Research paper.docx

Title-”Evolving Title-”Evolving Opportunities and Encounters for Cottage Industries in Ahmedabad”  Research Report

Submitted by-

Submitted to-

 Harsh kamdar

Dr. Varsha Ganguly

16bal077

Mr. Nadim Khan

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ACKNOWLEDGEMENTS

This report is an attempt to look at the opportunities & challenges of a cottage industry in Ahmedabad. This report deals with the modern day challenges faced by small-scale industries due to globalisation. This report also looks at the legal aspects of the small-scale industries in India.

I am thankful to the authorities for providing their view and cooperating with me f or my research work. I am also thankful to the respondents who helped in the research work. I am especially thankful to Dean and Director of ILNU Dr. Purvi Pokhri yal for giving me this opportunity. I am also thankful to the faculty, Dr. Varsha Ganguly  and Mr. Nadim Khan for giving me an opportunity to work and do the research. I thank to all the people who have directly or indirectly helped me in conducting the research.

Harsh Kamdar(16bal077)

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TABLE OF CONTENTS

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Serial no.

Title

1

Introduction

Page no.

&

Literature

4

Review 2

Statement of Problem

6

3

Research

7

4

Primary Data

8

5

Legal Aspects

11

6

Conclusion

15

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Bibliography

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INTRODUCTION & LITERATURE REVIEW

Cottage Industry is a form of small-scale industry where the productivity of the goods takes place in the houses of the workers, and the workforce include the members of the family. The equipment’s used to generate products are not the hi-tech ones but generally those, which are used at homes.1

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 DK Sinha,Cottage Industry in India: Problems Faced and Benefits, Your Article Library (Feb. 19,2017, 23:20), www.yourarticlelibrary.com/industries/cottage-industry-in-india-problems-faced-andbenefits/42364/. 4

Cottage industry is generally unorganised in character. The units use conventional methods of  production. These types of industries originate in the rural areas where unemployment and underemployment are widespread. Cottage industries; help the economy by engrossing a massive amount of remaining workforce of the rural areas. However, cottage industry cannot be considered as the mass producer of products. It faces major risks from medium or large industries, which demand huge amount of capital investment for all types of hi- end technologies. 2 India has a large and well-developed cottage industry sector. Practically every state and region have their own special niche products made in this sector. Products cover furniture, glassware, wooden artifacts, jewellery sports good, carpets, cane, bamboo and reed baskets, embroidered cloth and garments, and many other items. 3 This report mainly focuses on the opportunities & encounters of cottage industries in Ahmedabad, Gujarat. Gujarat has stayed one of the main states in material and painstaking work creation with a tremendous extension for further development. Gujarat Technical Textiles market is evaluated around Rs. 6,100 crore in 2011-12; contributing around 10% to the national specialized materials yield. Handiworks things, for example, jute makes, toys from the Kuchchh locale have great request. The state is known for its reality renowned twofold ikatPatola from Patan. Home outfitting with strength utilization of weaving, zari work, and so on is another potential zone. Regions like Ahmedabad and Surat have great number of artisans making home outfitting things. “Cottage Industry is often characterized by its enormous potential for employment generation and the person getting employed is basically regarded as a self -employed one. It has been empirically found out that Cottage Industry has given economic independence to the women in the developing as well as developed countries. Cottage industries involve all the famil y members contribution for the development of the family”.4 We can see in this bit of literature how the author talks about the  positive effects of having an empowered cottage industry in a country. Cottage industries create employment opportunities for the people this helps in reducing the unemployment in the country, which ultimately results in a better GDP for the country. This also helps in reducing the crime rates of the country since unemployment has been stated as the root cause of high crime rates. Another perspective that the author brings in the literature is of women empowerment. It sees

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 Ibid at 1.  Ibid at 1. 4  Dr. Merlin Thanga Joy & R. Melba kan,  Emerging Opportunities and Challenges for Cottage Industries in India, vol.3, ijsrp 3

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cottage industry as a mean of giving empowerment to women. It says that in a cottage industry women get equal opportunity to work. This again help in the development of the country. It breaks the stereotypical barrier of women should not work. Women can work in cottage industry/own cottage industry & hence empower themselves. “We depend on cottage industries for many of its needs. We get our clothing from mills but we have to depend on cottage industries for our bell-metal things, for our bangles and buttons. If we allow the cottage industries to decay, we shall do so at considerable loss to ourselves.”5 In this literature, the author talks about the necessity of cottage industries of how a person is bound to cottage industry for his day to day needs. We get anything from our clothes to our food from these industries. They play a vital role in growth of any country & hence exploitation of these from the hands of large-scale industries needs to be restrained. In the words of Dr. V.K.R.V. Rao, ''Small scale and cottage industries have a special claim for consideration in that they are the local investments through which the decentralization of i ndustrial  production can be achieved." 6 Rightly put in by the author that cottage industries or small-scale industries are the local investments through which we can achieve complete decentralization of industrial productions in the country.

STATEMENT OF PROBLEM

Cottage industry is considered for its vast latent of providing employment. Over the years, even though the employment has increased in this industry the income of the people has decre ased. This is because the intermediaries offer low prices to the manufacturers but take heavy chunks of money from the buyers. It is not only the intermediaries and the dealers. The new r evised foreign policies, globalization is also responsible for the current condition of cottage industry. The handloom weavers are facing constant competition from the power looms. These workers have given their whole life to stitching and knitting. The skill that they possess is just unmatchable. They are at the same place where they had started years ago.

Pawan Srivastav, Cottage Industries in India: Necessity, Impact, Advantages, Disadvantages and Solution, ImportantIndia (February 19,2017, 23:25), http://www.importantindia.com/15727/cottageindustries-in-india 5

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 Ibid  at 4.

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Gujarat is a highly developed state & hence is one of the most globally connected state in the country. The foreign policies adopted by the country’s government has resulted in an increase in entry of MNC’s in the state. This has resulted in hampering the growth of the cottage industry in the state & hence even after so many years the condition of the cottage industry in the state remains the same. The main problem before these industries is that they are unable to compete with large-scale industries. The economies of large-scale production are not available to them and therefore they fail to compete with large-scale industries. Cottage industries are the victims when it comes to attracting the attention of modern industry. This calls for preservation and promotion of cottage industries through formulation of public policies directed at improving the industry both in context of income of labourers and technological aspects. It is high time now that the Government took some initiatives. Though in every budget, new promises are made, new policies are made. But, so far none of them has benefitted these people much. They are almost in the same conditions as they were decades ago. Though there’s a marginal increase in their income but if at the same time, we also notice the increase in the expenditures, then, we can say that in fact they are worse now than they were earlier.7

RESEARCH

Objectives

The main objectives of this report are as follows

To find out the problems faced by cottage industry in Ahmedabad



To look at the opportunities evolving in these cottage industries.

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To look at the legal aspect of the same. Which includes steps taken by the government.

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 Ibid at 4.

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Geographic Details Study Area- Swastik cottage industry 679/1, Jagrut Pole Naka, Swaminarayan Mandir,

Swaminarayan, Ahmedabad, Gujarat 380001 District- Ahmedabad city, Ahmedabad, Gujarat.

Research Methodology

This research uses Focused Group Discussion research methodology. Groups of people among  people working in the cottage industry selected randomly were asked a few questions to discuss upon in Swastik Cottage Industry in Ahmedabad. The Discussion was conducted directly by the researcher to collect data. No statistics is actualized in analysing the data since the objective of the research is to study the seriousness of the problems alone.

Profile of the Respondents

In total, 8 people were selected for this FGD to be conducted, out of these 8 people, 6 were males and 2 were females, these respondents were in the age group of 36-46. These people are in the sector for over 5 years and are well experienced, t o give genuine data and make us understand the actual situation.

PRIMARY DATA COLLECTION To collect the primary data the researcher conducted a Focused Group Discussion among the cottage industry workers. The information of all the respondents is attached in annexure.

 Focused Group Discussion

The following questions were asked from the respondents-

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1. What are the changes that you people have noticed in the last decade, especially after the advent of Modi Govt., and the increased Globalisation?

When, this question came up in a FGD, there was a discussion which went on for around 10-15 mins, there were 3 views which came as a result. 2 out of 8 people had an opinion that the cottage industry is stuck at what it was before a decade and what it is after a decade, there are no as such noticeable changes and the industry is stagnant in its growth. 4 people out of the remaining 6, had an opinion that they have been benefited by the increased Globalisation and with more investors taking interest in investing here in the cottage industry, we are moving towards a more settled and stable form and are pretty sure that the industry will grow more and more as the time passes. Remaining 2 people were of the opinion that the government should make some policies and some new regulations for the cottage industry to help the industry grow, and also increase the revenue output of the industry.

2. Since the Govt. claims that it is in support of the small scale industry, and is trying to work for them. Do you people have helped from this and have you received any machines or instruments for the industry?

All the 8 respondents were of the same opinion on this and said that they have been benefited by the measures of government, and have received various machines and technological advances with the help of government.

3. What are some of the changes that you people would like to see in this cottage industry after a decade, and what would you like to suggest for the govt. to think upon and make some changes.?

We would like to expand this cottage industry, increase the overall revenue outcome, creat e better employment opportunities and also make the industry reach at the global level. We need govt. to make it easy for the investors to invest their valuable money and five them some benefits as well for the investment to sustain for longer period of ti me.

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ANALYSIS

After analysing the primary data, the researcher through observation & this discussion concluded that the cottage industries were facing the following problems:

1. Lack of Money:The cottage and small-scale industry is facing the difficulty of capital scarcity. The financial institutions are not ready to provide loans on low rate of interest. This is an obstacle in the ways of small-scale industry development.

2. Competition:10

There is a stiff competition between the small-scale industry and large-scale industry and usually the small-scale industry suffers because of the competition

3. Import Policy:The import policy of the government is not favourable for the small-scale industry. It detects the small-scale industry.

4. Problem of Raw Material:The owners of the small-scale industry cannot get enough raw material what they want. Raw materials provided to them are of poor quality.

5. Old Methods of Production:Small industries use old machines and old methods of production. Due to which the quality of small-scale industries product is very poor. Therefore, they are helpless to sell the product at low rate.

LEGAL ASPECTS

1. The main steps involve in setting up a Micro, Small & Medium Enterprise are as below 8 :-

Project Selection Technology and Machinery Arranging Finance Unit Development

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DEVELOPMENT COMMISSIONER (MSME), MINISTRY OF MICRO, SMALL & MEDIUM ENTERPRISES, available at http://dcmsme.gov.in/howtosetup/getstart.htm.

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Udyog Aadhaar Memorandum & Addresses of DICs Approvals Clearances Quality Certification

2. The lawmakers of the country also knew about the importance of Small-Scale Industries & therefore they provided different type of mechanisms in the constitution to protect the rights of this sector.

 Ar ticle 43A  {Participation of workers in management of industries} The State shall take steps, by suitable legislation or in any other way, to secure the participation of workers in the management of undertakings, establishments or other organisation engaged in any industry. Provision mentioned in this part is not enforceable by Court orders. 9

3. Government Policies for Development and Promotion of Small-Scale Industries in India 1. Industrial Policy Resolution (IPR) 1948:-The IPR, 1948 for the first time, accepted the importance of small-scale industries in the overall industrial development of the country. It was well realized that small-scale industries are particularly suited for the utilization of local resources and for creation of employment opportunities. However, they have to face acute problems of raw materials, capital, skilled labour, marketing, etc. since a long period of time. Therefore, emphasis was laid in the IPR, 1948 that these problems of small-scale enterprises should be solved by the Central Government with the cooperation of the State Governments. In nutshell, the main thrust of IPR 1948, as far as small-scale enterprises were concerned, was ‘protection.’10 2. Industrial Policy Resolution (IPR) 1956:- The main contribution of the IPR 1948 was that it set in the nature and pattern of industrial development in the country. The post-IPR 1948 period was marked by significant developments taken place in the country. For example, planning has  proceeded on an organised manner and the First Five Year Plan 1951-56 had been completed.

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I NDIAN CONST, ART 43(A).  DK Sinha, Government Policies for Development and Promotion of Small-Scale Industries in India, YourArticlelibrary, (Feb. 23, 2017, 03:02 a.m.), http://www.yourarticlelibrary.com/essay/economicsessay/government-policies-for-development-and-promotion-of-small-scale-industries-in-india/41015/ 10

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Industries (Development and Regulation) Act, 1951 was also introduced to regulate and control industries in the country.11 3. Industrial Policy Resolution (IPR) 1977: During the two decades after the IPR 1956, the economy witnessed lopsided industrial development skewed in favour of large and medium sector, on the one hand, and increase in unemployment, on the other. This situation led to a renewed emphasis on industrial policy. This gave emergence to IPR 1977. 12

4. Industrial Policy Resolution (IPR) 1980: The Government of India adopted a new Industrial Policy Resolution ( IPR) on July 23, 1980. The main objective of IPR 1980 was defined as facilitat ing an increase in industrial production through optimum utilization of installed capacity and expansion of industries. As to the small sector, the resolution envisaged:

(i) Increase in investment ceilings from Rs. 1 lakh to Rs. 2 lakhs in case of tiny units, from Rs. 10 lakhs to Rs. 20 lakhs in case of small-scale units and from Rs. 15 lakhs to Rs. 25 lakhs in case of ancillaries. (ii) Introduction of the concept of nucleus plants to replace the earlier scheme of the District Industry Centres in each industrially backward district to promote the maximum small-scale industries there. (iii) Promotion of village and rural industries to generate economic viability in the villages well compatible with the environment. Thus, the IPR 1980 reimphasised the spirit of the IPR 1956. The small -scale sector still remained the best sector for generating wage and self-employment based opportunities in the country. 13

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 Ibid  at 10.  Ibid  at 10. 13  Ibid  at 10. 12

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5. Industrial Policy Resolution (IPR) 1990: The IPR 1990 was announced during June 1990. As to the small-scale sector, the resolution continued to give increasing importance to small-scale enterprises to serve the objective of employment generation. The important elements included in the resolution to boost the development of small-scale sector were as follows:

(i) The investment ceiling in plant and machinery for small-scale industries (fixed in 1985) was raised from Rs. 35 lakhs to Rs. 60 lakhs and correspondingly, for ancillary units from Rs. 45 lakhs to Rs. 75 lakhs. (ii) Investment ceiling for tiny units had been increased from Rs. 2 lakhs to Rs. 5 lakhs provided the unit is located in an area having a population of 50,000 as per 1981 Census. (iii) As many as 836 items were reserved for exclusive manufacture in small- scale sector. (iv) A new scheme of Central Investment Subsidy exclusively for small-scale sector in rural and  backward areas capable of generating more employment at lower cost of capital had been mooted and implemented. (iv) With a view, to improve the competitiveness of the products manufactured in the small-scale sector; programmes of technology up gradation will be implemented under the umbrella of an apex Technology Development Centre in Small Industries Development Organisation (SIDO). (v) To ensure both adequate and timely flow of credit facilities for the small- scale industries, a new apex bank known as ‘Small Industries Development Bank of India (SIDBI)’ was established in 1990. (vi) Greater emphasis on training of women and youth under Entrepreneurship Development Programme (EDP) and to establish a special cell in SIDO for this purpose. (vii) Implementation of delicencing of all new units with investment of Rs. 25 crores in fixed assets in non-backward areas and Rs. 75 crores in centrally notified backward areas. Similarly, delicensing shall be implemented in the case of 100% Export Oriented Units (EOU) set up in Export Processing Zones (EPZ) up to an investment ceiling of Rs. 75 lakhs. 14

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 Ibid  at 10.

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CONCLUSION Cottage Industries are of cultural and economic importance to India. They keep the age-old traditions alive and provide employment to a number of people. The community should support them & further exploitation of these by the hands of large-scale industries should be controlled. In the over-populated countries like ours (India), the only way to fight the monster of unemployment is the development of cottage and small-scale industries. They will bring about a more equitable distribution of wealth.

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In the words of Dr. V.K.R.V. Rao, ''Small scale and cottage industries have a special claim for consideration in that they are the local investments through which the decentralization of industrial  production can be achieved." It can, therefore said that 'Small is Beautiful'. 15

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Dr. Merlin Thanga Joy & R. Melba kan,  Emerging Opportunities and Challenges for Cottage Industries in India, vol.3, ijsrp Dr. Merlin Thanga Joy & R. Melba kan,  Emerging Opportunities and Challenges for Cottage Industries in India, vol.3, ijsrp

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