Impact of globalization on small scale industries in

Impact of globalization on small scale industries in

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  I M PAC T O F G L O B A L I Z AT I O N O N S M A L L S C A L E I N D U S T R I E S I N I N D I A TANWEER AHMED BEIGH
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  INTRODUCTION  Globalization signifiesa process of internationalization plus liberalization, in which the world has become a small village due to the concept of globalization. The competition has become intense in every field. Nations fight with game plan to sustain their economy, by introducing new policies and announcing incentives to support mainly their economic- indicators. After the world economy was open to attack, the Indian economy has initiate to concentrate on the development of small industrial base, which had contribute positively to the India’s GDP; India’s GDP growth is better than other developing countries with the developed small industrial sector.
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  S M AL L S C A L E I N D U S T R Y A N D I T S I M P O R TA N C E  The definition of small scale sector is broadened from small-scale industries to small scale enterprises that include all business enterprises in the services sector which provide service to industrial sector in addition to small scale industries taking into account all these factors, at present, Reserve Bank of India uses an expanded definition of small scale industries which include:  (i) Small scale industrial undertaking which are engaged in the manufacturing, processing and preservation of goods in which the investment in plant and machinery not to exceed Rs. 5crore. These would include units engaged in mining or quarrying servicing and repairing of machinery.  (ii) Tiny enterprises whose investment in plant and machinery do not exceeds Rs.25 lacs  (iii) Power looms.  (iv) Traditional industries which require highworkmanship and techniques and also village and household industries producing common goods of consumption predominantly by using simple tools.  (v) The decentralized and informal sector like handlooms and handicrafts.  (vi) The industry related to services/ business enterprises.  (vii) Food and agro-based industries.  (viii) Software industry.
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  C O NT. .  The development of small scale industries is being given due importance by the Government in order to achieve the following objectives:-  1. To provide additional employment opportunities.  2. To mobilise resources of capital and skill from various parts of the country.  3. To provide a more equitable distribution of national income.  4. To provide a helping hand to large industries and facilitate them in their work
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  I M PA C T O F G L O B A L I S A T I O N O N S M A L L S C A L E I N D U S T R I E S  scale industries have an essential role to play in socioeconomic upliftment of developing countries like India. India initiated the economic reforms in 1991 with the objective of faster economic growth. Since the globalization process has been in vogue for the past 22 years, it becomes important to analyse whether the new economic order has had a positive or negative impact on the performance of SSIs in India. The decade of 1990s was marked by considerable deregulation of industrial economy through de licensing and de reservations, opening up the industrial sector to internal external competition, lowering of tariffs, removal of quantitative restrictions etc. These Mreforms have an adverse effect on the small scale sector. Cheaper and good quality of imported goods are posing a serious threat to small scale units operating in various industries like toys, sports goods, footwear, auto parts, silk etc. The most serious threat is being posed by cheap Chinese imports as the so called “China Price” is forcing many small scale units to close down. The costs of production in China are indeed very less as compared to India; it is no doubt correct to say that China is resorting to ‘dumping’ to eliminate its competitor in other markets.
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  N E ED A N D O B J E C T I V E S O F T H E S T U D Y  To study the growth and development of SSI units in India  To study the impact of globalization on SSI units unit in terms of growth rate employment and Industrial sickness.  To full fill the gaps so as to increase the productivity of the SSI units
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  D ATA BA S E A N D M E T H O D O L O G Y  In the present study an attempt has been made to analyze the impact of globalization on the growth of small scale industries. For this, the growth pattern and some aspects of productivity in SSI sector in India have been calculated. The study has been conducted with reference to the data related to Performance of Small Scale Industries in India. The SSI sector has been studied with the belief that they hold the largest share of Industrial Sector in India. The reference period for the analysis of the data has been taken from 1973-74 to 2006-07. The study period has been divided into two parts: pre liberalisation (1973-74 to 1989-90) and post liberalisation (1990-91 to 2006-07) to know the impact of globalization after liberalisation. For this, a comparative analysis of Average Annual Growth Rates for pre and post globalization periods has been carried out for key growth and performance parameters like number of units, production, employment and exports. The study has been based on secondary information. The data for the study purpose has been taken mainly from ‘Ministry of Micro, Small and Medium Enterprises, Government of India’ published by Reserve Bank of India in Handbook of Statistics on Indian Economy.
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  L I MI TAT I O N O F T H E S T U D Y  All the indicators related to the growth of small scale industries has been computed from 1973 to 2007, in this 1973- 74 to 1989-90 (17 years) are taken under pre- globalization period and 1990-91 to 2006-07 (17 years) are comes under post- globalization period.  Means 17 – 17 years of performance of pre and post globalization has been compared. In this study there is only one limitation that in the case of exports we are able to compare 17- 16 years of pre and post respectively. Exports in 2006-07 are not available.
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  GROWTH OF SMALLSCALE INDUSTRIES IN INDIA: PRE AND POSTGLOBALIZATION  The small scale industries play a significant role in boosting the overall economic growth of an economy. The small scale industries set- up by the entrepreneurs in different states and Union Territories of India have contributed to the increased shares in overall production, fixed investment, exports,
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  NUMBER OF SSIUNITS THE WORKING NUMBER OF UNITS IN SMALL SCALE SECTOR IN PRE AND POST GLOBALIZATION PERIOD IN INDIA IS SHOW IN THE FOLLOWING TABLE
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  RECOMMENDATION  Following aresome of the measures to enhance the performance of SSI.  The financial institutions need to be streamline the procedure and provide instant credit.  To provide continuous power supply to SSI units as provided to export units for smooth flow of production.  To provide proper training inputs from professional institute and international trainees.  To prevent of industrial sickness, quick revival steps need to be taken by the government.  To provide essential infrastructure facilities to units located in rural areas.  There is a need to promote professionalism in SSI units by adopting Total quality Management, Quality circles, ISO certification.  100% encouragement for Foreign Direct Investment. 
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  C O NC L U S I O N While globalization has put us on the map of superpower countries, SSIs have empowered the common man to walk with the same stride as the big-wigs. For India to be a superpower, it is must make efforts to strengthen each and every thread of its economic fabric to make the flag of its success fly high