A STUDY OF GLOBALISATION AND ITS IMPACT ON SMALL SCALE INDUSTRIES IN THANJAVUR DISTRICT

A thesis submitted to BHARATHIDASAN UNIVERSITY for the award of the degree of

DOCTOR OF PHILOSOPHY IN

ECONOMICS

By

R. GAYATHRI (Ref.No. 005276 /Ph.D.2/Eco/PT/JULY/2007)

Under the Supervision of Dr. D. KUMAR

Associate Professor in Economics

POST GRADUATE AND RESEARCH DEPARTMENT OF ECONOMICS JAMAL MOHAMED COLLEGE

(AUTONOMOUS) College with Potential for Excellence

(Accredited at ‘A’ Grade by NAAC – CGPA 3.6 out of 4.0) TIRUCHIRAPALLI-620 020.

JUNE 2012

Dr. D. KUMAR, P.G. and Research Department of Economics, Associate Professor in Economics Jamal Mohamed College (Autonomous), Tiruchirapalli-620 020.

Date:

CERTIFICATE

This is to certify that the thesis entitled A STUDY OF

GLOBALISATION AND ITS IMPACT ON SMALL SCALE INDUSTRIES IN

THANJAVUR DISTRICT submitted to Bharathidasan University, Tiruchirapalli,

for the award of the degree of DOCTOR OF PHILOSOPHY IN ECONOMICS

is a bonafide record of research work carried out by R. GAYATHRI, under my

guidance and supervision in the P.G. and Research Department of Economics,

Jamal Mohamed College (Autonomous), Tiruchirapalli-20, Tamil Nadu, India.

I further certify that no part of the thesis has been submitted anywhere else

for the award of any degree, diploma, associateship, fellowship or other similar

titles to any candidate.

(D. KUMAR) Research Guide

DECLARATION

I hereby declare that the work embodied in this thesis has been originally

carried out by me under the supervision of Dr. D. KUMAR, Associate Professor,

P.G. and Research Department of Economics, Jamal Mohamed College

(Autonomous), Tiruchirapalli-20 and this work has not been submitted either in

whole or in part for any other degree or diploma at any university.

Place : Tiruchirapalli,

Date :

(R. GAYATHRI) Research Scholar

ACKNOWLEDGEMENTS

I thank God who has showered his bountiful blessings on me on the

successful completion of my thesis.

I express my immense gratitude to my guide Dr.D.Kumar, M.A., M.Phil.,

M.B.A., B.Ed., DPMIR, Ph.D., Associate Professor in Economics, Department of

Economics, Jamal Mohamed College, Trichirapalli for his valuable guidance.

I express my heartfelt thanks to the Principal Hajee Dr.R.Khader

Mohideen, M.Com., M.Phil., Ph.D., M.B.A., Jamal Mohamed College,

Tiruchirapalli who has given me an opportunity to undertake this project as part

of the curriculum.

I owe my deepest gratitude to the Doctoral Committee members and in

particular to Dr. S. Seethalakshmi, Asst. Prof. of Economics, Bishop Heber

College, Trichy, for her valuable guidance.

I am grateful to Dr. P.N.P. Mohamed Sahaputeen, M.A., M.Phil. ,Ph.D .,

H.O.D., of Economics and Vice Principal, Dr. B. Mohamed Rafeeq, M.A.,

M.Phil., Ph.D., Assistant Professor, and all the Staff members of the Department

of Economics, Jamal Mohamed College (Autonomous), Trichirapalli, for their

cooperation in completing the thesis.

My thanks are due to Dr. Abdul Razzak, M.Sc., M.Phil., Ph.D.,

Assistant Professor, SRM University, Tiruchirapalli, for his kind help.

I am indebted to my Professors Dr. T. Govindaraj, Dean of Arts (Retd.)

and Dr. J. Jayasholan, Associate Professor, Department of Economics,

A.V.V.M. Sri Pushpam College (Autonomous), Poondi, for their support and

assistance.

v

I am obliged by the assistance provided by Mr. Ravindran, Manager,

District Industries Centre, Thanjavur and Mr. John, Research Officer,

Directorate of Industries and Commerce, Chennai to accumulate the data

required for the work.

I express my sincere gratitude to Mr. M. Nagarajan, M/s. Nagu

Computers, Thanjavur and Mr. R. Saravanan (INFOS Graaphix, Thanjavur)

for his timely execution of my thesis work.

Above all I extend my earnest thanks with love and dedication to my

beloved family members and friends for their encouragement towards me to

complete my thesis work.

R. Gayathri

CONTENTS

ACKNOWLEDGEMENTS iv

LIST OF TABLES vii

LIST OF FIGURES x

LIST OF ABBREVIATIONS

CHAPTER PAGE

I INTRODUCTION 1

II REVIEW OF LITERATURE 9

III PROFILE OF THE STUDY AREA 102

IV PERFORMANCE OF THE DISTRICT INDUSTRIES CENTRE, THANJAVUR

144

V PROFILE OF SAMPLE BENEFICIARIES 184

VI MAJOR CONSTRAINTS FACED BY SAMPLE BENEFICIARIES

237

VII SPSS DATA ANALYSIS 250

VIII FINDINGS, CONCLUSION AND SUGGESTIONS

272

BIBLIOGRAPHY xiii

APPENDIX: Questionnaire xxxii

LIST OF TABLES

Table No.

Title Page

2.1. Investment limit in SSI sector during the year 1950 to 2006

29

2.2. Plan investment in industries sector in Tamil Nadu 30 2.3. T.N. State Economy : Structure Changes (Percent) 34 2.4. Number of Small Scale Industrial Units (Permanent)

Micro, Small and Medium Enterprises, Investment, Employment and Production in Tamil Nadu

40

3.1. Revenue Taluks in Thanjavur district 112 3.2. District per capita income at current prices and constant

prices – Thanjavur district (1999-2000) series 113

3.3. Performance of Anna Marumalarchi Thittam, Thanjavur 127 3.4. Statement for loans sanctioned by TIIC, Thanjavur 128 3.5. The Agency-wise Plan and Credit Levels of Small

Enterprises 132

4.1. Total number of registered units in the manufacturing sector from 1980-2010

147

4.2. Taluk wise distribution of manufacturing units in Thanjavur dist (1980-1990)

149

4.3. Taluk wise distribution of manufacturing units in Thanjavur dist (1991-2010)

151

4.4. Industry-wise distribution of manufacturing units in Thanjavur district

153

4.5. Distribution of State / Special capital subsidy through DIC from 2000-01 to 2009-10

159

4.6. Distribution of low tension power tariff subsidy through DIC from 1999-00 to 2009-10

162

4.7. Distribution of generator subsidy through DIC from 2001-02 to 2009-10

165

4.8. Distribution of interest free sales tax loan assistance through DIC from 1996-97 to 2009-10

168

4.9. Distribution of interest-free sales tax deferred assistance through DIC from 2000-01 to 2009-10

171

4.10. Distribution of bank loan assistance for working capital through DIC from 1996-97 to 2008-09

173

4.11. Year wise and category wise DIC’ achievements in Prime Minister’s Rozgar Yojana scheme from 2004-05 to 2009-10

177

viii Table No.

Title Page

4.12. DIC’s Achievement in conducting motivation campaign, Industrial Information and Dissemination meeting from 1980-2010

180

4.13. Achievements in conducting entrepreneurs development programme (women) from 2002-03 to 2008-09

182

5.1. Age-wise classification of sample beneficiaries 185 5.2. Community-wise distribution of sample beneficiaries 186 5.3. Sex-wise classification of sample beneficiaries 187 5.4. Marital status wise classification of sample beneficiaries 188 5.5. Educational level of sample beneficiaries 189 5.6. Number of registered units in Thanjavur district 191 5.7. Industry-wise distribution of sample beneficiaries 192 5.8. Details of previous experience of sample beneficiates 195 5.9. Reasons for starting manufacturing industrial units 196 5.10. Distribution of sample beneficiaries based on number of

benefits received 198

5.11. Scheme wise distribution of benefits received by sample beneficiaries

199

5.12. Taluk wise total and average annual production of sample beneficiaries

201

5.13. Industry wise total and average annual production of sample beneficiaries

203

5.14. Taluk wise total and average annual sales of sample beneficiaries

204

5.15. Industry wise total and average annual sales of sample beneficiaries

205

5.16. Taluk wise total and average annual profit earned by sample beneficiaries

206

5.17. Industry wise total and average annual profit of sample beneficiaries

207

5.18. Taluk wise per unit average of annual fixed, working and total capital of sample beneficiaries before and after globalisation

209

5.19. Industries wise per unit average of annual fixed, working and total capital of sample beneficiaries before and after globalisation

211

5.20. Taluk wise per unit average annual employment by sample beneficiaries before and after globalisation

214

5.21. Industry wise per unit annual employment generation by sample beneficiaries before and after globalisation

216

ix Table No.

Title Page

5.22. Industry-wise average annual capacity utilization by sample respondents before and after globalisation

218

5.23. Reasons for less than 50 per cent capacity utilisation before and after globalisation

221

5.24. Taluk-wise per unit average annual average annual variable cost before and after DIC’s assistance

222

5.25. Industry wise per unit average annual variable cost of sample beneficiaries before and after globalisation

224

5.26. Taluk-wise per unit average annual production of sample beneficiaries before and after globalisation

226

5.27. Industry-wise per unit average value of production before and after globalisation

228

5.28. Average annual sales of sample beneficiaries before and after globalisation

229

5.29. Industry-wise average annual sales of sample beneficiaries before and after globalisation

230

5.30. Taluk-wise distribution of per unit average profit earned by sample beneficiaries before and after globalisation

231

5.31. Industry-wise distribution of per unit average profit earned by sample beneficiaries before and after globalisation

232

6.1. Major problems encountered by sample beneficiaries 243 6.2. Marketing problems of sample beneficiaries 244 6.3. Finance related problems sample beneficiaries 245 6.4. Raw materials related problems of sample beneficiaries 246 6.5. Labour problems related to sample beneficiaries 246 6.6. Problems related to technical and managerial 247 6.7. Power supply problems of sample beneficiaries 248 7.1. Taluk wise total and average annual production and sales

of sample beneficiaries 250

7.2. Taluk wise per unit average of Annual fixed Capital, Working capital and Total Capital before and after globalisation

259

7.3. The average annual employment generated by sample beneficiaries before and after globalisation

264

8.1. Top 10 industries suitable for the district 290

LIST OF FIGURES

Figure

No. Title Page

2.1. Definition of Micro, Small and Medium Enterprises Source

37

2.2. Number of Small Scale Industrial units (Permanent) Micro, Small and Medium Enterprises,

investment employment and production in Tamilnadu

42

3.1. Map showing the study area of the Thanjavur district 101

3.2. Staffing Pattern of District Industries Centres 116

3.3. Co-ordinating Agencies of the District Industries Centre 120

3.4. Levels of Monitoring of the programmes of the District Industries Centres

122

5.1. Industries wise per unit average of annual fixed, working and total capital of sample beneficiaries before and after globalisation

213

LIST OF ABBREVIATIONS

ASI - Annual Survey of Industry

BHEL - Bharath Heavy Electricals Limited

DIC - District Industries Centre

EAS - Employment Assurance Scheme

EP - Export Promotion

FERA - Foreign Exchange and Regulation Act

GDP - Gross Domestic Product

GOT - Government of Tamil Nadu

GSDP - Gross State Domestic Product

IDBI - Industrial Development Bank of India

IDRA - Industrial Development and Regulation Act

IMF - International Monetary Fund

IS - Import Substitution

IT - Information Technology

ITES - Information Technology Enabled Services

JRY - Jawahar Rozgar Yojana

KVIC - Khadi and Village Industries Commission

LDC - Less Developed Countries

MIDC - Maharashtra Industrial Development Corporation

MNC - Multi National Corporation

MODVAT - Modified Value Added Tax

MRTP - Monopoly and Restrictive Trade Practices

MSME - Micro, Small and Medium Enterprises

MWS - Million Wells Scheme

NCL - National Commission on Labour

NFCS - National Federation of Cooperative Sugar Factories Ltd.

NPFW - National Programme of Food for Work

NREGA - National Rural Employment Guarantee Act

NREGS - National Rural Employment Guarantee Scheme

xii NREP - National Rural Employment Programme

NSIC - National Small Industries Corporation

NSS - National Statistical Survey

NSSO - National Sample Survey Organisation

OECD - Organisation for Economic Corporation and Development

PCI - Per Capita Income

PMRY - Prime Minister’s Rozgar Yojana

R and D - Research and Development

RIP - Rural Industries Project

RLEGP - Rural Landless Employment Guarantee Programme

SGRY - Sampoorna Gramin Rozgar Yojana

SHG - Self Help Group

SICOM - The State Industrial and Investment Corporation of Maharashtra

SIDCO - Small Industry Development Corporation

SIDO - Small Industries Development Organisation

SIPCOT - State Industries Promotion Corporation of Tamil Nadu

SME - Small and Medium Enterprises

SSI - Small Scale Industries

SWOT - Strength, Weakness, Opportunity, Threat

TANSTIA - Tamil Nadu Small and Tiny Industries Association

TIIC - Tamil Nadu Industrial Investment Corporation

TNEB - Tamil Nadu Electricity Board

TNPCB - Tamil Nadu Pollution Control Board

UNESCO - United Nations Education, Scientific and Cultural Organisation

WB - World Bank

WTO - World Trade Organisation

CHAPTER – I

INTRODUCTION

1.1. INTRODUCTION

1.2. NEED FOR THE STUDY

1.3. RESEARCH GAPS FOUND

1.4. STATEMENT OF THE PROBLEM

1.5. RESEARCH QUESTIONS RAISED

1.6. OBJECTIVES OF THE STUDY

1.7. HYPOTHESES

1.8. PERIOD OF STUDY

1.9. LIMITATIONS

1.10. PLAN OF THE STUDY

CHAPTER – II

REVIEW OF

LITERATURE

2.1. EVOLUTION OF INDUSTRIES IN INDIA

2.1.1. Theoretical Framework for Industrialization

2.1.2. Why Industrialization?

2.1.3. Industrialization and Foreign Trade

2.1.4. The Meaning of industrialization

2.1.5. Evolution of industries in India

2.1.6. Colonial rule

2.1.7. Industrialization since Independence

2.1.8. Industrial Policy Resolution

2.1.9. The Concept of Globalisation

2.1.10. A brief Introduction on Tamil Nadu

2.1.11. Plan Investments in Industries sector in Tamil Nadu

2.1.12. Micro, Small and Medium Enterprises Act 2006

2.2. THEORY AND REVIEW OF LITERATURE

2.2.1. Review of literature related to growth and development spectrum

of small scale industries

2.2.2. Review of literature related to structural changes in the

development of industries

2.2.3. Review of literature related to the employment scenario

2.2.4. Review of literature related to the constraints faced by the small

scale industries

2.2.5. Review of literature related to the review by various committees

CHAPTER – III

PROFILE OF THE STUDY AREA

3.1. THANJAVUR PROFILE

3.1.1. History of Thanjavur

3.1.2. Places of historical importance in Thanjavur

3.1.3. Infrastructural and other improvements

3.1.4. Administration

3.2. INDUSTRY PROFILE

3.2.1. Role of the District Industrial Centre in Thanjavur

3.2.2. Organisational set up

3.2.3. Coordinating Agencies

3.2.4. Industrial Co-operative Wings

3.2.5. Export Guidance Cell

3.2.6. Institutions promoting the growth of industries in Thanjavur

3.2.7. Social development

3.3. METHODOLOGY

3.4. CONCEPTS

CHAPTER – IV

PERFORMANCE OF THE DISTRICT INDUSTRIES CENTRE, THANJAVUR

4.1. DISTRICT INDUSTRIES CENTRE – REGISTRATION OF

SMALL ENTERPRISES 4.2. DISTRICT INDUSTRIES CENTRE – INCENTIVE SCHEMES

AND ASSISTANCE 4.3. DISTRICT INDUSTRIES CENTRE AND ITS PROMOTIONAL

ACTIVITIES 4.4. SUMMARY

CHAPTER – V

PROFILE OF

SAMPLE BENEFICIARIES

5.1. Profile of the sample beneficiaries

5.2. Performance of sample beneficiaries

5.3. Impact of District Industries Centre’s Assistance on small scale

industries promotion during pre globalisation and post-

globalisation

5.4. Summary

CHAPTER – VI

MAJOR CONSTRAINTS

FACED BY SAMPLE BENEFICIARIES

6.1. CONSTRAINTS IN THE IMPLEMENTATION OF DIC

SCHEMES

6.2. PROBLEMS OF THE BENEFICIARIES

CHAPTER – VII

SPSS DATA ANALYSIS

7.1. ANALYSIS AND DISCUSSION

7.2. TESTING OF HYPOTHESES

CHAPTER – VIII

FINDINGS, CONCLUSION

AND SUGGESTIONS

8.1. An Analysis of Pre Globalisation scenario in Thanjavur

8.2. An Analysis of Post Globalisation scenario in Thanjavur

8.3. Major findings of the study

8.4. SWOT Analysis

8.5. Conclusion

8.6. Suggestions

8.7. Scope for Further Research

BIBLIOGRAPHY

APPENDIX