IIE NEWSLETTER
IIE NEWSLETTER VOL. 9 NO. 3 JULY-SEPEMBER 2004
FROM THE DIRECTOR’S DESK:-
HOW BIG IS SMALL
Small Scale Industries are considered to be one of the backbone of the economy in terms of employment creation. In a country like India with huge geographical spread-out, SSIs play a very important role not only from the point of generating employment and income but also to meet the local demand. However things are changing real fast during the last decade or so. With the impact of globalisation and de-reservation, the SSI sector has become prone to threats not only from global players but also from MNCs. In order to overcome such threats the prime concern of the SSIs are to improve quality and reduce cost. As a result, the concept of SSIs is undergoing a metamorphosis and gradually SSIs are moulding as SMEs. That says that the investment in plant and machinery are going up to reach sophistication. Also instead of competing with each other, SMEs have started operating as clusters where they complement each other. This increases their bargaining strength in terms of cost reduction, market accessibility and acceptability. There are quite a few models of such success stories in India.
As far as North East is concerned, SSIs still seem to be plagued with a host of problems and not being able to move forward. A study recently done by the Institute on status of SSIs shows that although the rate of growth in terms of numbers of units registered has been higher than the all India average, the status of SSIs can be termed as unhealthy in terms of size, bank finance, market penetration, entrepreneurial quality, etc.
It is indeed a healthy sign that the rate of growth of registered SSI units in the region is more than all India average which is estimated at 13.21per cent for the region against 11.59 per cent for the country as a whole during 1991-2001. But the actual yardstick is the growth in sales where the SSI units have failed to stand out. The highest maximum average annual growth in sales is recorded by the textile based units, followed by business and service based units, which is estimated at 4.54 per cent and 4.38 per cent respectively. This is inspite of the fact that the net addition to the SSI sector in terms of number is quite encouraging. This can be justified on the ground that its effect has been negated by simultaneous closure of units due to multitude of factors. The study shows that in case of Assam itself 38.05 per cent of the units coming after 1993 have been closed down which is more than 50 per cent in case of the other states of the region. Besides the units operating are also utilizing around 35 to 40 per cent of the capacity and in case of 27.85 per cent of the sample units there is constant decline in the utilized capacity, which have further aggravated the problem.
At a time when the trend is towards higher dose of investment in plant and machinery, the average size of SSI units of the region do not reflect this. The study shows that 47.63 per cent of the industries of the region are with investment below Rs.1 lakh while only 0.61 per cent of these are set up with an investment of Rs.50 lakh or more. The low level of investment in plant and machinery is reflected in the power utilisation status of the SSI units of the region. The study conducted by IIE revealed that in case of Mizoram only 30.65 per cent of the units use electricity for their operation, the same being 65.46 per cent for Assam.
Inspite of this, the SSI sector can be termed as an important generator of employment and this has recorded a growth of 6.7 per cent during 1993-2003. The employment generated per Rs.1 lakh of investment is highest in Manipur, estimated at 8.07 persons, and is found to be lowest in Sikkim at 1.80 persons, where the industrial growth is characterized by a few large industries with major share of investments and large number of smaller sized units with low investment. If the elasticity of employment is looked into, the same study shows that the traditional sector has the highest elasticity at 0.06 to be followed by the engineering and mechanical units with an elasticity of 0.051. The thrust therefore can be laid on the former through proper developmental intervention so that growing unemployment problem can be tackled.
The availability of finance is crucial for the entrepreneurs of the region as more than 90 per cent (in some cases as high as 100 per cent) of the entrepreneurs are of the first generation. This is found to be a problem for the SSI sector. The CD ratio of the states of the region has a minimum gap of 30 per cent compared to the all India average. The study shows that only 7.67 per cent of the SSIs in Manipur 12.26 per cent in Nagaland and 13.46 per cent of Mizoram have availed bank finance.
To ensure the growth of the SSI sector it is necessary that marketing linkages are developed. This is found wanting in the region. The study shows that quite a substantial production (46.76 per cent) of the manufacturing sector of the region is carried out on job order basis, which is highest in Mizoram at 69.94 per cent and lowest being recorded at 37.58 per cent in Manipur. Besides, the sale to bulk purchasers is negligible. Hence unless this can be dealt with and the opportunities properly exploited, the desired growth cannot be expected.
The trend of development calls for proper channelising of the entrepreneurs and though the pattern of entrepreneurship has undergone a definite change, the region has still a long way to go. If talked about Assam, the most industrially develop state of the northeast, entrepreneurship has developed more because of non-availability of jobs rather than change in entrepreneurial environment as 42.45 per cent of the respondent opined in this favour. The coming up of women run enterprise is a positive development and in this regard Meghalaya leads the NE states as 30.78 per cent of the units are managed by women, the same being 20.59 per cent for Assam according to the study. However the educated segment is yet to be adequately encouraged to take up entrepreneurship as a career option, as according to the study only 16.35 per cent of the entrepreneurs are with qualification of graduate and above which is estimated at 31.15 per cent for those below the secondary level. The structural deficiencies can be regarded as one of the important factors and the operation of the units from the developed industrial infrastructures as industrial estates, growth centres etc. estimated at 1.19 per cent in case of Assam is a ideal reflection of this.
In order to make SSIs more vibrant, the immediate need is a holistic approach, which calls for synergy form different sectors. A host of organizations/agencies are operating in the region providing all type of services. In certain cases this has resulted in duplication of efforts. Therefore, there is need for convergence, which could be best achieved through a regional planning body like NEC. It is suggested that road map be charted out for promotion of local entrepreneurship with specific targets and all stakeholders take due responsibility be it in the areas of training, finance, marketing, technology, infrastructure etc. with strict monitoring so that there is vibrancy and visibility in the SSI sector.
K. Ahmed
PROGRAMME HIGHLIGHTS
ENTREPRENEURSHIP DEVELOPMENT IN NAGALAND
THROUGH TURNKEY EDP:-
Indian Institute of Entrepreneurship and Department of Industries and Commerce, Government of Nagaland planned to train 100 local youth every year to take up self-employment activities through Turnkey Entrepreneurship Development Programme(TEDP). Under this module 100 youth were brought to IIE, Guwahati in groups for one month exposure to various aspects of motivational, technical and commercial inputs required for establishing small enterprises. Subsequently the youth were provided escort services by way of preperation of business plan, liaison with banks through Resource Centre of IIE at Dimapur in Nagaland. During the year 2002-03, 100 youth were trained and 31 of them, including 7 lady entrepreneurs, have started their own enterprises in various parts of Nagaland. 28 of them started with financial assistance from banks and rest 3 with their own. The investment in projects ranges from Rs.50,000/- to Rs.3.80 lakhs. The various projects selected by the entrepreneurs are - Cyber Café, Mushroom Processing, Steel Fabrication, Boutique Shop, Dhaba, Dry Cleaning and Xerox etc. Shri M.K. Handique of IIE is the Programme Director.
TURNKEY EDP AT TURA, MEGHALAYA:-
Indian Institute of Entrepreneurship organized one Turnkey Entrepreneurship Development Programme of eight weeks duration, from 24 May to 16 July 2004, at Tura, West Garo Hills district of Meghalaya. The North Eastern Council, Shillong, sponsored the programme. North East Development Society(NGO) supported IIE in conducting the programme. Shri S.S. Kamble, Principal, Regional Vocational Institute, Tura inaugurated the programme. In his inaugural speech, he praised the efforts of IIE in creating an entrepreneurial environment in the society. Dr. D.D. Mali, President, SPEED, Shri D.K. Areng, GM, DIC, Shri P. Goswami, Asstt. Director, Central Silk Board and Shri C.S. Dorke, Asstt. Director, SISI, Tura, were also interacted with the participants during the programme. 27 youth with Beauty Parlour, Computer and Dress making background attended the programme. Shri L.Guite, Branch Manager, SBI Main Branch, Tura, attended the valedictory function as guest of honour. Shri S. Lutfor Rahman was the Programme Co-ordinator.
EDP ON VILLAGE INDUSTRY MANAGEMENT:-
The Institute organized six Entrepreneurship Development Programme on Village Industry Management for REGP beneficiaries of Assam during July to September, 2004. The Khadi and Village Industry Commission, Guwahati sponsored the programmes. The Major objectives of the programme were to develop the achievement motivation and entrepreneurial qualities of the trainees, to improve their skill in project formulation, to help them understand the details of establishing an enterprise and to improve their basic management skills. Altogether 231 participants attended these five programmes.
Shri K. Ahmed, Director, IIE while welcoming the participants said that REGP is a very special scheme for rural area, which is creating employment opportunities for rural youth. It is an opportunity, which can be taken by all unemployed youth. He also urged the participants to take care for sustaining their proposed projects. Shri A.K. Baruah, Shri J.C. Kalita, Shri A.S.S. Dewan and Shri M.K. Handique, IIE faculties, conducted the programmes.
TEACHERS’ TRAINING PROGRAMME ON ENTREPRENEURSHIP:-
Indian Institute of Entrepreneurship announced and conducted a Teachers’ Training Programme on Entrepreneurship from 5 July to 9 July 2004. The main objective of the programme was to create an awareness of the need and importance of entrepreneurship and to develop skills amongst the teachers in guiding and counseling the students. The programme was attended by 8 Teachers from various colleges of Assam. Shri P. Sarma was the Programme Director.
TURNKEY EDP AT SORENG, SIKKIM:-
The Institute organized one Turnkey Entrepreneurship Development Programme at Soreng in Sikkim from 7 July to 31 August 2004. The North Eastern Council, Shillong, sponsored the programme. Besides classroom sessions, industry visits were also arranged for the participants in association with DIC, Jorethang. Shri R. B. Subba, Honourable Minister for Industries & Commerce, Government of Sikkim, in his valedictory address urged the participants to utilize the knowledge they have gathered during the training period and assured them full support in starting their enterprises. Shri K. Pariyar, SDM, Soreng, Shri D.R. Sharma, ROAD, Soreng and Shri L.B. Subba from DIC, Soreng were the special invitees of the function. 25 prospective entrepreneurs participated in the programme. Shri R. Das, IIE faculty, conducted the programme.
EDP ON FOOD PROCESSING AT MANIPUR, SIKKIM & MEGHALAYA:-
Indian Institute of Entrepreneurship organised four Entrepreneurship Development programme on Food Processing at Gangtak and Namchi in Sikkim, Nongpoh in Meghalaya and Imphal in Manipur. Ministry of Food Processing Industry, Government of India, sponsored the programme. The main objective of the programme was to create awareness about entrepreneurial opportunities in food processing sector and to develop the confidence level of the participants so that they can take up entrepreneurship as a career. During the programme, inputs were given right from entrepreneurial motivation, identification and selection of right type of product, service, enterprise launching, financial planning to enterprise management. Practical training and demonstration on processing of different food items was also arranged during the programme period. Apart from in house faculty, resource persons from various promotional & financial institutions and successful trained entrepreneurs were also invited to share their experiences with the participants. The Programme at Imphal was conducted during June 15 to July 13, 2004. The programme was inaugurated by Shri P. Biren Singh, GM, DIC, Imphal-East. Shri S. Kishorjit Singh, Professor, Manipur Institute of Management Science (MIMS), Manipur University, in his valedictory address highlighted about the future scope and challenges ahead of the entrepreneurs. The programme was conducted by Er. W. Ranjit Singh. The programme at Gangtak was conducted from 7 July to 8 August 2004 and attended by 25 participants. Shri P. Goswami was the Programme Director. The programme at Nongpoh was conducted from 6 July to 2 August 2004 and attended by 18 youth of the area. Shri B. Das was the Programme Director. The programme at Namchi in Sikkim was conducted from 19 August to 15 September 2004. The programme was attended by 30 participants. Shri A.S.S. Dewan was the Programme Director.