chapter - iii growth and working of small scale industries...
TRANSCRIPT
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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 30-09-
2009. 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)
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
Particulars 2000 -01 2004 -05 2007 -08 2009-10 2010 -11
Average
growth
(%)
Number of
MSEs 1.37 1.44 1.49 1.58 1.67 2.2
Fixed
investment
(Rs. crore)
3,425 4,425 5,849 10,504 15847 36.26
Employment 11.95 12.86 13.62 15.32 16.82 4.1
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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
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
S. No Regions Districts covered
1. Hyderabad region
(4 districts)
Hyderabad, Rangareddy, Medak and
Mahabubnagar
2. Rest of Telangana
(6 districts)
Adilabad, Nizambad, karimnagar,
Nalgonda, Warangal & Khammam
3. Telangana region
(10 districts)
Total of Hyderabad region & rest of
Telangana
4. North Coastal Andhra
(5 districts)
Srikakulam, Vizianagaram, East & West
Godavari, Visakhapatnam.
5. South Coastal Andhra
(4 districts)
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 Andhra &
Rayalaseema regions.
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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
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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 1995 -00 2000 – 04 2004-0 9 2006 - 07 2007 - 08 2008- 09
2009-10
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
North
Coastal
Andhra
2.7 0.7 1.1 1.0 1.3 1.9 196.61
South
Coastal
Andhra
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
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
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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 1995 - 2000 2000 – 04 2004 – 09 2006 - 07 2007 – 08 2008 - 09
2009-10
1 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
Telangana 16.2 7.2 21.5 18.2 44.8 38.3 106.82
North
Coastal
Andhra
13.2 5.3 15.1 15.1 27.1 26.8 255.79
South
Coastal
Andhra
20.7 7.0 16.2 20.8 24.1 25.1 173.008
Coastal
Andhra 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
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 2009-
10 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
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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
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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 42.4 45.9 46.7 47.0 47.1 48.0 48.8 48.73
North Coastal
Andhra
23.6 22.5 21.9 21.7 21.6 21.1 20.7 23.71
South Coastal
Andhra
21.4 20.0 19.9 19.9 20.0 19.9 19.5 16.68
Coastal
Andhra
45.0 42.5 41.8 41.6 41.6 41.0 40.2 40.40
Rayalaseema 12.6 11.6 11.5 11.4 11.3 11.0 11.0 10.87
Andhra
Pradesh
100 100 100 100 100 100 100 100
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 table-
3.10. 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
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(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 (%) Region
1995 -00 2000 – 04 2004 – 09 2006 - 07 2007 - 08 2008 - 09
2009-10
1 2 3 4 5 6 7 8
Hyderabad
Region 6.7 3.0 6.0 4.0 10.7 11.0 25.47
Rest of
Telangana 4.2 1.5 2.3 1.4 3.0 4.5 47.89
Telangana 5.5 2.3 4.5 2.9 7.5 8.4 30.32
North Coastal
Andhra 2.9 1.1 2.4 2.2 3.6 4.4 177.66
South Coastal
Andhra 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 1995-
2009. The position of Telangana region has been the most dominant in growth
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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
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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:
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• 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.
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• 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.
• 8 per cent subsidy on capital equipment for technology up-gradation
limited to Rs.50.00 lakh (for MSEs)
• 50 per cent subsidy on the expenses incurred for quality certification
limited to Rs.1.00 Lakh.
• 25 per cent subsidy on cleaner production measures limited to Rs.5.00
Lakh
• 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 non-
performing 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.
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(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.
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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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