CHAPTER - III GROWTH AND WORKING OF SMALL SCALE INDUSTRIES IN ANDHRA PRADESH In this chapter an attempt is made to discuss the growth and working of small-scale industries in Andhra Pradesh in general and Krishna district in particular. In addition to the growth and development of the small scale industrial units in sample regions of the selected district, it also presents the special economic zones and the various special schemes offered to promote the small scale industrial units. The industrial sector has gained in strength slowly but surely in many ways over the last decade or so. This has become possible due to proactive role of the State, viz., effective policy implementation including single window clearance and incentives, establishing world class infrastructure and most important, making available power at the cheapest industrial tariff, thereby releasing entrepreneurial energies in private as well as public sector. A positive mindset of the vast labour force across the industries has also played significant role in this growth process. The State is committed to provide world-class facilities like shipyards, airports, expressways, and quality power supply, water supply, etc. The government has taken-up various initiatives to achieve the desired growth rates in the Industrial sector during the 11th Five Year Plan period. The Department of Industries was established in 1960 with the objective of establishing Cottage and Small Scale Industries, Industrial Co-operatives and extending credit to artisans. Block-level training-cum-production centers,
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Rural Artisan Complexes and Guilds were established for giving necessary training to the artisans in rural areas. The Department was transformed into a technical and promotional agency for providing necessary assistance and service for establishment of industries. The Department has implemented several self-employment schemes promoted by State and Central governments for educated unemployed youth. The Department has rendered its services to other government agencies, like DRDA, Youth Services, STEP Societies, SC/ST/BC/Minorities/Women’s Finance Corporation, etc., by providing necessary technical guidance. The Department is now entrusted with the task of attracting investments (domestic as well as foreign) by preparing suitable policies for various sectors of the industry, to explore the availability of resources, to provide conducive industrial environment, to increase in labour intensive industries and to improve the exports by providing market inputs to exporters. The Department is concentrating on development of key sectors like pharmaceuticals, biotechnology, food processing, agro-based, chemicals, leather, textiles, precision components, aero-space engineering, electronics, semi-conductors, automobile and auto-components to accelerate the industrial growth in the State. It is achieved by creating sector-specific industrial infrastructure such as biotech parks, textile parks, leather parks, auto parks, fabcity and hardware parks.
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District Industries Centers: District Industries Centers were established in 1978 to serve as the nodal agency in the districts to assist the entrepreneurs for establishment of the Industries. The District Industries Centers are entrusted with the responsibility of providing all approvals/ clearances needed for setting up an industry under single window. The District Industries Centers are implementing agencies of MSMED Act and issue Entrepreneur Memorandum (EM) for Micro, Small and Medium Enterprises (MSME) besides maintaining effective liaison with various financial institutions in arranging required credit facilities. The District Industries Centers maintain all the data pertaining to the industrial development of the district.
Single Window Act: Government has enacted “Industrial Single Window Clearance Act” in 2002 for speedy processing and issue of various approvals/ clearances/ permissions required for setting-up of industrial undertakings and also to create an investment friendly environment in the State. Statutory time limits have been prescribed for various departments and concept of deemed approvals have been introduced under this Act. Since the beginning of the Single Window Act, 70,302 clearances were issued under single window in respect of 40,129 units (Micro, Small, and Medium and Large units) with a proposed investment of Rs.2, 32, 958 crore and an employment potential of Rs.9, 40, 869 as on 30-092009. The District Industries Centers (DICs) have been delegated the powers to
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process the proposals up to Rs.5.00 crore investment in plant and machinery in District Single Window Clearance Committee (DSWCC).
Growth and Development of Micro, Small and Medium Enterprises: Investment limits were enhanced with the enactment of Micro, Small and Medium Enterprises Development (MSMED) Act 2006. Government of India has unveiled a policy best suited for the micro, small enterprises with the objective to achieve 15 per cent annual growth rate, increase employment generation, create congenial and hassle-free environment, help the small scale industrial sector to acquire new technology and skills, improve the export performance, promote linkage between the large and small scale sector and to promote an appropriate institutional mechanism to revive sick industries.
Table - 3.1. Growth of Micro and Small Enterprises in Andhra Pradesh during the period 2000-01 to 2010-11 (Rs. in Lakh)
Particulars Number of MSEs Fixed investment (Rs. crore) Employment
2000 -01 2004 -05 2007 -08 2009-10
2010 -11
Average growth (%)
1.37
1.44
1.49
1.58
1.67
2.2
3,425
4,425
5,849
10,504
15847
36.26
11.95
12.86
13.62
15.32
16.82
4.1
Source: Government of Andhra Pradesh, Bureau of Economic & Statistics, 2010-11.
Table-3.1 shows the growth of micro and small enterprises in Andhra Pradesh during the period 2000-01 to 2010-11. It can be seen from the data that the no. of micro and small enterprises increased from 1.37 lakh to 1.67 lakh 94
during the period of study with an average growth rate of 2.2 per year. Further, the fixed investment also registered a growth of 36.26 per cent from 3,425 crore to 15,847 crore during the period of study. At the same time the rate of growth in employment recorded as 4.1 per cent from 11.95 lakh to 16.82 during the same period. The progress of the state in respect of number of enterprises and employment works out to be less when compared to the increase in fixed investment. Thus, it can be said from the foregoing discussion that there is a positive growth and development of micro and small scale enterprises in Andhra Pradesh during the period 2000-01 to 2010-11.
Table - 3. 2. Annual Growth Rates of MSEs in Andhra Pradesh (%) during 2001-11 Particulars
2000-01 2004-05
2007-08
2009-10
2010-11
Number of MSEs
1.2
1.9
2.9
3.1
5.63
Fixed investments
6.8
18.7
35.0
33.3
50.86
Employment
1.8
3.6
5.7
6.4
9.85
Source: Computed from the collected data.
The annual growth rates of micro small scale enterprises in Andhra Pradesh during 2001-11 are shown in table-3.2. The growth rates for specific periods as given reveal that there are some variations, with 2000-01 recording the lowest rates, and recovery noticed from 2004-05 onwards, and with the best results brought about during 2007-08.This phenomenal growth may be due to the special attention towards small scale industries by the government.
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After the Micro, Small and Medium Enterprises Development Act have become operational from October 2006, manufacturing and service activities are covered under the Small and Medium Enterprises (SMEs) Sector. The investment limits applicable to micro, small and medium enterprises in the manufacturing and services categories are presented in table-3.3.
Table - 3. 3. Classification of Micro, Small and Medium Enterprises from October 2006 Act Category
Micro Enterprises
Small Enterprises
Medium Enterprises
Manufacturing enterprises in terms of gross investment in plant and machinery
Not exceeding Rs.25 lakh
Rs.25 lakh to Rs.5 crore
Rs.5 crore to Rs.10 crore
Service enterprises in terms of gross investment in equipment
Not exceeding Rs.10 lakh
Rs.10 lakh to Rs.2 crore
Rs.2 crore to Rs.5 crore
The pattern of data presentation for the Small Scale Industries (SSIs) of earlier years is being continued on the same lines even after 2006. Hence, the activities referred to as small scale industries in early years are now called Micro and Small Enterprises (MSEs) covering manufacturing and service segments. The data for medium enterprises are not yet integrated with small scale enterprises. They continued to be treated as medium and large enterprises for purposes of data presentation.
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Development of Micro Small Scale Enterprises in Andhra Pradesh – A Regional Analysis: The development of micro and small scale enterprises has been analyzed region–wise and for the state as a whole for Andhra Pradesh.
Table - 3.4. Categorization of regions and sub-regions in Andhra Pradesh for analysis of industrial development S. No
Regions
Districts covered
1.
Hyderabad region (4 districts)
Hyderabad, Rangareddy, Mahabubnagar
2.
Rest of Telangana (6 districts) Telangana region (10 districts)
Adilabad, Nizambad, karimnagar, Nalgonda, Warangal & Khammam Total of Hyderabad region & rest of Telangana
North Coastal Andhra (5 districts) South Coastal Andhra (4 districts)
Srikakulam, Vizianagaram, East & West Godavari, Visakhapatnam. Krishna, Guntur, Prakasam and Nellore
6.
Coastal Andhra region
Total of North and South Coastal sub – Regions
7.
Rayalaseema ( 4 districts)
Chittoor, Kadapa, Anantapur, Kurnool
8.
Andhra Pradesh (23 districts)
Total Telangana, Coastal Rayalaseema regions.
3. 4. 5.
Medak
Andhra
Source: Commissionerate of Industries, Andhra Pradesh, Hyderabad.
Normally, the State is represented in terms of three regions as shown above. It is considered advisable to treat the whole State of three regions as five sub–regions. Hyderabad and three districts around Hyderabad, influenced by the metropolis, have many advantages for faster industrialization. Similarly, North Coastal Andhra region, with Visakhapatnam, as the next level city has
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and
&
influenced the growth of industrialization in the neighboring districts. Dispersal of industries is part of the design of industrialization in the small, medium and large enterprises. The data collected from the Commissionerate of Industries, Andhra Pradesh with regard to permanently registered micro and small scale enterprises in respect of Andhra Pradesh as a whole, with break-up presented region–wise are analyzed for number of enterprises, gross fixed investment and employment for the period 1995 to 2010 in spells of 4 to 5 years. The regional break-up presented for these three parameters for analysis of the levels of industrialization in MSEs is shown in table-3.5 to 3.10.
Share of Micro and Small Scale Enterprises (MSEs): The analysis on the share of micro and small scale enterprises for the three regions including sub–regions, and the state as a whole for the period ending March 1995- 2010 is shown in table-3.5. It can be seen from the data that the share (%) of micro and small scale enterprises is more in Telangana during all the years of study except in the year 1995. The share of Hyderabad region is the highest, and contributed to the higher share of Telangana in all the years. Analysis of the share of micro small scale enterprises in Andhra region is more or less the same during the period of study. The share of Rayalaseema has declined steadily and remained stationary, because of the substantial increase in Hyderabad region. It can be concluded from the foregoing analysis that the Telangana region is attracting more number of small scale entrepreneurs due to the availability of various required 98
facilities to the growth and development of the small scale enterprises in this region of the state.
Table - 3.5. Share of Micro Small Enterprises in A. P. : Region – wise (%) Regions
1995
2000
2004
2006 2007
2008
2009
2010
Hyderabad Region
22.4
26.4
27.2
27.6
27.7
28.3
28.9
34.47
Rest of Telangana
20.2
19.9
19.7
19.6
19.5
19.3
19.1
14.97
Telangana
42.6
46.3
46.9
47.2
47.2
47.6
48.0
49.45
North Coastal Andhra
24.7
23.5
23.0
22.8
22.7
22.3
22.0
20.27
South Coastal Andhra
20.1
18.6
18.5
18.6
18.6
18.6
18.6
20.38
Coastal Andhra
44.8
42.1
41.5
41.3
41.3
40.9
40.6
40.66
Rayalaseema
12.6
11.6
11.6
11.5
11.5
11.5
11.4
9.89
Andhra Pradesh
100
100
100
100
100
100
100
100
Source: Computed from the collected data.
Growth rate of micro and small scale enterprises: The cumulative and annual growth rates micro and small scale enterprises in the selected regions of the State are presented in table-3.6.
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Table - 3. 6. Growth rate of Micro and Small Scale Enterprises in A P: Region – wise CAGR (%) during
Annual Growth (%)
Region
2009-10 1995 -00
2000 – 04
2004-0 9
2006 - 07
2007 - 08
2008- 09
Hyderabad Region
7.1
2.0
3.2
2.5
5.1
5.1
43.70
Rest of Telangana
3.4
1.0
1.3
1.0
1.9
2.0
128.61
Telangana
5.4
1.6
2.4
1.9
3.8
3.8
61.91
2.7
0.7
1.1
1.0
1.3
1.9
196.61
2.1
1.1
2.0
2.2
2.9
2.7
139.5
Coastal Andhra
2.4
0.9
1.5
1.5
2.0
2.2
164.44
Rayalaseema
2.0
1.2
1.6
1.3
2.0
2.8
87.08
Andhra Pradesh
3.7
1.2
1.9
1.7
2.9
3.1
95.41
North Coastal Andhra South Coastal Andhra
Source: Computed from the collected data.
Taking the absolute values of the cumulative picture at the respective periods, Compound Annual Growth Rates (CAGRs) have been worked out in respect of the number of small scale enterprises in the selected State of the study. The period 2000-04 recorded lowest growth rates, and recovery has been noticed from 2004 to 2010 and recorded the fastest growth. Among the three regions, Telangana region performance has been the highest and thus higher than the State as a whole. Coastal Andhra and Rayalaseema have recorded lower performance, though the broad trend is on similar lines. Hyderabad region of four 100
districts has recorded the highest performance, even in the period of recession. Further, it is also observed that the Rayalaseema region performance can be considered moderate. The performance of North Coastal Andhra is lower compared to that of South Coastal Andhra. It can be concluded from the foregoing discussion that Coastal Andhra and Rayalaseema performance can be considered lower compared to the State as a whole.
Fixed Investment in MSEs: To analyze the performance of industrial development of any segment, its fixed investment has to be known. The analysis of share of fixed investment in micro and small scale enterprises region–wise is presented in table-3.7. The data in table-3.7 revealed that the share of Telangana has all along been the highest among the three regions, remaining in the 50.0 to 57.4 per cent range, and steadily improving every year, with the best performance in 2008 to 2010. This is corroborated by the highest performance in terms of share of Hyderabad region, improving from 35 to 45 per cent of the State total. The share of the rest of Telangana declined from 15.4 to 11.98 per cent largely due to the fast growth of Hyderabad region. The share of Coastal Andhra has declined from 40 to 34 per cent over years, and that of Rayalaseema has also declined from 11 to 7.25 per cent. The figures speak of the fast growth of fixed investment in Telangana region, propelled by the growth of districts around Hyderabad.
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Table - 3. 7. Share of Fixed Investment in Micro Small Enterprises in A. P: Region–wise (%) Regions 1995 2000 2004 2006 2007 2008 2009 2010 Hyderabad Region
34.5
35.1
36.5
36.6
36.8
41.0
43.8
44.82
Rest of Telangana
15.2
15.4
14.7
14.7
14.7
14.2
13.6
11.98
Telangana
49.7
50.5
51.2
51.4
51.5
55.2
57.4
56.81
North Coastal Andhra
24.3
21.7
20.5
20.0
19.6
18.5
17.6
19.81
South Coastal Andhra
15.0
18.3
18.5
18.7
19.2
17.6
16.6
16.13
Coastal Andhra
39.3
40.0
39.0
38.7
38.8
36.1
34.2
35.94
Rayalaseema
11.0
9.5
9.8
9.9
9.8
8.7
8.4
7.25
Andhra Pradesh
100
100
100
100
100
100
100
100
Source: Computed from the collected data.
Growth Rate of Fixed Investment: Region–wise analysis: Taking the absolute values of the cumulative picture at the respective periods, Compound Annual Growth Rates (CAGRs) have been worked out in respect of fixed investment in micro and small scale enterprises in Andhra Pradesh during the period of study. The annual and cumulative growth rate of fixed investment in micro and small scale enterprises is shown in table-3.8.
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Table - 3. 8. Growth Rate of Fixed Investment in Micro Small Enterprises in A P: Region – wise CAGR (%) during
Annual Growth (%)
Region 1
2009-10 1995 - 2000
2000 – 04
2004 – 09
2006 - 07
2007 – 08
2008 - 09
2
3
4
5
6
7
8
Hyderabad Region
16.2
7.9
23.1
18.7
50.6
41.9
104.45
Rest of Telangana
16.2
5.5
17.0
16.9
30.4
28.0
116.19
16.2
7.2
21.5
18.2
44.8
38.3
106.82
13.2
5.3
15.1
15.1
27.1
26.8
255.79
20.7
7.0
16.2
20.8
24.1
25.1
173.008
16.3
6.1
15.6
17.9
25.6
26.0
213.17
Rayalaseema
12.8
7.4
15.2
16.2
20.7
28.3
134.63
Andhra Pradesh
15.9
6.8
18.7
17.9
35.0
33.0
137.90
Telangana North Coastal Andhra South Coastal Andhra Coastal Andhra
Source: Computed from the collected data.
It can be seen from data that the period 2000-04 has recorded the lowest growth rates, and recovery has been noticed from 2004. The recent year 200910 has recorded the highest growth rate compared to past years (1995-2009). 2000 – 04 has been a period of recession for the State as a whole, and for all regions. Hyderabad region performed reasonably better compared to all other regions even in the period of recession. Among the three regions, performance of Telangana in fixed investment is outstanding, being higher than the State as 103
a whole, contributed mainly by the high level of growth in Hyderabad region. The rest of Telangana has performed better, compared to North Coastal Andhra. Surprisingly, South Coastal Andhra performance is higher compared to North Coastal Andhra. Rayalaseema performance can be rated as moderate. The performance of Coastal Andhra and Rayalaseema has been lower compared to the State picture. Among the three indicators selected for analysis, fixed investment is a reliable indicator for industrialization, indicating the nature of industrial activity.
Employment in Micro and Small Scale Enterprises: The generation of employment opportunities is one of the slogans of small scale industrial units in any nation and India is no exception. The analysis on the employment in micro and small scale enterprises for the three regions including sub–regions, and the State as a whole for the period ending March 1995- 2010 is shown in table-3.9. It can be seen from the data that the share of Telangana has been all along the highest being in the range of 46 to 49 per cent, with the exception of 1995. Coastal Andhra recorded 45 per cent compared to 42.4 per cent in Telangana. The share of Telangana has increased faster over the years because of faster growth, particularly in districts of Hyderabad region. Employment share of the rest of Telangana districts has been in the range of 20 to 12 per cent, declining over the years, with North and South Coastal Andhra also recording declining trends. The North Coastal Andhra share in employment is better, compared to that of South Coastal Andhra and the rest of Telangana, but 104
showing slight decline over the years. The share of Hyderabad region has been steadily improving from 22 to 37 per cent over the years. It can also be found from the data that the shares of Coastal Andhra and Rayalaseema have declined over years.
Table - 3. 9. Share of Employment in Micro Small Enterprises in A. P: Region–wise (%) Region
1995
2000
2004
2006
2007
2008
2009
2010
Hyderabad Region
22.4
25.7
26.8
27.2
27.5
28.8
30.1
36.78
Rest of Telangana
20.0
20.2
19.9
19.8
19.6
19.2
18.7
11.94
Telangana North Coastal Andhra
42.4 23.6
45.9 22.5
46.7 21.9
47.0 21.7
47.1 21.6
48.0 21.1
48.8 20.7
48.73 23.71
South Coastal Andhra Coastal Andhra Rayalaseema Andhra Pradesh
21.4
20.0
19.9
19.9
20.0
19.9
19.5
16.68
45.0
42.5
41.8
41.6
41.6
41.0
40.2
40.40
12.6 100
11.6 100
11.5 100
11.4 100
11.3 100
11.0 100
11.0 100
10.87 100
Source: Computed from the collected data.
Growth Rate of Employment in Micro and Small Scale Enterprises: Region–wise analysis: The cumulative and annual growth rates of employment in micro and small scale enterprises in the selected regions of the state are shown in table3.10. As it is said one of the objectives of any welfare State is to provide employment to the youth through which development can be achieved. Taking the absolute values of the employment, compound and annual growth rates
105
(CAGRs) have been worked out in respect of employment in micro and small scale enterprises in Andhra Pradesh during the period of study.
Table - 3. 10. Growth Rate of Employment in MSEs in Andhra Pradesh – Region–wise CAGR (%) during Annual Growth (%) 2009-10 Region 1 Hyderabad Region Rest of Telangana Telangana
1995 -00
2000 – 04
2004 – 09
2006 - 07
2007 - 08
2008 - 09
2
3
4
5
6
7
8
6.7
3.0
6.0
4.0
10.7
11.0
25.47
4.2
1.5
2.3
1.4
3.0
4.5
47.89
5.5
2.3
4.5
2.9
7.5
8.4
30.32
North Coastal Andhra South Coastal Andhra
2.9
1.1
2.4
2.2
3.6
4.4
177.66
2.5
1.8
3.1
3.3
5.0
4.0
125.02
Coastal Andhra
2.8
1.4
2.7
2.7
4.3
4.2
153.19
Rayalaseema
2.2
1.5
2.7
1.7
3.5
5.7
85.68
Andhra Pradesh
3.9
1.8
3.6
2.7
5.7
6.4
68.91
Source: Computed from the collected data.
It can be seen from the data in table-3.10 that the annual growth rate of employment in micro and small scale enterprises is showing an increased trend during the period of study. The period 2000–04 recorded the lowest growth rates, and recovery has been noticed from 2004 in employment picture, on the same lines as in the other two indicators. In recent years 2009-10 has recorded the highest growth rate was recorded, compared to the previous years 19952009. The position of Telangana region has been the most dominant in growth 106
of employment during all the periods. Coastal Andhra and Rayalaseema regions have shown lower performance compared to Telangana and also in relation to the State total. South Coastal Andhra has shown better record over North Coastal Andhra in respect of employment intensity of enterprises, with a combination of labour–intensive and capital–intensive enterprises operating in various districts. The Telangana performance has been higher than the state as a whole in all the years, propelled by the fastest growth in districts around Hyderabad. It is also found from the foregoing discussion that the CAGRs and annual growth rates for all categories registered a positive trend in respect of number of MSEs, fixed investment and employment during the period of study.
Special Economic Zones in Andhra Pradesh: India formulated the Special Economic Zone (SEZ) Policy from the year 2000 for accelerating exports. The Special Economic Zone (SEZ) Act, 2005 along with SEZ Rules, 2006 became operational from February 10, 2006. The number of SEZ approvals given by the Board of Approval of the Union Department of Commerce of the Ministry of Commerce and Industry has increased in leaps and bounds since then. The objectives of SEZs are generation of additional economic activity, promotion of exports of goods and services, attracting investment from domestic and foreign sources, developing world–class infrastructure facilities, and creation of employment opportunities. Along with faster pace of industrialization with focus on export promotion, and
107
attracting foreign technology, dispersal of economic activity across regions is another objective.
Role of SEZs in Andhra Pradesh: SEZs notified in the State are spread over 16 out of 23 districts in the state. Out of them, four districts fall in Telangana region. These four districts together account for 61.1 per cent as notified SEZs in the State. The dominance of Telangana region in notified SEZs is thus evident. All these SEZs assist the small scale units for financing and exporting their products.
INDUSTRIAL INCENTIVES (i) Industrial Investment Promotion Policy 2005-10: Government of Andhra Pradesh announced Industrial Investment Promotion Policy 2005-10, in the year 2005-06, extending various incentives for the small scale industries and tiny sector and large and medium scale industries, other than those located in the municipal corporation areas of Hyderabad, Vijayawada and Visakhapatnam. The objectives of the policy are to provide quality infrastructure at the doorstep of the industry, facilitate the industries meet the global quality standards and to support the industries for acquiring the latest methods and technological advancements taking place all over the world. The projects involving substantial expansion / diversification of existing industries in the eligible lines of activities are also entitled for benefits offered under the policy. Following are the incentives offered by the government to promote the small scale industrial units:
108
• 15 per cent investment subsidy on fixed capital investment will be given subject to a maximum of Rs.15.00 lakh. • 100 per cent reimbursement of stamp duty and transfer duty paid by the industry on purchase of land meant for industrial use. • 100 per cent reimbursement of stamp duty for lease of land/shed/ buildings. • 100 per cent reimbursement of stamp duty and transfer duty paid by the industry on financial deeds and mortgages, etc. • 25 per cent rebate on land cost limited to Rs.5.00 lakh in industrial estates/industrial development areas developed by APIIC. • Power cost will be reimbursed @ Rs.0.75 per unit during the first year of the policy and thereafter for the remaining four years, the rate of reimbursement would be so regulated on yearly basis, keeping in view the changes in the tariff structures to ensure that power cost to the industry is pegged down to the first year’s level throughout available period of the benefit. Benefit will be available for 5 years from the date of commencement of commercial production. • 25 per cent of the Value Added Tax paid during one financial year will be ploughed back as a grant by the government towards the payment of tax during next year. Benefit will be available for 5 years from the date of commencement of production, i.e., up to 6th year.
109
• 3 per cent interest subsidy on Prime Lending Rate (PLR) will be given on the term loan taken by new Tiny/SSI industrial units subject to a maximum of Rs.5.00 lakh per year for a period of 5 years. • 8 per cent subsidy on capital equipment for technology up-gradation. • 50 per cent subsidy limited to Rs.1.00 lakh on the expenses incurred for quality certification. • 25 per cent subsidy on specific cleaner production measures limited to Rs.5.00 Lakh. • 50 per cent subsidy limited to Rs.5.00 lakh on the expenses incurred for patent registration
(ii) Special Incentives to Women Entrepreneurs: •
5 per cent Additional investment subsidy on fixed capital investment limited to Rs.5 lakh to micro and small scale enterprises.
•
5 per cent of project cost will be provided as seed capital assistance to micro and small scale enterprises as a grant for industries, which were sanctioned seed capital assistance by prime lending institutions under National Equity Fund Scheme limited to Rs.5.00 lakh.
•
A 5 per cent interest subsidy on Prime Lending Rate (PLR) will be given on the term loan taken by new micro and small scale enterprises subject to a maximum of Rs.5.00 lakh per year for a period of 5 years.
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(iii) Special Incentives to SC/ST Entrepreneurs: •
35 per cent subsidy on fixed capital investment, additional 5 per cent subsidy for SC/ST, Women and additional 5 per cent investment subsidy for the units set-up in the scheduled areas by ST entrepreneurs and ST women entrepreneurs. Maximum limit per unit is Rs.50.00 lakh.
•
100 per cent reimbursement of stamp duty and transfer duty on purchase of land meant for industrial use.
•
100 per cent reimbursement of stamp duty for lease of land/shed/ buildings.
•
100 per cent reimbursement of stamp duty and transfer duty on financial deeds and mortgages, etc.
•
33.33 per cent rebate on land cost in IEs/IDAs limited to Rs.5.00 lakh
•
40 per cent investment subsidy for the units set up in scheduled areas by ST entrepreneurs or ST women entrepreneurs with a maximum limit per unit is Rs.50.00 lakh.
•
Power cost will be reimbursed @ Rs.1.00 per unit for 5 years to all those units which commence commercial production on or before 31-3-2010.
•
50 per cent of the VAT / CST reimbursement for 5 years to all those units which commence commercial production on or before 31-3-2010.
•
5 per cent Interest subsidy on Prime Lending Rate (PLR) on the term loan and working capital taken by the micro and small scale enterprises subject to a maximum of Rs.5.00 lakh per year for a period of 5 years.
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•
5 per cent of project cost will be provided as seed capital assistance to new MSEs as a grant under National Equity Fund scheme limited to Rs.5.00 lakh.
•
For micro and small scale enterprises infrastructure, like roads, power and water will be provided at door step for standalone units by contributing 50 per cent of the cost of infrastructure from IIDF with a ceiling of Rs.1.00 Crore.
•
50 per cent of the cost of infrastructure is raised to 75 per cent in respect of units set up by ST entrepreneurs in scheduled areas.
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8 per cent subsidy on capital equipment for technology up-gradation limited to Rs.50.00 lakh (for MSEs)
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50 per cent subsidy on the expenses incurred for quality certification limited to Rs.1.00 Lakh.
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25 per cent subsidy on cleaner production measures limited to Rs.5.00 Lakh
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50 per cent subsidy on the expenses incurred for patent registration limited to Rs.5.00 Lakh.
(iv) Pavala Vaddi Scheme: Government has introduced a new interest subsidy scheme of “Pavala Vaddi” to reduce the financial burden for setting-up of new micro and small scale enterprises including food processing industries in the State. The scheme shall be applicable to the term loan availed on fixed capital investment by the eligible new micro and small scale enterprises on or after 1-4-2008. The new
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micro and small scale enterprises shall commence commercial production after 1-4-2008 and before 31-3-2010. The new micro and small scale enterprises under IIPP-2005-10, availing term loan from scheduled commercial banks recognized by Reserved Bank of India, APSFC and SIDBI only are eligible under this scheme. (i)
The reimbursable interest on term loan is that portion which is in excess of 3 per cent per annum, subject to a maximum reimbursement of 9 per cent per annum.
(ii) The interest amount paid by the new eligible micro and small scale enterprises to the financial institutions/ banks on the term loan availed will be reimbursed with a maximum limit of 9 per cent on half yearly basis through the concerned financial institutions/ banks. Benefit will be available for a period of 5 years from the date of commencement of commercial production i.e., up to the first half of 6th year or till the closure of the term loan account, whichever is earlier. (iii) This reimbursement to the unit shall not include penal interest, liquidated damages etc. paid to the financial institutions / banks. (iv) The benefit shall be extended only to the eligible new units, which are promptly and regularly repaying the loan installments of principal and interest. (v)
The loan accounts that are classified as over-due in the books of the bank at the time of half yearly closing and those which are classified as nonperforming assets at year-end closing are not eligible for incentives.
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However, if they resume on-time repayments and regularize the arrears, they are eligible for the incentive in the next half yearly period. (vi) The benefit shall be extended only to eligible new micro and small scale enterprises set-up in the State except in the municipal corporation limits of Visakhapatnam, Vijayawada and Hyderabad. However, units under expansion/ diversification are not eligible for this benefit. (vii) The classification of enterprises as micro and small scale enterprises shall be as per the MSMED Act, 2006. (viii) All the definitions and other guidelines not mentioned in the G.O. shall be followed as per the operational guidelines of IIPP-2005-10 scheme.
(v) Bio-technology Park: Government of Andhra Pradesh intends to provide high quality infrastructure at a reasonable cost with integrated services to biotech manufacturing units by setting-up a series of biotech parks throughout the State. Shapoorji Pallonji Biotech Park is such a park set-up at Turkapalli (Village), Shamirpet (Mandal), Ranga Reddy district in an area of 300 acres with a private promoter. To cater to the needs of increasing demand for space, an additional space of 1.2 million sq. ft. is being developed in Phase-II of the park. There are 15 units in Phase-I and 15 units in Phase-II. This apart, APIIC has taken up development of Biotech Park at Karakapatla (V), Mulugu (M) of Medak district in an area of 609 acres, which is adjacent to Phase-I of SP Biotech Park in Toopran (V). Out of the 609 acres of land, an exclusive extent of 100 acres is earmarked and developed as biotech Special Economic Zone
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(SEZ). Government has constituted an Advisory Committee for Biotechnology Park, which will advise the government on the infrastructure to be created, types of units to be allotted site in the Park, etc.
(vi) Growth Centers: Government of India has approved growth centers to provide best infrastructure facilities available in the country in respect of power, water and telecommunications. These growth centers could be magnets for attracting industries in backward districts. The cost of each growth centre is Rs.30 crore. The financing pattern of the growth centre is in the ratio of 2:1. The Government of India have sanctioned 4 growth centers to the State, which are being set-up at Bobbili in Vizianagaram district, Ongole in Prakasam district, Hindupur in Ananthapur district and Jadcherla in Mahabubnagar district.
(vii) Critical Infrastructure Balancing Scheme (CIBS): Government has introduced a new scheme called ‘CIBS’ under which funds will be made available to the Industrial Associations /Service Societies/ NGOs for the up-gradation of the infrastructural facilities such as water supply, power supply, laying of roads, effluent treatment plants, etc., in the existing IEs/ small scale industrial clusters identified under the small scale industrial cluster development programs. The funds will be provided / reimbursed in the ratio of 1:1 between government and IAS/Service Societies/NGOs. In some cases, where the number of sick and closed units and vacant plots are more than 50 per cent, APIIC will share 20 per cent of the estimated cost and the service societies have to contribute only 30 per cent of the project cost. 115
(viii) Integrated Infrastructural Development Centers (IIDC): Integrated Infrastructural Development Centre (IIDC) is to facilitate the setting-up of industries in rural/backward areas and to provide stronger linkage between agriculture and industry. The cost of the centre will be financed by the central government by way of grant and the balance as loan from SIDBI. Government of India has sanctioned 6 IIDC centers in the State, which will be developed by the APIIC Ltd.
EXPORT PROMOTION The exports under computer software contributed more than 50 percent of the total exports from the State during the year 2008-09. The other major exports from the State are drugs and pharmaceuticals, fine chemicals, animal, marine and leather products, engineering items, agriculture and agro-based products, minerals and mineral products, handlooms, handicrafts, textiles, gems and jeweler and imitation jeweler items, electronics and electrical items, etc. The exports from the State increased to Rs.66,698 crore in the year 2008-09 from Rs.57,343 crore of the previous year 2007-08. The growth in exports during the year 2008-09 is 16.31 per cent over the previous year.
Prime Minister Rozgar Yojana (PMRY): The educated constitute nearly 40 per cent of the unemployed. Incidence of unemployment among the educated labour force is 11.8 per cent against 3.8 per cent for educated and uneducated taken together. Further, the incidence is much higher i.e., 26.7 per cent among women than 9.8 per cent among educated men. Women constitute 27 per cent of the educated unemployed. 116
Projection made using alternative techniques put the estimate of educated unemployed at 6-7 million in 1992. This is out of an estimated educated labour force of 52 million. Of the new employment opportunities that are being generated in the economy in recent years, about 45 per cent are estimated to be going to the educated. But, though relatively high, the employment growth of the educated still falls short of the growth of labour force by about 7 lakh in a year. The trend of a higher growth of their employment is likely to continue with the introduction of modern technologies. There may in fact be a shift towards employment of the educated in the activities which hitherto were the preserve of the uneducated. Hence, the problem of the educated needs a special focus within the overall strategy for tackling unemployment. Prime Minister’s Rozgar Yojana (PMRY) seeks to address itself to this problem. The PMRY aimed to provide employment to more than a million persons by setting-up of 7 lakh micro enterprises by the educated unemployed youth during the last four years of 8th Five Year Plan i.e. 1993-94 to 1996-97. The scheme continued in the 9th Five year plan. The scheme has been continuing in the 10th Five Year Plan. It relates to the setting-up of the self-employment ventures in all economically viable projects (except direct agricultural operations like raising of crops & purchase of manure, etc) The scheme also seeks to associate reputed non-governmental organizations in implementation of PMRY scheme especially in the selection, training of entrepreneurs and preparation of project profiles.
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Involvement of Non-Governmental Organizations: State/UT governments may involve
reputed Non-Governmental
Organizations, Chamber of Commerce and Industry, Trade and Industry Associations, etc, right from the identification, motivation and selection of beneficiaries by nominating them in the task force, preparation of project reports. They can also help the borrowers in proper management of the assets, marketing of the products, repayment of loan installment, etc. Training of beneficiaries is another area where they can play a very useful role. State/UT governments should work out the methodologies to associate the reputed NGOs in a manner which will bring the scheme to the doorstep of the potential beneficiaries. Industry Associations should also be requested to urge their members to adopt at least one unit and act as mentor. State governments may provide necessary infrastructure support like provision of industrial sites, shops, water on preferential basis to these entrepreneurs. Provision of sites and sheds at concessional rates to service ventures in urban areas will be essential for the success of service ventures. Many governments are providing various tax concessions and incentives under their Industrial policy. Such concessions should also be extended to the beneficiaries under the scheme.
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Conclusion: The foregoing discussion provides a brief survey of the development of micro and small scale enterprises in Andhra Pradesh. It has sought the highest growth and development of micro small scale enterprises during the last two decades across the regions as well as state as a whole. These industrial units are working with little variations in different regions with reference to number of enterprises, investment and employment creation. The discussion also focused on various industrial promotion and investment schemes in the State since 1956 to date.
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