CHAPTER-IV IMPLICATIONS OF GOVERNMENT POLICIES FOR SSI UNITS

4.1 Profile of PCMC

Pimpri is the part of metropolitan city in . It is well known industrial hub as MIDC established the first industrial estate in Chinchwad and area before 1960. Chinchwad Municipal Corporation is the richest corporation in because of major industrial undertakings. It is also known as auto hub. The major industries in PCMC area are TATA Motors, BAJAJ Auto (Force Motors), Hindustan Antibiotics, Mahindra and Mahindra, Thermax, Century Enka, Sandvik, Alfa Laval, KSB and so on.

Pune and Pimpri Chinchwad is surrounded by number of industrial estates such as Talegaon, Chakan, , Khed Shivapur, , , etc. Talegaon Chakan MIDC developed after 2000 is known as Detroit of America. Maharashtra’s largest IT park is in Pune and PCMC area, Hinjewadi Raju Gandhi Infotech Phase Number one, two and three have been developed which have been spread over 240 acers of land. The major companies in IT sector are Infosys, Wipro, TCS, Teck Mahindra, Cognizant, Veritas, PTC and many more in Hinjewadi and Kalyani agar area of Pune Metropolitan city.

4.2 District Industries Centre (DIC)

Government of Maharashtra decided to start District Industry Centre from 1987 in order to promote small tiny, cottage and village industry at each district level. DIC’s provides services and support to small scale entrepreneurs to identify feasible schemes, arrangement of credit facilities, machinery, raw materials and industrial clusters.

4.3 Maharashtra Industrial Development Corporation (MIDC)

MIDC was established in 1962 in order to create industrial infrastructure all over the state by providing industrial infrastructure at Taluka and District level for the balanced the regional growth of our state. MIDC allots industrial plots, construction of roads, water facility, common facilities such as banks, post offices, police station, fire station, communication, medical and canteen facilities. MIDC’s first industrial estate was

38 established in Chinchwad and Bhosari area in which more than 4000 SSI units are functioning at present, out of which 120 SSI units of life members of Pimpri Chinchwad Small Scale unit organization were selected out of 1000 life member units. At present MIDC’s major industrial area are at Mumbai, Thane, Pune, Tarapur, Kolhapur, Ahmednagar, Aurangabad, Nagpur, and in the growth center in Maharashtra. 233 industrial areas have been developed by MIDC in last 45 years on 53,120 hectors. Planned and systematic development of the state of the Maharashtra has placed Maharashtra in first position in India.

4.4 Western Maharashtra Industrial Development Corporation (WMDC)

In order to accelerate the process of industrial development in rural and backward parts of Maharashtra State four regional corporations namely , Western Maharashtra, Vidarbha and Marathwada were established. WMDC was incorporated in 1970 in order to encourage and assist orderly establishment, growth and development of industries in the district of Pune, Sangli , Satara, , Kolhapur, Dhule, Nashik, Jalgaon and Ahmednagar. WMDC creates industrial climate to shift large units to the backward and underdeveloped parts of state. WMDC established its first industrial estate in Pune region at Chakan 1982. The employment promotion by providing seed money and implementation of packages schemes of incentives for SSI units is the responsibility of WMDC.

4.5 Maharashtra Industrial and Technical Consultancy Organisation (MITCON)

It is the special type of organisation established by Government of Maharashtra which guides and helps to the small entrepreneurs for identification of opportunities, training, technical assistance, marketing and research in case of small scale units it works with Maharashtra center for entrepreneurship development Aurangabad.

4.6 Maharashtra Small Scale Industries Development Corporation Limited (MSSIDC)

It provides raw material to SSI units. Initially it started 12 raw material depos in different parts of the state to procure and distribute a variety of raw materials to SSI units. It procures and distributes Iron, Still, Pig Iron, Coke Coal, Fatty Acids, Paraffin Was, Zinc and Lead, Industrial Alcohol, Printing paper, Polythene and Plastics for industries.

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4.7 Maharashtra State Finance Corporation ( MSFC)

It provides loans to proprietary and partnership firms and loans are granted normally by maintaining security margin from 25 to 30 percent. This scheme enables entrepreneur to get short term loan against subsidies from Central / State Government, for which normal rate of interest is charged. Bridge loans are sanctioned for the fixed assets created by SSI units. The bridge loans are secured against hypothecation of machinery and / or bank guarantees. MSFC also provided finance for equipment, development and modernization of SSI units.

4.8 Industrial Regulation Acts and Policy Formulations

4.8.1 Industrial policy resolution of 1948

It is the first industrial policy of Government of India in which equal importance is given to private and public sectors. Industrial sector was devided as under:

A. Industries where state had monopoly that is arms and ammunition atomic energy and rail transport. B. Mixed sector which includes six industries such as coal, iron and steel aircraft manufacture, ship building, manufacture of telephone, telegraph and wireless apparatus and mineral oils. C. The field of government control for 18 industries of national importance were included in this category. D. The field of private enterprises all other were included in the private sector open to all.

Specific provision for the promotion of SSI units were not suggested in this policy plan.

4.8.2 Industrial Policy resolution 1956

Industries were classified in scheduled A, B and C. Fair and nondiscriminatory treatment was expected to be given to the private sector. State would continue to provide financial assistance for entrepreneur private sector, cooperative sector, agricultural and small tiny enterprises by providing subsidies and incentives. It was stressed the need of reducing regional in balanced all over the country. In this policy resolution private sector got less consideration.

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4.8.3 Industrial Policy Statement 1977

Janata party assumed power at Centre at 1977. Industrial policy 1956 gave more important to public sector basic industries development because of which unemployment increased and rural and urban disparities widened. Industrial sickness in some of the major industries also affected the growth the our economy adversely. Therefore the main elements of the new policy were development of small scale sector, promotion of cottage and small industries in rural areas and small towns. The small scale sector was classified in three categories.

A. Cottage and household industries to provide self-employment. B. Tiny sector investing in industrial units in machinery and equipment up to Rs. 1 lakh situated in towns with a population of less than 50000. C. Small Scale Industries with the investment of the Rs. 10 lakhs and in case of ancillaries with an investment in fixed capital up to Rs. 15 lakhs.

For the purpose of promotion of small scale and cottage industries Government reserved 807 items in 1978 in small scale sector as against 180 in the previous list. This plan proposed to set up district industry centers at each district level to serve for small scale and cottage industries. Khadi and Village industry commission was revamped .

4.8.4 Industrial Policy Statement 1980

Main object of this policy was to increase industrial production through optimum utilization installed capacity and expansion of industries. It emphasized rapid and balanced industrialization of the country to increase employment and per capita income. Preferential treatment was advocated to agricultural based industries and dispersal of industries to back-ward, rural and underdeveloped areas of Maharashtra. Investment limit was increased from Rs. 10 lakh to 20 lakh for SSI sector and for ancillary units it was increased from Rs. 15 lakhs to Rs. 25 lakh. Government encouraged dispersal of industries from large cities to backward area in order to correct regional imbalanced. This industrial policy insisted on more capital intensive path of development for employment generation.

4.8.5 Industrial Policy 1990

Main object of the policy was to change the policy measures for the small scale and agro based units. Investment limit was increased from Rs. 35 lakhs to Rs. 60 lakhs for

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SSI units and from Rs. 45 lakhs to Rs. 75 lakhs for ancillary units. Investment limits for tiny sector increase from Rs. 2 lakhs to Rs. 5 Lakhs.

New central investment subsidies was introduced and implemented for SSI units in rural and backward areas. 836 items were reserved exclusively for manufactured of small scale sector. It was suggested to modernize and upgrade the technology of SSI production to improve competitiveness. Small Industry Development Bank of India (SIDBI) was entrusted to provide adequate and timely credit to small scale industrial sector.

Fiscal concessions identification of locations in rural areas, emphasis on training of women and youth under entrepreneurial development program reduction in bureaucracy control, assistance to artisans in rural and cottage, industries through KVIC Board, Agro-processing units on Co-operative framework, licensing, priority in credit allocation from financial institutions, technology approvals within 30days were the suggested measures for SSI Sector in 1990 Industrial policy.

All new units up to an investment of Rs. 25 crores in fixed assets will be exempted from licensing and registration. The limit of investments for non-backward areas was Rs. 75 crores. Location policy and environmental clearances will not be permissible within 20 kilometers.

4.8.6 New Industrial Policy 1991

Government of India announced series of initiatives under this policy such as abolition of industrial licensing to all industry except 18 industries. This policy covers dilution of public sector role. Government intention was to invite a greater degree of participation by the private sector. MRTP limit was increased up to Rs. 100 crores. Free entry to foreign investment and technology was principally accepted. Preference for high technology and investment priority through direct foreign investment up to 51 percent was allowed. Industrial location policy was also liberalized. In case of new projects of engineering and electronic industries abolition of phased manufacturing programs was advocated. Mandatory convertibility clause was removed which reduced the threat to private firms to be taken over by financial institutions.

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4.8.7 Industrial Policy of Maharashtra 2001

Package scheme of incentives were introduced by Government of Maharashtra on 1964 after every 5 years in order to remove regional imbalances and to encourage industrial growth especially in backward areas through central investment subsidy, facilities for no industrial districts , supply of machinery on hire purchase system, transport subsidy, tax incentives and tax holidays, income tax concessions, depreciation allowance, wealth tax holiday, carry forward of business loss, exemption to export profits etc.

However central government policies and package incentives schemes of incentives failed to decentralized and disperse the large industrial units from Mumbai Pune Thane belt to other regions of Maharashtra. Number of study groups along with Dandekar Committee formed for suggesting and implementing the schemes for promotion of regional balanced are not successful and the regional imbalances in Maharashtra continues till today because of non-implementation of the suggestions and policy decisions of various committees of government of Maharashtra.

Industrial policy of Maharashtra 1993 aimed at simplification of procedures through single window systems and changes in the rules and regulations for industry and trade. 1995 industrial policy of Maharashtra aimed to empowered and developed industrial infrastructure through public private partnership has accelerated the growth rate of infrastructure all over Maharashtra. Industrial policy 2001 of Maharashtra helped to increase the inflow of foreign investment in industry and infrastructure. Promotion of IT sector high technology, knowledge based and biotech industries are successfully increasing exports of our country.

Main object of 2001 policy is to have sustainable industrial growth. New package scheme of incentives was operative from 2001 to 2006. Special incentive were made available to the industries established in C.D. and D.T. zones. Information technology and bio technology new formed small industries will be eligible for capital subsidy in C zone as well as D.T. zone. There is provision of exemption from sales tax to 24 khadi and village industries and interest subsidy to new textile units will be available. It the turnover of the industry is up to Rs. 20 lakhs per annum sales tax also be waived in respect of 72 other industries.

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