I M P A C T O F G L O B A L I Z 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

I N I N D I A

TANWEER AHMED BEIGH

INTRODUCTION

Globalization signifies a process of internationalizationplus liberalization, in which the world has become asmall village due to the concept of globalization. Thecompetition has become intense in every field. Nationsfight with game plan to sustain their economy, byintroducing new policies and announcing incentives tosupport mainly their economic- indicators. After theworld economy was open to attack, the Indian economyhas initiate to concentrate on the development of smallindustrial base, which had contribute positively to theIndia’s GDP; India’s GDP growth is better than otherdeveloping countries with the developed small industrialsector.

S M A L 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 servicessector which provide service to industrial sector in addition to small scaleindustries taking into account all these factors, at present, Reserve Bank ofIndia 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 andmachinery not to exceed Rs. 5crore. These would include units engaged inmining or quarrying servicing and repairing of machinery.

(ii) Tiny enterprises whose investment in plant and machinery do not exceedsRs.25 lacs

(iii) Power looms.

(iv) Traditional industries which require highworkmanship and techniques andalso village and household industries producing common goods ofconsumption 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.

C O N T. .

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

I M P A 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 socioeconomicupliftment of developing countries like India. India initiated theeconomic reforms in 1991 with the objective of faster economicgrowth. Since the globalization process has been in vogue for thepast 22 years, it becomes important to analyse whether the neweconomic order has had a positive or negative impact on theperformance of SSIs in India. The decade of 1990s was marked byconsiderable deregulation of industrial economy through de licensingand de reservations, opening up the industrial sector to internalexternal competition, lowering of tariffs, removal of quantitativerestrictions etc. These Mreforms have an adverse effect on the smallscale sector. Cheaper and good quality of imported goods are posinga serious threat to small scale units operating in various industrieslike toys, sports goods, footwear, auto parts, silk etc. The mostserious threat is being posed by cheap Chinese imports as the socalled “China Price” is forcing many small scale units to close down.The costs of production in China are indeed very less as comparedto India; it is no doubt correct to say that China is resorting to‘dumping’ to eliminate its competitor in other markets.

N E E D 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

D ATA B A 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.

L I M I 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.

GROWTH OF SMALL SCALE 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,

NUMBER OF SSI UNITS

THE WORKING NUMBER OF UNITS IN SMALL SCALE SECTOR IN PRE AND POST

GLOBALIZATION PERIOD IN INDIA IS SHOW IN THE FOLLOWING TABLE

RECOMMENDATION

Following are some of the measures to enhance the performance ofSSI.

The financial institutions need to be streamline the procedure andprovide instant credit.

To provide continuous power supply to SSI units as provided to exportunits for smooth flow of production.

To provide proper training inputs from professional institute andinternational trainees.

To prevent of industrial sickness, quick revival steps need to be takenby the government.

To provide essential infrastructure facilities to units located in ruralareas.

There is a need to promote professionalism in SSI units by adoptingTotal quality Management, Quality circles, ISO certification.

100% encouragement for Foreign Direct Investment.

C O N C 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