DATA BANK AND INFORMATION SYSTEM FOR SMALL SCALE INDUSTRIES

R. P. Mehta & Dr. W. B Donde

Small Industries Development OrganisationNew Delhi

1 Background

Since the introduction of the development programmes for small scaleindustries, the sector has made tremendous progress during the last two decades.The small scale industries have generated substantial capacity of a large variety ofconsumer and producer goods and its participation in the import substitution programmeof the country is noteworthy. Of late, this sector has successfully entered into thearena of production of sophisticated items. In short, this sector is making a signi-ficant c c nt r.i.but icn to the National Economy.

With the expansion of industrial activities in the small scale sector during thelast 20 years, all round awareness has developed about the need for comprehensiveand uptodate statistical data regarding this sector. Very little attention was devotedso far towards the establishment of a system of collection of basic. data regarding thissector on regular and continuing basis. Further, with competition in production bet-ween the small scale and the large scale sectors for a large variety of products, thenecessity for having uptodate information regarding small scale sector vis-a-vis thelarge scale is being felt more acutely. Reliable and upt odat e data regarding production.employment, investment, exports are woefully lacking. The only organised effort forthe collection c f data from the sm.a 11 sc a le sector so far ha s been through AnnualSurvey of Industries. The data collected through this survey, though useful, havehowever, their own limitations and do not cover a substantial portion of the smallscale secter comprising units which are not registered as factorie s.

In view of this need for establishing a system for collection and maintenanceof the ba sic data regarding the development of small sector, the Sma 11 Indu strie sDevelopment Organi sation decided to set up a "Data Bank Ce l l " for collecticn andrr-a inte na n ce of reliable and cemprehensive statistical data relating to small scaleindustries. To provide a base to the Data Bank, a countrywide census of small scaleindustrial units was launched in 1973-74. The frame for this census was built up fromthe registration records of registered small scale units being maintained by the

Paper presented at the Seminar on 'Towards the Evolution of Information System for NationalDevelopment'. New Delhi. 8-9 December 1975

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Indu.triel Department. of all the State Government. and Union Territoriel. The datacollected through the cen aus. would be updated by the Data Bank through the reviledprocedure of registration and the system of obtaining annual production return. fromthe registered small scale units. As both these measures have already been introduced,the mechanism of obtaining data regularly from the registered small scale units hasbeen created.

2 Information Needs

The inforwation needs essential for developmental activity in respect ofindustries in the srria ll scale sector could be broadly classified into the followingcategorie sr -

1) Developwentalii) Technicaliii) Regulatory andiv) Marketing.

The data on existing capacity, production, exports, employment, investmentetc. comprise the first category. These are expected to meet the requirements ofpolicy maker s to a considerable extent but would satisfy only a part of the requirement sof the individual entrepreneur, intending to set up a small scale industry.

Though information on such aspects as existing production, its dispersal etc.can provide an idea about the prospects of taking up a particular line of industry in aparticular area, information on aspects like technical/economic feasibility, processof manufacture, availability of machinery and raw materials. t~~ of testing facilitiesand their availability etc and above all on the management aspect are also equallyimportant. Such information could be grouped together under "Technical Information".

An individual entrepreneur ha s to follow a number of procedures either forsetting up or running a unit. e. g. obtaizring power load. licence from Municipal/localbodies; registration with the Sales Tax/Excise authorities, export documentation.enlistment in Gcve r-nrne nt purcha se prog:r;amme etc. and all the information will gounder the head "Regulatory Information".

The fourth category of information will be on the market and marketing intelli-gence for a product or group of products. In fact with the rapid advancement in techno-lcgy and the increa sing competition from the medium and large scale sector, the deci-sion for selecting a suitable line of manufacture will largely depend on this backgroundinformation. Information on total production. demand and supply position, pricestructure, locaticnal advantages, distribution channels and system. export potentiali-ties, sales promotion and advertisement, packaging. standardisation etc. are of vitalimportance both for the existing a s well a s the pro spective entrepreneur s.

3 Organisation of Data bank

31 Development Data:The data collected through the National Census, referred to earlier, will form

the base on which the superstructure of developmental data is to be built. The major

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breakthrough ha s been achieved in this direction. The procedure of registration o~thesmall scale units with the Industries Departments of the State Governments and UntonTerritorie s ha s been streamlined and brought to a uniform footing. Under this pro-cedure the individual entrepreneur or party seeking registration with the State Indus-tries Departments is required to fill in a prescribed form of application Incorpor attngthe base line data (data on location, employment, initial investment, type of organisa-tion, type of entrepreneur, etc.) which are not likely to change too frequently. Uniformccncept s and definitions in furnishing the information at the time of registration willensure that inter-state comparisons are valid and reliable. This base line information

from the application forms for Registration is envisaged to be supplemented with thedata which would flow through annual returns. The annual return will incorporate dataon actual production, capacity, employment, consumption of raw materials, exports,ancillcry supplie s and also the sale s effected during the period under report. The datagenerated by the se two source s will be adequate for erecting the super structure ofdevelopmental data over the base of the census data.

The basic data of the Census have been stored on the magnetic tapes. Th eupdating system for these data will also be a computerised one. The basic record on thetapes will be at the level of individual manufacturing units. The updating mechanismwill thus involve:-

a) Updating the data on variable items like production, employment, exports.consumption of raw materials, sales, etc.

b) Broadening of the base with the addition of information on units beingcontinuously added to the registration records.

Each individual unit will carry a unique identification number, consisting ofcode for State & District where the unit is situated and a running serial number whichwill vary from District to District. This scheme was adopted for computerisation ofdata from the Census schedule s and ha s been incorporated later on in the format of theregistration number to be allotted to the post-Census units. The registration numberto be allotted to the units registered after the cut off po int of the Census, will essential-ly consist of State code/District cOde/runhing serial number (which will be in continua-tion of running serial number of the Census). Thus, in future, the registration numberof the units itself will be the identification number for the computerised system. TheState code and the District codes have been evolved in collaboration with the DirectorateGeneral for Technical Development (DGTD) who are also building up their own informa-tion system. These identical District/State codes will enable matching of Districtwiseaggregate s for small scale sector with tho se of medium and large scale sector.

The implications of allocating a unique identification number to a particularunit are very wide. In any computerised sy stern where identity ha s to be kept at thelevel of individual constituent unit, the code to each of such unit ha s to be allotted foridentification purposes on the magnetic tapes or other storage medium. Since registra-tion number of the unit will be used in the records of other organisations like ChiefController of Imports and Exports, commercial banks, which also deal with the smallscale manufacturing units, it would be possible to match the data available with theseorganisations with the data maintained by the Data Bank of the Small Industries Develop-ment Organisation (SIDO) through the common parameter of the registration number.

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Time is not far off when the above mentioned agencie s may switch over to electronicdata processing and in that situation it would not only be feasible to exchange the datatape s between each other but such exchange will al so provide suff~ci~n~ material forevaluating the reliability of the data furnished by the same set of mdlvldual manufa c>touring units to the different agencies of the Government/Financial institutions inpursuance of various acts and regulations, directives etc.

A system of regular flow of the data from the District Industries Officers andthe md ividua'l manufacturing writs to the Data Bank of the smo and feedback from thelatter to the Small Industries Service Institutes and Directorates of Industries is inthe process of being established.

ThE:;Data Bank at the headquarters of the SIDO will maintain information bothat micro and macro levels throu~h a suitable computerised system. The feedback to theSISIs will be the information at ma cro or micro level in respect of the State sundertheir juri sdiction. The Small Indu strie s Serv ice In stitute s (SISI) will maintain informa-tion relating to names and addresses of the units pr oduct wi se, on srit abl y de aigne dindex cards. The index cards will have the provision for incorporating the details likecapacity. production, employment investment and details of machinery and equipment.Besides enabling the SISls to furnish the information needed by the entrepreneurs. thedata thus maintained will also be useful to the technical officers for preparation andscrutiny of model schemes and project reports.

At the first phase of programme of work. the system of flow of data as detailedin the foregoing paragraphs will be put into operation and efforts will be made to perfectthe same; In the absence of any statutorv obligations for the small scale units. tofurnish the data periodically to the State Industries Department§, the task of establish-ing regular flow of the se annual returns is be set with numerous difficultie s, and itwould entail lot of financial and human resources to achieve a definite success. Anumber of recommendations for strengthening the State level organisations are underconsideration of the Government in this regard and it is expected that some headwaywill be made in building up the informatior system, both at the State levels and thesmo headquarters by implementing these recommendations. What is more importantis that consciou s and determined efforts are to be made for evolving a system ofmaintenance and dissemination of developmental data relating to small scale sector.It is also envisaged that an Index of Industrial Production in the small scale sector onannual ba sis, would be built up.

12 Technical Information

As already indicated, the individual entrepreneurs often need technical informa-tion, in addition to developmental information, right from the proposal stage to actualsetting up of a unit and running it on efficient and profitable line s, The technical infor-mation may relate to :-

i) Feasibility studiesii) Schemes and project reports on selected itemsiii) 'Ie sting facilitie sIv] Common facility services

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v) Prices of various items of machinery and raw materials and the sourcesof availability

vi) New products andpecce s se e being developed for commercial exploitationvii) Consultancy services and demonstration

vi Ii ] Training facilities. andix) Resea:fch and Development facilities.

Maintenance of this type of information is more relevant for the ~llIndustries Service Institutes. (rather than the SIDO Headquarters) which are contactpoints for the smo with the small scale units. Some special studies like a.rea surveys.techno-economic surveys. studies on identification of growth centres. intensive cam-paigns etc are undertaken not only by _the Small Industries Developm~Organisationbut' by some other agendes also. directly or indirectly. connected witli'tb;a-developmeiltof small scale sector. It is intended to keep uptorlate information about such studies.This will not only be useful in avoiding duplication of efforts by different organisationswhile undertaking such studies but will also afford an opportunity of critical evaluationof the recommendations made in various studies conducted and completed over diff~rentperiods of time. Though a number of surveys and campaigns are being conducted indifferent parts of the country and large number of industries are recommended in the,report s for setting up in various area s, th~re ba s not been any follo w up action toa scertain whether such recommendations were implemented and if so. with whatresults. If comprehensive information about the previous studies undertaken is madeavailable before a fre sh survey is contemplated. the que stion of evaluating earlierrecommeAdations. during the proposed survey could be taken care of.

Collection and maintenance of this type of information is very expensive andrequires special expertise. A documentation unit known as sme;U Enterprises Docu-mentation Centre (SENDOe) is already functioning in the Small Industry ~xtension andTraining Institute at Hydetabad. The SENDOC has developed a well organised systemof collection and Ihaintenance of technical information on most of the aspects listedabove. The wealth of technical information available with the SENDOC could be usedfruitfully by the Small Industries Servic~ Institutes. A scheme for establishing aninformation grid between SENDOe and the SIDO with its constituents scatte red all overthe country. is being worked out. The Data Bank at the SIDO headquarters and SENDOCof the SlET Institute will be the two nodes of this information network and a system ofcontinuous exchange of information between the variou s constituents of the grid willensure optimum utilisation of the resource s and fuller use of the information beingcollected and maintained.

For maintenance of information on scientific lines Small Industries ServiceInstitutes should have necessary expertise and qualified staff.

33 Regulatory Information

A prospective entrepreneur is normally not acquainted with the existing policiesof the Government regarding development programmes as well as the procedures whichneed to be ~one through in setting up a manufacturing unit. He would be saved a lot of

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hardship and running about, if he is .briefed and guided~roperly in advance.the procedural items in this conne ct iori are: - \.

a) Obtaining approval of industrial power and connection thereof.

Some of

b) Licence from local Municipal authoritie s for carrying out the manufacturingactivities.

c) Registration with/clearance from other agencies like Drug Controller,Health Authorities, etc. for certain specific items.

d) Obtaining water connection.

e) Procedure for securing financial assistance.

£) Procedure for obtaining machinery on hire purchase basis.

g) Registration under Sales Tax/Excise Acts.

h) Procedure for obtaining import licence, if relevant.

i) Inc entive for expo r t and export de cumentation.

j) Enlistment for Government purchase programme.

k ) Foreign collaboration procedure, if necessary.

The information on the above aspects is no doubt, available, with variousdepartment", of the Government (both at Central and State levels), yet there ha s neverDeen concertea efforts to bring together all at one place so that the same could bedisseminated to the needy parties as a sort of assistance in one package. It is consi-dered de sirable to ccl le ct and maintain this type of regulatory information at the levelof Small Industries Service Institute for tpe benefit of the individual parties. Thetopics having uniformity at the All India level such as import/export policy, excise,taxation, etc. may well be attended to at the SIDO headquarter s and the latest anduptodate information communicated to the Small Industries Service Institutes. Theother topics where there are variations from State to State, the Small IndustriesService Institutes themselves will be made responsible for collection and maintenance.Small handouts incorporating the latest information could be prepared at periodicalintervals to facilitate the process or dissemination of information.

34 Marketing Intelligence:

Of late, marketing ha s emerged a s one of the foremo st problems being facedby the small scale industri z, : units. Areas where there is stiff competition frommedium and large scale sector, the small scale units are distinctly at a disadvantageas their capacity to incur substantial expenditure on publicity and other sales promo-t ioria l measures is very limited. At times some units have, perforce, to close down,being unable to find regular outlet for their product s, This re sult s in infructuousinvestment on the part of the individual entrepreneur as also the financial institutions

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and other Agencie s who get themselve s involved a s a re sult of their promotionalefforts for this sector.

Enlistment of small scale units under the Government.purchase programme andopening of sub-contract-exchange s have been brought into being to help the indi:i~ualmanufacturers in marketing their products. But these alone are no longer sufficient tomitigate the hardships faced by the manufacturers. Marketing assistance is to be .clearly distinguished from marketing intelligence. ~hile t~e form~r ~e.lates to physl~alhelp in dispo sing of the p rc-duct s, the latter is a service Whl.chthe mdlvldual manufacturer requires in respect of supply. prices and demand at different market centres.Marketing intelligence is a very broad term implying a variety ~f information neededfor marketing and marketability of the products. It may comp ra se >

a) Information about the distribution channels -- whole-sales. retail. sales.Government supplies. ancillary supplies. exports etc.

b) Price mark-ups at different stages from the factory gate to the ultimateconsumer.

1\

c) Market prices of different brands - whole sale. retail sale.

d) Marketing practice s,

e) Facilities like after-sale services.

g) Substitute s,

The marketing intelligence collected from the field is to be supplemented bythe r info r rnat i.onavailable from secondary sources. It may not be desirable to coverall the products for introducing .a system of ccilection and maintenance of marketingintelligence as it would involve huge staff for collection and compilation of data. Theproducts where the problem of marketing is very acute could be selected and effortsmade to supply m.arketing intelligence to the needy partie s, Information on some ofthe aspect s "..,entioned above. is collected, though not on a systematic ba sis, by theSIDe while conducting area survey s and other special type of studies like impact ofreservation, prospects of an industry, etc. Lot of planning and considerable amountof investment is, ho wever , necessary to evolve a system of regular collection.maintenance. and dissemination c f this type of information to the entrepreneur. Otheragencies like Trade Develcpment Authority. NSlC. State Small Industry DevelopmentCorporaticns are al so gathering some information. Coordination between the variousagencies and exchange of available data will lead to considerable economy in expendi-ture.

4 Phasing of Programme

Building up of Data Bank is a slow proce ss and hfls nece ssarily to be suitablyphased. In the first phase. a system of flow of developmental data from the individual

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units has to be put on sound lin es. This will entail considerable efforts on a sustainingbasis for which close collaboration between the Centre and the States will be an essen-tial prerequisite. This phase of action has already taken a start. A proposal is underconsideration of the Government regarding enactment of legislation for the small scalesector. This will provide legal backing for collection of statistics from the smallscale units. The second phase will be the establishment of information grid at each ofthe Slsr level with the active participation of the SENDOC of the SIET Institute. Thethird phase will relate to introduction of a system of collection, maintenance anddissemination of regulatory type of information. It will not be prudent to confineattention only to the first phase and wait till the same, more or less, gets going beforeembarking on the next phase. Resources permitting, the second and the third phasescould also be taken up concurrently. As for marketing intelligence, it is too early tosay as to when it would be possible to make a beginning.

The Data Bank, when fully developed, will function as a storehouse of informa-tion essential for the development of industries in the small scale sector. One canthink of creating 'Product Profile s ' under which all information pertaining to a parti-cular product or indirectly relevant to it, is brought together at one place. Theproduct profile may comprise information on:

a) Existing unit s in sma U/large scale sector.b) Capacity/production in the small/large scale sector.c) Demand and supply position.d) Policy regarding its development-reserved, priority, not to be encouraged

categories etc.e) Whether covered under Excise Act, if so tqe rate of Excise duty.£) Type of machinery required.g) Availabilitv of schemes and project reports.

h) Fea sibility studie s, if conducted.i) Raw material requirements.j) Marketing channels.k) Prices - whole sale, retail.1) Exports and imports.

A selective approach might have to be adopted as it may be neither possiblenor desirable to cover all the products running into more than four to five thousandwhich are being manufactured by small scale industries. Initially, such type of pro-files could be maintained in folders arranged in alphabetical order or in sequence ofproduct codes. But ultimately it would be advantageous to transfer the data on to themagnetic tapes or even better, on magnetic disc, (a storage medium with randomacce ss feature) for much quicker retrieval.

5 Looking into the Future:

Electronic data pr oce as ing is gradually catching the imagination of variousagencies in the Government sector. Where huge mass of data is to be processedinvolving updating of a large number of indi.vidual records at frequent ~tervals, com-puterisation is the only resort, provided accurate inputs are ensured in time. If atthe time of carrymg out this transformation, concerned departments collaborate withother departments having c-omputer facilities, it would be possible to dovets il the

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r equi r e rnent s of other organisations at the initial stage and introduce some commonpara meter s through which ba sic data couId be exchanged on EDP sy stem. To cite anexample, registration number of small scale units could be interconnecting link betweenthe basic data to be maintained by the SID0, tommercial banks, Office of the ChidController of Imports and Exports as one group. Commodity codes could be yetanother common. para meter through which exchange of data might be fea sible betweenthe SID0, DGTD, DGS&D, etc. The Department of Statistic s. Government of India,are in the process of bringing out 'Product ClassitiX:ation' codes which could beadopted uniformly by all concerned. Time has come.when some serious thought hasto be given to evolve a system whereby export from the small scale sector could betabulated by the Director General of Commercial Intelligence and Statistic severyrnonth. No doubt, a series of documents will need modification and a number ofhurdles might have to be overcome, yet the task is by no means unsurmountable, if theconcerned Departments could get together with a wilLto find out a solution to thisproblem.

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