Chemical Industry
Chemical industry, the fourth largest industry after textiles, iron and steel and engineering industries in India, produces various basic inorganic and organic chemicals, fertilisers, plastics, pharmaceuticals, pesticides and dyestuffs.
Basic Chemicals : Heavy basic chemicals are those chemicals which are produced on large scale and serve as raw material or processing agents in the manufature of other products. The major chemicals of this category are sulphuric acid nitric acid, soda ash, caustic soda, liquid chlorine, calcium carbide, benzene, acetic acid, acetone, butanol, styrene, PVC, etc. Sulphuric acid most vital in many industries producing factories are located mostly in Kerala, Maharashtra, Gujarat, Tamilnadu, Madhya Pradesh and West Bengal. Caustic soda and Soda ash plants are located at Mithapur, Porbandar and Dhrangadhra, all in Gujarat. Proximity to limestone and sea salt, the raw materials, are the main factors for location of the factories.
Fertilisers : India produces only nitrogenous and phosphatic fertilisers at present. The first state-owned fertiliser unit was set up in 1951 at Sindri in Bihar. There are at present nine fertiliser companies under public sector. They are : (i) Fertilisers Corporation of India Limited (FCI) having units at Sindri (Jharkhand) Gorakhpur (UP), Talcher (Orissa), Ramagundem (AP), (ii) National Fertilisers Limited (NFL) having units at Nangal and Bhatinda in Punjab, Panipat (Haryana), and Vijaipur, (iii) Hindustan Fertilisers Corporation Limited (HFCL) having units at Namrup (Assam), Durgapur (WB), Barauni (Bihar) and Haldia (WB); (iv) Rashtriya Chemicals and Fertilisers Limited (RCF) having units at Trombay and Thal (Mumbai); (v) Fertilisers and Chemicals Travancore Ltd. (FACT) having units at Udyogmandal (Alwaye), and Cochin (Kerala); (vi) Madras Fertiliser Ltd. (MFL) having unit at Manali (Madras), (vii) SAIL with unit at Rourkela (Orissa); (viii) Neyveli Lignite Corporation (NLC) with unit at Neyveli (Tamilnadu); (ix) HCL with unit at Khetri (Rajasthan)
Under cooperative sector the plants are at Kalo, Hazira and Kandla Gujarat and Phulphur (UP). Under private sector some important companies are located at Varanasi, Kanpur, Kota, Broach, Visakhapatanam, Goa, Ennore, Baroda, Tuticorin etc.
There is no problem of making nitrogen and ammonia fertilisers from light petroleum naphtha as this is surplus in India. But production of complex fertilisers depends on the availability of rock phosphates and sulphur which is mostly imported.
Pharmaceuticals : The two premier public sector undertakings engaged in production of drugs are : (i) Indian Drugs and Pharmaceuticals Limited (IDPL) having five plants, one each located at Rishikesh (UP, the largest antibiotic plant in the world), Hyderabad (AP), Gurgaon (Hyaryana), Madras and Muzaffarpur (Bihar) (ii) Hindustan antibiotics Limited (HAL) at Pimpri (Poona).
Pesticides : Hindustan Insecticide Ltd. with its units at Delhi and Alwaye is the leading producer of pesticides in the country.
Localisation Factors
The industries in India are highly unevenly distributed. Except some industries which have grown up by chance, the location of majority of industries is governed by various factors such as availability of raw materials, power resources, concentration of enterprise, water, cheap labour, transport facilities and markets. Besides these geographical factors, there are other factors of historical, human, political and economic nature which are now tending to surpass the force of geographical advantages.
Industrial Regions
Certain amount of agglomeration or regional concentration of industries is also visible in India though the belt and regions of heavy concentration similar to Europe, USA or Japan do not exist so far. Six industrial regions of India can be clearly distinguished : (i) Hooghly Belt, (ii) Mumbai-Poona Belt, (iii) Ahmedabad-Boaroda Region, (iv) Madras-Coimbatore-Bangalore Region, (v) Chhotanagpur Region, and (vi) Mathura-Delhi-Saharanpur-Ambala Region—arranged in the order of importance.
Hooghly Belt : Running along the Hooghly river, from Naihatti to Budge Budge along the left bank and Tribeni to Nalpur along the right bank, the Hooghly Belt constitutes one of the most important industrial regions of India. The important industries in the belt are jute textiles, engineering, cotton textiles, chemicals, leather-footwear, paper and match works. The factors responsible for development of the Ganga and Brahmaputra plains, proximity to coal, jute and leather producing areas, cheap transport and labour, availability of abundant fresh water, easy discharge facilities, and the persistent British interest in its development. Most of the enterprise and managerial and technical skills came from U.K., in the initial stages but these were gradually replaced by local resources.
Mumbai-Poona Belt : Including Bombay, Kurla, Ghatkopar, Vile Parle, Jogeshwari, Andheri, Thana, Bhandup, Kalgan, Pimpri, Kirkee-Poona and Hadapsar, this belt has a heavy concentration of cotton textile, engineering and chemical industries. Cotton textile industry, the nucleus of industrial growth in the area, began here during the 1850s as a result of Parsee enterprise. Development of hydro-electric power in the sahyadris later on, availability of raw cotton in Maharashtra and Gujarat, cheap labour from Konkan besides the most important factor namely the port facilities of Bombay contributed to the development of cotton mills here.
Ahmedabad-Baroda Belt : Comprising Kalol, Ahemdabad, Nadiad, Baroda, Broach, Surat, Navasari and Ankleshwar, this region produces cotton textiles, chemicals and engineering goods on a large scale. The cotton textile industry had developed in Bombay initially to export yarn to China. Ahmedabad, situated in a cotton growing tract of Gujarat has emerged as the second largest centre of cotton textiles after Bombay. The power problem, a handicap till recently, has been met successfully as a result of the completion of a number of projects including Dhuvaran Thermal Power Station, Uttaran Gas Power Station, Ukai Hydro Electric Project and Tarapur Atomic Power Project. Cheap transport all-along the coast, raw cotton in South Gujarat and Kathiawar and skilled labour from the Gujarat Plains are the chief advantages of this region.
Madurai-Coimbatore-Bangalore Region : Cheap cotton, a large market, cheap and skilled labour and supply of cheap power by the development of hydroelectric power projects at Mettur, Sivasamudram, Papanasam, Pykara and Sharavati were rsponsible for attracting a number of industries particularly cotton textile to this area. Madras, Coimbatore and Madurai are the leading producers of cotton textiles. Bangalore has cotton, woollen and silk textile together with a number of public sector engineering industries. Leather, chemicals and automobile industries are also located in Madras.
Chhotanagpur Plateau Region : This region comprising parts of Jharkhand and West Bengal produces over 80 per cent of India’s coal (from Damodar Valley), substantial quantities of iron ore, manganese, bauxite, mica and limestone. Jamshedpur, Bokaro, Kulti, Burnpur and Durgapur are centres of steel production. Metallurgical and heavy industries have come up at Asansol, Dhanbad, Bokaro, Ranchi and Jamshedpur, Due to availability of coal, iron ore and other refractory materials in close proximity and the large scale development of metallurgical industries this area is often compared to Rhur region of West Germany.
Mathura-Saharanpur-Ambala Region : This region has two separate belts running in north-south direction between Faridabad and Ambala in Haryana and Mathura and Saharanpur in Uttar Pradesh. The belts merge into a large agglomeration around Delhi which is one of the largest industrial cities in India. It has cotton textile, glass, chemicals and engineering industries. Saharanpur and Yamunanagar have paper mills and Modinagar is a large industrial centre with textile, soap and engineering industries. Ghaziabad is a large centre of agro-industries and Faridabad of engineering industries. Ferozabad is a leading centre of glass works. There are sugar factories situated practically on all major stations along the Delhi-Saharanpur railway line. Mathura has oil refinery. Besides availability of cheap raw materials like sugarcane, raw cotton, sands and wheat bran, a large market is mainly responsible for the industrial development in the area. Thermal power stations of Faridabad and Harduaganj and Bhakra Nangal Hydro Power project supply power to the area.
Problems of cottage industries in India
• Our cottage industries face a number of problems and our cottage workers suffer from several handicaps. The importance of these are given below:
→ Difficulties of Finance. The Indian craftsmen almost invariably suffer from the difficulty of finance. Their poverty and indebtedness are only too well known. Besides, adequate and cheap credit facilities are not available to them. The banks, in general, do not advance any loans to the artisans, the number of co-operative societies is very small, and the low credit of the artisan does not enable him to procure adequate amount of loans. Only two sources remain to the artisan, the money-lender and the traders of the middlemen who supply them raw materials or purchase finished goods from them. The loans obtained from these sources, however, are not only inadequate but are also given at a high rate of interest.
→ Problems of Marketing. Another serious difficulty faced by the cottage units is in the field of marketing. The small producers do not have any proper marketing organisation to sell their output at remunerative prices. And due to the quality and cost advantage of the large industries, the cottage producers find it difficult to compete with them in the sale of their products.
→ Difficulties of Securing Raw Materials. Then there is the difficulty of securing raw materials. The cottage industries are unable to get raw materials at competitive prices. They get supplies which are neither regular and adequate in quantity nor reliable in quality. This raises their cost of production and adversely affects the quality of the finished product.
→ Outdated Machinery and Equipment. Apart from the difficulties mentioned above, the cottage craftsmen use primitive tools and implements. Little attention has been paid to produce and supply suitable machinery and instruments to the worker at concessional rates, there is also the lack of cheap power. All this weakens the competitive strength of the artisans vis-a-vis cheap machine-made goods.
• Other problems of cottage industries relate to the lack of technical knowledge and research, the lack of education, the lack of efficient methods of production, absence of standardisation, etc. Due to these several problems the cottage industries have had a faltering progress in our economy till now.
• The Government has introduced a wide range of policies and programmes to support the development of cottage industries. An extensive network of institutions has been created for this purpose which includes assistance in marketing, purchases, financial support, training facilities, consultancy services etc.
• To accord preference to the small-scale sector the Government has reserved a number of items to be exclusively produced only by the small-scale industries under its store purchase policy, the Government have reserved a number of items which are to be purchased only from the small-scale sector.
• Similarly, a scheme of incentives to the producers in the small-scale sector is also being implemented which includes, apart from other measures, National Awards for the small-scale entrepreneurs. With these measures the small-scale sector has overcome many of its difficulties and is now making rapid progress.
Main problems of Cotton Industry
• The cotton industry is confronted with several problems. The most important problem before the industry is the shortage in the availability of good quality cotton.
Still it is necessary to import sizeable quantities of long-staple cotton in order to enable the industry to produce fine and superfine cloth for which the demand has been steadily growing. But, unfortunately, import is becoming increasingly difficult on account of the foreign exchange crisis. A long-term solution lies only in the increase in domestic cotton production of long-staple variety to the required extent.
• A second problem is the existence of uneconomic units in the industry and the comparatively low productivity of labour in our country. A considerable number of units are of an uneconomic size, and this means higher cost of production.
• Equally important is the problem connected with export promotion. Japan is once again emerging as a formidable rival of India in the foreign market. Several European countries like the Netherlands, Germany, Italy and Spain are also entering the foreign market. Pakistan has also been building up her cotton textile industry. Unless we improve the quality and reduce the cost of the textiles, it would not be possible to contend with the severe competition offered by these countries.
• The cotton textiles are now facing the menace of synthetic textiles in an increasing measures. While in the mid-fifties, cloth out of man-made fibres was totally absent in India, it has caught up rapidly in the recent years. For example, the per capita availability of cloth in 1960-61 was 15 metres of which 13.8 metres was cotton cloth and only 1.2 metre of synthetic cloth. In 1989-90, while the per capita availability of cloth remained slightly higher at 17.3 metres, the share of cotton cloth declined to 11.5 metres while that of synthetic cloth went up to 5.8 metres.
• Research is another aspect which has not received proper attention at the hands of the industry. Unless a determined effort is made to place the industry on a rational basis, its future can neither be bright nor assured. It is incumbent on the mill owners to take necessary steps to ensure that the latest advances in manufacturing technique are adopted.
• It is gratifying to note that the advanced centres of the textile industry in India are becoming more and more alive to the importance of textile research and have already taken active steps in this direction.
• Due to the various problems mentioned above and the mismanagement of the textile mills, the Government adopted the policy of taking over the sick mills. National Textile Corporation has been set up to manage these sick mills and a number of these mills have shown an improvement.
• To put the industry on a sound footing, it would be necessary to bring about a healthy amalgamation of the uneconomic units into a few strong, efficient and economic units. Of late, the government has adopted the policy of taking over sick mills, and the National Textile Corporation has been created for this purpose.
• Currently, the Corporation is managing 125 mills. Such a large scale takeover of mills is not a sign of the health of the industry, but indicates a deep malaise from which it suffers.
• Another direction in which considerable improvement is essential is the replacement of old plant and machinery. The machinery being mostly worn out, is responsible for high costs of production and consequently for the weak competitive position of the industry both at home and in world market. For obvious reasons, rationalisation is inevitable if the industry has to be placed on permanent footing of efficiency.
• The National Textile Corporation has been given the task of the modernisation of the mills and improve their efficiency.
Problems faced by the Jute Industry
• The main problems facing the industry are: Raw material problem, modernisation of plants and equipment and problem of competition and emergence of substitutes.
• The chief difficulty of the industry since partition has been about raw material supply. But in recent years due to the efforts made to increase home production the output of raw jute in India has increased substantially. This has improved the situation considerably and has eased the jute textile industry’s position.
• Another problem being faced by the industry at present is that the equipment in the industry is to a large extent worn out and obsolete with the result that production is inherently uneconomic and the cost of production is unduly high. It is, in fact, very necessary to reduce the cost of production by modernising equipment and making use of up-to- date modern machinery. This will increase the competitive strength of the industry. To encourage modernisation, licences for the import of machinery are being liberally granted to the jute mills. A start has also been made in the manufacture of jute mill machinery in the country. Loans are also being offered through the National Industrial Development Corporation for modernisation of equipment. This is gratifying indeed.
• The Indian Jute Mill Industry is also at present faced with serious competition from foreign mills. A number of countries like South Africa, Brazil, Philippines and Japan have started building up jute manufacturing industry with completely modern equipment. Pakistan has also set up a few big and modern jute factories and has emerged as a powerful competitor.
• Lastly, several substitutes for our jute products have also cropped up. Sisal hemp of Philippines and kenaf of West Indies are being increasingly used in foreign countries as substitutes for jute. The industry has to face still more competition in the open market from the paper bag industry also. It will be difficult for the industry to maintain foreign markets unless expeditious steps are taken to modernise plant and equipment to counter the continuing rise in the prices of jute and jute goods.
Problems of the Iron and Steel Industry
Though the iron and steel industry has made substantial progress during the past three decades, the output of this industry has not been increasing at a pace commensurate with the requirements of our developing economy. The industry is facing a number of problems which has been responsible for fluctuations in its output. Some of the main problems of the industry are:
• Low utilisation of installed capacity. The iron and steel industry suffers from a low utilisation of installed capacity. For example, the capacity utilisation in this industry during 1970-71 was only about 67 per cent of the total installed capacity. While, during this year, the private sector plant, Tata Iron and Steel Company was making 86 per cent use of the installed capacity, the public sector unit, Bhilai, could make use of only 40 per cent of its installed capacity. However, over the past years, there has been some improvement in the capacity utilisation. The industry is making use of nearly 75 per cent of its installed capacity. However, while the Tata Iron and Steel Company is using nearly 90 per cent of the installed capacity, all the public sector steel units are making a much lower use of their capacity. The low use of installed capacity is one of the major causes of slow growth in their production.
• Inadequate reserves of metallurgical coal is one major problem of the industry. Supplies of metallurgical coal being insufficient, it is highly essential that suitable and effective steps are taken for the conservation of this high-grade coal.
• Another main problem of iron and steel industry is the chronic shortage of the outputs as compared with its demand. Because of this, there has always been tremendous pressure on the distribution system that gave rise to black market. It is only with the recent introduction of the dual price policy that the black marketing in steel has come to an end. But efforts at increasing the supply of steel and at the same time curbing the non-essential use have not been successful.
• Another problem of the industry, more particularly in the public sector, is that it has not been able either to make adequate profits or to plough back its own resources for its expansion. Because of constant labour trouble, and inefficient management of the plants, the production of steel and iron has been at a much lower level than it should have been. The maintenance of the plants has not been proper with more than normal breakdowns. The management has been more in bureaucratic hands than in expert hands.
• Still another shortcoming of the industry is the lack of totally inadequate production of special steels and alloys. For the growth of industry and the development of rugged machinery, it is essential that proper types of steel alloys be available to the economy. At present we have largely to depend upon imports of these.
Sugar industry suffers from various wicknesses
• In spite of the progress achieved by the industry, it suffers from certain weaknesses. The first is the faulty location of industry. A large number of the sugar mills are in Uttar Pradesh and Bihar. But these States are not so well suited for the production of sugarcane as Maharashtra and parts of the South.
• The defective location has been responsible for the high cost of sugar produced. There is thus a clear case for re-assessment of the existing position and for the adoption of a policy of licensing by which some greater dispersion of the industry takes place. Mills should be near the markets and in the centre of the sugar cane producing areas. In Maharashtra and Southern parts of India the yield of sugarcane per acre of land is greater and sugar cane crushing season also lasts longer. It is desirable that new sugar factories should be set up in these areas.
• The sugar industry also faces a competition from ‘khandsari sugar’ and ‘gur’. Because of better gur and khandsari prices, the sugar cane growers divert their supply of sugar cane from sugar factories to these producers, thereby leading to a reduction in the production of sugar.
• Another serious weakness of the industry is the high cost of production of sugar. There is greater need for rationalisation of the sugar industry. Most of them lack the standard crushing systems. The sugarcane is of poor quality and its supply is inadequate. So both the quantity and the quality of sugarcane will have to be improved if the cost of production is to be lowered.
• A Development Council has been set up for sugar which is attending to these problems. The cost of sugar can be reduced by the economic utilisation of bye-products like bagasse and molasses. Bagasse or sugarcane waste can be used for the manufacture of paper and newsprint. Molasses can be used for road surfacing and the manufacture of power-alcohol. Such use, as is already taking place, needs to be extended.
• Another aspect of sugar industry relates to the rising price of sugar and the consequent control of prices by the Government. During the period under consideration there has been a wide fluctuation in sugar output from year to year. But at the same time, there has also been a substantial and continuous rise in the demand for sugar due to increasing population, changing sugar-consumption habits and expanding industries. Therefore, while during the 1960’s sugar prices have been rising on account of increasing demand, higher cost of production and periodical shortage of supply, in the 1970’s and early eighties, there has also been a worldwide increase in sugar prices.
• Our country decided to take advantage of these favourable international prices and entered the export market in a substantial way. Over the years, the malpractices of the traders and manufacturers also added to the upward movement of sugar prices.
• The industry is clamouring for a reduction of this burden. The chronic shortage of sugar production in comparison with its demand led the authorities to develop the system of dual markets for this product.
• A portion of sugar is procured as a levy from the sugar mills at a rate much below the open market price, the balance is permitted to be sold in the market at any price which the mills might be able to charge.
• The levy sugar is then supplied at correspondingly low rates to the ration shops and the needy consumers. But the real solution lies in the removal of the chronic problems of cost and low output from which the industry suffers.
Schemes for Boosting Exports of SSI
Export promotion from the small scale sector has been accorded a high priority in the India’s export promotion strategy. It include simplification of export procedures and provides incentives to the SS sector for higher production to maximise export earnings. Following schemes have been formulated to help SSIs in exporting their products; (a) Products of SSI exporters are displayed in international exhibitions and the expenditure incurred is met by the Government. The trade enquiries generated are widely circulated; (b) In order to promote exports from the small-scale sector, manufacturer exporters are given triple weightage for the purpose of recognition as Export House/Trading House/ Star Trading House/Super Star Trading House; (c) In order to enable SSI units to avail benefits of Export promotion Capital Goods, imports of jigs, fixtures, dies, moulds to be allowed for the full c.i.f. value of the licence instenad of restricting it to 20 per cent; (d) To acquaint SSI exporters with latest packaging standards, tech-niques, etc., training programmes on packaging for exports are organised in various parts of the country, in asso-ciation with the Indian Institute of Packaging; (e) Reimbursement of expenses incurred on adopiting bar coding by EAN India upto Rs. 20,000.
India Hydrocarbon Vision 2025
This policy framework strives :
To assure energy security by achieving self-reliance through increased indigenous production and investment in equity oil abroad.
To enhance quality of life by progressively improving product standards to ensure a cleaner and greener India.
To develop hydrocarbon sector as a globally competitive industry which could be bench marked against the best in the world through technology upgradation and capacity building in all facets of the industry.
To have a free market and promote healthy competition among players and improve the customer’s service.
To ensure oil security for the country keeping in view strategic and defence consideration.
Green Fuels
In order to reduce pollution, unleaded petrol is being supplied throughout the country from February 1, 2000. Further, supply of diesel with 0.05 per cent (maximum) Sulphur content and also unleaded petrol with sulphur content of 0.05 per cent (maximum) hitherto supplied in the National Capital Region (NCR), is now being supplied in all the four metropoliton cities.
Compressed Natural Gas (CNG) has already been established as a clean and environment friendly fuel. The retail network of CNG dispensing stations in being expanded in Mumbai and Delhi.
Di-Methyl Ether (DME) is another environment friendly fuel, manufactured from natural gas, and has been recognized as a fuel for the future in the India Hydrocarbon Vision 2025 document., An Indian Combine consisting of IOC, GAIL and Indian Institute of Petroleum have entered into a Joint Collaboration Agreement (JCA) with Amoco (now BP-Amoco) on a 50:50 basis to develop an integrated value chain to bring DME to India and to develop it as a power generation fuel, as an alternative to LPG and as an auto fuel for diesel engines. MOUs to the tune of 2,480 Mega Watt have been secured from independent power producers.
Objective of Disinvestment (Privatisation)
The policy disinvestment specifically aimed at :
(i) Modernization and upgradation of Public Sector Enterprises.
(ii) Greation of new assets.
(iii) Generation of employment.
(iv) Retiring of public debt.
(v) To ensure that disinvestment does not result in alienation of national assets, which through the process of disinvestment, remain where they are. It will also ensure that disinvestment does not result in private monopolies.
(vi) Setting up a Disinvestment Proceeds Fund.
(vii) Formulating the guidelines for the disinvestment of natural asset companies.
(viii) Preparing a paper on the feasibility and modalities of setting up Asset Management Company to hold, manage and dispose the residual holding of the government in the companies in which government equity has been disinvested to a strategic partner.
(ix) Government is taking the following specific decisions:
(a) To disinvest through sale of shares to the public in Bharat Petroleum Corporation Limited (BPCL).
(b) To disinvest in Hindustan Petroleum Corporation Limited (HPCL) through strategic sale.
(c) To allot, in both cases of BPCL and HPCL, a specific percentage of shares to the employees of the two companies at a concessional price.
National Labour Commission
The First National Commission on Labours was constituted on December 24, 1996. The commission submitted its report in August 1969 after examining the relevant issues for labour in both organised and unorganised sectors. Need of the another commission felt in view of massive changes in economic policies. Demand of labour reforms forced the Government of India to constitute another National Commission under the Chairmanship of Ravindra Verma on October 15, 1999. Verma Commission submitted its report to GOI on June 29, 2002 which was made public on September 7, 2002.
Main recommendations of the Verma Commission are following:
- Multiplicity of trade unions should be check so as to make trade union movement more constructive and objective.
- Caste based trade unions should neither be given any assistance, nor encouraged.
- Go slow’ and ‘work to rule’ steps taken by trade unions should be treated as misconduct,
- Necessity of prior approval of government for retrenchment and lay off in industrial units should scrapped.
- All the existing labour laws should be classified under Industrial Relations, Wages, Social Security, Safety and Welfare, and Working Conditions.
- The commission expressed serious concern over excessive holidays in public institutions. It has resulted into stagnation of working environment. The commission is of the view that national holidays should be limited to three (26th Jan, 15th Aug. and 2nd Oct.). Besides these 3 national holidays, 2 provincial and 10 restricted holidays may be given.
- Working hours should be 9 hrs per day and 48 hrs per week. Any worker working more than this limit should be compensated.
- Strikes in Essential services such as water supply, should be decided by vote of affirmation by the majority of the workers.
- These must be a minimum wages at national level, however States/UTs should have statutory right to decide minimum wages which should not be below to national level minimum wages.
- Workers of unorganised sector should be covered by such policy framework which protect them against exploitation, nonpayment of wages, arbitrary retrenchment, access to job, etc.
- Labor welfare measures should contain compensation against accidental injury/death, provident fund, medical benefit, Pension benefit, maternity benefit and child care shelters as well as old age benefits.
- Reforms in labour laws alongwith a broad based social security scheme is a necessity of the time.
