Chapter - 2 Industrial Development Of Contents 2.1 Early Beginning

2.1.1 Emergence of Railways

2.1.2 Cotton Textile Industry

2.1.3 Generation of Hydro Power

2.1.4 Sugar Industry

2.1.5 Gur Industry

2.1.6 Engineering Industry

2.1.7 Glass Industry

2.1.8 Pharmaceutical Industry

2.1.9 Mining Industry

2.1.10 Other Industries

2.2 Second World War

2.3 After Independence

2.4 After formation of Maharashtra

2.5 Growth of Small Scale Industries

2.6 Spatial Distribution

2.7 Qualitative Change In The Industries

2.8 Co-operative Sector

2.9 Public Sector Undertakings In Maharashtra

2.10 Important role played by Government

2.10.1 Industrial Estates

18 2.10.2 Finance for Industry

2.10.3 Efforts to decentralize Industries

2.10.4 Adequate Supply Of Power

2.10.5 Labour Legislation

2.11 New Class of Industrialist

2.12 Local Entrepreneurship

2.13 Industrial Location Policy

2.14 Infrastructure Facilities

2.15 Industries In Maharashtra (Recent Development) 1991 onwards

2.16 Industrial Scenario of Maharashtra

2.16.1 Industrial Policy

2.16.2 State Government’s Industrial Policy

2.16.3 Developments in organized sector:

2.16.4 Package Scheme of Incentives

2.16.5 Assistance to industries

2.17 Industrial Development in 2000

2.18 Electronics Industry

2.18.1 Introduction

2.18.2 Meaning and Definition

2.18.3 Importance

2.19 Development of Electronics Industry In Maharashtra

2.19.1 Historical Perspective

W 2.20 Electronics Industry In 90’s

2.21 Post 1990’s Development Of Electronics

2.22 Electronics Production By States

2.23 Profile of Electronics Production

2.24 Conclusion

20 Chapter 2

Industrial Development Of Maharashtra

2.1 Early Beginning

In the early nineteenth century, main industries in Maharashtra, like all

places in the country, were confined to Indian courts, places of pilgrimage &

centers of international trade. These industries were essentially in the nature of

handicrafts producing fine textiles & other luxury products for the aristocracy.

Some of these industries had also reached high water marks of excellence & enjoyed an all India reputation. Thus and Umrer were the centers of

hand woven Silk bordered cloth, which was praised all over India for its artistic skill & refined finish. Belgaum, Pune and Irkal were famous for their silk fabrics and Yeola for the . Paithani had become the craze of every aristocratic woman. The brass metalware of Pune, Nashik and Sangli and the Bidriware of

Aurangabad had a great demand all over Maharashtra.

The main feature of these industries was that they were catering to local demand & because of limited transport & communication facilities they had a very small local market, which affected their growth and expansion.

Apart from such organized industries in a few centres, every village not only grew most of its food, but also provided from its own resources satisfaction of wants of local population. Its cloth and often the raw material for it, its sugar, its dyes, its oil for cooking or lighting, its household vessels, and agricultural implements were manufactured or produced either by the cultivator himself or by the villager craftsmen who were members of the village community. 2.1.1 Emergence of Railways

Eighteen - fifties were a decade of great public works activity throughout

India. The first railway in India was opened in 1853 between Bombay & Thana, a distance of twenty-one miles. By the middle of sixties the railway lines were extended towards the cotton growing areas of and Gujrath.

Railway operations forced establishment of railway workshops and expansion of foundry facilities for maintenance & repair works. These workshops and foundries provided necessary training & experience to many Indian technicians and this resulted in opening of many engineering works in Maharashtra.

The improved transport facilities by railway greatly helped to develop export trade of raw cotton through the port of Bombay. This trade in turn gave rise to a number of cotton presses meant for bailey cotton. Some of these presses were large and employed more than 1000 workers.

2.1.2 Cotton Textile Industry

The first textile mill was established in 1854 at Tardeo (Bombay) named

Bombay spinning mill. Other enterprising merchants followed up this successful venture.

Early Eighteen sixties were much favourable to the cotton trade in

Bombay. Outbreak of the American civil war in April 1861 stopped cotton export from South America and textile industries in Europe had to depend on Indian cotton. During the period between 1861 and 1865, every year, about one million bales of cotton were exported from Bombay. During this period a number of textile mills were established in Bombay and elsewhere. At first Bombay was marked out as the most favourite centre but soon it spread to other places as well. Cotton textile mills were erected at A/agpur in 1887 by

22 the late Mr. J. N. Tata and at Solapur in 1877 by the late Morarji

Gokuldas. Nagpur and Solapur were particularly selected as the new centers of cotton mills because they commanded the cotton zones of Berar and Karnataka respectively.

The British Government was slowly changing its attitude of indifference and discouragement to Indian industries. Outbreak of the World War I in 1914 brought home the inherent weakness of Indian economy. An industrial commission was appointed in 1916 to chalk out the lines of industrial development in the country and it was followed by appointment of Fiscal

Commission in 1922, which recommended a policy of discriminating protection.

This policy was accepted by then Government and it helped the establishment and growth of industries in the country and particularly in port cities like

Bombay. The stoppage of imports during the First World War and the Swadeshi movement also helped the growth local industries.

Though the industry was started in Bombay with the spread of railways, this industry spread very soon to mofussil areas. The industry spread to many cotton growing areas such as Solapur, Nagpur, Khandesh, Wardha, Barshi,

Amraoti etc. The princely status of Sangli and Miraj were also able to attract two textile mills within their jurisdiction.

Apart from the textile mills power-looms were established in large numbers in centers like Ichalkaranji, Bhiwandl, Malegaon & Sangli, areas continued to have large concentrate of handlooms. The location of cotton textile industry in the interior areas of the state was determined by the availability of labour, raw material & the existence of a reliable market in nearly areas. a 2.1.3 Generation of Hydro Power

Another significant factor, which contributed to the industrial development of Bombay, is the generation of Hydro-Power by Tata Hydro-Electric Supply

Company Ltd. Dams were constructed at Mulshi and Lonavala and the power was switched on from this power station on 1 1 February 1915. The availability of power helped further development of industries in Bombay.

During the inter war period considerable industrial development had taken place in Maharashtra. Among important - industries were textiles, sugar, paper, glass, engineering, chemicals, minerals & metals etc.

2.1.4 Sugar Industry

The first sugar factory in Maharashtra was established in Belapur in

Ahmednagar District in the year 1918 & for years together was the only factory in this region manufacturing sugar directly from sugar cane. From 1933 to 1940 around 12 sugar factories were set up in Maharashtra at different places like

Phaltan, Walchandnagar, Shrirampur, Kopargaon, Belvandi, Ravalgaon,

Kolhapur, Akiuj etc. More than one crore of rupees were invest in these factories.

2.1.5 Gur Industry

Gur Industry is one of the ancient industries of Maharashtra. Prior to the establishment of the Sugar factories the cultivation of Sugar Cane in the

Deccan Canals area was entirely done for this industry. This is a decentralized industry and was mainly concentrated in Pune, Baramati, Kopargaon, Belapur &

Kolhapur areas. During factories M/s. Chitale Bros, made an attempt to organize production of gur by promoting public Limited Company. 2.1.6 Engineering Industry

In 1934 there were about 37 engineering factories in Maharashtra employing about 6000 workers on an average. Majoring of them were railway workshops engaged in all sorts of repairs in connection with railway wagons & machinery. The Satara Industries works & Kirloskar Brothers Ltd. were the two large concerns in engineering industry. The above two companies did quite a good deal of pioneering work in manufacturing a agricultural implements like iron ploughs, sugar cane crushers, nut crackers and other sundry things like cots, shelves, chairs and a variety of agricultural implements. Some of the engineering factories like G.G. Dandekar Machine Works at Bhiwandi were also manufacturing rice hulling plants, floor mills, weaving machinery and similar kinds of machinery on a smaller scale. They had also exported to some countries in Africa, Iran and Burma some of their machines.

2.1.7 Glass Industry

In forties, there were in all five-glass factories, they had a total investment of Rs.10 lakhs and provided employment for about 1000 workers. The Paisa

Fund Glass Works promoted by Lokmanya Tilak provided training ground to many ambitious young entrepreneurs, who subsequently started independent factories.

Ogale Glass works Ogalewadi; Onama Glass Works at Gondia, Vijay

Glass Works at Bombay and Paisa Glass Works at Talegaon were some of the important glass factories established in Maharashtra during this time.

2.1.8 Pharmaceutical Industry

Dhootpapeshwar Industries in Panvel was started in 1872 and Sandu

Brothers started another Pharmaceutical unit in 1899. As a result of their 25 success till 1925 quite a few pharmaceutical companies were started in

Maharashtra. Among them could be mentioned Ayurveda Resashala at Pune,

Ayurvediya Arkashala at Satana, Ayurvedashram pharmacy at Ahmednagar,

Maharashtra Chemicals, Magora Chemicals, Chemoforma Laboratories, Zandu

Pharmaceuticals, T. Walkers Laboratories etc.

2.1.9 Mining Industry

The mineral wealth of Maharashtra is largely concentrated in the Nagpur and partly in Ratnagiri area. In 1934 about 200 mines were working and manganese, coal, limestone and building. Stone were extracted from these mines. The manganese ore of the mines in Nagpur area is of the highest quality.

2.1.10 Other Industries

Apart from these industries, oil mills, paper mills, rice mills, metal processing factories, chemicals and colour making industries, Bidi factories, aluminum works, food industry, rubber industry, scientific instruments, manufacturing industry, packing industry, tanneries. Hydro-electric Companies, electricity generating companies, were some of the industries which were started by local entrepreneurs in Maharashtra during the inter war period and these industries were flourishing. The motion picture industry had its origin in

Maharashtra and during this period silent movies were replaced by talkies.

Kolhapur, Pune, and Bombay were the three centers where this industry was concentrated. A number of private studios were in operation in these centers.

Apart from large scale industries there were quite a few small scale industries in handloom weaving, brass and copper ware, sericulture, fishing.

26 canning, engineering, workshops and so on these industries were the

decentralized sector of the industry.

One point, which strikes the observer about these industries, is the concentration of industries in certain parts of Maharashtra and their total absence in others. Bombay had the highest number of industries both in the large scale as well as in the Small Scale Sector. The Bombay Deccan or the present Western Maharashtra came second and claimed location of majority of the industries in Maharashtra outside Bombay. The reasons may be because of the encouragement given by the Deccan States or because of the location of factories like Kirloskar or Coopers in this region. Even now this picture has not been changed.

2.2 Second World War

The Second World War gave a great Phillip to these industries. The imports were totally stopped and there was a sudden rise in wartime demand.

The Government also placed orders for variety goods in order to meet its wartime needs. Therefore, many of the industries expanded considerably during wartime and because of the sudden rise in prices and all-round shortages, most of them made huge profits. Many new units producing machine tools, diesel engines, electrical instruments and appliances were started in India for the first time. Quite a few entrepreneurs utilized the opportunity to organize themselves in order to meet these requirements and those who were really capable did expand their existing production base. The then British Govt., used

India as production base to meet its war time needs and though not most willingly had to introduce modern technology into the Indian Industry. Some of the Indian entrepreneurs quickly seized this opportunity and did introduce a new products and new technology in their existing production systems.

After the war, these industries faced with the problem of unutilized capacity. The imported goods again started coming in and the wartime inflationary demand had also disappeared. Therefore, the Government appointed an Interim tariff board to go through this question. This Board made inquiries of about 90 industries and recommended a few industries for giving protection.

2.3 After Independence

After independence, the Industrial Policy was announced in 1948 and efforts were made to attract foreign capital into the country. A moderate beginning towards industrialization was made in 1951. But the first Five Year

Plan gave emphasis on the agricultural development and therefore it did not give the impetus needed for the industrial development of the country. During this period in Maharashtra, no appreciable industrial development took place.

This state of affairs did not continue for a long time. During the years that followed, power projects including Koyna project were undertaken by the

Government and sufficient power was made available in the State. Two

Refineries were commissioned at Trombay in Bombay. Around this time the then Government of Bombay took a bold decision of encouraging setting up of

Cultivator’s Cooperative Sugar Factories in Maharashtra. This decision changed the face of rural Maharashtra. The first cooperative sugar factory was commissioned at Pravaranagar in in the year 1950 and with its success many more were established all over Maharashtra.

28 2.4 After formation of Maharashtra

After the formation of Maharashtra State in 1960, a real impetus was given to the all round industrial development of Maharashtra. For instance, in 1960, there were only 850 large-scale units in the state while in 1968 their number increased to 1963. In 1960 there were 4 sugar factories in the private sector and 14 in the co-operative sector. This number increased in 1969 to 11 sugar factories in private sector and 27 in co-operative sector. While the number of private sugar factories has not gone up, the number of small scale industrial units in the state was 4807 in 1960 and in 1969 the number of such units has increased to 1, 11, 786 in 1985. There was also a qualitative change in the industries during this period. The place of traditional industries like textiles, utensils making etc. has been taken over by industries which employ sophisticated technology such as electronics, petrochemicals, fertilizers, scientific instruments, machine tools, all types of machinery etc. Though the general tempo of industrialization in the country must have helped industries to grow in the state, credit must be given to the deliberate policies of encouragement perused by the State Government towards this end. Thus the information of various corporations such as Maharashtra Small Scale Industries,

Development Corporation, State Industries and Investment Corporation of

Maharashtra and the policies of granting incentives to attract industries in the interior of the State have helped in a great measure industrialization of the

State.

According to Annual Survey of Industries 1981-82 data covering the entire registered factory sector, carried out by the Govt, of India, Maharashtra continues to be in the leading position in industrial scene in India. The State accounted for nearly a sixth of productive capital as well as of employment and

nearly a fourth of gross value of output and of value added by manufacture by

the organized industrial sector in the country.

2.5 Growth of Small Scale Industries

During the period 1961 to 1985 there has been a phenomenal growth of

Small Scale Industries in Maharashtra. The total number of Small Scale

registered units was mere 4860 in 1961, the number grew to 21,838 in 1971

and in 1985 this number has grown to 1, 11,786.

Earlier in 1961 the small scale industrial units were mainly concentrated in

Greater Bombay - But during the last twenty -five years because of the

deliberate encouragement given by the State Government and other Financial

agencies industries are being set-up in all Parts of the state the promotional

effort of the state agencies has also helped many a new class of entrepreneurs

to come to set up industries. They are not from the traditional business

community. But are well-qualified technicians, engineers and have decided to

take up industry as their career. This contribution to the industrial development

of the state is quite significant.

2.6 Spatial Distribution

Though the state is foremost in industrialization most of the industrial activity is concentrated in the Bombay, Pune, Thane belt of western

Maharashtra. Because of historical reasons, Bombay had a distinct advantage over other regions and the regions nearby Bombay like Thane, Panvel, Pune got also advantage of the spill over activity of Bombay. Following table shows the picture of concentration of industries in 1962 and 1981 in Maharashtra.

30 Table 2.1

No. Of Industrial Workers in different regions of the State

No. Of No. Of workers workers Region % to total employed in % to total employed in 1984 1962 Greater 5,20,666 66.93 5,24,881 46.87 Bombay Western 1,36,167 17.51 3,11,722 27.85 Maharashtra Marathwada 14,801 1.90 44,549 3.9 Vidarbha 62,225 8.00 1,03,559 9.25 Konkan (including 44,000 5.66 1,34,973 12.05 Thane) Total 7,77,859 100.00 11,19,644 100.00 Maharashtra excluding 2,57,193 33.06 5,94,803 53.13 Bombay Source: Industrial Development of Maharashtra by MCCI, 1987 p. 14

In 1962 Greater Bombay accounted for 66.93% industrial workers in the state. Apart from Western Maharashtra, which accounted for 17.51% of the industrial workers employed in the state, other regions accounted for very negligible percentage of industrial workers. This speaks of high concentration of industries in Greater Bombay alone. But during the last forty years, as a result of deliberate policy of discouraging establishment of industries in Greater

Bombay and encouraging industries in other regions, Bombay’s share in

Factory Employment in the State has been reduced from 66.93% to 46.87%

Western Maharashtra accounts for 27.85% and Konkan 12.05%. Vidarbha and

Marathwada still enjoy less than 15% of industrial workers in the State. Pune and Thane Districts have risen from about 5% each to about 11% each. Thus one can say that the policy of dispersal of Industries by offering packages schemes of incentives has yielded results.

31 2.7 Qualitative Change In The Industries

Over a period of last two decades, the composition of the organized

industrial sector has undergone a considerable change. In 1961, the main

industrial production in Maharashtra was that of consumer goods, which accounted for 52 % of the value added by this sector. The cotton textile industry was an important industry in the state and it alone employed about 40% of the total industrial work force in the state. Now, this share has declined to 20% of the total industrial workers in the state. Over the years capital goods industries have gained prominence with 64 % of the value added in this sector accounted for by them. From ASI data, it appears that the chemical and chemical products, textiles, machinery, cloth, electrical and non-electrical, petroleum products, sugar, transport equipment and rubber products are the industry groups which contribute substantially to industrial production of the state.

Petrochemical industries and electronic industries have a bright future and

Government has plans to encourage them on a massive scale within the state.

2.8 Co-operative Sector

The co-operative sector plays a very significant role in the industrial development of the state. The co-operative movement in Maharashtra particularly the co-operative Sugar industry - is a matter of pride for the state.

The state was fortunate in having such visionaries like Prof. D.R. Gadgil, Vikhe

Patil and Vaikanthbhai Mehta who the laid foundation of co-operative Sugar

Industry in the state. The first Sugar Factory in the co-operative was started in

1950 and with its success many more were started. These sugar factories have served as growth centers for rural development and with their initiatives many economic activities such as dairies, distilleries, poultries, paper mills have been

32: started in their respective regions. Many of them have also opened educational institutions and technical colleges and have been able to change the face of rural areas within their jurisdiction.

Apart from sugar factories spinning mills, oil mills and dairies have been organized in the co-operative sector with a great success.

2.9 Public Sector Undertakings In Maharashtra

Among the important undertakings are Oil & Natural Gas Commission

(ONGC), Corporation, Corporation,

Hindustan Antibiotics, Hindustan Organic Chemicals, Rashtriya Chemicals and

Fertilizers, etc.

The Government of Maharashtra owns about 60 public sector undertakings. State Transport undertaking is one of the oldest nationalized public sector transport undertaking. The other public sector undertaking are promoted by various State level corporations such as Maharashtra Agro

Industries Development Corporation Ltd., Maharashtra State Textile

Corporation Ltd., MAFCO Ltd., MELTRON Ltd., Western Maharashtra

Development Corporation Ltd., Development Corporation of Konkan Ltd.,

Marathwada Development Corporation Ltd., Development Corporation of

Vidarbha Ltd., etc.

2.10 Important role played by the Government

Real impetus to industrialization was given after the formation of

Maharashtra State in 1960. The State Government formed a number of corporations to assist industries to give them financial assistance, provide them with developed land, to make them available machinery on hire purchase and supply required raw material etc.

33 The Maharashtra Industrial Development Corporation was established in

1962 in order to develop industrial areas in different parts of the State. MIDC

developed industrial areas and made available developed plots with roads,

power, water supply etc., to industries. It also constructed sheds and galas and

made them available to smaller units. MIDC has constructed sheds and

developed industrial areas in for off places like Chandrapur, Parbhani,

Buldhana, Ratnagiri and has been instrumental in attracting industries to these areas.

2.10.1 Industrial Estates

Number of industrial estates have been formed in various parts of the state. At present there are three types of industrial estates in the state,

1. Government Managed Industrial Estates

2. Estates Managed by Local Authorities

3. Estates Managed by Co-operative Societies

2.10.2 Finance for industry

Maharashtra State Financial Corporation was constituted on August

1962. The corporation caters to the needs of term loans of Small and Medium

Scale Industries for acquisition of fixed assets like land, building, plant and machinery. It has decentralized its activities and has an office in every district.

The State Industrial Investment Corporation of Maharashtra (SICOM) was set up in 1964 for inducing large and medium scale industries to go into the underdeveloped areas of the State by extending assistance in the form of equity participation supplementary long term finance and by providing package scheme of incentive like interest free sales tax, loans, sharing cost of projects, exemption from Sales Tax, octroi etc. It also operates as an agent for central 34 Investment subsidy scheme of Government of India and IDBI scheme for

provision of seed capital assistance.

Apart from these three corporations, the State Government has also

promoted Maharashtra Small Scale Industries Development Corporation for

providing raw materials and marketing assistance, Maharashtra State Financial

Corporation for providing financial assistance and separate corporations were

established to look after the development of agro industries, oil seeds, fisheries,

electronics, mining, handloom, power loom, textiles etc. In addition to these

State Level Corporations, four Regional Development Corporations have been

set up one each for Western Maharashtra, Vidarbha, Marathwada and Konkan.

2.10.3 Efforts to decentralize Industries

In order to attract industries outside Bombay and Pune Metropolitan

Regions in the interior of Maharashtra, the Government offered a scheme of

incentives called package scheme of incentives. As a result of these incentives

many new industrial centers emerged in Maharashtra like Nasik, Aurangabad,

Jalgaon, Satara, Akola, Ahmednagar and Nagpur. Industries are going in rural areas away from these main centers. This is a direct result of the deliberate policy pursued by the State Government to attract industries away from

Bombay, Thane, Pune belt.

2.10.4 Adequate Supply Of Power

In 1948 Bombay State Electricity Board was formed and Government took the responsibility of production and distribution of power supply on itself.

Immediately after the independence, there were about four important power projects in the State, like Tata Co. at Mulshi, Radhanagari Power Supply

Scheme and small power generating schemes in Vidarbha at Khaparkheda and 35 Ballarsha. Small cities in the State had their own power supply by private companies, which were generating and distributing power supply in respective cities. But after Independence, during the last two decades, the Government has undertaken and completed gigantic hydroelectric power projects like Koyna,

Khaparkheda, Ballarsha, Yeldari, Tarapur, and Koradi etc.

2.10.5 Labour Legislation

During the last 25 years the State Government has passed a number of

Acts and the factory worker has been protected to a considerable extent. After independence, there were only two Acts relating to labour, i.e. Factories Act and workers Compensation Act. After independence a number of Acts have been legislated. Thus Factories Act was recasted completely in 1948, other Acts legislated during this period were Bombay Shops and Establishments Act,

1948, Industrial Disputes Act, 1947, Bombay Industrial Relations Act, 1946,

Minimum Wages Act, 1948, Motor Transport Workers’ Act, 1961, Bidi Industrial

Labour Act, 1966, Unfair Labour Practices Act, 1970, etc. Apart from these

Acts a number of welfare schemes like E. S. I. C. were introduced and Workers’

Welfare Board was constituted which organized periodically drama and sports competition in the State. These activities have received good response from workers.

2.11 New Class of Industrialist

Important development during the last three decades is emergence of a new class of entrepreneurs. There are young graduates in physics, chemistry, engineering, chemical engineering, electronics and they are starting new small units in increasing numbers. This is a very hopeful sign. Now in a number of sophisticated industries like electronics, scientific instruments and apparatus, 36 medical instruments, chemical plants, plastic processing etc. a number of

talented and educated young persons has entered into industry. This is a new

area of challenge to talented and ambitious youth.

2.12 Local Entrepreneurship

One of the subjects, who have been debated for many decades in

Maharashtra, is about the very low percentage of Marathi speaking people in trade industry and business. Though there has been some change in recent years the picture continues to be dismal. Because of the historical reasons and

social cultural background of Marathi speaking people, the society has all along given importance to education, there is no tradition of business in most of the

Maharashtra families. As a result, we find very few Maharashtrian entrepreneurs in industries and far less in trading. In fact trading has been totally neglected by Maharashtrian and even in the small villages in

Maharashtra we do not even a local grocer of the local Marathi speaking community. All these reasons have no far kept away Marathi speaking people from entering into business.

But during the last two decades, probably because of the demonstration effect, may be because of the encouragement given by leading Maharashtrian

Industrial Houses like Kirloskars, or due to the State help many Maharashtrian entrepreneurs have come forward and have made a successful industrial career. The percentage of such local entrepreneurs is more in Pune and in the

Southern Maharashtra belt from Pune to Kolhapur. In other regions this percentage is very low. In Greater Bombay the proportion of local entrepreneurs is almost negligible.

Though there are deep-rooted historical and sociological reasons for this 37 lack of entrepreneurship, the state has expected to make some special effects

to break this barrier. But for obvious reasons and for the fear of being changed

with having a narrow and regional outlook, the state could not make any special

efforts for this purpose. Gujarat has made special efforts to promote local

entrepreneurship and has been running a successful entrepreneurship development programme for the last 30 years. In the same line various state level corporations do conduct short-term courses on EDP.

2.13 Industrial Location Policy

The industrial location policy of Government of Maharashtra had twin objectives. The first was to bring about certain industrial growth in the Bombay

Metropolitan Region. Promotion of industrial units outside the Bombay and

Pune metropolitan regions will follow in second phase.. The Bombay metropolitan region has been divided into four zones and all industrial units in these zones were required to obtain no objection certificate for setting up new units or for expansion / shifting of existing units. This and the policy of package scheme of incentives in order to attract industries in the interior of the State was announced on 26-12-1974 and has been revised from time to time. This has produced and desired result and from the number of registered factories and the number of SSI Units in different districts of Maharashtra, one can certainly say that there is a considerable shift away from Greater Bombay. But the available data on industries and experience indicates that the entrepreneurs have moved towards location in industrial areas and to location close to the existing agglomeration of industries. More over, Bombay being the center of industrial activity and since most the entrepreneurs happen to be from Bombay, they have always chosen locations near about Bombay and a place where they 38 can easily reach from Bombay. Therefore, areas near about Bombay such as

Thane, Panvel, Khopoli, Pune, Patalganga, Alibag have developed very quickly and places like Nasik and Aurangabad \A/here an entrepreneur can reach easily have developed.

2.14 Infrastructure Facilities

One reason why entrepreneurs are not prepared to move into the interior is the total lack of infrastructure facilities. More financial incentives or loans on concessional terms do not attract industries to backward areas. They need proper infrastructure facilities. The small towns are very poorly connected by road or by rail and there are absolutely no communication facilities worth the name. An entrepreneur is totally cut off from the world. Once he goes in such a distant place. Telephone and telex services are not available. Therefore, the tendency is to cling to the existing developed areas or be near about these areas.

The Maharashtra Industrial Development Corporation has so far done a commendable job in developing industrial areas in different parts of the state.

This has no doubt helped an orderly growth of industries in new areas.

The industrial policy initiatives undertaken by the Government since July

1991 have been designed to build on the past industrial achievements and to accelerate the process of making Indian Industry internationally competitive. It recognizes the strength and maturity of the industry and attempts to provide the competitive stimulus for higher growth. The thrust of these incentives has been to increase the domestic and external competition through extensive application of market mechanism and facilitating forgoing of dynamic relationships with foreign investors and suppliers of technology. 39 2.15 Industries In Maharashtra (Recent Development) 1991 onwards

The industrial sector occupies a prominent position in the economy of

Maharashtra and manufacturing is the major constituent of industrial sector. In the recent year 1996-97 manufacturing sector contributed 24.0 percent to total state Income while agriculture sector contributed 19.1%. As against this, at the

All-India level, the corresponding percentages were 18.6 and 26.3 respectively.

In respect of employment also, the manufacturing sector is important in

Maharashtra. According to 1991 population census 13.2 percent of the main workers in the state were engaged in manufacturing, processing, servicing and repair activity.

2.16 Industrial Scenario of Maharashtra

Out of the total 24 industry divisions, the eleven industry divisions, which contribute substantially to industrial production in the state, are I.Food Products

2.Beverages, Tobacco and related Products 3.Cotton textiles 4. Textile

Products 5.Paper, Paper Products and Printing, Publishing and allied industries

6.Rubber, Plastic, Petroleum and Coal Products (Printing, Publishing and allied industries), processing of nuclear fuels 7.Basic chemicals and chemical products 8.Metal Products and part 9.Machinery (Except Electrical Machinery)

10.Electrical machinery, apparatus and appliances 11.Transport equipment and parts contribute substantially to the industrial production in the state. These industry divisions accounted for 74.7 percent of net value added in the manufacturing sector in the State in 1995-96 and 65.1 percent at the All India

Level in 1994-95.

40 2.16.1 Industrial Policy

The main thrust of the Industrial Policy announced by the Government of

India in July 1991 is towards creating an atmosphere conducive to the

development Of entrepreneurship and technological progress as well as to attain

competitiveness in the international market.

2.16.2 State Government’s Industrial Policy:

The salient features of the industrial policy announced by the State

Government in 1993 includes:

(a) Simplification of rules as regards purchase of plots for industrial

purposes,

(b) Liberal financial incentives for industries,

(c) Guarantee to provide infrastructure facilities,

(d) Special concessions to small industries sector,

(e) Promotion to develop agro-processing and software industries,

(f) Crash programme for export oriented industries and

(g) Added stress on competitiveness.

The new ‘Industry, Trade and Commerce policy of Maharashtra’ was announced in December 1995. The basic approach of the new policy is

(a) Strong support to liberalization,

(b) Transparency, and simplification of procedures,

(c) Private sector participation in developmental efforts and

(d) Thrust on infrastructure in developing regions.

It was planned to take the following steps under this policy:

(1) To develop industrial townships with excellent infrastructure at nine

different locations in the State. The locations are: Butibori (Nagpur),

4] Sinnar (Nashik), Nandgaon Path (Amravati), Waluj Shendre

(Aurangabad), Kushnur (Nanded), Kagal-Hatkanangle (Kolhapur),

Mahad (Raigad), Nivali Phata (Ratnagiri), and Indapur (Pune). The

area of these industrial townships will range from two thousand

hectares to seven thousand hectares.

(2) Single window system: To create a suitable administrative nucleus in

each of the above nine industrial areas where officers from different

departments that are involved in setting up of the industrial units and

vested with necessary powers would remain present and give time-

bound clearances to projects.

(3) To encourage privatization of Government undertakings.

(4) To develop aqua parks along the coast through MIDC where the

necessary infrastructure like cold storages, packaging, warehousing

and ponds for pisciculture would be provided to entrepreneurs.

(5) To introduce certain modification in industrial locations policy of

Mumbai Metropolitan Region (MMR) 1993 so as to allow permission to

industries which fall in schedule-ll category in zone I to expand or

charge the product or process, provided that the industries do not

require any additional electricity or built-up area for manufacturing

purpose and that the overall pollution decreases as a result of changes.

(6) An independent policy for agro industries.

(7) For small enterprises (a) to provide assistance to about 1.259 lakhs

small entrepreneurs through seed capital and bank finance to start

ventures, (b) to exempt small scale sector in B, C, D and D + areas

from payment of stamp duty and registration fee on mortgage deeds 42 and (c) to make import (second hand) machinery of value less than Rs.

1 crore to qualify for benefits under package scheme of incentives.

(8) To strengthen Maharashtra Khadi and Village Industries Board to

implement new changes in interest subsidy scheme of the Central

Government implemented through Khadi and Village Industries

Commission.

2.16.3 Developments in organized sector:

The advent of liberalization has already given an impetus to the repaid

industrial development of the State. The industrial development after

liberalization is also characterized by the participation of Non-Resident Indians/

Foreign Direct Investors (NRIs/FDIs). For speedy growth of SSI, the State

Government has already brought about simplifications in the SSI registration

procedures and accordingly reduction in documents has been brought about.

During 1997, up to October 1997, the Government of India issued 66 letters of

intent and 14 industrial licensees for establishing industries in the State.

2.16.4 Package Scheme of Incentives:

The package scheme of incentives to industries is in operation in the State since 1964 and its aim is development of industries in backward areas of the

State. This scheme is modified from time to time. Under the scheme, incentives in respect of concessions in sales tax, the State Government to the industries extends electricity duty, etc. The scheme is implemented through SICOM Ltd.,

Regional Development corporations for Konkan, Vidarbha, Marathwada and

Western Maharashtra and also through District Industries Centers. During 1996­

1997, the State Government made an amount of Rs. 170.64 crore available to these institutions. During 1997-1998 up to November 1997, the amount made 43 available by the State Government to these institutions for disbursement to eligible units was Rs. 45.52 crore.

2.16.5 Assistance to industries:

The State Government has continued the policy of promoting industrial growth and dispersal of industries to the underdeveloped areas in the State through creation of necessary infrastructure and providing financial incentives.

The State Government achieves its objectives through institutions such as

SICOM Ltd., Maharashtra State Finance Corporation (MSFC), Maharashtra

Industrial Development Corporation (MIDC), Maharashtra Small Scale

Industries Development Corporation (MSSIDC) etc. In addition to the above

State level organizations, central-financing agencies such as Industrial

Development Bank of India (IDBI), Industrial Credit and Investment Corporation of India (ICICI), etc also extend financial assistance to the industries in the

State. ^

2.17 Industrial Development in 2000

The Industrial Policy initiatives undertaken by the Government of India are briefed hereafter. Since July 1991 has been designed build on the past industrial achievements and to accelerate the process of making Indian industry internationally competitive stimulus for higher growth. The thrust of initiatives has been to increase the domestic and external competition through extensive application of market mechanism and facilitating forgoing of dynamic relationships with foreign investors and suppliers of technology. ^

44 2.18 Electronics Industry.

2.18.1 Introduction:

In this fast developing society, electronics has come to stay as the most important branch of engineering. Electronic devices are being used in almost all the industries for quality control and assembling in the factories. Great strides taken in the industrial applications of electronics during the recent years have demonstrated that this versatile tool can be of great importance in increasing production, efficiency and control.

2.18.2 Meaning and Definition:

“The branch of engineering v\/hich deals with current conduction through a vacuum or gas or semiconductor is known as Electronics.”

Electronics essentially deals with electronic devices and their utilization.

An electronic device is that in which current flows through a vacuum or gas or semiconductor. Such devices have valuable properties, which enable them to function and behave as the friend of man today.

2.18.3 Importance:

Electronics has gained much importance due to its numerous applications in industry. The electronic devices are capable of performing the following functions-

1) Rectification -The conversion of a. c. into d. c. is called rectification.

Electronic devices can cover a. c. power with high efficiency. This d. c.

supply can be used charging batteries, field supply of d. c. generators

electroplating etc.

45 2) Amplification - The process of raising the strength of a weak signal is

known as amplification. Electronics devices can accomplish the job of

amplification and thus act as amplifiers.

3) Control - Electronics devices find wide applications in automatic control.

4) Generation - Electronics devices can convert a. c. power of any

frequency.

5) Conversion Of Light Into Electricity - Electronic devices can convert

light into electricity. This conversion of light into electricity is known as

photo- electricity.

6) Conversion Of Electricity Into Light - Electronic devices can convert

electricity into light. This valuable property is utilized in television and

radar. ^

2.19 Development of Electronics Industry In Maharashtra:

2.19.1 Historical Perspective;

The first milestone in the development of the electronics industry in India was the Bhabha Committee’s Report in 1966, which focused attention on the

industry and initiated organized data collection, analysis and planning.

The rapid developments in semiconductor and microprocessor chips were taking place simultaneously in the development countries in the decades 1970’s and 80’s.

High R&D costs fast technological obsolescence, modularization, miniaturization, reducing per unit cost of semiconductors and assembled units along with improvements in performance and quality were the marked features of these developments. These were accompanied by the attendant developments in the computer field, which included the developments in mini 46 and microcomputers, development of software, and education and training in computer use.

Up to 1980, the policy for electronics industry emphasized establishment of new capacities limited only to the public sector, joint sector and small-scale sector. Further, the policy was somewhat restrictive on outputs, technology transfer arrangements for private sector and gave a lower priority to the entertainment and consumer electronics.

However, this policy was reoriented in 1981. Establishment of national and regional TV station, introduction of color TV, emphasis on computerization, broad- banding of license, removal of licenses, removal of many restrictions on locational policies and progressive liberalization of technology imports capital goods imports encouragement to non-Resident Indians brought the Electronics

Industry to the forefront of industrial development in the country.

The Industrial development of Maharashtra is concentrated in few centers.

Out of these, Bombay was first to develop, thanks to the development of sound infrastructure by the British in the pre-independence days. This attracted a large number of textile engineering, automobile, chemical and food - processing industries both in the 1950’s and 1960’s. The persistent efforts to dispense industries in 1950’s led to the development of Thane and Pune and subsequently when these regions developed, to the development of growth centers like Nasik, Jalgaon, Aurangabad, Sangali, Ichalkaranji, Nagpur and

Ahmednagar.

Yet, in spite of the growth of these centers, the Bombay - Thane - Pune

(BTP) region countries to attract industry, and occupies a very important

47 position in the industrial development of Maharashtra. The Bombay

Metropolitan Region also attracts a sizable amount of investment in Industry.

This historical development in Maharashtra and the important position occupied by the BTP area emphasize two points given on the following:

a) The importance of urban infrastructure; In spite of increasing

congestion and instance in cost of living, BTP still provides reliable

and low cost industrial infrastructure (transport communication power,

water, finance, market, raw material and manpower) and social

infrastructure like health, education, entertainment and comm^n^^

The importance of power in particular, is overwhelming for the

development of electronics. In this respect, electronics is similar to a

continuous process industry where not only adequate, but an

uninterrupted quality is related to continuity, voltage and frequency

regulation.

b) The dispersal of industries in Maharashtra has taken place in those

regions only where this urban (industrial and social) infrastructure has

developed. The presence of agencies like MIDC, SICOM, MSSIDC,

MSFC and DIC, made it somewhat more orderly as far as these

regions are concerned.

India is now standing on the foot - steps of the third millennium. There exists a distinct danger of the third invasion of this country now from the rising eastern powers and other industrially developed nations to deprive the people by offering them goods and services cheaper and better quality and deprive them not only of their wealth but also of their spirit of enterprise. This too, they

48 can do, due to the strength of new technologies of electronics and informatics, without landing on the shores of this country like the preceding invasions.

Maharashtra alone is in a unique position to rise to the occasion as it did in earlier periods. It can gear itself to meet the challenge of this third invasion by innovative policies, entrepreneurship and dedicated hard work, so that the third millennium does not see repetition of history. ®

2.20 Electronics Industry in 90’s.

The World has witnessed the emergence of the new electronics culture that has affected the lives of millions world over. Electronics is hailed as the industry of 90,s and it is expected to play a crucial role in reshaping industrial and economic structures of nations in the coming decade. With its wide and varied applications it has attained the status of an all-pervasive industry.

Today, electronics plays a vital role in communication transportation, defense, information, processing, medical services industries, exploration and utilization of outer space and many other areas. Countries which seek to be self- reliant -must depend on their advanced electronics industry to ensure security as the performance of many of today’s impartial weapons systems are dictated by the quality reliability and performance of the electronic Components.

Nations, which secure a leadership position in the advanced electronics technology, are destined to stay at the fore trout of the information age. ®

2.21 Post 1990’s Development Of Electronics:

Electronics is the fastest growing sub-sector of the Indian industry. If achieved a growth of 20 percent in production in 1997-98. Production of electronic items is likely to register a growth of 40 percent per annum during the

9*^ Plan period.

4® With de-licensing of consumer electronics industry, liberalization in foreign investment and Export-Import Policies, all renowned global giants have either established production facilities in the country or are present in the market through technical/financial collaborations, thus giving the consumer a wider choice in terms of product features, technology quality and competitive prices.

In software, the strength of the country with its abundant technical manpower skills is well recognized. To further harness this potential, the

Government has taken several important initiatives to make India a global information technology superpower and a frontrunner in the era of information revolution. As a result, software industry has emerged as one of the standout sectors of the economy, recording a growth of 58 per cent in production and an increase in exports by 76 per cent in 1997-98.

Recognizing the potential of information technology, top priority has been given to its promotion. A National Task Force on Information Technology and

Software Development was set up in May 1998. The Task Force has submitted a 108-point Action Plan. Details of the recommendations of the Task Force are given in Box 1.1.

50 Box 1,1

National Task Force on Information Technology and Software Development • Recognizing that the impressive growth achieved by the country since the mid- 1980s in Information Technology is only a fraction of the potential, a National Task Force on Information Technology and Software Development was set up on May 22, 1998 under the chairmanship of the Deputy Chairman, Planning Commission. • The Task Force submitted the Information Technology (IT) Action plan comprising 108 recommendations on July 4, 1998. The recommendations have since been notified in the Gazette of India, dated 25th July 1998. • While making recommendations, the Task Force has kept in view the objective that by 2008. The annual export of computer software will be US $ 50 billion and the export of computer and telecom hardware will be US $ 10 billion. • The major recommendation of the Task Force are: - The compound annual growth rate of around 55 per cent observed between 1992­ 97 should increase to 80 per cent by 2008. - Schools, polytechnics, colleges and public hospitals in the country shall have access to computer and internet by the year 2003. - A new paradigm in setting up IT software and hardware manufacturing units for making them viable for meeting both local demands as well as exports by creating a policy framework and investment climate in the country comparable to that in Taiwan, Malaysia and Singapore. - A policy framework and industrial strategy designed for making the Indian IT industry strong enough to meet the demands of zero duty regime under the WTO- ITA by the year 2003.

- Spread the IT culture to all walks of econom ic and social life of the country. - The 108-point Action plan also includes opening of Internet Gateway access; encourage private STPs zero customs and excise duty on IT software; income tax exemption to software and services exports; encouragement to set up venture capital funds; a fund to handle the Y2K problem; gift tax exemption on computers; 1-3 percent of Budget of every Ministry/ Department for IT applications; networking of all Universities and research institutions; allowing US Dollar linked stock option to employees of Indian software companies; Sweat Equity; and new schemes for students including attractive package for buying computers etc. • Government has accepted the Task Force recommendation and has directed all concerned departments to implement the recommendations.

51 On the basis of the IT Action Plan, the Internet policy as well as licensing terms and conditions were modified and a large number of Internet service providers have been licensed. ‘Operation Knowledge’ has been launched for universalizing IT education and IT - based education in a phased manner. The second report on “Information Technology Action Plan Part II; Development, Manufacture and Export of IT Hardware” was submitted on November 3, 1998. ^

2.22 Electronics Production by States®

The following table gives the information regarding electronics production by states during the period 1990 - 1994.

Table 2.2

Electronics Production by States

State Units* Production (Rs. Cr.) T o ta l E m p lo y m e n t No

1990 1991 1992 1993 1994

K a rn a ta k a 297 1775.83 1750 2303.98 2597.65 2906.95 50,000

Uttar Pradesh 179 1679.21 1898.4 2069.52 2 4 6 0 2696.81 42,000

Maharashtra 716 1424.54 1532.6 1847.69 2174.55 2451.39 57,450

D e lh i 311 942.02 921 1040.3 1182.55 1339.13 4 5 ,0 0 0

Andhra Pradesh 141 5 8 7 .3 4 5 8 5 6 3 0 .1 9 5 7 7 .2 8 5 4 .4 8 2 8 ,0 0 0

Tamil Nadu 269 568.88 594.35 7 6 0 .3 7 8 1 6 .5 2 978.1 16,800

G u ja ra t 193 393.08 361.3 3 99.41 4 7 9 . 6 7 7 .9 8 1 5 ,0 0 0

P u n ja b 4 7 274.92 352.85 3 9 2 .3 3 5 0 7 .3 5 720.26 07,900

W est Bengal 152 3 0 0 .8 7 3 4 7 3 6 3 .7 2 4 1 7 528.7 13,600

K e ra la 74 2 6 6 .3 5 4 0 9 .4 410.06 464.95 5 8 2 .6 1 1 0 ,1 0 0

R a ja s th a n 80 243.73 253.6 2 7 8 .6 7 3 7 0 .2 5 3 9 8 .5 1 1 0 ,2 0 0

H a ry a n a 6 8 1 6 2 .8 1 7 0 .3 5 159.18 149.8 223.27 06,500

M a d h ya 4 2 1 3 0 .1 4 1 5 0 .8 5 167.56 209.15 219.77 07,200 P ra d e s h

O ris s a 11 4 3 .2 6 3 2 .9 3 8 .2 6 4 4 .0 6 4 2 .1 8 0 3 ,2 0 0

G o a 12 16.32 22.22 22.56 2 1 .1 5 2 7 .9 5 0 0 ,6 0 0 *1994 Source: Industrial Data Base 1998 P.620 S2 Source: Industrial Data Base 1998 P.620

The table above shows the Electronics Production by States during 1991 to 1994. It clearly depicts that the production in Maharashtra has increased from

1425 in 1991 to 2451 in 1994. Maharashtra State is on the highest rank, In terms of providing employment.

53 2.23 Profile of Electronics Production ®

The following table gives the idea of electronics production profile during the period 1997- 2002.

Table 2.3 Profile of Electronics Production (Rs. Crore). 2001-02 2000­ 1999­ 1998­ 1997­

01 00 99 98

Electronic hardware

Consumer electronics 12700 11550 11200 9200 7600

Industrial electronics 4550 4000 3750 3300 3150

Computers.... 3500 3400 2500 2300 2800

Communication & broadcast 1800 1750 1450 1300 900 equipment Strategic electronics

Components 5700 5500 5200 4750 4400

TOTAL 32750 30700 28100 25250 22100

Computer Software

Software for exports... 36500 28350 17150 10940 6500

Domestic software 11634 9400 7200 4950 3470

GRAND TOTAL 80884 68450 52450 41140 32070

Source: Statistical Outline Of India 2002-2003.

The table 2.3 shows that production of electronics hardware and software has increased during the period 1997-2002.

54 2.24 Conclusion;

It can therefore be stated that, in the early nineteenth century, main

industries in Maharashtra were essentially in the nature of handicrafts, catering

to local demand. Emergence of railways improved transport facilities and it

greatly helped to develop export trade of raw cotton through the port of

Bombay. Subsequently cotton textile, power loom, sugar, gur, glass,

engineering, pharmaceuticals, mining and other industries developed.

Generation of Hydropower is an important factor responsible for further

industrialization. Apart from large scale industries there were quite a few small- scale industries. The Second World War gave a great boost to the industries as imports were totally stopped and there was a sudden rise in the wartime demand.

After the formation of Maharashtra State in 1960, a real impetus was given to the all round industrial development of Maharashtra.

The State Governments industrial policy in 1993 includes liberal financial incentives for industries guaranteed infrastructure facilities and special assistance to SSI,

Electronics is the fastest growing sub-sector of the Indian industry. The chapter therefore gives and insight of the industrial development with the special reference to Electronics Industry in Maharashtra. .

55 References

1. Dr. Sabade B.R.: Industrial Development Of Maharashtra, Maratha

Chamber of Commerce and Industries, Tilak Road Pune- 411002, 1987,

PP.1-23.

2. Economic Survey of Maharashtra, 1999, PP.71-78.

3. India 2000, the director. Publications Division Ministry of Information And

Broadcasting Government Of India Patiala House New Delhi- 110001.

4. Mehta V.K.: Principles Of Electronics, 1994, P.1.

5. Ranade S.P. Industrial Development of Maharashtra, Maratha Chamber of

Commerce and Industries, Tilak Road Pune-411002, 1987, PP. 201,205,

206 and 217.

6. Kothari’s Industrial Directory Of India, Kothari Enterprises Madras, India,

1996, P. 7.1,Industry Profile.

7. India 1999, the director. Publications Division Ministry of Information And

Broadcasting Government Of India Patiala House New Delhi- 110001,

P.109.

8. Industrial Database 1998, P.620.

9. Statistical outline of India 2002-2003, Tata services limited department of

Economics and statistic Bombay house Mumbai - 400001, December

2002, P.61. Mahindra Enterprises 9, Khatau Bldg, Dr. S. S. Road,

Lalbaugh, Mumbai - 400 012.

56