Analysing Industries With Special Reference To Indian Economy (Economics)

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In previous posts, We've already written Concepts related to Industries. to read that post: Visit https://economics-subject.blogspot.com/2021/06/concepts-in-industrial-sector.html

With that knowledge we're going to read about: 

• Meaning of Industries
• Types,
• Importance in economic growth
• major problems faced by the industry,
• Measures to support and promote industrial growth,
• How government is involved to support industries.
• Importance of industries in a country. 

Industry

Industry is one of the major sector in the economy. It increases employment, efficiency in a labour, promotes regional development, education, infrastructure etc.

Simply Industry deals with extraction, conversion and production of goods 

Small Scale Industries

If the process of manufacturing and production is done in small scale that means on smaller amount, it is called as a small scale industry. It has number of advantages like equal distribution of income, utilising regional resources etc.

Problems of small scale industries 

The small scale industries which play an important role in every economy are facing some problems. They are:

• Finance or lack of required money
• Shortage of raw materials
• Ideal capacity or simply (under utilisation of resources)
• Technology: or (lack of technology) or (Inadequate technology)
• Marketing or (low organised marketing facilities) you can write
• Infrastructure 
• Managerial competent or (lack of good entrepreneurs)
• Skilled man power 
• Poor project planning 

Finance 

Small scale Industries in India are facing acute shortage of finance. This stops the 

expansion and manufacturing. We can consider this problem as a major problem for the expansion of the small scale industries.

Shortage of raw materials 

the small scale units are facing problems like availability of 

inadequate quantity, poor quality and irregular supply of raw materials. It seriously effects 

the functioning of the industries. lack of proper equipment's and lack of human resource is the main problem.

Ideal capacity

there is under utilisation of installed capacity to the extent of 40 to 50% in 

case of small scale industries. Shortage of raw materials, lack of funds, power cuts etc are 

the reasons for this. 

Technology 

the small scale industries in India are still technologically backward. They are 

lagging in arranging necessary funds to modernise their units. So they are confronted with 

the problems of less production, poor quality and higher costs of production.

Marketing 

small scale industries are also exposed to marketing problems in India. They have 

low organised marketing facilities. They mostly depend on middle men. Sometimes they face 

competition from other large scale units in marketing, most of the small scale industries 

cannot spend more money on advertisements and publicity.

Infrastructure 

there is inadequate availability of transportation, communication, power and 

other facilities. The poor infrastructural facilities are effecting in working of these industries. 

Thus their operations will become uneconomically unable.

Managerial competent

many small scale industries have turned sick due to lack of 

managerial competent on the part of entrepreneurs.

Skilled man power 

The small scale units are located in the backward areas are facing the 

problems of skilled workers. They may not have been available there. As a result the industry continues with the labours who are available in the location. it is a major problem where industries suffers highly.

Poor project planning 

it is another problem in India. The small scale entrepreneurs do not 

give much importance to viability studies, project feasibility analysis is not at all given weight 

age.

Conclusion

Friends, Small scale units have to overcome many problems. It requires external support whether government or any organisation in hard times. The growth of small scale industries influences the infrastructure and national output.

Now we've read the major problems of small scale industries. Now we'll look at measures to expand or to improve the growth of small scale industries.

Measures to expand or protect small scale industries reference to India

Small scale industries plays a crucial role in the Indian economy.

The government of India has taken following steps to solve the problems of small scale 

industries.

• Credit facilities 
• Establishment of Industrial estates 
• Testing laboratories
• Supply of designs
• Supply of raw material 
• Purchase of products of small and cottage industries 

Credit facilities 

the government established small industries development bank of India 

SIDBI in 1990 to extend credit facility to small scale industries. After nationalisation that means after getting independence the 

commercial banks are also provided loans to small scale industries.

Industrial estates 

An industrial estate is a place where the required facilities and factory accommodation are provided by the government to the entrepreneurs to establish their industries there. In India, industrial estates have been utilised as an effective tool for the promotion and growth of small-scale industries.

the government has setup industrial estates in different towns and cities. 

Various facilities like road, banking, marketing and communication etc are provided to 

encourage the small scale industries.

Testing laboratories

 the government established testing laboratories to maintain the 

prescribed standard of the product of small scale industries.

Supply of designs 

The government is also providing new designs and models to producers to 

improve the quality of products.

Publicity or advertisement

the government has setup display setups and showrooms inside and outside the 

countries to increase the sales of products of small scale industries in the country.

Supply of raw material 

the government is importing raw material from abroad and other 

countries for small scale industries and supplying them at a lower price to encourage them.

Purchase of products of small and cottage industries 

the government purchases the 

products from small and cottage industries and sales them in show rooms and display 

centres and inside and outside the country to create demand for that goods.

Conclusion 

to encourage the small scale industries the government is taking care to protect them 

from foreign competition and establishing of handicraft development centres and training 

institutions and etc.

Role of small-scale industries

We've already told little about importance of small scale industries above in the introduction section. Here we'll understand its role and importance clearly and shortly.

• Small scale industries generate employment opportunities
• Enhance mobilization of resources and entrepreneur skills (Friends, Here particularly mobilisation refers to labour).
• Facilitate equitable distribution of income
• Regional disposal of industries
• Provide opportunities for development of technology
• Utilize indigenous organizational and management capabilities
• Promotes or increases exports (Friends, as a result A country can become self reliance which means to depend on own resources in the country. It decreases the dependence on other countries.
• Support the growth of large industries
• Maintain better industrial relations

Causes for industrial backwardness in India Historically, psychologically and Economically

There are number of reasons for the backwardness of industries. These are the main points which are highly responsible for the backwardness or lagging Industrial growth in India.

• Lack of planning or Defective planning
• Attitude of the labour towards the development of industry
• Lack of marketing facility or Limited market
• Heavy taxes by the government and authorities
• Energy crisis
• Lack of industrial research
• Lack of scientific research and methods
• Lack of transport facility
• Lack of technical experts
• Lack of foreign exchange and relations
• Lack of credit facility or finance
• Lack of capital or low capital formation.
• Lack of mineral resources.

Industrial policy resolution 1991

As part of new economic reforms that is liberalisation, privatisation and globalisation it became 

necessary to government of India to announce its new industrial policy under the prime ministership 

of P.V narasimhan and dr. Manmohan singh as financial minister. The new industrial policy was 

1st announced on 24th July 1991.

Its features are

• Abolition of Indian industrial licenses to liberalise the economy
• Role of public sector has come down to promote investment and private sector
• Amendment to MRPT act. that is (MONOPOLIES AND RESTRICTIVE TRADE PRACTICES ACT).
• Free entry to foreign investment and technology
• Liberalisation in policy 

Abolition of Indian industrial licenses to liberalise the economy 

except to certain industries 

relating to security and strategy concern and social reasons licensing is abolished. Now there 

are only 6 industries ware licensing is compulsory. These are alcohol, ziggurats, hazardous 

chemicals, drugs and electronics, aeronautical, defence equipment and industrial explosives.

Role of public sector diluted 

in this policy the number of industries which are reserved for 

public sector has been reduced to 3. they are

a. Arms and immunisation  elide items of defence equipment 

b. Atomic energy

c. Railway transport.

Amendment to MRPT act

to remove the ritual limits of assets in respect to mrpt 

companies and dominate undertaking.

‘-Free entry to foreign investment and technology 

the government is committed to free 

entry to increase the flow of foreign direct investment and technology and into core 

infrastructure sectors as to supprivent national efforts.

Liberalisation in policy 

liberalised industrial location policy is followed in locations other 

than cities ware the population is more than 1 million people.

Removed of mandatory convertibility clause 

the new industrial policy of 1991 is removed 

the mandatory convertability of clause of the lones given by financial institutions for new 

projects into equity.

Conclusion

Finally the Industrial policy is very friendly to all business and organisation. promotes economic growth.

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The end

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