Industrial Sector

Structure of Industries

The Structure of Industries can be explained as follows:1. Based on Use2. Based on Management3. Based on Investment4. Based on Type

Based on Use

Primary Industries(Basic)Example: Heavy Engineering IndustriesConsumer Goods Producing IndustriesExample: Cloth, Leather, Salt Sugar etcIntermediate goods producing IndustriesExample: Coal, Cement, iron, electricity etc

Based on Management

Public Sector FirmsPrivate SectorJoint Sector

Based on InvestmentLarge Scale Industries (10 to 100 Crore Investment)Medium Scale Industries (5 to 10 Crore Investment)Mega Industries (100 Crore and above Industries)Micro Industries ( 25 Lakh below, For Service oriented it is 10 lakh)Small Scale Industries ( above 25 Lakh below 5 Lakh , For Service 10 lakh- 2 Crore)

Cottage Industries ( Rural Industries like handy crafts )Ancillary Industries (Investment should not exceed 1 Crore)Tiny Industries ( below 25 lakh investment)

Based on TypePublic Limited Companies

Private Limited Companies

Government Companies

Classification of IndustriesI. Primary Industry (Nature related, Forests, Flowers, Fishes)

II. Genetic Industry ( Plants, Animals Farms)III. Extractive Industry ( Oils, Coal, minerals, iron ore)IV. Manufacture Industry ( Final goods like Cloth, Sugar, soaps, chemicals)

V. Construction Industry ( Housing, Bridges, Roads, Barrages, Dams etc)

VI. Services Industries (Hotels, Tourism, Entertanment)

Index of Industrial Products There are three components in Index of Industrial

products.I. MiningII. Manufacturing andIII. Electricity The Classification of Index of Industries

depends on its use. The Growth of Industries can be explained

through IIP. For the under stand of growth rate of

Industries it can considered last five years.

Index of Industrial Product, Growth Rate (2004-05Groups 2009-10 2010-11 2011-12 2013-14 2013-14

Mining 7.9 5.2 -2.0 -2.3 -0.6

Manufacturing 4.8 8.9 3.0 1.3 -0.8

Electricity 6.1 5.5 8.2 4.0 6.4

General Index 5.3 8.2 2.9 1.1 -0.8

Growth of Important Industries Production(in%)

Sector 2009-10 2010-11 2011-12 2012-13 2013-14

Coal 8.1 -0.2 1.3 4.6 0.7

Crude Oil 0.5 11.9 1.0 -0.6 -0.2

Natural Gas 44.6 10.0 -8.9 -14.5 -13.0

Refineries goods -0.4 3.0 3.1 29.0 1.6

Chemicals & fertilizers 12.7 0.0 0.4 -3.4 1.5

Steel 6.0 13.2 10.3 4.1 6.8

Cement 10.5 4.5 6.7 7.7 3.0

Electricity 6.2 5.6 8.1 4.0 5.7

Total Index 6.6 6.6 5.0 6.5 3.1

Industrial Development in Planning Era

Plan Industries developed1st Plan Developed efficiency to existing Industries like cement, paper, cotton, colours, Vanaspathi, engineering gods etc

2nd plan Heavy Industries like Iron & Steel, Heavy Engineering, Fertilizers, Lignite projects etc

3rd Plan HMT, Locomotives, Air Crafts, Railway coaches, Shipping etc4th Plan Automobiles, Tires, Electronic goods, Machine tools, Tractors etc5th Plan Iron, Export goods, SAIL, Pharmaceuticals, Oil Refineries, Heavy engineering tools etc

6th Plan TV Receivers, Automobiles, Cement, Jute, Cloth, Rail Wagons etc7th Plan Hi-tech, Electronics8th Plan Liberal policy introduced, given importance to small, tiny sectors encouraged by government

9th Plan Importance given to Cement, Coal, Crude Oil, Consumers goods, Electricity, Infrastructure etc

10th Plan Modern Technology Development, Exports promotion, Regional Development

11th Plan Services development like Education, Health related services development.

12 Plan Providing of equal opportunities, Manufacturing sector development

Important Industries in India Cotton Industry: Providing employment 45 Millions, It is providing 4% share in GDP, through the Exports , it is getting 11% income.

Sugar Industry: In production and consumption sugar Industry is largest in the world. It is providing employment for 0.5 million people.

Jute Industry : Oldest industry, providing employment to 40 lakh Agricultural families out of 83 mills in India 63 are at West Bengal State.

Chemical Industry: It is producing 70000 commercial products, 12.5% share in Industrial production. Its exports share is 16.2%.

Important Industries in India Cement: After china India producing more in the world. 185

Large and 350 Small plants are producing at present.

Iron & Steel: Its capital is 90,000 Crores, 4th rank in the world and providing employment to 6 lakh people.IT Industry: providing Employment Directly 2.8 million and indirectly 8.9 million people.Petroleum: it was started in 1867. ONGC, HPCL, BPCL, IOC are working in this industry.Mining: The share of GDP of this industry only 2.2 to 2.5 percent. It is providing employment to 7 lakh people.

Industrial Policy ResolutionsObjectives of IPR:1. Rapid Industrial Development2. Balanced Industrial Growth3. Prevention of Concentration of

economic power4. Balanced regional

Development

Industrial Policy Resolutions1948 IPR:1. It has announced by Government of India on 6th, April, 1948.2. It is declared that India follows Mixed Economy System (public+ Private

sectors combination).3. Industries are divided as Four categories. A. Government Monopolies ( Atomic Energy, war heads arms) B. Public Sector : ( coal, Iron& Steel, shipping, Aero plains, Telephone,

Wireless, Tele graph) C. Under control of Government: ( machineries, Chemicals, Fertilizers,

Non-Ferrous metals, Rubber, cement, paper, automobiles, electronic engineering, etc.)

D. Private sector: Mostly consumer goods industries left to prvate sector.

IPR- 1956 (30th, April, 1956)

Classification of Industries are three types:1. Schedule-A: ( 17 industries look after by Government)2. Schedule-B: (12 Industries also managed by Government)

3. Schedule-C ( Which are not mentioned in A ad B Schedule is left to Private persons)

Help to Private SectorCottage and Small industries developmentBalanced Regional DevelopmentRole of Foreign CapitalTechnology DevelopmentIntensives to Labour

1977- IPR1. Small Scale Industries divided 3 types: A. Cottage Industry, B. Tiny Sector and C. Small scale industries.2. Establishment of District Industrial Centers and Importance given to

Power looms.3. Decentralization of Industries through the development of Ancillary

Industries.4. Subsidies provided to Export oriented goods.

5. Given importance to Technology, Management ,Skill Development for Small and Cottage industries.

IPR-1980 ( 25th, July, 1980)Reconstruction of Government Sector( Increasing of Efficiency, Make strong of Finance and Marketing)

Economic Federalism:(For regional Development Government has to encourage Small Cottage and Ancillaries has to develop in backward areas)

Redefinition of Small Industries:(Tiny Industry Investment limit increased 10 to 2 lakh, Small Scale units investment increased 10 to 20 lakh, For Ancillaries 15 to 25 lakhs)

Encourage of Rural industriesRemoval of Regional disparities Industrial Sickness ( some ties merging with healthy units, some units has over take by government)

IPR-1991( July 24th , 1991)Main Features:Removal of Industrial LicensingReducing o Government SectorAbolishing of MRTP actFreedom for Foreign Investment & TechnologyRemoval of mandatory convertibility ClauseLiberalization of Industrial Location

Special Economic Zones( SEZs)The Special Economic Zones (SEZs) Policy was announced in April 2000.After extensive consultations, the SEZ Act, 2005, supported by SEZ Rules, came into effect on 10th February, 2006.The main objectives of the SEZ Act are:(a) generation of additional economic activity (b) promotion of exports of goods and services (c) promotion of investment from domestic and foreign sources (d) creation of employment opportunities(e) development of infrastructure facilities

 

The SEZ Rules provide for:" Simplified procedures for development, operation, and maintenance of the Special Economic Zones and for setting up units and conducting business in SEZs;Single window clearance for setting up of an SEZ;Single window clearance for setting up a unit in a Special Economic Zone;Single Window clearance on matters relating to Central as well as State Governments;Simplified compliance procedures and documentation with an emphasis on self certification.

Small Scale IndustriesThe Micro, Small and Medium Enterprises Development Act, 2006 - 16 June 2006 .The act defined Small Scale Industries as follows:A. Manufacturing Enterprises: i) A micro Enterprise, where the investment in plant and

machinery but does not exceed RS. 25 lakh. ii) A Small Enterprise, where the investment in plant and

machinery is more than 25 lakh does not exceed 5 crore. And iii) A medium Enterprise, where the investment in plant and

machinery is more than 5 crore but does not exceed 10 crore

Small Scale IndustriesB. Service Enterprises: i) A micro Enterprise, where the investment in

equipment does not exceed RS. 10 lakh. ii) A Small Enterprise, where the investment

in equipment is more than 10 lakh does not exceed 2 crore. And

iii) A medium Enterprise, where the investment in equipment is more than 2 crore but does not exceed 5 crore

Problems of Small Scale Industries1. Finance and Credit2. Infrastructural Constraints.3. Inverted Tariff Structure4. Availability of Raw Materials5. Problem of marketing6. Delayed payments7. Problem of Sickness8. Adverse effects of economic Reforms.

Sources of Industrial FinanceInternal Sources ( Savings, Surplus of other units):Equities, Debenchers, and Bonds:Public Deposits:Bank Loans:Indigenous Bankers:Foreign Capital:Development banks: IDBI, IFCI, ICICI, IIBI, SIDBI, and IDFC( Infrastructure Development Finance Company)