm productivity enabled India to become self-sufficient by the 1970s. It also empowered the smallholder farmers to seek further means to increase food staples produced per hectare. By 2000, Indian farms were adopting wheat varieties capable of yielding 6 tons of wheat per hectare. With agricultural policy success in wheat, India's Green Revolution technology spread to rice. However, since irrigation infrastructure was very poor, Indian farmer innovated with tube-wells, to harvest ground water. When gains from the new technology reached their limits in the states of initial adoption, the technology spread in the 1970s and 1980s to the states of eastern India — Bihar,[Orissa] and West Bengal. The lasting benefits of the improved seeds and new technology extended principally to the irrigated areas which account for about one-third of the harvested crop area. In the 1980s, Indian agriculture policy shifted to "evolution of a production pattern in line with the demand pattern" leading to a shift in emphasis to other agricultural commodities like oilseed, fruit and vegetables. Farmers began adopting

17 The Government of Punjab (2004). Human Development Report 2004, Punjab

56 | P a g e improved methods and technologies in dairying, fisheries and livestock, and meeting the diversified food needs of India's growing population. As with Rice, the lasting benefits of improved seeds and improved farming technologies now largely depends on whether India develops infrastructure such as irrigation network, flood control systems, reliable electricity production capacity, all season rural and urban highways, cold storage to prevent food spoilage, modern retail, and competitive buyers of produce from the Indian farmer. This is increasingly the focus of Indian agriculture policy.

India's agricultural economy is undergoing structural changes. Between 1970 and 2011, the GDP share of agriculture has fallen from 43 to 16 percent. This isn't because of reduced importance of agriculture, or a consequence of agricultural policy. This is largely because of the rapid economic growth in services, industrial output, and non-agricultural sectors in India between 2000 to 2010.

As of 2011, India had a large and diverse agricultural sector, accounting, on average, for about 16 percent of GDP and 10 percent of export earnings. India's arable land area of 159.7 million hectares (394.6 million acres) is the second largest in the world, after the United States. Its gross irrigated crop area of 82.6 million hectares (215.6 million acres) is the largest in the world. India has grown to become among the top three global producers of a broad range of crops, including wheat, rice, pulses, cotton, peanuts, fruits, and vegetables. Worldwide, as of 2011, India had the largest herds of buffalo and cattle, is the largest producer of milk, and has one of the largest and fastest growing poultry industries.18

18 India: Basic Information". United States Department of Agriculture - Economic Research Service. August 2011.

57 | P a g e

The following table presents the twenty most important agricultural products in India, by economic value, in 2009. Included in the table is the average productivity of India's farms for each produce. For context and comparison, included is the average of the most productive farms in the world and name of country where the most productive farms existed in 2010. The table suggests India has large potential for further accomplishments from productivity increases, in increased agricultural output and agricultural incomes

TABLE NO. 2.5 AGRICULTURE IN INDIA, LARGEST CROPS BY ECONOMIC VALUE

Average World's most Economic Unit yield, India productive farms value price (2010) (2010) (2009 prices, (US$ / (tons per (tons / Rank Produce Country US$) kilogram) hectare) hectare) 1 Rice $38.42 billion 0.27 3.3 10.8 Australia Buffalo 2 $24.86 billion 0.4 1.7 1.9 Pakistan milk 3 Cow milk $17.13 billion 0.31 1.2 10.3 Israel 4 Wheat $12.14 billion 0.15 2.8 8.9 Netherlands 5 Mangoes $9 billion 0.6 6.3 40.6 Cape Verde Sugar 6 $8.92 billion 0.03 66 125 Peru cane 7 Bananas $8.38 billion 0.28 37.8 59.3 Indonesia 8 Cotton $8.13 billion 1.43 1.6 4.6 Israel Fresh 9 $5.97 billion 0.19 13.4 76.8 USA Vegetables 10 Potatoes $5.67 billion 0.15 19.9 44.3 USA

http://www.ers.usda.gov/briefing/india/basicinformation.htm

58 | P a g e

11 Tomatoes $4.59 billion 0.37 19.3 524.9 Belgium Buffalo 12 $4 billion 2.69 0.138 0.424 Thailand meat 13 Soyabean $3.33 billion 0.26 1.1 3.7 Turkey 14 Onions $3.17 billion 0.21 16.6 67.3 Ireland Chicken 15 $3.12 billion 0.64 10.6 20.2 Cyprus Meat Chick 16 $3.11 billion 0.4 0.9 2.8 China peas 17 Okra $3.07 billion 0.35 7.6 23.9 Israel Cattle 18 $2.93 billion 0.83 13.8 24.7 Jordan Meat 19 Eggs $2.80 billion 2.7 0.1 0.42 Japan 20 Beans $2.57 billion 0.42 1.1 5.5 Nicaragua

(Source: Top Production India: 2009". FAOSTAT, The United Nations. 2009. http://faostat.fao.org/DesktopDefault.aspx?PageID=339&lang=en&country=100) The Statistics Office of the Food and Agriculture Organization reported that, per final numbers for 2009, India had grown to become the world's largest producer of the following agricultural produce:  Fresh Fruit  Pulses  Lemons and limes  Indigenous Buffalo Meat  Buffalo milk, whole, fresh  Fruit, tropical  Castor oil seeds  Ginger  Sunflower seeds  Chick peas  Sorghum  Areca nuts  Millet  Other Bast fibres  Spices  Pigeon peas  Okra  Papayas  Jute  Chillies and peppers, dry  Beeswax  Anise, badian, fennel,  Bananas coriander  Mangoes, mangos teens, guavas  Goat milk, whole, fresh

59 | P a g e

Per final numbers for 2009, India is the world's second largest producer of the following agricultural produce:

 Wheat  Cow milk, whole, fresh  Rice  Tea  Vegetables, fresh  Potatoes  Sugar cane  Onions  Groundnuts, with shell  Cotton lint  Lentils  Cottonseed  Garlic  Eggplants (aubergines)  Cauliflowers and broccoli  Nutmeg, mace and cardamoms  Peas, green  Indigenous Goat Meat  Sesame seed  Cabbages and other brassicas  Cashew nuts, with shell  Pumpkins, squash  Silk-worm cocoons

In 2009, India was the world's third largest producer of eggs, oranges, coconuts, tomatoes, peas and beans.19

In addition to growth in total output, agriculture in India has shown an increase in average agricultural output per hectare in last 60 years. The table below presents average farm productivity in India over three farming years for some crops. Improving road and power generation infrastructure, knowledge gains and reforms has allowed India to increase farm productivity between 40% to 500% over 40 years. India's recent accomplishments in crop yields while being impressive, are still just 30% to 60% of the best crop yields achievable in the farms of developed as well as other developing countries. Additionally, despite these gains in farm productivity, losses after harvest due to poor

19 Country Rank in the World, by commodity". Food and Agriculture Organization of the United Nations. 2011. http://faostat.fao.org/DesktopDefault.aspx?PageID=339&lang=en&country=100

60 | P a g e infrastructure and unorganized retail cause India to experience some of the highest food losses in the world. TABLE NO. 2.6 AGRICULTURE PRODUCTIVITY IN INDIA, GROWTH IN AVERAGE YIELDS FROM 1970 TO 2010

Crop Average YIELD, Average YIELD, Average YIELD, 1970-1971 1990-1991 2010–2011 kilogram per kilogram per kilogram per hectare hectare hectare Rice 1123 1740 2240 Wheat 1307 2281 2938 Pulses 524 578 689 Oilseeds 579 771 1325 Sugarcane 48322 65395 68596 Tea 1182 1652 1669 Cotton 106 225 510 (Source: Handbook of Statistics on Indian Economy". Reserve Bank of India: India's Central Bank. 2011. http://www.rbi.org.in/scripts/AnnualPublications.aspx?head=Handbook%20of%20 Statistics%20on%20Indian%20Economy

India and China are competing to establish the world record on rice yields. Yuan Longping of China National Hybrid Rice Research and Development Center, China, set a world record for rice yield in 2010 at 19 tonnes per hectare in a demonstration plot. In 2011, this record was surpassed by an Indian farmer, Sumant Kumar, with 22.4 tonnes per hectare in Bihar, also in a demonstration plot. Both these farmers claim to have employed newly developed rice breeds and System of Rice Intensification (SRI), a recent innovation in rice farming. The claimed Chinese and Indian yields have yet to be demonstrated on 7 hectare farm lots and that these are reproducible over two consecutive years on the same farm.

61 | P a g e

2.6 EVOLUTION AND PROGRESS OF AGRO-BASE INDUSTRIES IN INDIA

Importance of agro based industriesr was first realized and documented after the disastrous famine of Bengal during 1870’s. Report of the Famine Commission, set up by the British Government, in its report submitted in 1880, clearly stated the need for agricultural improvement and improved post harvest infrastructural development specifically, rail network. Need was also felt for incorporating chemical interventions in the agricultural sector and precision farming through agricultural mechanisation manned by engineers. The Royal Commission on Agriculture setup by the British Government, conducted a detailed study. In its report published during the year 1928, it called for scientific approach to the sector and stressed for developing rural industries and cooperatives. Realizing the importance of the agro-processing sector for rural development as a tool for POORN SWARAJ (complete self rule), Mahatma Gandhi during 1930’s promoted CHARKHA (spinning wheel) and balanced nutrition by setting example and writing articles in his famous magazine “Harijan”. It was continued by his followers namely, Narhari Bhave, Binoba Bhave and Jay Prakash Narayan. They promoted self-dependence through KHADI and village industries. The R&D institutions developed by the British for taking care of agricultural and rural industries included: The Imperial Agricultural Research Institute, Pusa; Indian Veterinary Research Institute, Mukteshwar; Dairy Research Institute at Bangalore; Poona Agriculture College; Public Agriculture College, Saidapet (Madras); Sibpur Engineering College (Bengal) etc. Horticultural Research Station was created at Chaubatia (U.P.) in Kumaon Hills for horticultural research including packaging and transportation improvements.

62 | P a g e

By the middle of the nineteenth century, common agro based industries included hand pounding units for rice, water power driven flour mills, bullock driven oil ghanies, bullock operated sugarcane crushers, paper making units, spinning wheels and handloom units for weaving. In British India, during the year 1863, a note was written by the Governor of Madras state, Sir William Denison to the government of Madras state for laying greater stress on agriculture and agro processing (Royal Commission, 1928). Based on this, a set of improved machinery was brought from England for demonstration and adoption. It included threshing machines, winnowers, chaff cutters, besides steam ploughs, steam harrows, cultivators, seed drills and horse hoes. The demonstration continued at Saidapet near Madras till 1871 with little outcome.

Post independence era in India witnessed rapid growth in agro-base industries specifically during 1980s. It followed the first phase of the Green Revolution that had resulted in increased agricultural production and the need for its post harvest management. The importance of the sector was realized by the business community leading to diversification from grain trading to processing. Lead was given by the rice processing industry, followed closely by wheat milling, paper and pulp industry, milk processing sector, jute industry, sugarcane processing and oils extraction through solvent plants. In some areas like the solvent extraction industry, the growth in installed processing capacity has been far higher than the supply of the raw materials. However, in other areas like fruits and vegetable processing, the growth has not been encouraging on account of poor demand for processed products by the consumers. In such cases, the industry has also not been able to develop the demand adequately.

63 | P a g e

At the start of the twentieth century, Indian agriculture was in a stage of subsistence. By the year 1925-26, the total area under some major crops in undivided British India was: rice – 32 mha, wheat – 9.6 mha, sorghum – 8.2 mha, Royal Commission on Agriculture (1928). The yields were very low. In the year 1950-51, India produced only 50 million tonnes of food grain and a variety of other crops. By the year 2000-2001, India started producing about 700 million tonnes (Mt) of biological materials per year including food grains, oilseeds, fruits, vegetables, sugarcane, milk, eggs, meat, fish, tea, coffee, fiber crops, floricultural produce, forest produce and so on. The country has diverse agro-climatic conditions and consumer preferences and hence it produces a vast variety of agricultural and livestock materials. Table 2.3 gives the change in agriculture production over the last fifty years. As could be seen, India holds a major share for some of these products in the global context. However, their market potential is not being fully realized due to poor post harvest management and inadequate infrastructure and programme for processing of agro-produce.

TABLE NO 2.7. PRODUCTION STATUS CHANGE OVER LAST FIFTY YEARS Commodity 1950-51 Mt 2000-01 Mt Food grains 50 206 Oil seeds 5 24.5 Fruits 12 41 Vegetables 10 72 Potatoes 1.7 25 (1998) Onion 1 5.5 Mushrooms --- 40 Kt Milk 17 78 (1999) Meat 0.7 (1971-72) 4.6 Eggs 10 bn 30 bn Honey 07 kt (1963-64) 5.5 kt Coconut 4.5 bn 15 bn Spices --- 3

64 | P a g e

Sugarcane 57 309.4 Certified seeds -- .075 Cotton 07 2.5 Jute 067 1.67 Coir 0.13 (1954-55) 0.34 Wool 32 kt (1980-81) 45 kt

India is one of the key food producers in the world, with the second largest arable land area. It is the largest producer of milk, pulses, sugarcane and tea in the world and the second largest producer of wheat, rice, fruits and vegetables. India’s Food Processing industry is one of the largest industries in the country - it is ranked fifth in terms of production, consumption, export and expected growth.

Although India is one of the largest producers of agricultural raw materials, the food industry itself is extremely underdeveloped. Less than 2 percent of fruit and vegetable production is processed in the country, compared to 30 percent in Thailand, 70 percent in Brazil, 78 percent in Philippines and 80 percent in Malaysia. In the last decade, India has moved from an era of scarcity to one of plenty. The production of fruits and vegetables is now 66 percent of the total quantity of food grains. The yield of these crops in India is about 30 percent of that in other countries, so we can imagine the sort of spurt that is possible in the sector. In the situation that prevails in India, 90 percent of fruits and vegetables produced are marketed by the farmers, as compared to less than 20 percent of cereals. This shows that the main challenge the food sector is going to face in the coming decade will be one of marketing, which hitherto has been a major constraint in its growth, so it is here that the thrust of policy will have to be. In this scenario, food processing becomes critical. This could absorb surpluses at farm level and ensure fair prices for the producers. It

65 | P a g e would also ensure availability of the produce at reasonable price for the consumer. In addition, the employment generation potential of this sector is much higher than other sectors, i.e., 54,000 persons get direct employment per billions of rupee investment in the food sector, in comparison to 48,000 in textile and 25,000 in paper industry. There is also a fourfold generation of indirect employment in the ancillary and downstream activities, on account of the investment in food sector. Furthermore, 60 percent of the employment generation is in small towns and rural areas. The primary reason why the food processing sector has not developed is that agriculture has largely been for subsistence and not market-driven. This has not yielded adequate surpluses for processing and was coupled with the low yield of crops. The lack of awareness about the processable variety of raw materials and the non-availability of suitable raw materials in terms of size, color, texture, etc., has contributed to the lack of volume and economy of scale. Present tax factors also drive a wedge between branded products manufactured in the organized sector and products from the unorganized sectors. In fact, the tax in India on processed food is amongst the highest in the world, and has been a major single impediment in attracting investments, both locally and from abroad. This is coupled with the fact that investments in the processing industries are in any case at high risk and yield low return. Investment are further depressed because despite the apparent advantages of hygiene and quality, the price-sensitive Indian consumer has stayed away from the high-priced, packaged foodstuffs. Further, consumer preferences in India are largely towards fresh food. However, with the growing urbanization and increasing middle class of late, there has been some shift towards processed food.

66 | P a g e

2.7 GOVERNMENT POLICIES AND SUPPORT MEASURES

The evolution of the policy framework and support measures of the Government can be broadly grouped into the following three periods: 1948-1991: In all the Policy Resolutions from 1948 to 1991, recognition was given to the micro and small enterprises, termed as an effective tool to expand employment opportunities, help ensure equitable distribution of the national income and facilitate effective mobilization of private sector resources of capital and skills. The Micro, Small and Medium Enterprises Development Organisation [earlier known as Small Industries Development Organization (SIDO)] was set up in 1954 as an apex body for sustained and organised growth of micro, small and medium enterprises. Within next two years, the National Small Industries Corporation, the Khadi and Village Industries Commission and the Coir Board were also set up. The era provided the supportive measures that were required to nurture MSEs, in the form of reservation of items for their exclusive manufacture, access to bank credit on priority through the Priority Sector Lending Programme of commercial banks, excise exemption, reservation under the Government Purchase Programme and 15% price preference in purchases, infrastructure development and establishment of institutes for entrepreneurial and skill development. MSME–Development Institutes [earlier known as Small Industries Service Institute (SISI)] were set up all over India to train youth in skills/entrepreneurship. Tool Rooms were established with German and Danish assistance for providing technical services essential to MSEs as also for skill-training. At the State level, District Industries Centres were set up all over the country.

67 | P a g e

1991-1999: The new Policy for Small, Tiny and Village Enterprises of August, 1991 laid the framework for government support in the context of liberalisation, which sought to replace protection with competitiveness to infuse more vitality and growth to MSEs in the face of foreign competition and open market. Supportive measures concentrated on improving infrastructure, technology and quality. Testing Centres were set up for quality certification and new Tool Rooms as well as Sub-contracting Exchanges were established. The Small Industries Development Bank of India (SIDBI) and a Technology Development and Modernisation Fund were created to accelerate finance and technical services to the sector. A Delayed Payment Act was enacted to facilitate prompt payment of dues to MSEs and an Industrial Infrastructure Development (IID) scheme was launched to set mini industrial estates for small industries. 1999 onwards: The Ministry of MSME [earlier known as Ministry of Small Scale Industries and Agro & Rural Industries (SSI & ARI)] came into being from 1999 to provide focused attention to the development and promotion of the sector. The new Policy Package announced in August, 2000 sought to address the persisting problems relating to credit, infrastructure, technology and marketing more effectively. A Credit Linked Capital Subsidy Scheme was launched to encourage technology upgradation in the MSE sector and a Credit Guarantee Scheme was started to provide collateral-free loans to micro and small entrepreneurs, particularly the first generation entrepreneurs. The exemption limit for relief from payment of Central Excise duty was raised to Rs.1 crore ($0.25 million) and a Market Development Assistance Scheme for MSEs was introduced. At the same time, consultations were held with stakeholders and the list of products reserved for production in the MSE sector was gradually reduced each year.

68 | P a g e

In 2006, the long-awaited enactment for this sector finally became a reality with the passage of the Micro, Small and Medium Enterprises Act. In March, 2007, a third Package for the Promotion of Micro and Small Enterprises was announced which comprises the proposals/schemes having direct impact on the promotion and development of the micro and small enterprises, particularly in view of the fast changing economic environment, wherein to be competitive is the key of success.

2.7.1 MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006 The Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 seeks to facilitate the development of these enterprises as also enhance their competitiveness. It provides the first-ever legal framework for recognition of the concept of “enterprise” which comprises both manufacturing and service entities. It defines medium enterprises for the first time and seeks to integrate the three tiers of these enterprises, namely, micro, small and medium. The Act also provides for a statutory consultative mechanism at the national level with balanced representation of all sections of stakeholders, particularly the three classes of enterprises; and with a wide range of advisory functions. Establishment of specific Funds for the promotion, development and enhancing competitiveness of these enterprises, notification of schemes/programmes for this purpose, progressive credit policies and practices, preference in Government procurement to products and services of the micro and small enterprises, more effective mechanisms for mitigating the problems of delayed payments to micro and small enterprises and assurance of a scheme for easing the closure of business by these enterprises are some of the other features of the Act. Foreign Direct Investment (FDI) Policy With the

69 | P a g e promulgation of the MSMED Act, 2006, the restrictive 24% ceiling prescribed for equity holding by industrial undertakings, whether domestic or foreign, in the MSEs has been done away with and MSEs are defined solely on the basis of investment in plant and machinery (manufacturing enterprises) and equipment (service enterprises). Thus, the present policy on FDI in MSE permit FDI subject only to the sectoral equity caps, entry routes and other relevant sectoral regulations. Task Force on Micro, Small and Medium Enterprises Considering the importance of the MSME sector in the overall growth of the economy, the Prime Minister announced the setting up of a Task Force on MSMEs in August 2009. Accordingly, a Task Force was set up in September 2010 under the chairmanship of the Principal Secretary to Prime Minister to look into the issues and concerns of the MSME sector in a holistic manner.

The Task Force classified the common issues into 6 major thematic areas and constituted separate Sub-Groups for detailed examination. These thematic areas covered (i) credit, (ii) marketing, (iii) labour, (iv) rehabilitation and exit policy, (v) infrastructure, technology and skill development and (vi) taxation. A separate Sub- Group was also constituted to look into the development of MSMEs in the North-East and Jummu & Kashmir. Each of the Sub-Groups examined the specific issues over a series of meetings, and after detailed deliberations with all the stakeholders, including MSME Associations, submitted their reports to the Task Force. The recommendations of the previous Committees, Working Groups and Study Groups, which are relevant in the current context, were taken into consideration by the Task Force and its Sub-Groups while finalizing its reports. The Task Force submitted its report to the Hon'ble Prime Minister on 30th January 2010. The Report provides a roadmap for the development

70 | P a g e and promotion of the MSMEs in the country. It recommends an agenda for immediate action to provide relief and incentives to the MSMEs, accompanied by institutional changes and detailing of programmes to be achieved in a time bound manner. In addition, it suggests setting up of appropriate legal and regulatory structures to create a conducive environment for entrepreneurship and growth of MSMEs in the country.

PRESENT POLICY FRAMEWORK AND FOCUS AREAS 2.7.2 LIMITED LIABILITY PARTNERSHIP (LLP) ACT, 2008 The salient features of the proposed LLP Act, 2008 are as under: (i) LLP shall be a body corporate and a legal entity separate from its partners. It will have perpetual succession. Indian Partnership Act, 1932 shall not be applicable to LLPs, since LLP shall be in the form of a body corporate. (ii) An LLP has to be incorporated with a minimum of two persons. The Act does not restrict the benefit of LLP structure to certain classes of professionals only and would be available for use by any enterprise which fulfils the requirements of the Act. (iii) The LLP will be an alternative corporate business vehicle that would give the benefits of limited liability but would allow its members the flexibility of organizing their internal structure as a partnership based on an agreement. (iv) On registration LLP shall be capable of : (a) suing and being sued; and (b) acquiring, owning, holding and developing or disposing off property. (v) A person may cease to be a partner of a LLP in accordance with an agreement with the other partners or in absence of agreement with the other partners, by giving a notice in writing of not less than 30 days of his intention to resign as partner.

71 | P a g e

(vi) In the event of an act carried out by a LLP, or any of its partners, with intend to defraud creditors of the LLP or any other person or for any fraudulent purpose, the liability of the LLP and partners, who acted with intend to defraud creditors or for any fraudulent purpose shall be unlimited for all or any of the debts or other liabilities of the LLP. (vii) A contribution of a partner may consist of tangible, movable or immovable or intangible property or other benefits to the LLP including money, promissory notes, other agreements to contribute cash or property, and contracts for services performed or to be performed. (viii) While the LLP will be a separate legal entity, liable to the full extent of its assets, the liability of the partners would be limited to their agreed contribution in the LLP. Further, no partner would be liable on account of the independent or unauthorized actions of other partners, thus allowing individual partners to be shielded from joint liability created by another partner's wrongful business decisions or misconduct. (ix) An LLP shall be under obligation to maintain annual accounts reflecting true and fair view of its state of affairs. (x) Provisions have been made in the Act for corporate actions like mergers, amalgamations etc. (xi) There is a provision of voluntary winding up as well as winding up by the Tribunal. (xii) There are provisions for inter conversion of LLP into firm, public and private company etc. The LLP Act should pave the way for greater corporatisation of the Small and Medium Enterprises – thereby enhancing their access to equity and funds from the market.

72 | P a g e

2.7.3 DE-RESERVATION

The issue of de-reservation has been a subject of animated debate within government for the last twenty years. The Approach to the Eleventh Five Year Plan notes the adverse implications of reservation of products for exclusive manufacture by the MSEs and recommends the policy of progressive de-reservation. To facilitate further investments for technological upgradation and higher productivity in the micro and small enterprises, 654 items have been taken off the list of items reserved for exclusive manufacture by the manufacturing micro and small enterprises in the last few years – reducing it to 20 at present. This has helped the sector in enlarging the scale of operations and also paved the way for entry of larger enterprises in the manufacture of these products in keeping with the global standards.

2.7.4 CREDIT/FINANCE

Credit is one of the critical inputs for the promotion and development of the micro, small and medium enterprises (MSMEs). Some of the features of existing credit policy for the micro and small enterprises (MSEs) are:

Priority Sector Lending—Credit to the MSEs is part of the Priority Sector Lending Policy of the banks. For the public and private sector banks, 40% of the adjusted net bank credit (ANBC) is earmarked for the Priority Sector. For the foreign banks, however, 32% of the ANBC is earmarked for the Priority Sector, of which 10% is earmarked for the MSE sector. In terms of the recommendations of the Prime Minister's Task Force on MSMEs, the Reserve Bank of India (RBI) has advised the banks to achieve a 20 per cent year-on-year growth in credit to micro and small enterprises and a 10 per cent annual growth in the

73 | P a g e number of micro enterprise accounts. In order to ensure that sufficient credit is available to micro enterprises within the MSE sector, as per the RBI's extant guidelines to banks, 60 per cent of MSE advances should go to the micro enterprises. The banks have been advised that the allocation of 60 per cent of the MSE advances to the micro enterprises is to achieved in stages viz., 50 per cent in the year 2010- 11, 55 per cent in the year 2011-12 and 60 per cent in the year 2012- 13. The foreign banks having shortfall in lending to stipulated priority sector lending targets/sub-targets will be required to contribute Funds to be set up with Small Industries Development Bank of India (SIDBI)

Institutional Arrangement—The SIDBI is the principal financial institution for promotion, financing and development of the MSE sector. Apart from extending financial assistance to the sector, it coordinates the functions of institutions engaged in similar activities. SIDBI's major operations are in the areas of : (i) refinance assistance, (ii) direct lending, and (iii) development and support services. Commercial banks are important channels of credit dispensation to the sector and play a pivotal role in financing the working capital requirements, besides providing term loans (in the form of composite loans). At the State level, State Financial Corporations (SFCs) and twinfunction State Industrial Development Corporations (SIDCs) are the main sources of long-term finance for the MSE sector. To ensure better flow of credit to MSEs, the Ministry of MSME is implementing the following major schemes:

74 | P a g e

2.7.5 CREDIT GUARANTEE SCHEME To ensure better flow of credit to micro and small enterprises by minimizing the risk perception of banks/financial institutions in lending without collateral security, the Government launched Credit Guarantee Fund Scheme for Micro and Small Enterprises in August 2000. The scheme covers collateral-free credit facility extended by eligible lending institutions to new and existing micro and small enterprises for loans up to Rs.100 lakh ($250,000) per borrowing unit. The guarantee cover is up to 75 per cent of the credit sanctioned [85% in respect of loans up to Rs.5 lakh ($12,500) and 80% for loans provided to MSEs owned/operated by women and all loans in the North-East Region].

2.7.6 PERFORMANCE & CREDIT RATING SCHEME The Performance & Credit Rating Scheme for manufacturing MSEs was launched in April, 2005 with the objective of assisting the MSEs in obtaining performance-cum-credit rating which would help them in improving performance and also accessing bank credit on better terms if the rating is high. Under the scheme (implemented by the National Small Industries Corporation in conjunction with reputed rating agencies), 75% of the fee charged by the rating agency is reimbursed by the Government subject to a maximum of Rs.40,000 ($1,000).

2.7.7 EMERGING SOURCES Faced with increased competition on account of globalisation, MSMEs are beginning to move from an obsession with bank credit to a variety of other specialized financial services and options. In recent years, the country has witnessed increased flow of capital in the form of primary/secondary securities market, venture capital and private equity, external commercial borrowings, factoring services, etc. More

75 | P a g e advanced MSMEs have started realising the importance of these alternative sources of funding to raise resources and the need for adopting better governance norms to take advantage of these funding sources. The enactment of the Limited Liability Partnership Act, 2008 is expected to provide a thrust to the MSMEs in their move towards corporatisation.

2.7.8 COMPETITIVE TECHNOLOGY In today's fast paced global business scenario, technology has become more vital than ever before. With a view to foster the growth of MSME sector in the country, Government has set up ten state-of-the-art Tool Rooms and Training Centres. These Tool Rooms provide invaluable service to the Indian industry by way of precision tooling and providing well trained craftsmen in the area of tool and die making. These Tool Room are highly proficient in mould and die making technology and promote precision and quality in the development and manufacture of sophisticated moulds, dies and tools. The Tool Rooms are not only equipped with the best technology but are also abreast with the latest advancements like CAD/CAM, CNC machining for tooling, Vacuum Heat Treatment, Rapid Prototyping, etc. The Tool Room & Training Centres also offer various training programmes to meet the wide spectrum of technical manpower required in the manufacturing sector. The training programmes are designed with optimum blend of theory and practice giving the trainees exposure on actual jobs and hands on working experience. The Tool Rooms have also developed special training programmes to meet the requirements at international level, which are attended by participants from all over the globe.

The Ministry of MSME implements the following schemes and programmes for the upgradation of technology of the MSMEs:

76 | P a g e

2.7.9 ISO 9000/14001 CERTIFICATION FEE REIMBURSEMENT SCHEME To enhance the competitive strength of the MSEs, the Government introduced a scheme to incentivese technological upgradation, quality improvement and better environment management by the MSEs. The scheme reimburses 75% of the fees, subject to a maximum of Rs.75,000 ($2000), for acquiring Quality Management System (QMS)/ISO 9000 certification and/or Environment Management System (EMS)/ISO 14001 certification by the MSEs. Micro and Small Enterprises-

2.7.10 CLUSTER DEVELOPMENT (MSE-CDP) : The MSE-CDP Scheme is being implemented for holistic and integrated development of micro and small enterprises in clusters through Soft Interventions (such as diagnostic study, capacity building, marketing development, export promotion, skill development, technology upgradation, organizing workshops, seminars, training, study visits exposure visit, etc.), Hard Interventions (setting up of Common Facility Centres) and Infrastructure Upgradation (create/upgrade infrastructural facilities in the new/existing industrial areas/clusters of MSEs).

Under the Scheme, financial assistance is provided for preparation of Diagnostic Study Report with a maximum grant of Rs. 2.50 lakh, upto 90% of the project cost of maximum Rs. 25.00 lakhs for Soft Interventions, upto Rs. 5.00 lakh for preparation of Detailed Project Report (DPR), upto 90% of the project cost of maximum Rs. 15.00 crore for Hard Internventions (Common Facility Centre), upto 80% of the project cost of maximum Rs. 10 crore for Infrastructure

77 | P a g e

Development. Under the Scheme, there is infrastructure development component which has provision for development of infrastructure facilities in new/existing industrial areas/estates or existing industrial areas/estates/clusters at a eligible project cost upto Rs. 10 crore (excluding the cost of land) with Government of India assistance 60% of the project cost (Rs. 6 crore) in general cases and 80% (Rs. 8 crore) for NE & Hill States, industrial areas/estates with more than 50% (a) micro, (b) women owned and (c) SC/ST units. The remaining amount will be loan from SIDBI/Banks/Financial Institutions or equity from State/UT Government.

2.7.11 CREDIT LINKED CAPITAL SUBSIDY SCHEME The Credit Linked Capital Subsidy Scheme (CLCSS) aims at facilitating technology upgradation by providing 15% upfront capital subsidy w.e.f. 29th September, 2005 to manufacturing MSEs, on institutional finance up to Rs.1 crore ($0.25 million) availed of by them for induction of well-established and improved technologies in the specified subsectors/ products approved under the scheme. National Manufacturing Competitiveness Programme (NMCP) The National Manufacturing Competitiveness Programme is the nodal programme of the Government of India to develop global competitiveness among Indian MSMEs. Conceptualised by the National Manufacturing Competitiveness Council, the Programme was initiated in 2007-08. There are ten components under the NMCP targeted at enhancing the competitiveness for the entire value chain of the MSME sector. These are:

(a) Building Awareness on Intellectual Property Rights for the Micro, Small & Medium Enterprises (MSMEs): The scheme for “Building Awareness on Intellectual Property Rights (IPR), for the

78 | P a g e

Micro, Small & Medium Enterprises (MSMEs) has been launched to enable Indian MSMEs to attain global leadership position and to empower them in using effectively the tools of Intellectual Property Rights (IPR) of innovative projects. The main features of the scheme are: (i) Awareness/Sensitization Programmes on IPR; (ii) Pilot Studies for Selected Clusters/Groups of Industries; (iii) Interactive seminars/Workshops; (iv) Specialised Training; (v) Assistance for Grant on Patent/GI Registration; (vi) Setting up of IP Facilitation Centre (IPFC); and (vii) Interaction with International Agencies. These initiatives are being developed through Public-Private Partnership (PPP) mode.

(b) Scheme for Providing Support for Entrepreneurial and Managerial Development of SMEs through Incubators: The scheme aims at nurturing innovative business ideas (new/indgenious technology, processes, products, procedures, etc.), which could be commercialized in a year. Under the scheme, various institutions like Engineering Colleges, Research Labs etc. will be provided funds upto Rs.6.25 lakh for handholding each new idea/ entrepreneur. The incubator will provide technology guidance, Workshop and Lab support and linkage to other agencies for successful launching of the Business and guide the entrepreneur in establishing the enterprise.

(c) Enabling Manufacturing Sector to be Competitive through Quality Management Standards (QMS) and Quality Technology Tools (QTT): During the year 2008-09, GoI launched a scheme, 'Enabling Manufacturing Sector be Competitive through Quality Management Standards (QMS) and Quality Technology Tools (QTT)' in order to improve quality and productivity in the MSE sector. The scheme is aimed at improving the quality of the products in the MSE sector and inculcate the Quality consciousness in this sector. The

79 | P a g e major activities under this scheme are : (i) Introduction of Appropriate Modules for Technical Institutions; (ii) Organising Awareness Campaigns for MSEs; (iii) Organising Competition-Watch (C-Watch); (iv) Implementation of Quality Management Standards and Quality Technology Tools in selected MSEs; (v) Monitoring International Study Missions; and (vi) Impact Studies of the initiatives.

(d) Setting up of New Mini Tool Rooms under Public Private Partnership (PPP) Mode: Under the scheme, Mini Tool Rooms (MTRs) are proposed to be set up by providing financial assistance to private promoters on viability gap funding basis. The Central Assistance would be up to 40% of Project cost restricted to Rs. 9.00 crore. The MTRs would improve the competitiveness of MSMEs in the manufacturing sector by creating capacities in the private sector for designing and manufacturing quality tools as well as by bridging the gap between the demand and supply of trained manpower in the industry. The approved Plan expenditure under the scheme is Rs. 135 crore.

(e) Marketing Assistance/Support to MSEs (Bar Code): The objective of the 'Marketing Assistance/Support to MSEs' scheme of NMCP is to popularise the Bar Code registration and motivate the small and micro-manufacturing enterprises to adopt the Bar Code Certification on large scale and to sell their value added products worldwide and enable higher export price realization. It also helps in domestic marketing (wholesale & retail). 75% of annual fee (recurring) of Bar Code certification for the first three years are reimbursed to micro and small entrepreneurs under the Scheme.

(f) Lean Manufacturing Competitiveness Scheme (LMCS) for MSMEs: Under the scheme, MSMEs are being assisted in reducing

80 | P a g e their manufacturing costs through proper personnel management, better space utilization, scientific inventory management, improved process flows, reduced engineering time and so on. LMCS also brings improvement in the quality of products and lowers costs which are essential for competing in national and international markets. The total GoI contribution is stipulated as Rs. 26.3 crore (approx.) for this scheme. The broad activities planned under the scheme include implementation of Total Productive Maintenance (TPM), 5S, Visual Control, Standard Operation Procedures, Just in Time, Kanban System, Cellular Layout, Poka Yoke, TPM, etc. The Scheme has been approved as a pilot project for Lean interventions in 100 Mini Clusters.

(g) Promotion of Information & Communication Tools (ICT) in Indian MSME Sector: The objective of this scheme envisages that some of those clusters of SMEs, which have quality production and export potential, shall be identified & encouraged and assisted in adopting ICT applications to achieve competitiveness in the national and international markets. The total GoI contribution is stipulated as Rs. 47.7 crore (approx.) for this scheme. The broad activities planned under the scheme include, identifying target clusters for ICT intervention, setting up of ereadiness centre, developing web portals for clusters, skill development of MSME staff in ICT applications, preparation of local software solutions for MSMEs to enhance their competitiveness, and networking MSME cluster portals on the National Level Portal in order to outreach MSMEs into global markets.

(h) Design Clinics Scheme for MSMEs: The main objective of the scheme is to bring the MSME sector and design expertise into a

81 | P a g e common platform and to provide expert advice and solutions on design problems, resulting in continuous improvement and value-addition for existing products. It also aims at value-added cost effective solutions. The GoI contribution is stipulated as Rs.49.08 crore for this scheme. The broad activities planned under the scheme include set up of Design Clinics Centre in Delhi along with 4 regional centres for intervention on the design needs of the MSME sector, organising seminar/workshops, financial assistance to student designed projects/individual projects upto 3 MSMEs/Group of 4 MSMEs or more.

(i) Marketing Assistance and Technology Upgradation Scheme for MSMEs: The objective of this scheme is to identify and encourage those clusters of MSMEs, which have quality production and export potential and assist them to achieve competitiveness in the national and international markets. The scheme aims at improving the marketing competitiveness of MSME sector by improving their techniques and technology for promotion of exports. The GoI contribution is stipulated as Rs.18.6 crore for this scheme. The broad activities planned under the scheme include technology upgradation in packaging, development of modern marketing techniques, competition studies, corporate governance practices, setting up of marketing hubs, State/District level exhibitions etc.

(j) Technology and Quality Upgradation Support to MSMEs: The objective of the Scheme is to sensitize the manufacturing (MSME) sector in India to upgrade their technologies, usage of energy efficient technologies to reduce emissions of Green House Gases, adoption of other technologies mandated as per the global standards, improve

82 | P a g e their quality and reduce cost of production, etc.,towards becoming globally competitive. The major activities planned under the scheme include Capacity Building of MSMEs Clusters for Energy Efficiency/Clean Development Interventions, Implementation of Energy Efficient Technologies in MSME sector, Setting up of Carbon credit aggregation centres and encouraging MSMEs to acquire product certification licences from National/International bodies. The scheme total budget is Rs. 140.98 crore with GoI contribution of about Rs. 65 crore. Skill Development: The Ministry of Micro, Small & Medium Enterprises promotes the development of micro and small enterprises in the country with the objective of creating self-employment opportunities and upgrading the relevant skills of existing and potential entrepreneurs. The entrepreneurship and skill development scheme is implemented by Office of the DC (MSME) through its network of 30 MSME-DIs, their 28 Br. MSME-DIs and 2 MSME-TIs. The programmes are conducted include Entrepreneurship Development, Entrepreneurship and Skill Development, Management Develolpment and Business Skill Development. These programmes are of short duration and the curriculum based on needs of the industry and are customized, if required by the clients. 20% of the targeted training programmes are conducted exclusively for the weaker sections of the society (SC/ST/Women/Physically Handicapped), for which no fee is charged. Besides, a stipend of Rs.500/- p.m. is provided. The office of the DC (MSME) also conducts vocational and educational training through its MSME-Testing Centres, MSME-Field Testing Stations and autonomous bodies like Tool Rooms (TRs), Technology Development Centres (TDCs) and Training Institutes (TIs). These long term, short term, trade/field-specific and industry-specific tailor-made courses also include specialized programmes for Engineers, Diploma

83 | P a g e holders so that their absorption by the industry is immediate. A good number of trainees have set up their own enterprises in creating employment opportunities. The Ministry is at present training about 3 lakh persons per annum both for business and technical skill development, which is among the largest programme by any single Ministry in India. The Ministry is also focusing on socially backward groups and on least developed areas under its 'Outreach Programme'.

2.7.12 MARKETING AND PROCUREMENT Under Government Stores Purchase Programme, various facilities are provided to enterprises registered with National Small Industries Corporation (NSIC) in order to assist them for marketing their products in competitive environment. These facilities are : (i) issue of Tender Sets free of cost; (ii) exemption from payment of Earnest Money Deposit; (iii) waiver of Security Deposit upto the Monetary Limit for which the unit is registered; and (iv) price preference up to 15% over the quotation of large-scale units. In addition to these facilities/benefits, 358 items has also been reserved for exclusive purchase from the MSE Sector. However, as these guidelines were/are not of a mandatory nature, the same has failed to achieve the desired results. To assist the MSEs in marketing of their products, Section 11 of the MSMED Act, 2006 enjoins the formulation of a scheme of preferential procurement of goods/services produced/rendered by MSEs both at the Central and State/UT levels. Once formulated, the procurement scheme may be more effective in providing the much- needed marketing support that MSEs seek so desperately. Each Ministry/Department, CPSU, etc. would have to make specific mention of the compliance of the preference policy in its Annual Report to be tabled in Parliament.

84 | P a g e

2.7.13 EXPORT PROMOTION Export promotion from the MSE sector has been accorded a high priority. To help MSEs in exporting their products, the following facilities/incentives are provided: (i) Products of MSE exporters are displayed in international exhibitions and the expenditure incurred is reimbursed by the Government as 50% of space rent and 75% air fair to the entrepreneurs belong to General Category subject to maximum upper limit Rs. 1.25 lakh. For the units owned by SC/ST/Women or entrepreneurs from North Eastern Region, the subsidy for space rent and air fair is 100% subject to maximum upper limit Rs. 1.25 lakh; (ii) To acquaint MSE exporters with latest packaging standards, techniques, etc., training programme on packaging for exporters are organised in various parts of the country in association with the Indian Institute of Packaging; (iii) Under the MSE Marketing Development Assistance (MDA) Scheme, assistance is provided to individuals for participation in overseas fairs/exhibitions, overseas study tours, or tours of individuals as member of a trade delegation going abroad. The Scheme also offers assistance for (a) sector specific market study by MSE Associations/Export Promotion Councils/Federation of Indian Export Organisation; (b) Initiating/contesting anti-dumping cases by MSE Associations; and (c) reimbursement of 75 per cent of the one time registration fee and annual fee (recurring for first three years) charged by GSI India (formerly EAN India) for adoption of Bar Coding.

85 | P a g e

2.7.14 FISCAL CONCESSIONS Under the General Excise Exemption Scheme, full excise exemption up to turnover of $375 thousand per annum is provided to enterprises having annual turnover of up to $1 million. However, the limits of excise exemptions has encouraged tendency among MSEs is to go in for horizontal expansion (i.e., fragmentation) rather than vertical expansion and upward graduation into medium and large enterprises. For incentivising such graduation of small to medium/large enterprises so as to enable them to achieve economies of scale, extension of excise exemptions to the graduating medium enterprises on a tapering scale is under consideration of the Government.

2.7.15 STRENGTHENING OF DATABASE A reliable database is the key input in any policy decision-making process. This is more so for the MSME sector in view of its large size and wide disparity among the enterprises within the sector. The Ministry has so far conducted four Census in the year 1971-72, 1992- 93, 2002-03 and 2006-07 for strengthening/updating the database on MSE sector. However, the long gap between the Census has limited the reliability of the MSE database. To strengthen the database for the MSME Sector, statistics and information will now be collected in respect of number of units, employment, rate of growth, share of GDP, value of production, extent of sickness/closure, exports and all other relevant parameters of micro, small and medium enterprises, including khadi and village industry, through annual sample surveys and quinquennial census. The quinquennial census and annual sample surveys of MSMEs will also collect data on women-owned and /or managed enterprises.

86 | P a g e

2.7.16 INCLUSIVENESS The Ministry of MSME launched a special programme, namely, 'Outreach Programme for Skill Development in Less Developed Areas' in September, 2006. Under this programme, the field offices of the Ministry organize short-term skill development programmes in the less developed areas. Such short-term courses are tailor-made for these areas so as to enable trainees to get employment or start self- employment ventures. These programmes are of short duration of 1-3 weeks and the activity selected for trainees are relevant to the local requirement. The target group consist wholly or partly of disadvantaged sections. Further, under the recently announced Promotional Package for MSEs, 20% of Skill Development Programmes have been reserved for weaker sections along with the provision of a stipend of Rs.500 per capita per month exclusively for SCs/STs, women and physically handicapped. In case of the regular EDP/MDP/Skill Development programmes, a nominal fee of Rs.100 is charged. However, there is no fee for SCs/STs, women and physically handicapped candidates. India's pioneering policies for the development of MSEs offers case studies for the developing world. Government has moved away, though not yet fully, from its role of direct interventions to that of a friend and facilitator. There is growing realization that protection in the form of reservation needs to be replaced with easy access to capital, technology and skill development to integrate the MSMEs more firmly with the domestic and global economy. And these are now the specific target areas of the Ministry of MSME.

87 | P a g e

2.8 INDIAN DAIRY INDUSTRY India has the highest livestock population in the world with 50% of the buffaloes and 20% of the world’s cattle population, most of which are milch cows and milch buffaloes. India’s dairy industry is considered as one of the most successful development programmes in the post Independence period.

In the year 2006-07 the total milk production in the country was over 94.6 million tonnes with a per capita availability of 229 gms per day. The industry had been recording an annual growth of 4% during the period 1993-2005, which is almost 3 times the average growth rate of the dairy industry in the world. Milk processing in India is around 35%, of which the organized dairy industry account for 13% of the milk produced, while the rest of the milk is either consumed at farm level, or sold as fresh, non-pasteurized milk through unorganized channels.

Dairy Cooperatives account for the major share of processed liquid milk marketed in the India. Milk is processed and marketed by 170 Milk Producers’ Cooperative Unions, which federate into 15 State Cooperative Milk Marketing Federations. Over the years, several brands have been created by cooperatives like Amul (GCMMF), Vijaya (AP), Verka (Punjab), Saras (Rajasthan). Nandini (Karnataka), Milma (Kerala) and Gokul (Kolhapur). Uttar Pradesh, Punjab, Haryana, Rajasthan, Gujarat, Maharashtra, Andhra Pradesh, Karnataka and Tamil Nadu are the milk surplus states in India. The manufacturing of milk products is obviously high in these milk surplus States. Exports of dairy products have been growing at the rate of 25% per annum in the terms of quantity terms and 28% in terms of value since 2001.

88 | P a g e

Significant investment opportunities exist for the manufacturing of value-added milk products like milk powder, packaged milk, butter, ghee, cheese and ready-to-drink milk products.

India has emerged as the largest milk producing country in the world with present level of annual milk production estimated as 94.5 million tonnes. We expect a production level of 135 million tonnes by the year 2015. India has a large livestock population base constituting 278 million livestock including 180.5 million cattle, 82.8 million buffaloes, 4 million sheep and 9.2 million goats. The livestock population is projected to increase to 322 million by the year 2015. The large livestock population is raised primarily on crop residues and grazing in the common property including basement. The forest area, which was a major source of grazing, is no longer available to livestock breeders especially landless people. As a consequence, the available feed resources fall short of the nutritional requirement. The shortfall is estimated as 59.9 million tonnes for the green fodder and 19.9 million tonnes for dry fodder. This shortfall is likely to increase by 2015 to 63.5 million tonnes of green fodder and 23.56 million tonnes of dry fodder.

The landless people are, therefore, likely to face severe shortage of resources to raise cattle and other species of livestock. There is a real danger that in the absence of resources to maintain their stock, these under-privilege rural people may give up livestock farming. This could be a serious setback to lakhs of rural families who derive income as well as employment opportunities from livestock sector. India prepares to tackle the international market following Japan, where milk consumption today, has more than trebled to 70 kg per capita

89 | P a g e from a mere 20 kg in the 'sixties - the consumption of dairy products in other Asian 'tiger' nations is also growing. As a consequence - creating excellent export opportunities for India, as these nations are deficient in milk by at least 3 million tonnes per year. India, with some 27 per cent of Asia's population, accounts for more than half of the milk output with enough growth potential to explore foreign markets. In anticipation of the export opportunities and in view of the post GATT scenario, India is gearing up to tackle the demands of the international market.

Indian companies are preparing themselves to meet international standards and other non-tariff barriers. Planners are taking measures to meet the sanitary and phyto-sanitary specifications - prescribed by Office International des Epizooties (OIE) under the auspices of the World Trade Organization (WTO) -, which range from the quality assurance of processed dairy products to the health status of livestock

2.8.1 PROCESSED DAIRY PRODUCTS Cheese The organized cheese market including its variants like processed cheese, mozzarella, cheese spreads, flavored and spiced cheese, is valued at around Rs 4.5 billion. Processed cheese at 60% of the overall market is Rs 2.7 billion. The next most popular variant is cheese spread claiming a share of around 30% of the total processed cheese market. The market is primarily an urban phenomenon and is known to be growing at around 15%. The market for cheese cubes, slices and tins is growing. The flavored cheese segment has been constantly declining.

90 | P a g e

Gujarat Cooperative Milk Marketing Federation (GCMF) with the Amul brand continues to be the main operator in the branded cheese market in India. It pioneered the market for processed, branded cheese. What GCMF did was to develop the technology to make cheese from buffalo milk. World over it is made from cow milk.

Britannia Industries joined the fray in the cheese market in mid-1990s through an arrangement with Dynamix Dairy Industries (DDI). It was set up in 1995 by a consortium of five companies - Conwood, Indo Saigon, Hiranandani, ETA and Metro. DDI has capacity to process 500,000 litres of milk per day with an estimated investment of Rs 1500 mn. The plant designed by Valio of Finland is run on technology tie-up with Schreiber Foods of the US. Schreiber is the largest supplier of processed cheese to fast food chains in the US with expertise in sliced cheese.

Britannia's cheese is sold in tins in the form of cubes, and in individually wrapped slices in packs of fives and tens. The slices are being promoted more aggressively worldwide, and these account for a bulk of cheese consumption. These are gaining acceptance in India as well. Amul followed Britannia in launching slices. Its cheese spread in the form of paste has been well received in the market.

Britannia has been concentrating on metros and large cities. The network covers some 60,000 dairy outlets equipped with cold cabinets, refrigerators and insulated boxes. Amul covers some 500,000 retail outlets.

French cheese major, Fromageries Bel, a 10-bn French franc outfit, has entered the Indian market with La Vache Kirit or what is worldwide known as The Laughing Cow. Its target market to start with were the two metros of Delhi and Mumbai with distribution entrusted

91 | P a g e to Delhi-based Rai & Sons, distributors for premium food brands, Ferraro Rocher and Ricola. The Bel product will be produced at Bel's facility in Poland exclusively for the Indian market. La Vache Kirit is a guaranteed vegetarian product. Fromageries Bel is expected to widen its product portfolio by launching laughing Kirit (creamy cheese in cube form) and Babybel (semi-hard with a wax coating appropriate for sandwiches).

Laughing Cow was expected to be followed by an Austrian cheese brand, Happy Cow (owned by Woerle). Woerle has entered into a licensing arrangement with Veekay Foods & Beverages in Mumbai. Nestle and Kraft have been planning to make foray in the Indian market.

Foreign brands in India include: Probolene, Colby, Mozzarella and Parmessan from Italy, Cheddar from Dutch, Gryueve. The new entrants will have to compete with well-established players such as Amul, Britannia's Milkman and Dabur’s Le Bon, enjoying substantial market shares in the overall Indian cheese market. The US-based Philip Morris, which brought in its Kraft cheese brand earlier, has gained a significant presence in the market. The rest of the market is spread among Verka, Nandini, Vijaya and Vadilal.

Dabur had forayed into the dairy products market through its joint venture company, Dabon International, a 50:50 joint venture between Dabur India and French dairy products major, Bongrain. The company claimed a product range of 20 different varieties of cheese under LeBon brand. Dabon has a manufacturing facility at Noida with an installed capacity of 12,000 tonnes per annum. Incidentally, the government had, in a move in late April 2001, barred Dabon from marketing flavoured milk and processed cheese in the country.

92 | P a g e

Dabur was to launch speciality cheese like blue cheese and hard cheese. It had plans to developing cold chains at the distributor and retail levels in the state capitals and major towns in order to increase penetration levels.

The demand for cheese is projected to grow from about Rs. 4.50 bn in 2003-04 to Rs. 6.00 bn in 2006-07 and to over Rs 11.00 bn by the terminal year of the projection period, 2014-15. Cheese is becoming a popular item in the menu of all relatively affluent families. Slowly but surely, it will penetrate into the rural markets.

Processed Cheese Leading Brands

Amul, Vijaya, Verka, Vadilal, Kraft, Britannia.

Market Growth Rates 1990-91 – 1996-97 18.5% 1996-97 – 2001-02 20.6% 2001-02 – 2006-07 11.7% 2004-05 – 2009-10 9.4% 2009-10 – 2014-15 7.4% Lead Players

The lead players in processed milk products in the market are as follows:

Amul, Britannia, and others include Vijaya, Verka and Vadilal. In the category of cheese Amul, Britannia Dabur (Le Bon) are the leading players including others like Verka, Nandini, Vijaya and Vadilal

Dairy Whiteners

About 15% of the total milk output in India is estimated to be processed in the organized dairy. The industry has maintained a high growth profile, especially in the wake of the Operation Flood,

93 | P a g e colloquially also termed as White Revolution, initiated in early 1980s. Today, India produces over 85 mn tonnes of milk annually. The total milk economy is estimated at Rs 1300 billion in terms of value.

The market for dairy whiteners (commercially know as beverage milk powders and condensed milk) and creamers is around Rs 3,000 mn. Apart from MNCs like Nestle and companies like Britannia, the Indian enterprises have also made perceptible progress. Names like Amul, Sapan, Vijaya, Mohan, Parag and several others have been seen in the marketplace with their whiteners. These are available mostly in pouches, tetrapacks, and in the near future, may be in miniportion cups.

Aseptically packed creamer in miniportions is widely used in the West, but has yet to enter the Indian market in any substantial way. Amul did make a beginning with its whitener pouches and has emerged as a leader with a market share of 45% followed by Nestle’s 23%. Aseptically packed creamer involves techniques to impart a longer shelf life to the product. It is packed in small cups ready to be poured into a cup of tea or coffee. Creamer is fresh milk with increased fat content (upto 12%) and is aseptically packed after undergoing Ultra Heat Treatment (UHT) at 1400 C. Its introduction will affect the existing whitener market as a natural milk product with a longer shelf life.

Britannia forayed into the dairy business as a diversification move in 1997. Its first offering, Milkman Butter, just managed a 5% share. The dairy business claims a 10% share in Britannia's topline. The company had drawn up plans to atleast capture 5% of the overall fresh milk market estimated by Britannia at Rs 420 bn. Extending the product portfolio beyond cheese, dairy whitener and butter, Britannia

94 | P a g e entered the fresh milk segment in 2001. In the dairy whitener, the company has managed to capture a significant market share.

Nestle India with its Everyday dairy whitener has established its brand well. It has also entered into the market with its Nestle Pure Milk and, of course, a product in its niche area, Nescafe Frappe. Having earlier launched UHT milk, Nestle is concentrating on expanding its reach. Its plans covered Rs 800 mn investment in its Moga (Punjab) facility. New product segments like butter, yoghurt and flavoured milk were also on the cards. While Sapan characterises it as Dairy Special (instant milk mix for tea and coffee), Vijaya is the only UHT processed milk homogenised brand sold in the market in 200 ml and one litre tetrapack. All the rest, Amulya, Meadow, Mohan, Parag and Shweta dairy whiteners are in the form of powders. Mohan also markets a non-dairy whitener alongside its dairy type product. Since India is a major consumer of tea and coffee, it would be a very large market if only the price was not a constraint. In addition to domestic consumption, the whiteners/creamers find a high level of institutional acceptance, especially by railways, hotels and restaurants, airlines, hospitals and nursing homes and corporate offices. The institutional market can be tapped first, in particular, the airlines, railways and hotels. The penetration can then be extended to the household sector. The potential for exports, especially to neighboring countries and the countries in the Middle East, the Gulf and Africa, also exist and could be exploited.

Lead Players

Nestle, Amul, Britannia, Dynamix Diary, Sterling Agro, Haryana Milk Foods, Mohan Food, Modern Dairy, K Dairy

95 | P a g e

Leading Brands

Amul, Sapan, Vijaya Spray, Meadow, Mohan, Parag, Shweta, Malkana, Gagan, White Magic, Every Day.

Market Growth Rates

1990-91 - 1996-97 3.6%

1996-97 - 2001-02 10.1%

2001-02 - 2006-07 8.7%

2004-05 - 2009-10 8.3%

2009-10 - 2014-15 8.0%

The main thrust of proposals is on the improvement of animal health and adoption of sanitary and phyto-sanitary specifications (SPS) for dairy products. Towards this end, the Technology Mission on Dairy Development (TMDD) has initiated a wide-ranging program.

TABLE 2.8: MILK UTILIZATION PATTERN IN INDIA, 1943-2004

Year 1943* 1956 2004 Milk Production (million tones) 23.5 17.8 91 Mil Utilisation (Percentage) 100 100 100 Liquid Milk 28.0% 39.2% 46.0% Traditional Products 72.0% 60.8% 50.0% Ghee/Makhan (clarified butter) 58.7% 46.0% 33.0% Dahi (Yogurt-like) 5.2% 8.8% 7.0% Khoya (Partially desiccated Milk 5.0% 4.4% 7.0% Chhana and Paneer (unprocessed cottage cheese) 3.1% 1.6% 3.0% Western Products: Milk Powder, etc Neg Neg 4.0% *Includes Pakistan and Bangladesh Source: Handbook on Technology of Indian Milk Products

96 | P a g e

The upsurge in milk production has thrown up challenges in milk marketing. The country is blessed with an enormous domestic market because of the following factors: Large population and its continuous growth, low level of per capita milk consumption and hence large size of potential, but latent demand, increasing purchasing power, which is already in evidence, will transform the huge latent demand into real demand. The groups of dairy products offering exciting marketing opportunities are liquid milk itself, which accounts for a sizeable part of the milk consumption products, in which our dairy industry already has demonstrated considerable expertise, like milk powders, butter and ghee. The ability to manufacture the relatively new and sophisticated products like cheese and ice cream alongside the traditional products like paneer, khoya and milk-based sweets are now being manufactured on a large scale.

2.8.2 MILK UTILIZATION PATTERN TABLE 2.9 DEMAND FOR MAJOR MILK PRODUCTS IN THE ORGANIZED SECTOR, 1988-2009/ METRIC TONE

Product Demand 1988 Demand 2009 Ghee 100,000 200,000 Cheese 4,200 15,000 Paneer 1,000 16,000 Shrikhand 3,000 5,650 Rasgolla 1,600 6,000 Gulabjamun 3,000 5,850

As shown in the table, of the total milk produced in the country, nearly 46 per cent is consumed as liquid milk and the balance converted into various dairy products, such as ghee, butter, milk powder, ice cream, cheese, condensed milk and for making various

97 | P a g e kinds of sweetmeats having distinct regional preferences. Dairy products an estimated 54 per cent of India's milk production is converted into products, both traditional and Western. In this, the share of traditional products is about 50 per cent, accounting in 2001 for a little over 42 million tonne of milk, which yields over 10 million tonne of mithais and other related products per year. The growth projections for their demand in the organized sector are presented in Table above.

Commercial production of traditional products

With the increase in the availability of liquid milk and Western dairy products, refinement in the marketing network and significant improvement in per capita income, there is an increased pressure for the restructuring of the indigenous milk product industry. Now, the organized sector has started showing keen interest in processes and equipment for manufacturing traditional products standardization of products, as well as refinement in packaging and improvement in safety and shelf life. Any innovation which can enable the organized sector to manufacture and market indigenous milk products on an industrial scale can have a far reaching impact on the dairy industry as well as on the economic condition of milk producers. The market for indigenous products far exceeds that for Western dairy products like butter, milk powder and cheese. A great scope exists for further expansion of the market for indigenous milk products, provided quality and safety are ensured and the shelf life is extended to facilitate distribution over larger areas. Major innovations are needed in manufacturing, quality assurance, packaging and process engineering to adapt these products to current marketing and consumer requirements. Some commercial processes have been

98 | P a g e developed to manufacture ghee, khoya, shrikhand and gulabjamun, but much is required to be done.

Major Players

The dairy industry is dominated by the co-operative sector. About 60% of the installed processing capacity is in the co-operative sector.

The National Dairy Development Board (NDDB) is a major player in the market with its major brand, Amul. Leading brands like Amul, Nestle, Mother Dairy and Britannia are in the race to tap the growing market.

SmithKline Beecham Consumer Healthcare, Nestlé India and Heinz India are amongst the large MNCs that dominate the high-value milk products market. Other players include Indiana Dairy Specialties, Jagatjit Industries Ltd and various other state cooperatives.

Some dairy plants have production of mithais on a commercial scale. Some national brands like Haldiram, Bikanervala, K C Das, Chitales, Ganguram, Brijwasi, Agarwal Sweets etc are getting wide acceptance because of consistent quality Encouraged by the growing market and cashing on brand value select dairy companies are planning major expansion plans in various cities with new brands suited to local taste and preferences and realizing higher prices with higher sales volumes and product safety.

The milk and dairy products segment is set for up gradation of cold- storage chains for expansion. Mother Dairy, a wholly owned subsidiary of National Dairy Development Board plans to make strong presence in the market of milk and milk products under the Mother Dairy brand through retail outlets across the country in addition to its own 300 outlets with provision of cold storage and cold chains.

99 | P a g e

TABLE NO. 2.10 MILK PRODUCTION IN INDIA

Production in India Year Production Per Capita Availability (Million Tonnes) (gms/day) 1991-92 55.7 178 1992-93 58.0 182 1993-94 60.6 187 1994-95 63.8 194 1995-96 66.2 197 1996-97 69.1 202 1997-98 72.1 207 1998-99 75.4 213 1999-2000 78.3 217 2000-01 80.6 220 2001-02 84.4 225 2002-03 86.2 230 2003-04 88.1 231 2004-05 90.7 229 2005-06 94.6 220 Source: State/UT Animal Husbandry Departments, 2006

100 | P a g e

TABLE NO. 2.11 MILK PRODUCTION BY STATES

Estimates of Milk Production - State wise (000 tones) State 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04 2004-05 All India 72128 75424 78286 80607 84406 86159 88082 90715 Andhra Pradesh 4473 4842 5122 5521 5814 6584 6959 7252 Arunachal Pradesh 43 45 46 42 42 46 46 48 Assam 719 725 667 683 682 705 727 739 Bihar 3420 3440 3454 2489 2664 2869 3180 2974 Goa 38 41 44 45 45 46 48 57 Gujarat 4913 5059 5269 5312 5862 6089 6421 6745 Haryana 4373 4527 4679 4850 4978 5124 5221 5222 Himachal Pradesh 714 724 742 761 756 773 786 870 J & K 1167 1232 1286 1321 1360 1389 1414 # 1422 Karnataka 3970 4231 4471 4599 4797 4539 3857 3917 Kerala 2343 2420 2532 2605 2718 2419 2111 2025 Madhya Pradesh 5377 5442 5519 4761 5283 5343 5388 5506 Maharashtra 5193 5609 5707 5849 6094 6238 6379 6567 Manipur 62 65 68 66 68 69 71 75 Meghalaya 59 61 62 64 66 68 69 71 Mizoram 17 20 18 14 14 15 15 16 Nagaland 46 48 48 51 57 58 63 69 Orissa 672 733 850 876 929 941 997 1283 Punjab 7165 7394 7706 7777 7932 8173 8391 8554 Rajasthan 6487 6923 7280 7455 7758 7789 8054 8310 Sikkim 35 35 35 35 37 45 48 46 Tamil Nadu 4061 4273 4586 4910 4988 4622 4752 4784 Tripura 57 76 77 77 90 79 84 86 Uttar Pradesh 12934 13618 14152 13857 14648 15288 15943 16512 West Bengal 3415 3441 3465 3471 3515 3600 3686 3790 A&N Islands 22 22 23 22 23 26 25 24 Chandigarh 43 43 42 43 43 43 44 43 D&N Haveli 4 8 8 8 8 8 8 4 Daman & Diu 1 1 1 1 1 1 1 1 Delhi 267 290 290 291 294 296 299 303 Lakshadweep 1 2 1 2 2 2 1 1 Pondicherry 36 36 37 37 37 37 40 41 Chhattisgarh - - - 777 795 804 812 831

101 | P a g e

Uttaranchal - - - 1025 1066 1079 1188 1195 Jharkhand - - - 910 940 952 954 1330 Source: Basic Animal Husbandry Statistics, 2004

In addition to the above-mentioned points - there are areas where major thrust is required: Brand image or major players needs to be projected in leading international dairy trade fairs, particularly of those countries to which exports are being targeted. Another step may be to encourage technical collaboration and marketing tie-ups with leading international dairy companies.

With the liberalization and open policies of the Government and the restructuring of the economy the dairy industry is undergoing major developments. This has brought about greater participation of the private sector. This is also consistent with global trends, which can hopefully lead to greater integration of Indian dairying with the world market for milk and milk products. India is witnessing winds of change because of improved milk availability, a changeover to market economy, globalization and the entry of the private sector in the dairy industry. The value addition and variety in the availability of milk products are on everybody's agenda. There is a consistent increasing demand for new products and processes. The major reasons are an increase in disposable incomes, changes in consumer concerns and perceptions on nutritional quality, hygiene and safety, arrival of foreign brands, increasing popularity of satellite or cable media and availability of new technologies and functional ingredients. India is the world's largest milk producer in the present scenario.

102 | P a g e

2.9. INDIAN POULTRY INDUSTRY It is believed that the Indian Poultry Industry is 5,000 years old, since last 4 decades it began to witness remarkable growth from backyard to poultry industry.

The organised sector of poultry industry is contributing nearly 70% of the total output and the rest 30% in the unorganized sector. The broiler industry is well dominated in southern states in our country with nearly 60-70% total output coming from these states. The layer industry once again is represented more in southern states especially, Andhra Pradesh, Tamil Nadu and Maharashtra producing nearly 70% of the country's egg production. India's 75% of egg produce is consumed by the 25% population living in urban and semi-urban areas. Presently about 800 hatcheries are operating in the country.

Per capita consumption The National Institute of Nutrition has recommended 180 eggs and 11 kg of meat per capita consumption for our country. At present,

 Per capita availability of meat is 1.6 kg.

 Per capita availability of egg is 1.8 kg or 42 eggs.

 Average consumption of eggs in major cities is 170 eggs

 Average consumption of eggs in smaller cities is 40 eggs

 Average consumption of developed rural areas is 20 eggs

 Average consumption of undeveloped rural areas is only 5 eggs.

 While 20% of Indian population is vegetarian.

In spite of this, with the rise of middle class and increased urbanization people prefer to go for non-vegetarian.

About 3 million farmers and 15 million agrarian farmers are employed in the poultry industry that grow poultry ingredients for feed and contribute about Rs 26,000 crore to the national income.

103 | P a g e

India is the fifth largest producer of egg and ninth largest producer of poultry meat. India was positioned 17th in the world poultry production. The Indian poultry production is considered to be the cheapest in the world. Leading broiler integrators in India are as follows:

 Venkateswara Group, Pune

 Suguna Poultry Farms Ltd, Coimbatore

 Pioneer Poultry Group, Coimbatore

 Godrej Agrovet Ltd, Mumbai

 Sky Lark group, North India

 Jafa com feed

These companies account for nearly 40% of broiler industry integrators and contracts. Pioneer Poultry group introduced the concept of contract farming in the year 1980 and the concept of integration was introduced by Suguna farms in 1990. Poultry farming came to be accepted as a viable activity by mid 60s and the real thrust to development came in 1971 with the establishment of Venkateswara Hatcheries Pvt Ltd. The Central Poultry Breeding Farms laid the foundation for the development of poultry industry during 1959. Other agencies such as ICAR (CARI) contributed much in the R&D sector.

Commercial Poultry

India has emerged as the only country in the developing world a self- reliant, technology driven industry, with capability to produce every essential input for successful poultry farming including indigenous genetic resource and breeding, world class poultry vaccines and medicines, specific pathogen free eggs (SPF), farms and hatchery automation systems, pelleted feed, egg processing, poultry processing,

104 | P a g e nationwide network of disease diagnostic laboratories and facilities for entrepreneurial development and training in both private and public sectors.

Rural Poultry Production Rural poultry production constitutes important component of agricultural economy in India, small poultry holder are practically capable of more significant contribution to alleviate malnutrition, poverty and unemployment. A spectacular progress has been made from subsistence to sustainable production system. Indian backyard population increase is only by 16% in the last 30 years from 60 to 70 million. China's 76% of total egg comes from rural backyard production. India requires both mass production as well as production by masses.

Egg Scenario India produces 3.6% of global egg production, i.e., 61 million tonnes. The annual growth rate of egg is 5 to 8%. India has the lowest cost of egg production in the world at 2.55 US cents per egg.

Value added products The introduction of new poultry products and perceptible shift in eating habits are moving people to branded food such as chicken yummiez, cold cuts, breaded and coated snacks, marinated snacks, chicken nuggets, canned chicken curry, freeze dried chicken pulao, meat soup, powder omlette and scrambled egg mixtures, sandwich, pizza, burger and dial-a-chicken and fast food joints, Kentucky Fried Chicken (KFC), McDonald's, Wimpy, Pizza Hut all these are going to change the palatability of the chicken consumer.

105 | P a g e

Medical uses Chicken eggs are used to produce source of molecules to treat snakebite. Duck embryos are used in manufacturing anti-rabies vaccine. Diet eggs or designer eggs are going to boost special eggs for vitamin E substitution, Omega fatty acids and antioxidant requirements. Poultry eggs and meat have got sensorial, curative, nutritive and therapeutic potential. Poultry is labour intensive and has a potential to create 25,000 more jobs on the consumption of one more egg per capita and similarly 25,000 additional jobs on the consumption of 100 gm more chicken meat.

By the year 2010 India is expected to produce 260 million layers (77700 million eggs) and 3500 million broilers (5.9 million tonnes). Per capita consumption of meat will be around 3.5 to 4.5 kg and eggs will be around 65 and it is expected to contribute Rs 60,000 crore. No agriculture sector is growing as fast as the Indian poultry, making it the most dynamic rapidly emerging sector of livestock economy. The export of poultry meat at present is worth Rs 150 crore and is expected to reach Rs 1,500 crore by 2010. Indian agriculture contributes 28 per cent to the GDP of which 17% is contributed by poultry. Poultry is the only industry where modern technology co- exists with the traditional poultry keeping because poultry technology is appropriate, adaptable, accessible, available and affordable both for the rich and the poor.

106 | P a g e

Recent positive developments of poultry industry

 NABARD has committed to bring about rural prosperity through poultry.

 Meeting of sub-group of poultry has asked for funds of Rs1095 crore for poultry development during the 11th Plan and Rs 30,000 crore for the entire livestock sector under various schemes of the Government of India.

 India has resumed egg export.

 IFC (Washington based International Finance Corporation) picked up stake in Suguna Poultry farms. Suguna Poultry paves the way for North Indian expansion and introduces dial-a- chicken concept to promote value added products. Thousands of broiler farmers will reap the benefit.

 Venkateswara Hatcheries has decided to use tennis to promote their brand Venky's.

 Poultry farmers to get maize on concessional rate to use it as feed in poultry.

 Kerala livestock development board chalked out plan for poultry tourism in Munnar.

 Poultry litter to fetch carbon credit in Andhra Pradesh with 3.5 mw power plant.

 Godrej Agrovet Ltd introduced wide range of processed chicken in the brand name of Godrej Real Good Chicken.

The poultry production and consumption in the domestic market is slated to grow. Indian poultry industry has been a major contributor to the food-processing sector in the country. From backyard activity to major commercial operation the poultry sector has undergone a paradigm shift.

107 | P a g e

Indian poultry industry has been growing at annual varying rates of 8- 15% and this growth in the past few decades made India fifth largest producer of eggs and ninth largest producer of poultry broiler. At present the industry is estimated at over Rs 30,000 crore and is expected to grow over Rs 70,000 crore by 2012.

India produces 1,400 million chickens a year, which is close to 27 million a week, of which 95% is traded alive. According to a market report the poultry production and consumption in the domestic markets is slated to grow by 66% to approximately 2.3 million tonnes by 2010.

Poultry sector is one of the fastest growing industries of the Indian economy than any other sector contributing about $230 million to the Gross National Product. But in statistical terms the industry has reported a loss of over Rs 4,000 crore as an aftermath effect of the bird flu crisis.

The contribution of the small rural farmers points out the importance of integration of the poultry farming and the allied sector. Suguna Poultry Farm is the pioneer in poultry integration and contract poultry farming in India, with presence in nine states and membership of about 15,000 contract farmers. Suguna has set an example of integration and contract farming before the industry and has proved to be beneficial for the company. Integration could be the way forward for the entire industry towards expansion and success.

Presently 100% Foreign Direct Investment (FDI) is permitted in the food processing sector. Also FDI in food retailing, covering dairy, poultry, marine, vegetables and fruits might help the entire food processing industry grow. Poultry farming in India has transformed

108 | P a g e from a mere tool of supplementary income and nutritious food for the family to the major commercial activity generating the required revenue. The growth of the industry with steady production of 1,800 million kg of poultry meat, 40 billion egg per year and employment generation of about 3 million people indicates the future prospects for the industry. Changing food habits, rising income of the middle class Indian, presence of private players, rising market demand of the Indian poultry produce in the export market are some of the contributing factors to the growth of the industry

2.10 INDIAN FOOD INDUSTRY 2.10.1 FRUITS & VEGETABLES

The installed capacity of fruits and vegetables processing industry has doubled from 1.1 mn tonnes in January 1993 to 2.1 mn tonnes in 2006. Presently, the processing of fruits and vegetables is estimated to be around 2.2% of the total production in the country. The major processed items in this segment are fruit pulps and juices, fruit based ready-to-serve beverages, canned fruits and vegetables, jams, squashes, pickles, chutneys and dehydrated vegetables. The new arrivals in this segment are vegetable curries in retortable pouches, canned mushroom and mushroom products, dried fruits and vegetables and fruit juice concentrates.

The fruits and vegetable processing industry is rather fragmented. A large number of units are in household and small-scale sector, having low capacities of up to 250 tonnes per annum. From the year 2000 onwards the industry has seen a significant growth in ready-to-serve beverages, pulps and fruit juices, dehydrated and frozen fruits and vegetable products, pickles, processed mushrooms and curried vegetables, and units engaged in these segments are export oriented.

109 | P a g e

TABLE NO. 2.12 EXPORTS OF PROCESSED FRUITS & VEGETABLES (Quantity in MT, Value in Rs Mn) Year-2001-02 Year-2004-05 CAGR Quantity Value Quantity Value Quantity Value Dried & Preserved 209157.8 5371.5 351034.3 7657.5 18.8 12.5 Vegetables Mango Pulp 76735.18 2413.4 90988.6 3008.6 5.8 7.6 Pickles & 38758.97 1203.4 67193.29 1205.8 20.1 0.1 Chutney Other Processed 61332.39 2017.4 80760.5 2755.3 9.6 10.9 Fruits & Vegetables Total 385984.3 11005.7 589976.7 14627.2 15.2 9.9 Source: Ministry of Food Processing Industries, Annual Report 2005- 06 2.10.2 MEAT

Since 1995, production of meat and its products has been significantly growing at a rate of 4% per annum. Presently the processing level of buffalo meat is estimated at 21%, poultry is estimated at 6% while marine products are estimated at 8%. But only about 1% of the total meat is converted into value added products like sausages, ham, bacon, kababs, meatballs, etc. Processing of meat is licensed under the Meat Food Products Order, 1973. Presently the country has 3,600 slaughterhouses, 9 modern abattoirs and 171 meat-processing units licensed under the meat products order.

110 | P a g e

Poultry industry is also among the faster growing sectors rising at a rate of 8% per year. It is observed that the vertical integration of poultry production and marketing has lowered costs of production, consumer prices of poultry meat and marketing margins. There are eight integrated poultry processing units in the country, which of course hold a significant share in the industry.

TABLE NO. 2.13 EXPORTS OF MEAT AND MEAT PRODUCTS (Quantity in MT, Value in Rs Mn) 2001-02 2004-05 CAGR Quantity Value Quantity Value Quantity Value Buffalo meat 243356 11444 306971 16156 8.0 12.2 Sheep/Goat meat 3915 331 8885 794 31.4 33.9 Poultry products 19876 1301 264608 1541 137.0 5.8 Animals Casings 464 96 552 126 6.0 9.3 Processed Meat 267 13 107 16 -26.2 6.5 Total 267878 13185 581123 18633 29.5 12.2 Source: Ministry of Food Processing Industries, Annual Report 2005- 06

Meat export is largely driven by poultry, buffalo, sheep and goat meat, which is growing at close to 30% per annum in terms of quantity. It is considered that the growing number of fast food outlets in the country has and will have a notable impact on the meat processing industry.

2.10.3 MARINE PRODUCTS

India is the largest fish producing country in the world it is the third largest fish producer in the world while ranks second in inland fish production. Categorically India’s potential for fishes, from both inland and marine resources, is supplemented by the 8,000 km coastline, 3 mn hectares of reservoirs, 50,600 sq km of continental shelf area, 1.4

111 | P a g e mn hectares of brackish water and 2.2 mn sq km of exclusive economic zone.

Processing of marine produce into canned and frozen forms is carried out fully for the export market. With regards to infrastructure facilities for processing of marine products there are 372 freezing units with a daily processing capacity of 10,320 tonnes and 504 frozen storage facilities for safe storage with a capacity of 138,229.10 tonnes, besides there are 11 surimi units, 473 pre-processing centres and 236 other storages.

Processed fish products for export include conventional block frozen products, individual quick frozen products (IQF), minced fish products like fish sausage, cakes, cutlets, pastes, surimi, texturised products and dry fish etc.

Exports of marine products have been inconsistent and on a declining trend which can be owed to the adverse market conditions prevailing in the European and American markets. The anti-dumping procedure initiated by the US Government has affected India’s shrimp exports to the US.

TABLE NO.2.14 FISH PRODUCTION & EXPORTS Year Production (in Million tonnes) Exports Marine Inland Total Quantity (MT) Value Rs. Bn 2000-01 2.81 2.84 5.65 440473 64.44 2001-02 2.83 3.12 5.95 424470 59.57 2002-03 2.99 3.21 6.2 467297 68.81 2003-04 2.94 3.45 6.39 412017 60.92 2004-05 2.78 3.52 6.3 461329 66.47 Source: Ministry of Food Processing Industries, Annual Report 2005-06

112 | P a g e

2.10.4 GRAIN PROCESSING

Processing of grain includes milling of wheat, rice and pulses. In 1999- 00, there were more than 91,000 rice hullers and 2,60,000 small flourmills which were engaged in primary milling. There are 43,000 modernized rice mills and huller-cum-shellers. Around 820 large flourmills in the country convert about 10.5 mn tonnes of wheat into wheat products. Also there are 10,000 pulse mills milling about 75% of pulse production of 14 mn tonnes in the country.

Primary milling of grains is the considered to be the important activity in the grain-processing segment of the industry. However, primary milling adds little to shelf life, wastage control and value addition. Around 65% of rice production is milled in modern rice mills. However, the sheller-cum-huller mills operating give low recovery. Wheat is processed for flour, refined wheat flour, semolina and grits. Apart from the 820 large flourmills, there are over 3 lakh small units operating in this segment in the unorganised sector. Dal milling is the third largest in the grain processing industry, and have about 11,000 mechanised mills in the organised segment. Oilseed processing is another major segment, an activity largely concentrated in the cottage industry. According to estimates, there are approximately 2.5 lakh ghanis and kolus which are animal operated oil expellers, 50,000 mechanical oil expellers, 15,500 oil mills, 725 solvent extraction plants, 300 oil refineries and over 175 hydrogenated vegetable oil plants. Indian Basmati rice has gained international recognition, and is a premium export product. Branded grains as well as grain processing is now gaining popularity due to hygienic packaging.

113 | P a g e

2.10.5 BEER & ALCOHOLIC BEVERAGES

When discussed on alcoholic beverages, India is considered to be the third largest market for alcoholic beverages in the world. The domestic beer and alcoholic beverage market is largely dominated by United Breweries, Mohan Meakins and Radico Khaitan. The demand for beer and spirits is estimated to be around 373 million cases per year. There are 12 joint venture companies having a licensed capacity of 33,919 kilo-litres per annum for production of grain based alcoholic beverages. Around 56 units are manufacturing beer under license from the Government of India.

Country liquor and Indian Made Foreign Liquor are the two segments in liquor; both cater to different sections of society . The former is very much consumed in rural areas and by low-income groups, while the middle and high-income groups consume the latter.Liquor license outlets in India figures approximately 23,000 with another 10,000 outlets in the form of bars and restaurants. Regulations in this sector differ state-wise in terms of excise and custom duty. In Tamil Nadu, Kerala and Andhra Pradesh, the distribution is controlled by the state government, and any change XVIII in the ruling party has a direct impact on the availability of alcohol.

The wine industry in India has come into prominence lately and has been receiving support from the Government as well, to promote the industry,. The market for this industry has been estimated to be growing at around 25% annually. Maharashtra has emerged as an important state for the manufacture of wines.

114 | P a g e

2.10.6 CONSUMER FOODS

This segment comprises of packaged foods, aerated soft drinks, packaged drinking water and alcoholic beverages.

Packaged / Convenience Foods

Consumer food industry mainly consists of ready-to-eat and ready-to- cook products, salted snacks, chips, pasta products, cocoa based products, bakery products, biscuits, soft drinks, etc.

There are around 60,000 bakeries, several pasta food units and 20,000 traditional food units and in India. The bakery industry is among the few processed food segments whose production has been increasing consistently in the country in the last few years. Products of bakery include bread, biscuits, pastries, cakes, buns, rusk etc. This activity is mostly concentrated in the unorganized sector. Bread and biscuits constitute the largest segment of consumer foods with an annual production of around 4.00 million tonnes. Bread manufacturing is reserved for the small-scale sector. Out of the total production of bread, 40% is produced in the organized sector and remaining 60% in the unorganised sector, in the production of biscuits the share of unorganized sector is about 80%.

Cocoa Products

Cocoa products like chocolates, drinking chocolate, cocoa butter substitutes, cocoa based malted milk foods are highly in demand these days, 20 production units are engaged in their manufacture with an annual production of about 34,000 tonnes.

115 | P a g e

Soft drinks

After packed tea and packed biscuits the soft drink segment is considered to be the 3rd largest in the packaged foods industry. Over 100 plants are engaged in aerated soft drinks industry and provide huge employment. It has obviously attracted one of the highest FDI in the country. Strong forward and backward linkages with glass, plastic, refrigeration, sugar and the transportation industry further strengthen the position of the industry. Soft drink segment has a huge potential in the Indian market, as a vast portion of the market is still to cover. TABLE NO. 2.15 EXPORTS OF CONSUMER FOODS (Quantity in MT, Value in Rs Mn)

2001-02 2004-05 CAGR Quantity Value Quantity Value Quantity Value Groundnuts 112813 2509 177115 5030 16.2 26.1 Gaur gum 117883 4032 129648 6643 3.2 18.1 Jaggery & Confectionery 365893 4365 35549 770 -54.0 -43.9 Coca products 1293 129 2274 273 20.7 28.5 Cereal preparations 380087 2247 49487 2778 9.1 7.3 Alcoholic & non-alcoholic 49672 1183 30045 1138 -15.4 -1.3 Beverages Miscellaneous Preparations 23189 1373 52514 2244 31.3 17.8 Milled Products 322347 1964 140123 1449 -24.2 -9.6 Source: Ministry of Food Processing Industries, Annual Report 2005- 06

The market for semi-processed/cooked and ready to eat foods was around Rs 82.9 billion in 2004-05 and is rising rapidly with a growth rate of 20 per cent. With the changing life styles of the Indian middle class and the busy schedules of both the husband and wife in the family the demand for semi-processed cooked/ready to eat food will go up steadily as hired domestic help is also becoming costlier.

116 | P a g e

HUL has entered the ready to eat segment through Indus Valley rice meals in seven flavours. MTR Foods has also launched a wide range of rice meals and other curries. Satnam Overseas has also entered this growing market with its Kohinoor brands of rice meals and curries. ITC ‘s more than 50 packaged branded food products under Kitchens of India and Aaashirvaad brands with different varieties of ready to eat, cooked, food is gaining popularity in the market.

Pizza Corner has also expanded its outlets rapidly this year. There are currently 37 Pizza Corner outlets of Global Franchise Architects (GFA) across India. The total production of culinary products and snack food was around Rs 1750 crore in 2004-05 and is growing at a moderate rate of 8 per cent. The culinary products including mainly wheat based products comprising of noodles, vermicelli, macaroni and spaghetti is gaining popularity. HUL (Kissan and Knorr range) and Nestle (Maggi) dominate this segment, as both have large product portfolios. Heinz and Top Ramen are also knocking at the door.

Indian snack food market has reached a value of Rs 1530 crore. It is one of the largest snack markets in the world. Potato chips are by far the largest product category within snacks, with 85% of the total market share. Snack nuts and savory snacks also add to the market. At present, popcorn has yet to break into the Indian market.

Frito Lay's India, Pepsico’s Snack Food Division having snack foods plants in Channa (Punjab) and Pune (Maharashtra), and going for another in (Sakrail) West Bengal with investment of Rs 75 Crores as the state of West Bengal has immense opportunities for agro-based industries. The company has carried out backward integration to source potatoes and other crops with farmers across the states.

117 | P a g e

The world’s largest producer of French fries and potato specialties McChain Foods with McChain Smiles and NP Foods have entered in India’s potato snack industry in 2005.

Ready-to-eat food

According to the report of Euromonitor International, a market research company, the amount of money Indians spend on meals outside the home has more than doubled in the past decade, to about US$ 5 billion a year and is expected to double again in about half that time. The industry is estimated to grow at 9-12 per cent, on the basis of an estimated GDP growth rate of 6-8 per cent, during the tenth five- year plan period. Value addition of food products is expected to increase from the current 8 per cent to 35 per cent by the end of 2025. Fruit and vegetable processing, which is currently around 2 per cent of total production is estimated to increase to 10 per cent by 2010 and to 25 per cent by 2025.

With the growth of 150 per cent in sales, the popularity of food and agro products is not surprising. With such promise in the sector, a number of foreign companies have joined the competition. While US brands such as McDonald's, Pizza Hut and Kentucky Fried Chicken have become household names, more are on their way.

The new wave in the food industry is not only about foreign companies arriving here attracted by the prospective size of the market. It is also about the migration of the made in India tag on food products travelling abroad. Indian food brands and fast moving consumer goods (FMCGs) are now increasingly finding prime shelf-space in the retail chains of the US and Europe. These include Cobra Beer, Bikanervala

118 | P a g e

Foods, MTR Foods' ready-to-eat foodstuff, ITC's Kitchen of India and Satnam Overseas' Basmati rice.

Major social, economic and demographic changes over recent years have had great influence on the food we eat, and on where, when and how we do so. As a result the convenience food sector has grown by 70% over the past decade, creating a huge market. Convenience foods are foods which are designed to save consumers time in the kitchen and reduce costs due to spoilage. These foods require minimum preparation, typically just heating, and are packaged for a long shelf life with little loss of flavor and nutrients over time.

2.11 FEATURES OF AGRO-BASE INDUSTRIES IN INDIA 2.11.1 Vast source of raw material

 India is one of the largest producers of wheat and rice.

 Coconuts, cashew nuts, ginger, turmeric and black pepper is widely grown in some parts of the country.

 India is the second largest producer of groundnuts, fruits and vegetables. That it accounts for about 10 per cent of the world's fruits production with the country topping in the production of mangoes and bananas.

 Due to the high processing levels milk products offer a significant opportunity in India. India is the world's largest producer of milk owing to the strong business models formed through cooperative movements in the country. Milk and related products account for 17% of India's total expenditure on food. This segment enjoys liberal regulations as all milk products except malted foods are automatically allowed 51% foreign equity participation and all exports of dairy products are freely allowed.

119 | P a g e

 Alcoholic beverages have been categorised as the new high opportunity sector in India. Liquor manufactured in India is categorised as Indian Made Foreign Liquor (IMFL). The sector is still barred from the import of potable alcohol as it is subject to government licensing. In the meanwhile, India has recently started producing wine for domestic consumption.

 Meat and poultry has also gained popularity due to the emergence of producers that have integrated breeding, feed milling, contract growing and marketing facilities for improved productivity. Meat, fish, and poultry are in rural areas as they are easily affordable and provide necessary nutrients. India has the potential to be a leading global food supplier if it employs the right marketing strategies and creates an efficient supply chain

2.11.2 . CONVENTIONAL FARMING TO COMMERCIAL FAMING In recent years, there has been a shift from conventional farming of food grains to horticulture which include fruits, vegetables, ornamental crops, medicinal and aromatic plants, spices, plantation crops which include coconut, cashew nuts and cocoa and allied activities

2.11. 3. MARKET IN THE FORM OF LARGE URBAN MIDDLE CLASS With a huge population of 1.12 billion and population growth of about 1.6 % per annum, India is a large and growing market for food products. Its 350 million strong urban middle class with its changing food habits poses a huge market for agricultural products and processed food.

120 | P a g e

2.11. 4. LOW PRODUCTION COST The relatively low-cost but skilled workforce can be effectively utilised to set up large, low-cost production bases for domestic and export markets.

2.11.5. CHANGE IN CONSUMPTION PATTERNS Increasing incomes are always accompanied by a change in the food habits. Over the last three decades in India a shift in food habits have been observed. The report observes that the proportionate expenditure on cereals, pulses, edible oil, sugar, salt and spices declines as households climb the expenditure classes in urban India while the opposite happens in the case of milk and milk products, meat, egg and fish, fruits and beverages.

For instance, According to report of ICRA the proportionate expenditure on staples like cereals, grams and pulses declined from 45 per cent to 44 per cent in rural India while the figure settled at 32 per cent of the total expenditure on food in urban India.

A large part of this shift in consumption is driven by the processed food market, which accounts for 32 per cent of the total food market. It accounts for US$ 29.4 billion, in a total estimated market of US$ 91.66 billion. The food processing industry is one of the largest industries in India -- it is ranked fifth in terms of production, consumption, export and expected growth.

According to the Confederation of Indian Industry (CII) the food- processing sector has the potential of attracting US$ 33 billion of

121 | P a g e investment in 10 years and generate employment of 9 million person- days.

2.11.6. GOVERNMENT ASSISTANCE The Government has introduced several schemes to provide financial assistance for setting up and modernizing of food processing units, creation of infrastructure, support for research and development and human resource development in addition to other promotional measures to encourage the growth of the processed food sector.

2.11.7. FOREIGN DIRECT INVESTMENT Foreign direct investment (FDI) in the country's food sector is poised to hit the US$ 3-billion mark in coming years. FDI approvals in food processing have doubled in last one year alone. The US-based private equity fund, New Vernon Private Equity Limited (NVPEL), has decided to invest Rs 45 crore in Kochi-based spice major, Eastern Condiments, which is the flagship company of Eastern Group.

America's largest chocolate and confectionery-maker Hershey is acquiring 51 per cent stake in Godrej Beverages and Foods for US$ 54 million.

2.11. 8. FOOD PARKS In an effort to boost the food sector, the Government is working on agri zones and the concept of mega food parks. Twenty such mega parks will come are proposed across the country in various cities to attract Foreign Direct Investment (FDI) in the food-processing sector. The Government has released a total assistance of US$ 23 million to implement the Food Parks Scheme. It has so far approved 50 food

122 | P a g e parks for assistance across the country. The Centre also plans US$ 22 billion subsidy for mega food processing parks.

2.11. 9. CONDUCIVE FOOD PROCESSING POLICY ENVIRONMENT The national policy on food processing aims at increasing the level of food processing from the present 2 per cent to 25 per cent by 2025. The government has allowed 100 per cent FDI in processing sector. Mergers and acquisitions and effecting a seamless organisation to evolve into truly global players.

2.12 AGRICULTURE AND AGROBASE INDUSTRIES IN MAHARASHTRA

123 | P a g e

Information of Maharashtra:- a) Area of Maharashtra:- 307713 sq. km. b) Total Population of Maharashtra:-112372272 (As per census 2011) c) No. of District in Maharashtra :- 34 d) No. of Talukas in Maharashtra :- 353 e) No. of Villages in Maharashtra :- 43711 f) Agriculture Production in Maharashtra :- 103.17 lakhs Tonnes g) Net Maharashtra Domestic Product Value :- 2,94,001 crores h) No. of Co-op. Societies in Maharashtra :- 1,73,408 i) No. of University in Maharashtra :- 17 j) Percentage Literasy in Maharashtra :- 77% k) Electricity Cap in Maharashtra :- 12,903 mega watt l) Length of Railway in Maharashtra :- 5,497 kms m) Length of Road in Maharashtra :- 227 lakh kms

Maharashtra is a state in the Southwestern region of India. It is the second most populous state after Uttar Pradesh and third largest state

124 | P a g e by area in India. Maharashtra is the wealthiest state in India, contributing 15% of the country's industrial output and 13.3% of its GDP (2006–2007 figures). Maharashtra is bordered by the Arabian Sea to the west, Gujarat and the Union territory of Dadra and Nagar Haveli to the northwest, Madhya Pradesh to the northeast, Chhattisgarh to the east, Karnataka to the south, Andhra Pradesh to the southeast and Goa to the southwest. The state covers an area of 307,731 km2 (118,816 sq mi) or 9.84% of the total geographical area of India. Mumbai, the capital city of the state, is India's largest city and the financial capital of the nation. Nagpur is the second capital of the state. Marathi is the official language.

In the 17th century, the Marathas rose under the leadership of Chhatrapati Shivaji against the Mughals, who ruled a large part of India. By 1760, Maratha power had reached its zenith with a territory of over 250 million acres (1 million km²) or one-third of the Indian sub- continent. After the Third Anglo-Maratha War, the empire ended and most of Maharashtra became part of Bombay State under a British Raj. After Indian independence, Samyukta Maharashtra Samiti demanded unification of all Marathi-speaking regions under one state. At that time, Dr. Babasaheb Ambedkar was of the opinion that linguistic reorganization of states should be done on a "One state – One language" principle and not on a "One language – One state" principle. He submitted a memorandum to the reorganization commission stating that a "single government can not administer such a huge state as United Maharashtra". The first state reorganization committee created the current Maharashtra state on 1 May 1960 (known as Maharashtra Day). The Marathi-speaking areas of Bombay State, Deccan states and Vidarbha (which was part of Central

125 | P a g e

Provinces and Berar) united, under the agreement known as Nagpur Pact, to form the current state.

Maharashtra's gross state domestic product for 2011 is estimated at 901,330 crore (US$170.35 billion) in current prices. As of 2010 Maharashtra had a Per Capita Income of $ 1,660, far ahead of national average of $ 1,219 . Maharashtra's GDP Per Capita crossed the US$ 2,000 threshold for the first time in 2011 making it one of the richest states in India. Maharashtra is third-most urbanised state with urban population of 45% of whole population. Mumbai, the capital of Maharashtra houses the headquarters of almost all major banks, financial institutions, insurance companies and mutual funds. Within Mumbai is located Bollywood, the centre of India's Hindi film and television industry. India's largest stock exchange Bombay Stock Exchange, oldest in Asia, is located in the city. After successes in the information technology in the neighbouring states, Maharashtra has set up software parks in Pune, Mumbai, Navi Mumbai, Nagpur and Nasik, Aurangabad. Now Maharashtra is the second largest exporter of software with annual exports of 18 000 cr and accounts for more than 30 per cent of the country's software exports, with over 1,200 software units based in the state. Maharashtra ranks first nationwide in coal-based thermal electricity as well as nuclear electricity generation with national market shares of over 13% and 17% respectively. Maharashtra is also introducing Jatropha cultivation and has started a project for the identification of suitable sites for Jatropha plantations. Ralegaon Siddhi is a village in Ahmednagar District that is considered a model of environmental conservation. Over 41% of the S&P CNX 500 conglomerates have corporate offices in Maharashtra.

126 | P a g e

Maharashtra has had an immense History in textiles and Mumbai city was the original home of India's textile mills. Today some of the city's known for textile industry Solapur, Ichalkaranji, Malegaon and Bhiwandi. Sugar industry has made considerable progress specially in the co-operative sector. Maharashtra is well known for the development of sugar industry on co-operative lines in which the farmers acquire a share in the sugar mills. Pharmaceuticals, petrochemicals, heavy chemicals, electronics, automobiles, engineering, food processing, and plastics are some of the major industries of the state. Maharashtra is renowned for the production of three-wheelers, jeeps, commercial vehicles and cars, synthetic fibers, cold rolled products and industrial alcohol. Small scale industries have also come up in a big way in the state. The state capital Mumbai is called as an industrial city. Industrial development in the state is largely concentrated in Mumbai. The six important industries in the district are cotton textiles, chemicals, machinery, electricals, transport and metallurgy.[5] These industries also provide employment to a considerable number of people in Mumbai.

Although Maharashtra is a highly industrialized state of India, agriculture continues to be the main occupation of the state. Principal crops include rice, jowar, bajra, wheat, pulses, turmeric, onions, cotton, sugarcane and several oil seeds including groundnut, sunflower and soyabean. The state has huge areas, under fruit cultivation of which mangoes, bananas, grapes, and oranges are the main ones. Irrigation facilities are being extended so that agriculture could be made less dependent upon rain water. The net irrigated area totals 33,500 square kilometres.

127 | P a g e

Maharashtra has diverse agro climatic conditions suitable for the cultivation of a wide range of crops, and a progressive farming community. The State has a large urban population with high purchasing power. It is one of the major horticulture States in India, with more than 13 lakh ha under different fruit crops. Maharashtra is a pioneer and leader in the use of water saving technology like drip and sprinkler irrigation, and accounts for 60 percent of the total area under drip irrigation in the country. Almost all the area under grapes and more than 60 percent of the area under banana in the state has access to drip irrigation. The State is the largest exporter of Thompson seedless grapes, Alphonso mangoes, onions and long stem cut flowers.

Figure No.2.2 Agriculture production strengths of Maharashtra (All India Rank)

Source: NHM, NHB, Agriculture Department, Govt. of Maharashtra

128 | P a g e

Maharashtra’s Gross State Domestic Product (GSDP) at current prices for 2008-09 was estimated at Rs.692479 crores and contributes more than 13% cent of national GDP. Agriculture and allied activities contribute nearly 12% per cent to the State’s income, although 55% of the population is dependent on them. In the food processing sector, Maharashtra has as many as 16,512 small and medium and 322 large scale food processing units. 13 mega projects (not including textiles) have also been approved under the Package Scheme of Incentives since 2005 with an investment of nearly Rs. 2600 crores. At the grassroots level, there are more than 45,000 agro processing cooperatives. In fact, food products and beverages is one of the major industries in Maharashtra, and contributed 9.7% in terms of total value of output in 2007-08. The food processing sector in the State has attracted Rs. 1039 crores worth of Foreign Direct Investment through 173 projects since 1991.

Thus, Maharashtra is one of the country’s leaders in agrobase- industry in general, and in food processing in particular. However, the current level of processing in the State, as in the rest of India, is very low by international standards. There is tremendous potential for much higher value addition through processing. The Maharashtra Industrial, Infrastructure and Investment Policy, 2006, which is also applicable to agri processing and other agro-industrial units, stated that the Government of Maharashtra would formulate a separate policy for agro-industry with a focus on food processing and preservation. This would create more off farm jobs and also bring greater value addition and incomes for the rural population. Given the peculiar problems associated with this sector such as high levels of fragmentation, perishability, complex supply

129 | P a g e chains, large wastages etc, there is a need for a separate Policy to address them, with a focus on food processing.

The agricultural and related industrial and processing sectors operate today in a new and evolving business and social environment. It is a competitive, consumer-driven environment, global and rapidly changing, with enormous implications for the role of the agriculture sector in the overall food system. It is highly inter-dependent, blending the efforts of many industries to add value to agricultural products. Effective policies must recognize the wide diversity in the agriculture sector itself in Maharashtra, in terms of size, location, financial status, crop and other products produced, managerial abilities, income sources, and goals and aspirations. The problems faced by these groups are widely different and require solutions tailored to address particular needs.

2.13 AGRICULTURE AND AGRO-BASE INDUSTRIES OF AHMEDNAGAR DISTRICT Ahmednagar District recognized by the name of Malik Ahmed who was the chief founder and it was the Kingdom of Nizamshah in A.D.1494. After the end of Peshwa rule in A.D. 1818 Ahmednagar District was established. Ahmednagr is the largest district of Maharashtra State with geographical area of 17418 k.m., which is 5.66% of area of Maharashtra State. Out of total areas 391.5 sq. k. m. is urban area and remaining 16,656.5 sq. k. m. is rural area. Ahmednagar is centrally located in western Maharashtra. In Ahmednagar district there were 14 blocks or talukas and 1,581 villages and 1,308 gram sabhas. The Ahmednagr district is laid between 18.2* to 19.9* North latitude and 73.9* to 57.5* East longitude, and is bounded on the

130 | P a g e north by Nasik district, on the north east by Aurangabad district, in the east by Beed and Osmanabad, on the south by Solapur and in the south west by Thane and Pune district. Figure No. 2.3 Map of Ahmednagar district

TOPOGRAPHY- There are various land forms founds in Ahmednagar district. These different types of land forms in the region constitute its physical set- up. The physical of Ahmednagar district are the following divisions- 1) Western hilly region- The main Sahyadri range touches Akola Tahsil in the western area of Ahmednagar and forms this main range three spears viz. Kalsubai, Baleshwar and Harishchandragad. Kalsubai is the highest peak of Sahyadri (1654 mtr.).

131 | P a g e

2) Central plateau region- Parner, Ahmednagar Tahsil and parts of Sangamner, Shrigoda and Karjat Tahsils are included in this region. 3) Northern and southern plain regions- It includes northern Koperagaon, Rahata, Shrirampur, Rahuri, Newasa, Shevgaon and Pathardi Tahsils. This is the region of the Godavari and the Pravara river basins. Parts of the southern tahsils of Shrigoda, Karjat and Jamkhed are also included in this physical division. This region covers basins of the Ghod, Bhima and the Sina rivers.

RIVERS Godavari and Bhima are the major rivers of the district. The Pravara is the tributary or Godavari. The Mula, Adhala and Mahalungi are the important tributary to the Pravara. The southern part of the district consisting of Parner, Ahmednagar, Pathardi, Shrigonda and Karjat tahsils constitute the Bhima basin with the tributaries of Kukadi and Ghod. Among the rivers, the Pravara, Mula and Godavari have been a boon to this district.

SOIL The entire district is occupied by basaltic lava flow, which is popularly known as the „Deccan Traps‟. These lava flows are sometimes associated with intertrappen beds such as lime stones, sand stones, clay shales, red bole beds, porous thin mantle of black cotton soil present almost every where on the basaltic area. According to the Dry Farming Research Station, Solapur, considering the depth of soil and other factors, only 26% of the area is suitable for double cropping while the rest is suitable only for crops like Bajra, Groundnut, Sunflower, Grasses and Plantation. 6.5- ENVIRONMENT- The climate of the district is characterized by a hot summer and general dryness

132 | P a g e during major part of the year except during south-west monsoon season, when the relative humidity is between 60% and 80% thereafter it decreases. Ahmednagar gets rain mainly from south-west monsoon but the distribution is mostly uneven. The average rainfall in the district was 579 mm during 2007-08. The district can be divided into following agro-climatic zones encountered from east to west: i] Scarcity Tract- Out of 13 blocks of the district 12 blocks and eastern one third part of the Akola tahsil fall in the scarcity tract. Due to satisfactory rain and construction of dams water table has increased in many parts thereby increasing sugarcane plantation. ii] Transition Zone I- Western part of Akola taluka and the limited area from south east portion of Sangmner taluka is covered by this zone. This part of the district receives rainfall of about 700 mm to 1,250 mm. iii] Transition Zone II- Area of the western side of the high rainfall zone comes under this zone. This zone receives of about 1,250 mm to 2,500 mm. iv] High-Rainfall Zone- This zone includes the narrow strip of land west to the ghat zone and receives rainfall of 2000 mm to 3000 mm. 223

PROMINENT PLACES IN THE DISTRICT: Ahmednagar: Chand Bibi’s Fort, VRDE, Various Industries, Cloth shops, Ganapati idol manufacturing units, a large military base, MIRC (Mechanised Infantry Regiment Centre) only one of its kind in India, Tank Museum and Historical Museum. Rahuri: Agricultural University – Mahatma Phule Krishi Vidyapeeth, sugar factories and Muladam. Newasa: Mula Sugar factory, Shingnapur-Shani Temple, Deogad-Datta Temple, Newasa- Sant Dnyaneshwar Temple, Mohiniraj temple and Sugar factories.

133 | P a g e

Sangamner: Nimgaon Jali, Place of history – Peshave knight Trimbakji Dengale. Akole: ‘Kalsubai’ highest peak of Sahyadri, Wilson (Bhandardara) Dam, Randha Hydro Electricity Project and Rushi Agasti Temple. Kopargaon: Shirdi – Sai Baba Temple, tourist center, Sugar factories and Raghoba Dada Wada. Pathardi: Madhi – Kanifnath temple, Mohata – Devi Temple, Vrudheshwar Temple and Sugar factories. Karjat: Rehekuri – Deer Sanctuary, Rashin – Goddess Jagadamba temple, Sugar factory and Shri Siddhivinayak Temple at Siddhatek. Parner: Ralegan Siddhi – Model village of all rural development by Padmashree Anna Hazare, Sugar factory, Adarsha Gram – Hiwane Bazar by Shri Popatrao Pawar, Ranjan Khalge Nighoj. Jamkhed: Comprehensive rural Health Project founded by Dr. Rajanikant Arole and Kharda Fort. Rahata: Loni – Education Centre for all types of educational facilities, sugar factories, Shirdi Saibaba temple. Shrigonda: Kashti – Horticultural nursery, sugar factories and Shaikh Mohamed Maharaj Samadhi. Shrirampur: Sugar factories.

AGRICULTURAL RESOURCES: Agricultural resources have an important bearing in economy of the Ahmednagar district with 46.47% of the working force directly engaged in agricultural activity. Rabbi Jowar is the main crop of the district. Bajra, Groundnut and Mung are the main Kharif crops whereas Jowar, wheat and Gram are grown in Rabbi seasons. Sugarcane is the main cash crop of the district. With the extension of irrigation facilities, multiple cropping is also existing in the district. Otherwise

134 | P a g e agricultural activity in Ahmednagar district largely depends upon the monsoon season, which is irregular.

LAND UTILISATION: The total geographical area is 1667 thousand hectors, out of which forest area is 7.89%, 7.50% fallow land, 0.64% non-agricultural land, 11.13% barren uncultivated land and 79.51% was net cultivated land. The gross cropped area of Ahmednagar district is 13.26 lakh hectors. The following table indicates the land utilization position in district:

TABLE NO. 2.16 UTILISATION OF LAND IN AHMEDNAGAR DISTRICT

Sr. No. Particulars Area (In Hect.) 1. Geographical area 1667788 2. Forest area 131593 3. Non-agricultural Land 10770 4. Barren uncultivated land 185787 5. Land useful for cultivation but not 28661 cultivated 6. Current fallow land 56021 7. Other fallow land 69112 8. Area sown more than once 140310 9. Gross cropped area 1326156

Agricultural Sector Performance – A Brief Review: 1) The total area under Jowar cultivation, both Kharif as well as Rabbi, is 439648 hectares. The yield per hectare is 564 Kgs. And the total production is 2.84 lakh tons. Maximum area under Jowar cultivation is in Shrigonda, Parner and Nagar Taluka.

135 | P a g e

2) The total area under Bajra cultivation is 362287 hectares. The total production of Bajra for the district was 174100 tons and the yield per hectare is 748 kgs. Maximum Bajra is cultivated in Sangamner, Paner and Pathardi talukas. 3) The total production of sugarcane in dressed cane is 104.32 lakh tons. The total area under sugarcane cultivation is 81155 hectares and the yield per hectare is 78 kgs. Maximum sugarcane is cultivated in Newasa Taluka.

HORTICULTURE: Ahmednagar district is rich in horticulture crops. The total area under horticulture crop cultivation is about 76986 hectares for the year 2010 – 11. The State Government has undertaken a programme to promote horticulture development through establishments of nurseries and granting of capital subsidy to marginal and small farmers and Scheduled Castes and Scheduled tribes. The subsidy is also provided for drip and sprinkler system on priority basis. The people have direct access to markets of Mumbai, Pune, Kolkata and other cities. However, in order to tap the export potentials a chain of cold storage and pre-cooling facilities needs to be developed locally. The fruit processing industry needs to be promoted on cluster basis. Area under cultivation and production of major fruit crops for the district is indicated in the following table:

136 | P a g e

TABLE NO. 2.17 AREA UNDER CULTIVATION AND PRODUCTION OF FRUIT CROPS Sr. No Name of the Crop 2010 – 2011 Area (Hect.) Production(Tons) 1 Mango 14133 35243 2 Chikku 10751 49963 3 Pomegranate 9248 30644 4 Mosambi 3257 34126 5 Ber 3299 10073 6 Guava 5325 147217 7 Lime 13141 172836 8 Tamarind 4060 14517 9 Orange 1041 6457 10 Custard Apple 4985 13914 11 Banana 1944 30457 12 Grapes 2259 30553 13 Papaya 737 25057 14 Coconut 1083 2442

Resoure-based Talukas: • Mango – Jamkhed, Parner, Ahmednagar and Akole • Chikku and Tamrind – Ahmednagar • Lime – Shrigonda • Ber – Shrirampur and Jamkhed • Pomegranate – Sangamner

LIVE STOCK RESOURCES: As per the 2003 live stock census the number of live stock in the district are indicated in the following table:

137 | P a g e

TABLE NO. 2.18 NO. OF LIVE STOCK Sl. No Name of the Live-stock Numbers 1 Cow & Ox 1314938 2 Buffalo 198988 3 Goat 1055767 4 Sheep 394994 5 Poultry Birds 2139029 6 Horse 5253 7 Others 29738

There are 8 authorized slaughter house in Ahmednagar district. During the year 2008 – 09 about 22632 animals had been slaughtered. Ahmednagar taluka accounts for the maximum i.e. 39.38% of the total animals slaughtered. Hides, skins and bones available were utilized locally. A sizeable number of micro and small leather goods manufacturing units exists in Ahmednagar district.

DAIRY AND POULTRY DEVELOPMENT: In Ahmednagar district dairy business is taken as main activity by many of the small farmers as the money produced through milk is being circulated immediately. After agriculture, the dairy is the second largest economic activity in the district having strong co-operative base with private competition. The daily milk collection is about 7.08 lakh liters and financial turnover is more tha Rs. 100 lakhs. There is scope for setting up of dairy based industries in Ahmednagar district. There are 2822 Milk Development Co-operative Societies with a total membership of 143922. There are 20 Chilling centers with a capacity of 720000 liters. The average consumption of milk per day is 400000 ltrs. Since the average consumption of milk is very less in Ahmednagar district, the milk is being transported to other cities. The surplus

138 | P a g e quantity of milk can easily be utilized for producing milk based products. The availability of green fodder is not adequate. Efforts should be made to increase it. There are very big weekly cattle markets at Walki, Loni and Ghodegaon in addition to many local markets. However, availability of quality animals is a serious problem which needs special attention. Similarly, there exists good scope for Poultry farming. As per the 2003 Census, the population of the poultry birds was 2139029 in Ahmednagar district. The production of poultry eggs is more than 15 lakhs per year. There is no hatchery in the district. The district has to depend upon Aurangabad, Nashik and Pune for supply of one day old chicks. There is thus a need to establish hatchery unit in the district itself either in private or public sector. Promotion of this sector will automatically give rise to poultry feed making units.

FISHERIES: Different types of fishes like Katla, Rohu, Mrigal, Cyprinus, Silver crap, Grass crap, Barbus Ticto etc. are available in Ahmednagar district. An area of about 10261 hectares is covered by Major Irrigation Project as well as other small and medium tanks. In the year 2010 – 11 the annual fish catch was 2225 ton. The production shows a slight increase of 1.5% over the previous year. Quantity of fish netted out from the Waterspread of Jaikwadi, Ujni and Ghod reservoirs on the border of Shevgaon, Karjat and Shrigonda talukas respectively contributes major part of the fish catch in the district. As such the talukas like Karjat, Shrigonda, Jamkhed, Rahuri and Pathardi are said to be rich in resources. Nowadays, technical staff is provided by the District Fisheries Department in order to increase the fish production. Fish Farmers Development Agency has also been established by the

139 | P a g e

Government. There are 76 Fishermen’s Co-operative Societies in Ahmednagar district. Whatever fish catch is done in the district is sold locally and also there is no assured daily supply of fresh fish. Efforts should be made to increase the fish production.

FOREST: The total area under the forest is 132 thousand hectares which is 9.85% of the total geographical area of the district. Akole taluka have the maximum forest areas in the district. The forest produce includes Hirda, Custard apple, fuel wood, grass, gum and tendu leaves. Revenue earned from forest produces is as follows:

TABLE NO. 2.19 REVENUE EARNED Sl.No. Product Value (Rs.) 1 Fuel Wood 37000 2 Sale of Plants 200000 3 Others 1997000 Total 2234000

The National Waste Land Development board and Social Forestry Department provides full technical and financial support for development of community and private waste land. The department of Forestry takes care of the forest land development and its maintenance. Places like Bhandardara Dam in Akole taluka, Chand Bibi’s Mahal in Ahmednagar Taluka, Rehekuri Blackbuck sanctuary in Karjat taluka and Kalsubai Harishchandragad Sanctuarary in Akole taluka can be developed as tourist place. There is a need to increase the forest area in the district.

140 | P a g e

MINERALS: Minerals of economic value are not found in the district. Mud used for making bricks, sand and metal stone used for construction purpose are the only important minerals found in Ahmednagar district.

SERICULTURE: Resim industry has been started since 1989. Upto February 1993 programme was implemented by KVIB In the year 2010 – 11, 357 Acres of land is brought under Resim cultivation in Ahmednagar district. Resim cultivation is successfully developed in almost all the talukas of the district. The sericulture in the district is mulberry based. As Sericulture Department itself is purchasing cocoons, there is no problem of marketing. The Sericulture Department is providing the following facilities for making sericulture more popular in the district. (a) It provides tuti seeds at subsidized rates to the farmers. (b) It gives free cocoons to the farmers for the first two years. (c) It conducts a training course for farmers. (d) The board purchases products of resim at fair prices. Sericulture actually is being encouraged in the district and it offers great potential to prospective entrepreneurs. The sericulture Dept. had supplied 1,63,495 nos. of seeds and the total production of cocoons is round 78830 kgs. during 2010 – 11.

MANPOWER: Ahmednagar District Population 2011

In 2011, Ahmednagar had population of 4,543,083 of which male and female were 2,348,802 and 2,194,281 respectively. In 2001 census, Ahmednagar had a population of 4,040,642 of which males were 2,083,053 and remaining 1,957,589 were females. Ahmednagar

141 | P a g e

District population constituted 4.04 percent of total Maharashtra population. In 2001 census, this figure for Ahmednagar District was at 4.17 percent of Maharashtra population.

Ahmednagar District Population Growth Rate

There was change of 12.43 percent in the population compared to population as per 2001. In the previous census of India 2001, Ahmednagar District recorded increase of 19.80 percent to its population compared to 1991.

Ahmednagar District Density 2011

The initial provisional data released by census India 2011, shows that density of Ahmednagar district for 2011 is 266 people per sq. km. In 2001, Ahmednagar district density was at 237 people per sq. km. Ahmednagar district administers 17,048 square kilometers of areas.

Ahmednagar Literacy Rate 2011

Average literacy rate of Ahmednagar in 2011 were 80.22 compared to 75.30 of 2001. If things are looked out at gender wise, male and female literacy were 88.81 and 71.15 respectively. For 2001 census, same figures stood at 85.70 and 64.35 in Ahmednagar District. Total literate in Ahmednagar District were 3,213,330 of which male and female were 1,826,412 and 1,386,918 respectively. In 2001, Ahmednagar District had 2,598,597 in its district.

Ahmednagar Sex Ratio 2011 With regards to Sex Ratio in Ahmadnagar, it stood at 934 per 1000 male compared to 2001 census figure of 940. The average national sex ratio in India is 940 as per latest reports of Census 2011 Directorate. In 2011 census, child sex ratio is 839 girls per 1000 boys compared to figure of 884 girls per 1000 boys of 2001 census data.

142 | P a g e

Ahmednagar Child Population 2011 In census enumeration, data regarding child under 0-6 age were also collected for all districts including Ahmadnagar. There were total 537,346 children under age of 0-6 against 589,706 of 2001 census. Of total 537,346 male and female were 292,242 and 245,104 respectively. Child Sex Ratio as per census 2011 was 839 compared to 884 of census 2001. In 2011, Children under 0-6 formed 11.83 percent of Ahmednagar District compared to 14.59 percent of 2001. There was net change of -2.76 percent in this compared to previous census of India. TABLE NO. 2.20. POPULATION OF AHMEDNAGAR DISTRICT Description 2011 2001 Actual Population 4,543,083 4,040,642 Male 2,348,802 2,083,053 Female 2,194,281 1,957,589 Population Growth 12.43% 19.80% Area Sq. Km 17,048 17,048 Density/km2 266 237 Proportion to Maharashtra Population 4.04% 4.17% Sex Ratio (Per 1000) 934 940 Child Sex Ratio (0-6 Age) 839 884 Average Literacy 80.22 75.30 Male Literacy 88.81 85.70 Female Literacy 71.15 64.35 Total Child Population (0-6 Age) 537,346 589,706 Male Population (0-6 Age) 292,242 312,953 Female Population (0-6 Age) 245,104 276,753 Literates 3,213,330 2,598,597 Male Literates 1,826,412 1,517,029 Female Literates 1,386,918 1,081,568

143 | P a g e

Child Proportion (0-6 Age) 11.83% 14.59% Boys Proportion (0-6 Age) 12.44% 15.02% Girls Proportion (0-6 Age) 11.17% 14.14% (Source : Census 2011) Chart No. 2.1 Population of Ahmednagar district

TABLE NO. 2.21. RURAL & URBAN POPULATION OF

AHMEDNAGAR DISTRICT Description Rural Urban Population (%) 79.90 % 20.10 % Total Population 3,630,012 913,071 Male Population 1,877,105 471,697 Female Population 1,752,907 441,374 Sex Ratio 934 936 Child Sex Ratio (0-6) 837 848 Child Population (0-6) 435,862 101,484 Male Child(0-6) 237,327 54,915 Female Child(0-6) 198,535 46,569 Child Percentage (0-6) 12.01 % 11.11 % Male Child Percentage 12.64 % 11.64 % Female Child Percentage 11.33 % 10.55 %

144 | P a g e

Literates 2,492,690 720,640 Male Literates 1,435,315 391,097 Female Literates 1,057,375 329,543 Average Literacy 78.04 % 88.79 % Male Literacy 87.53 % 93.84 % Female Literacy 68.03 % 83.47 % (Source : Census 2011) Ahmednagar District Urban Population 2011 Out of the total Ahmednagar population for 2011 census, 20.10 percent lives in urban regions of district. In total 913,071 people lives in urban areas of which males are 471,697 and females are 441,374. Sex Ratio in urban region of Ahmednagar district is 936 as per 2011 census data. Similarly child sex ratio in Ahmednagar district was 848 in 2011 census. Child population (0-6) in urban region was 101,484 of which males and females were 54,915 and 46,569. This child population figure of Ahmednagar district is 11.64 % of total urban population. Average literacy rate in Ahmednagar district as per census 2011 is 88.79 % of which males and females are 93.84 % and 83.47 % literates respectively. In actual number 720,640 people are literate in urban region of which males and females are 391,097 and 329,543 respectively.

Ahmednagar District Rural Population 2011 As per 2011 census, 79.90 % population of Ahmednagar districts lives in rural areas of villages. The total Ahmednagar district population living in rural areas is 3,630,012 of which males and females are 1,877,105 and 1,752,907 respectively. In rural areas of Ahmednagar district, sex ratio is 934 females per 1000 males. If child sex ratio data of Ahmednagar district is considered, figure is 837 girls per 1000 boys. Child population in the age 0-6 is 435,862 in rural areas of which

145 | P a g e males were 237,327 and females were 198,535. The child population comprises 12.64 % of total rural population of Ahmednagar district. Literacy rate in rural areas of Ahmednagar district is 78.04 % as per census data 2011. Gender wise, male and female literacy stood at 87.53 and 68.03 percent respectively. In total, 2,492,690 people were literate of which males and females were 1,435,315 and 1,057,375 respectively.

All details regarding Ahmednagar District have been processed by us after receiving from Govt. of India. We are not responsible for errors to population census details of Ahmednagar District.

INDUSTRIES-

Small Scale Industries- Separating gains of rice from husk by pounding, and gathering medicinal plants are the small scale industries in Akole tahsil. Weaving cloth on handlooms and powerlooms goes on at Ahmednagar, Pathardi, Sangamner and Kharda. Weaving rough blankets of sheep wool is the small scale industry in Sangamner, Karjat and Pathardi tahsils. Making ropes from agave and ambadi is carried on in Shrigonda tehsil. Bidi rolling is carried on in Ahmednagar, Akola and Sangamner tahsils. Kopargaon, Rahata, Ahmednagar and Rahuri are markets for selling jaggery. Jaggery is made in the neighboring areas of these places. There are oil mills at Shrirampur, Sangamner, Ahmednagar and Vambori.

Large Scale Industries- Milk chilling plants are located at Ahmednagar, Karjat, Kopergaon, Babhaleshwar and Sangamner etc. there is a factory producing „Ayurvedic‟ medicines at Ahmednagar are manufacturing mopeds and T.V. sets. Pharmaceutical factories are located at Kopergaon and Kanhegaon. Industries making engines and

146 | P a g e pump-sets are located at Shrirampur. There are spinning mills at Shrirampur, Haregaon and Rahuri. Ginning and pressing industries are also found at Sangamner, Ahmednagar, Pathardi and Shevgaon.

Sugar Industries- Ahmednagar district is called „Sugar Bowl‟ of Maharashtra. At present 17 co-operative sugar factories are operating with full capacity. Sugar industries are located at Agastinagar, Sangamner, Kolpewadi, Takli, Rahata, Pravaranagar, Karegaon, Rahuri, Bhende, Sonai, Pathardi, Shrigonda, Shevgaon, Bodhegaon, Rashin etc. papermills making paper from sugarcane bagasse are at Sangamner, Rahuri, Kopergaon and Pravaranagar.

TABLE NO. 2.22 SUGAR FACTORIES IN AHMEDNAGAR DISTRICT

Sr. Taluka Name of the Factory Permanent Seasonal Sugar No. Workers Workers Production Metric Tons 01. Akole Agasti Co-op. Sugar 340 512 52249 Factory Ltd. Akole. 02. Sangamner Sangamner Co-op. Sugar 503 424 113898 Factory Ltd. Amrutnagar. 03. Kopergaon Kopergaon Co-op. Sugar 500 542 79432 Factory Ltd. Kolpewadi. 04. Rahata Ganeshnagar Co-op. 373 455 42587 Sugar Factory Ltd. Ganeshnagar. 05. Kopergaon Sangiwani Co-op. Sugar 568 165 80813 Factory Ltd. Sahajanandnagar. 06. Rahata Padmshri Vikhe Co-op. 573 693 120950

147 | P a g e

Sugar Factory Ltd. Pravaranagar. 07. Shrirampur Ashok Co-op. Sugar 281 554 63552 Factory Ltd. Ashoknagar. 08. Newasa Dnyneshwar Co-op. Sugar 631 613 112525 Factory Ltd. Bende Bdk. 09. Newasa Mula Co-op. Sugar 484 509 104070 Factory Ltd. Sonai. 10. Shevgaon Kedareshwar Co-op. 123 620 35620 Sugar Factory Ltd. Bodhegaon. 11. Patherdi Vrudheshwar Co-op. 233 318 55744 Sugar Factory Ltd. Adinathnagar. 12. Nagar Nagar Taluka Co-op. 101 318 38675 Sugar Factory Ltd. Walaki. 13. Rahuri Dr.B.B.Tanpure Co-op. 543 162 78567 Sugar Factory Ltd. Shivajinagar. 14. Parner Parner Co-op. Sugar 250 270 35285 Factory Ltd. Devibhoyare. 15. Shrigonda Shrigonda Co-op. Sugar 320 422 90769 Factory Ltd. Shrigonda. 16. Shrigonda Kukadi Co-op. Sugar 166 392 77045 Factory Ltd. Pimpalgaon Pisa. 17. Karjat Jagdamba Co-op. Sugar 219 270 27667 Factory Ltd. Rashin. Total District 6278 7304 1246723 Source- Regional Asst. Director (Sugar), Ahmednagar.

148 | P a g e

EXISTING INDUSTRIAL STRUCTURES AND FACILITIES The lack of infrastructural facilities, inadequate local markets, skilled labourers, immobility of local persons and lack of entrepreneurial talents/environment, are the major constraints for the rapid industrialization of the district. As we know the agriculture is facing the problem of disguised unemployment and it is, therefore, necessary to divert the under employed force to some other productive activities. At present only 2.52% of the total working force is engaged in manufacturing, processing, service and home industries. At present, Industrial Estates in Ahmednagar, Shrirampur, Supa-Parner and Rahuri talukas are functioning. Nawasa has been declared as the growth center. Additional Supa-Parner Industrial area has been proposed in the district.

INDUSTRIAL ESTATES/AREAS: The details of M.I.D.C. area and co-operative industrial estates functioning in Ahmednagar district are as follows:

TABLE NO. 2.23 DETAILS OF M.I.D.C. INDUSTRIAL AREA Sr.No Name & Total No. of No. of No. of Location of the area (In plots plots units Industrial Hect.) covered allotted functioning Estate 1 Ahmednagar 591.02 1468 1468 1028 2 Shrirampur 339.40 341 289 125 3 Supa-Parner 329.84 513 487 72 4 Rahuri 10.00 56 36 17 5 Newasa 254.10 161 58 0 (Source: MSME DI Mumbai, industrial Potential Survey A’Nagar 2011)

149 | P a g e

TABLE NO. 2.24 DETAILS OF CO-OP. INDUSTRIAL AREA Sr.No. Name & Total No. of No. of No. of Location of the area (In plots plots units Industrial Hect.) covered allotted functioning Estate 1 Ahmednagar 51.05 175 175 85 2 Kopargaon 109.29 249 154 77 3 Shrirampur 23.24 89 89 59 4 Sangamner 28.17 77 77 45 (Source: MSME DI Mumbai, industrial Potential Survey A’Nagar 2011) LARGE AND MEDIUM SCALE ENTERPRISES:

There are 59 large scale industries in Ahmednagar district, out of which 16 are sugar factories. The total investment in plant and machinery of these large scale units is about Rs. 6115.11 crores. About 21861 employees have been employed in these large scale units. These large sale units mostly comprises of agro-based, chemical based and Engg. based units. Large scale units like Kinetic Engg., Drillco, Kirloskar Oil Engines, Crompton Greaves, Larsen & Turbo, Ahmednagar Forging, Indian Seamless Metal Tubes etc. are functioning in the district.

Ahmednagar is the largest sugar producing district of Maharashtra State. There are 15 Co-operative and one private sugar factory. All these 16 sugar factories have crushed

45.26 lacs M.Ton of Sugarcane and produced 4.93 lacs M.Ton of Sugar. The investment in Plant & Machinery of all the sugar factories comes to about Rs. 186.1 crores. It provides employment to about 6506 workers.

150 | P a g e

PERFORMANCE OF MSME SECTOR: As at the end of May 2011, there are 5220 Micro, Small And Medium Enterprises existing in Ahmednagar district. Majority of the units are agro based, metal based, plastic, chemical, electronics, electrical based etc. Amongst the agro based units oil mills, dal mills and cotton ginning and pressing occupy the prime position. The number of Micro, Small And Medium Enterprises appears to be quite small, since the filling of Entrepreneurs Memorandum as per the MSME Development Act 2006 is not compulsory. There are quite a large number of units, which have not converted their SSI registration certificate into Entrepreneur Memorandum (Part – II). The No. of MSME, Employment, Investment in plant and machinery and installed capacity since inception pertaining to MSMEs for the last 3 years is as follows:

TABLE NO. 2.25DETAILS OF MSMEs HAVING EM (PART – II)

Investment Installed No. of MSMEs Employment Year in P & M Capacity (Lakh (Cumulative) (In Nos.) (Lakh Rs.) Rs.) 2008–09 4589 31064 34765 145955 2009–10 4877 33836 39102 159325 2010–11 5193 38524 44817 186988 (Source: MSME DI Mumbai, industrial Potential Survey A’Nagar 2011)

EMPLOYMENT SCENARIO: Employment Scenario for the past 3 years in Ahmednagar district is indicated in the following table:

151 | P a g e

TABLE NO. 2.26EMPLOYMENT IN MSME SECTOR Year No. of Employment Employment MSMEs (in Nos.) per enterprise 2008 – 09 4589 31064 6.7 2009 – 10 4877 33836 6.9 2010 – 11 5193 38524 7.4 (Source: MSME DI Mumbai, industrial Potential Survey A’Nagar 2011)

The above table indicates the No. of employment generated by MSME sector. It is clear from the above table that the employment per unit is increasing year by year which means that the units which are coming are mostly labour intensive units.

INVESTMENT SCENARIO: The Investment in plant and machinery pertaining to MSME sector for the last 3 years are indicated in the following table:

TABLE NO. 2.27 INVESTMENT IN PLANT & MACHINERY IN MSME SECTOR Year No. of Investment in P & M Investment in P & M MSMEs (in lakhs Rs.) per enterprise 2008 – 09 4589 34765 7.57 2009 – 10 4877 39102 8.01 2010 – 11 5193 44817 8.63 (Source: MSME DI Mumbai, industrial Potential Survey A’Nagar 2011)

The above table clearly shows that the investment in plant and machinery per enterprise is increasing year by year.

VILLAGE INDUSTRIES: The development of Cottage and Village industries are being looked after by Khadi & Village Industries Commission. There are about 2804 cottage and village industries existing in Ahmednagar district. Most of

152 | P a g e these units are mineral based, agro based, chemical based, rural engineering, forest based etc. Category-wise the number of cottage and village industries in Ahmednagar district are as follows:

TABLE NO. 2.28 COTTAGE AND VILLAGE INDUSTRIES – CATEGORY-WISE Sl. Group of Village Normal C.B.F. R.E.G.P P.M.E.G.P. No. Industries 1 Mineral BasedIndustry 286 54 35 44 2 Forest Based Industry 226 12 5 0 3 Agro Based & Food 361 77 46 64 4 Polymer & Chemical Based 300 50 45 18 industry 5 Handmade Paper &Fiber 14 10 13 27 Industry 6 Rural Engineering 351 104 32 50 7 Bio-Technology 12 0 0 0 8 Service Industry 240 72 123 133 Total 1790 379 299 336 (Source: MSME DI Mumbai, industrial Potential Survey A’Nagar 2011)

EDUCATION AND TRAINING FACILITIES:

In Ahmednagar district there are 3443 Primary Schools and 1021 Secondary and Higher

Secondary Schools. There are 41 Degree Colleges in Arts, Science and Commerce, one Law College, 45 B.Ed Colleges, 9 Engineering Colleges, 2 Medical colleges, 3 Ayrvedic colleges, 13 Industrial Training Institutes and 5 Pharmacy colleges. Colleges are affiliated to Pune University. The literacy rate of the district is 75.30% (Male – 85.70% and Female – 64.35%) and that of the state is 76.90%. Besides these,

153 | P a g e

DIC, MCED and various other Industrial Development Organisations are conducting numerous training programmes, thereby developing the entrepreneur-ship quality. MCED are conducting the following training courses: • Developmental programme for Self-employment • General Entrepreneurship Development Programme. • Prime Minister Employment Generation Programme • Vocational Training Programmes • Entrepreneurship Awareness Campaigns • Entrepreneurship Awareness Programme

SWOT Analysis of the District Based on prevailing agro-ecological situations, socio-economic status, livestock and other related factors about agriculture and allied enterprises, researcher made SWOT analysis of Ahmednagar district. The SWOT tool indicates the Strength, Weaknesses, Opportunities and Threats.

Strengths  Highest geographical area of 17.00-lakh hectare  Fertile soils with different types of soil  Well irrigation facility (30 per cent) of the total cultivable area  Multiple cropping systems  Higher educational and literacy level (more than 60 per cent)  Hand working farming community  High aspiration towards adoption of new technologies  Well-developed co-operative sector  Well-established communication system  High cosmopolite nature of the farming community  Well leadership in agriculture  High potential for agro and agro based enterprise

154 | P a g e

Weaknesses  Maximum parts of district comes under drought prone area  Un-assured irrigation in canal command area  Uneven distribution of rainfall  Fragmented land holding  Increase in area under saline alkaline soils.  High cost of production  Increasing rate of degradation in natural resources  Uncertainty in crop production due to different natural calamities  More gender divide in social set up resulting in poor participation of women  Less skill of entrepreneurship among rural youths related to agricultural and allied enterprises  High pressure of traditional folkways and norms among the farmwomen  Less knowledge about post harvest handling of agriculture produce  Low yield and productivity of crops and livestock  Unorganized farming community

Opportunities  Ample scope for utilization of raw material to promote agro based industries in rural youth  Formulation of enterprise and commoditiwise groups  Establishment of credit mobilization based on SHG  Diversification in agriculture and other enterprises  Market driven extension to improve yield and quality of various commodities based on customer needs

155 | P a g e

 Farmers driven research and extension through groups  Use of information technology  Communication for environment friendly technologies and concepts  Enhance application of user-friendly biotechnological options

Threats

Small land holding sometimes affects the adoption of technologies Natural calamities, fluctuating price policies, hike in inputs costs influence in adoption of technologies Local political environment may affect the people’s participation in development process Attitudinal behaviour may influence on continuation of technologie

156 | P a g e