Industrial Policy

Retrospect

1.1 Gujarat State has taken rapid strides in industrial development, since its formation in 1960. As a result, its rank among the states has steadily risen from 8th in 1960 and it is now vying for the top slot. From its traditional textile base, it has diversified into fields like Chemicals, Petrochemicals, Engineering, Pharmaceuticals, Dyes & Dye Intermediates, Food Processing, Agro-based Industries, Dairy, Edible Oils and a host of other sectors. The economic reform process has provided a boost to the efforts of the State towards rapid industrialisation. In terms of the new investments, Gujarat topped the list among States in the country in 1994. Through the successive incentive policies and other investor-friendly measures the State has been striving not only to accelerate the total flow of investment into industrial sector, but also to attract more and more flow to the backward regions with the aim of achieving equitable development of the State. The policies pursued by the State have resulted in increasing employment opportunities, promoting entrepreneurs belonging to weaker sections and also in improving the export performance of the State. Besides visible and notable success in promoting investment in general, dispersal of growth to neglected regions and removing regional imbalances has also been achieved. The diversified base of industry in the State has the capability to sustain long term growth. Industrial development in the State has also resulted oin a structural change in the occupational pattern with share of primary sector in State Domestic Product going down and the contribution of secondary and teritary sector growing substantially. Another heartening development in this regard is that those who started small ventures in the 60s and 70s, capitalizing on the support provided by the State, have grown very fast, entering into the big league and thereby widening the entrepreneurial base of the State.

When the State is entering in the 21st century and considering the fact that the foundation laid today will play a crucial role in our passage to the next century, it becomes clear that the industrial policy of the State has to adequately deal with all factors which have a symbiotic relationship with the industrial development. To pinpoint these factors, it is necessary to indentify the areas of concern emerging as a sequel to the process carried oon so far, and take appropriate corrective and curative measures, lest they should hinder growth in future. Briefly, the areas of concern are as floows :

1. The State has been able to attract substantital flow of investment to the industrial sector during last couple of decades. Although a significant part of this investment has gone to backward talukas, quite a few of the backward areas have been left out from the process of industrial development.
2. As a result of massive investments in the petrochemical, chemical and pharmaceutical industries, the State is facing problem of pollution in the major industrial growth centres. The problem is mainly confined to the older industrial estates which were set up prior to the enactment of various pollution control and environmental protection llegislations.
3. The State Governments efforts at Human Resources Development, particularly in imparting vocational and technical education to its youth, are proving inadequate to meet the requirement of rapid industrialisation of the state. Unless corrective action is taken in time, there may be shortages of skilled and professional manpower in the State.
4. Gujarat enjoys comparatively better infrastructural facilities amongst the States. However, the existing infrastructural facilities are proving to be inadequate to meet the requirement of new investments. Significant investment has to take place for improving infrastructure including social infrastructure.
5. One of the main objectives of the New Industrial Policy introduced by Government of India is to make Indian industry globally competitive. Existing iindustrial sectors will have to undergo substantial restructuring through technological upgradation and modernisation in order to improve productivity, quality of products, designs, consumer satisfaction and cost-effectiveness in order to survive.
6. The State enjoys an enviable record of industrial peace and harmony in industrial relations. However, overall productivity and quality consciousness need significant improvement in order to ensure that the local industry not only survives international competition but also gets established in markets abroad.
7. In order to ensure competitiveness of the local industry, the gestation period of a project going into commercial production has to be kept to the minimum. To achieve this, statutory provisions, rules, regulations and procedures relating to grant of approvals at the State level for setting up and running of industrial units will have to be comprehensively reviewed. Routine and irrelevant restrictions will have to be removed to ensure grant of necessary clearances without any delay.
8. The organisations set up by the State Government to promote and facilitate the process of industrialisation of the State have played a significant role in the rapid industrialisation of the State. However, their objectives and functioning need to be reoriented to conform to the requirements of the era of liberalisation.

Objectives

2.1 While employment generation and balanced regional development will continue to be among the objectives of the new industrial policy of the State, it is necessary in the present context to have wider focus while determining the objectives in view of the concerns expressed. Investment in industry has a multiplier effect on employment generation as rapid industrialisation can create large scale employment directly and indirectly and this can absorb the under - employed of primary sector as also provide employment to the educated unemployed. Parameters of sustainable development should underscore our efforts of industrilisation in future. Environmental protection and pollution mitigation are most important in this regard. Priorities in investment should be guided by the goal of achieving equity in development. To achieve this, there has to be a profound bias in favour of the backward regions and backward and poor people. With these considerations, the objectives of the new iindustrial policy are enumerated below:

1. Accelerate development of the backward areas of the State.
2. Creation of large scale employment opportunities to absorb the swelling ranks of unemployed.
3. Increase the total flow of investment to industrial sector.
4. Accelerating the development of infrastructure and human resources to sustain the long term growth.
5. Achieving sustainable development.
6. Encouraging entrepreneurship and developing technology to promote Swadeshi Spirit.

Approach

3.1 In the present climate of economic liberalisation and globalisation, the States approach needs to be radically different from what it has been till now. The licence regime imposed certain limitations in the approach and this resulted iin each State competing with other States in the country for attracting more investment to that State. The globalisation process is radically transforming this scenario. Multinationals are trying to set up their production facilities in the country and the Indian companies are trying to upgrade their processes and products to become internationally competitive. Parameters of World Trade Organisation, norms pertaining to Intellectual Property Rights, insistence by foreign countries upon prohibition of environmentally unfriendly processes and products and the need to provide a level playing field to strengthen the Swadeshi spirit are other factors that call for change in our approach. International investment flows to areas which are perceived as most investment-friendly. Therefore, the States approach should help in successfully competing with the newly emerging high growth regions of South East and East Asian countries. Gujarat should try to benchmark itself vis-a-vis those regions and not merely be content in competing with the other States in the country in attracting investments. With this approach, Gujarat should be able to take the lead in rapid economic change in the country.

Strategy

4.1 Incentives (1995-2000)

4.1.1 The State Government has been following a policy of incentives for attracting industries to the backward regions of the State. This will continue with specific emphasis on industrialisation of backward and neglected regions of the State with priority on employment intensive industries. In the Incentive Policy 1986, Taluka was considered as the unit of backwardness for promoting new industries for the first time. The evaluation of impact of incentives offered so far by the State indicates that large number of talukas are still to witness adequate industrialisation. The relative backwardness of talukas was decided by Dr.I.G.Patel Committee giving due weightage to different parameters of development viz., Industry, Infrastructure, Education, Health Facilities and so on. The approach of the State Government for new incentive policy will be to provide more incentives to backward talukas, which will be decided taking into consideration the relative backwardness of the taluka as determined by Dr.I.G.Patel Committee and talukas which are yet to witness rapid industrial development.

4.1.2 Various Industries Associations and Industry Groups from time to time have made representations regarding competition amongst States while offering incentive packages. It has been argued that provision of infrastructure facilities should be given more stress than financial incentives. The State Government, however, cannot accept these suggestions unilaterally unless all states jointly take a decision to stop providing incentives and allocate resources provided for incentives for development of infrastructure. In the new Incentive Policy, the State Government will offer incentives to industries located in more backward talukas. Though infrastructure development is most crucial for industrial development, it will not be possible for the State to develop all infrastructural facilities in immediate future. In this context, the State will offer incentives for investment in specific infrastructure.

4.1.3 Normally entrepreneurs belonging to backward class, women and unemployed educated youth normally set up tiny projects initially. In order to encourage these groups of entrepreneurs in setting up industries, the State Government will offer cash subsidy to the extent of 40% for tiny industries. In addition, it has been decided to continue cash subsidy on Capital Investment only for Small Scale Industrial units in order to sustain the growth of Small Scale Sector as well as to encourage local entrepreneurs. Besides, 5% additional subsidy will be continued to Scheduled Castes/Scheduled Tribes entrepreneurs setting up Small Scale units. As regards regional spread, the State Government will be offering incentives at higher rates in more backward talukas. Incentives will be offered for setting up Premier Unit in each taluka with a view to spreading industrialisation. Besides, setting up of Mother Unit will be encouraged to promote exploitation of natural resources and use of local skills. With a view to promoting more employment opportunities, incentives will be offered to identified thrust industries like Ready-made Garments, Electronics, etc. Incentives will also be offered to large projects so as to increase total flow of investment.

4.1.4 The present policy of 19900-95 will come to an end on 15th August, 1995. The units which are under implementation and have taken specified effective steps will be given extension of time limit to go into commercial production beyond 15th August, 1995.

New Industrial Incentive policy 1995-2000 is being issued separately.

4.2 Infrastructure Development

It is well known that no amount of subsidies or incentives can compensate for lack of infrastructure development in a particular area. The experience world over has amply proved that infrastructure development holds the key in promoting industrial development of an area. Government will give specific emphasis on infrastructure development, particularly in backward areas. The State has already set up Gujarat Infrastructure Development Board under the chairmanship of Hon. Chief Minister to allow single point expeditious clearance of infrastructure development projects with private sector participation. The Board would also lay down guidelines and norms for identification of such projects and their clearances. Investment in specified infrastructure will be provided due weightage in determining the quantum of incentive under the new Incentive Policy.

4.3 Land Laws

Easy availability of the right type of land is a crucial factor in the location of an industrial unit. The present laws governing grant of land for industry are rather cumbersome. The State Government will introduce suitable amendments in the present land laws to make land available for setting up industry without protracted paper work and delay.

Procedure for the grant of permissions under various land reform laws would be simplified and time-bound clearances assured. At present, non-agriculturists cannot purchase agricultural land without the prior approval of the Government. This provision causes undue delay in acquiring land for industrial use. Amendments will be carried out in the Bombay Tenancy and Agricultural Lands Act so that bonafide entrepreneurs could purchase land for setting up industrial projects without any delay. Conversion of agricultural land for Non-Agricultural (NA) use for industrial purposes would also be simplified by the introduction of the concept of Deemed NA. Government would stipulate precautionary conditions so that there is no misuse of these facilities and that lands acquired under these provisions are utilised for industrial use within a specified time period. To reduce delay in grant of permission for acquiring land for industrial use, Government will consider further delegation of powers to the Collectors.

Government has identified Agro and Food Processing Industries as one of the Thrust Industries so that the farmers in the State could get better returns for their products in addition to generation of employment in rural areas. In order to ensure that Agrobased projects can be set up with necessary linkages to ensure easy availability of raw material and increase productivity of agriculture in local areas. Government has decided to make necessary arrangements including contractual marketing agreement with farmers.

4.4 Land Use Planning and Zoning

With rapid industrialisation and urbanisation of Gujarat, in order to ensure easy availability of land. Government intends to introduce the concept of land use planning to ensure optimum utilisation of land. Government will try to ensure that rich agricultural land is not diverted for the purpose of industry. To ensure this, it will identify specific sites in backward regions of the State which could be developed for the setting up of industrial estates/zones with necessary infrastructural facilities. One of the main objectives of zoning on the basis of land use planning would be the location of industries in clusters so that the environmental protection measures can be adopted through setting up of common effluent treatment plants, disposal of treated effluents etc. Government will try to prevent haphazard growth of industries which may make pollution control measures as well as optimum utilisation of land difficult.

4.5 Industrial Townships and Urban Development

Urbanisation is the concomitant to industrialisation process. Experience in the State, which is one of the most urbanised States in the country, shows that this is creating a severe burden on the existing urban infrastructure and services which in any case have been already stretched far beyond their designed capacity. In designing industrial growth centres and clusters, therefore , instead of adopting an estate development approach, therefore, instead of adopting an estate development approach, industrial township approach has become necessary. Creating industrial parks with all urban facilities added on, and also promoting new township to act as focal point in urbanisation are some of the aspects which the State would like to promote as a part of the new industrial policy. Development of such township would decelerate, to some extent, the haphazard growth being experienced by the cities and towns in the State. The state would like to promote private sector initiatives in setting up industrial parks and the new townships which can attract investments from not only within the country but also from abroad.

Establishing new ventures is not merely confined to setting up of factories and production facilities. When the State wants to reap the full advantage of flow of investment, it is necessary that facilities like Trade and Finance Centres, Corporate Headquarters, Exhibition Centres, Convention Centres and other facilities of international standard are created for smooth and rapid execution of trade and business dealings. The State is experiencing serious inadequacy in this regard. It is therefore, intended to take up projects for creating such complexes in and around metropolitan centres. The State would be seeking the cooperation and help from well-known designers, planners and developers in undertaking such ventures.

4.6 Power

Gujarat has been fortunate enough to be in a reasonably comfortable position as far as availability of power is concerned. Demand for power has been growing at a rate of 8% to 10% per annum. Apart from requirement of power in the industrial sector, consumption of energy has been growing at a rapid rate in domestic, commercial and agricultural sectors. The State Government has taken the initiatives of promoting new generating capacities with projects totalling 3000 MW in various stages of implementation. However, looking to the rapid rate of industrialisation and urbanisation in the State, it will be necessary to increase the power generating capacity from the present 6165 MW to over 15000 MW by 2000 AD. This will require massive investment for which the State Government has welcomed private sector participation.

Major investments by the private sector in generation and distribution of power will require comprehensive review of the existing statutory provisions, policies and procedures relating to the power sector. The role of Gujarat Electricity Board vis-a-vis the private sector entrants into power sector will also have to be set out in clear terms. Government will address these issues in its Power Policy which is on the anvil.

The State Government will encourage modernisation in industrial units to adopt energy conservation and use of non-conventional sources of energy as well.

4.7 Port Development

Gujarat has over 1600 kms. of coastline and 40 minor and intermediate ports which could be the base for tremendous development. This potential can offer excellent locations for promoting hinterland industrialisation and globalisation. To encourage port based industrialisation, linkages will be provided by setting up infrastructural facilities like tank terminals, warehouses, customs houses and social infrastructure. More potential sites would be identified and prioritised for development by Gujarat Maritime Board, Gujarat Industrial Investment Corporation for joint sector or for privatisation. These ports will be run on commercial basis and would generate own resources for maintenance and future growth. What is critical in this regard is to ensure optimum utilization of this inelastic resource. Systematic development of the coast has the potential of making Gujarat the window to the World, as well as the major entry point for investments flowing into the country. In this context, the State will declare new Port Policy.

4.8 Road Development

This importance of road development for improving transportation and communication network cannot be over-emphasised. Economic viability of several major projects depends upon the existence of road linkages of the right king. Road privatization is getting more and more importance in developing countries. Gujarat has already initiated this process by making amendments in the Motor Vehicles Act. A list of roads with privatization potential has already been prepared. With the Gujarat Infrastructure Development Board laying down the guidelines governing private sector participation, the development of this important infrastructure will take off rapidly.

4.9 Human Resources Development

The rapid industrialisation of Gujarat has highlighted the need for human resources development which holds the key in all round improvement in technology, innovation and productivity. Human resource development will have to cover the entire gamut from basic education, vocational and technical education to professional qualification. Providing skill-specific vocational educational facilities to meet the requirement of industry in a specific area is the best way of generating employment opportunities in local areas. For this purpose, industry will be involved to project the area-specific requirement of various skills, and also in finalising the curriculum in ITIs and Polytechnics so that the local youth could acquire the necessary skills to get absorbed in the industries coming up in the area. At the end of the spectrum of human resource development is the generation of manpower with professional qualifications. With the rapid industrial development and consequential faster growth in the service sectors, a large number of professionals would be required in Gujarat. The State has been fortunate enough to have national level institutes of ex-cellence such as Indian Institute of Management (IIM), National Institute of Design (NID) and Institute of Rural Management (IRMA). However, students from the State have not been able to take full advantage of the location of these institutes in the state. The State Government will initiate efforts to enable the students from Gujarat to successfully complete for admission into these institutes so that they are available to sustain the rapid growth of economy in the State. In addition, the State Government will promote, with the active participation of the private sector, setting up of various management, professional and engineering institutes in different parts of the State. The State Government will also pursue with Government of India the setting up of an Indian Institute of Technology (IIT) in Gujarat in order to provide suitable opportunities to the students in the State and the Region with regard to facilities of higher technical education to meet the requirement of the industries. The State Government will also consider setting up of separate University for technical education. Satellite education will also be encouraged.

4.10 Pollution Control and Environmental Protection

The requirement of sustainable development entails the need to tighten the pollution control measures and environmental safety in the State. The chemical and petrochemical industry alongwith dyes, dye intermediates and pharmaceuticals triggered the industrial transformation of the State in the 70s and the 80s. Since most of the laws relating to pollution control and environment safety came into force in the 80s, there has been some laxity in adhering to the stipulated parameters by the industrial units which had been set up prior to that. In order to comply with the legal provisions as also the standards prescribed by Gujarat Pollution Control Board, the State has contemplated a number of measures like supporting the setting up of common effluent treatment plants in industrial clusters, facilities for collection and disposal of effluents and hazardous wastes in such clusters, tightening the implementation of the laws, strengthening the machinery of Gujarat Pollution Control Board and also supporting the industries in some ways. Industrial development cannot be at the cost of the environment. Alongwith strictly implementing the pollution and environment protection measures, the State would be striving to set right the irregularities in this regard, which has taken place in some industrial clusters. The State would also like to confine the development of highly polluting industries to the zones and designated estates specifically set up for industries so that the pollution control measures can be managed economically and the standards in this regard can be met adequately.

4.11 Mineral-based Industries

Gujarat has several valuable minerals which if properly explored and exploited can go a long way not only in accelerating development of the industry, but also in correcting regional imbalances in the industrial development as many of these minerals are occuring in relatively backward areas of the State. A fine example of this is Lignite. Exploration carried out in the past one decade or so has resulted in identification of good deposits in Kutch and Saurashtra. Lignite based power projects are being set up in these areas. Large limestone deposits are helping in setting up of several cement plants in the State. Other minerals like Bauxite, Bentonite, Marble, Graphite, Granite, Flourspar, etc. Are attracting industrial ventures all over the State. The State intends to systematise the exploration and exploitation of the mineral resources and in doing so, value addition would be one of the basic considerations. Even application of latest satellite remote sensing technology will be encouraged for exploration of minerals. In order to organise the mineral based activities on scientific basis and also to simplify and streamline the present policies, it is intended to bring out a State Mineral Policy during the current year. In addition, setting up of mineral based industries will be encouraged.

4.12 Agro-based Industries

The State Government intends to put emphasis on the development of Agro and Food Processing Industries with the specific objective of ensuring better returns to the farmers for their products as well as creating employment opportunities in the rural areas. The strategy would be to promote industries based on specific farm products in particular areas with priority given to, items having export potential. Infrastructural facilities for this purpose in the form of chain of cold storage, post-harvest storage facilities, cargo complex and facility of air freighting of fresh fruits and vegetables and cut flowers at Ahmedabad airport, etc. Will be developed. Government will disseminate latest technologies in all land-based activities covering agriculture, horticulture, animal husbandry and aquaculture, so that the farmers in specific areas are able to provide the inputs to sustain agro-industry complexes. Private sector will be encouraged to set up such complexes with specific extension measures to compliment the Governments efforts at increasing agricultural yields.

4.13 Thrust Areas

Rapid industrialisation by itself does not really generate significant growth in employment opportunities in the organised sector. In the liberalised environment when Indian industry is striving to be globally competitive, it cannot be burdened with surplus manpower. Employment quotient per unit of capital is comparatively higher in specific industrial sectors and service sector. The State Government intends to promote and encourage certain thrust areas in order to create adequate employment opportunities to absorb the youth entering the job market every year. These areas are as follows:

1. Electronics
2. Ancillary Development
3. Garments
4. Gems and Jewelleries
5. Food and Agro Processing Industry
6. Handlooms and Handicrafts.
7. Leather goods
8. Other labour-intensive industries

4.14 Exports

Gujarat contributes as much as 16% of the total export from the country. However, looking to its present rapid rate of industrial development, there is scope for a quantum jump in exports from the State and higher value addition of its exportable products. Government, therefore, intends to adopt a specific policy of promoting export from the State with higher value addition. Some of the measures will form part of the other schemes such as promotion of agro and food processing industries, development of aquaculture, etc. The main thrust would be in providing infrastructural facilities such as development of ports with bulk handling facilities, setting up of container depots near major industrial growth centres, facilities for product testing and development, particularly for small scale units, encouragement of quality upgradation by adoption of total quality management and ISO series certification, etc.

4.15 Foreign Investment

The State Government will welcome foreign investment particularly in high-tech and high priority industries. The State Government will promote foreign investment and foreign technology tie-ups. In addition, foreign direct investments will be encouraged for infrastructure projects and especially for power generation, port development, construction of roads and bridges as well as social infrastructure such as education facilities, health care facilities and tourism projects. It will actively promote flow of foreign technologies for the technological upgradation and modernisation of different industrial sectors including infrastructure projects in the State.

4.16 Non-Resident Indians

A large number of expatriate Gujaratis have settled in various countries abroad. These NRIs have, through their enterprise and hard work, established themselves in trade and industry in their adopted countries. They not only have investible resources but also high level of skills and managerial capabilities, which can be utilised in setting up world class enterprises in this country. Non-resident Indians, as a matter of fact, have become the second highest source of foreign investment in terms of actual inflow into the country in the post-liberalisation period. The Government of Gujarat intends to use its unique advantage to create and atmosphere for attracting significant NRI investment to the State.

The State had pioneered the concept of promoting NRI investment through the Industrial Extension Bureau. The flow so far has not been very significant considering the potential . The Government, therefore, intends to not only promote NRI investments by offering special incentives, but also by removing irritants to NRIs who are used to certain facilities abroad. The State Government intends to strengthen dissemination of information for selection of projects. Besides, it also plans to consider giving priority/reservation in allotment of plots/sheds in industrial estates or reservation of plots in industrial townships, scheme of construction of luxurious houses for NRIs near major towns and cities.

4.17 Research & Development and Modernisation of Existing Units

Technological upgradation and modernisation of existing units are crucial to the survival of Indian industry in the liberalised era. This will mainly be encouraged by providing necessary incentives under the incentive policy. However, this can be done on a regular and sustained basis only by adequate investments in R&D facilities, which has been a neglected area of Indian industry and which is crucial for Indian industries for acquiring a competitive edge. Government, therefore, intends to encourage and facilitate adequate investment in R & D facilities. Small and medium scale units may not be able to invest in R & D beyond certain minimum testing facilities. In specific industrial sectors, therefore, Government will have to take the initiative in setting up common R & D facilities servicing a large number of units in a specific sector, with financial participation of different industries associations. The management of such establishments will be left to the industries associations or subsidiary companies/societies set up by them so that these are run on professional and commercially viable lines.

In addition to facilitating setting up of common R & D establishments, Government will adopt specific measures to encourage dedicated research sponsored by industries in the Universities and technical educational institutions in the State. This will benefit both the industry as well as the educational institutions. As part of the efforts in this direction, Government will promote the setting up of Science Parks attached to Universities/R & D establishments so that the benefits of technology flow to small and medium enterprises.

The existing industrial establishments will have to upgrade its technological levels on a priority basis in order to survive in the increasingly competitive market place. Investment in R & D facilities can be a long term solution to meet the technological requirements of the industries in the State. Small scale industries in particular will have to source the required technologies from established national R & D establishments in the country as well as from sources abroad. While the medium and large industrial units have the capability of sourcing such technologies, the small scale units will definitely require assistance in locating such sources, adapting the available technology to their requirements and for getting such technologies on reasonable terms. Government will asset the small scale sector in this area. For this purpose, Government intends to strengthen the Industiral Extension Bureau to play a catalytic role in this case.

4.18 Small Scale Sector

The Government is committed to promote the healthy growth of small scale sector. Government will provide positive support to SSI units in such areas as sourcing of technology for technological upgradation and modernisation, improvement in quality of the products of such units through adoption of ISI or ISO 9000 certification. Small scale industries also need assistance towards supply of raw materials and marketing. For this purpose, the existing organisations of the Government such as Gujarat State Financial Corporation, Gujarat Small Industries Corporation and District Industries Centres would be strengthened and reoriented. Assistance will be provided in identifying different products through market research.

4.19 Entrepreneurship Development

Government is concerned that with the restructuring of the financial sector, as a part of liberalisation, there has been a lessening of emphasis on priority sector lending by the nationalised banks. This has adversely affected the changes of first generation entrepreneurs and those from disadvantaged groups in obtaining finance from banks and financial institutions to set up industrial units. Government of Gujarat has always aimed at widening the entrepreneurial base in the State. This is a process which will continue to require positive intervention by the State Government with adequate support. The State Government had pioneered the concept of training for entrepreneurship development by setting up the Centre for Entrepreneurship Development. It would now put greater emphasis on training of first generation entrepreneurs, particularly those belonging to the category of women, Scheduled Castes/Scheduled Tribes and other backward classes and technically qualified unemployed youth. In order to make this training effective and result oriented, it will ensure close and regular coordination with banks and financial institutions so that the persons trained get financial assistance for setting up of industrial units without delay.

4.20 Simplification of Rules & Procedures

Most of the statutory provisions, rules, regulations and procedures relating to the industrial as well as other sectors in the whole country as well as in Gujarat have their genesis in the Licence Permit Raj. Some of the statutes currently in force pre-date the independence of the country and were relevant to the war time requirements of the British India. There is an imperative need for comprehensive review of all the statues, rules and regulations so that they are brought in tune with the reforms and the requirements of the liberalised era. The State Government will set up Task Forces to undertake such reviews with the specific objective of doing away with redundant and irrelevant restrictions and requirements and to simplify the rules and procedures in the remaining areas to facilitate grant of various clearances in an objective and transparent manner.

In undertaking this review, the State Government will not compromise on the basic requirement of safety in the work place and labour welfare measures. On the contrary, it would aim at making these provisions more effective in their administration. Government will not try to enforce all these statutes on the basis of mistrust and suspicion but expect industries to understand their responsibilities for compliance.

4.21 Single Window Clearance System

The State Government is committed to provide the facility of single window clearance to ensure that entrepreneurs do not have to visit different government offices to obtain the required clearances for setting up industrial units in the State. For this purpose, the State Government intends to introduce single window clearance system at the district and the state levels based on a common application backed by computerised processing and clearance through Committees where all the Government departments and agencies are represented.

4.22 Industrial Data Bank

A weak point of the present Industries Administration is the lack of reliable data relating to industrial investments, production, sickness, etc. As a matter of fact, under the earlier regime, Director General of Technical Development (DGTD) in the Ministry of Industry, Government of India, used to collect and maintain production data of different industrial sectors. Most of the industries are no longer under compulsory licensing and this has affected the availability of reliable data on industrial production. The State Industries Administration had no system for collecting production data on a regular basis. Similarly, in the small scale sector, data relating to investment, employment, etc. Are simply not available. Data relating to sickness and closure are entirely historical based on survey carried out at a particular time. This has limited the ability of the State Industries Administration to fix targets for production in different sectors, project and plan for infrastructural facilities, raw material supplies, service back-up, etc. In view of this, the State Government has decided to set up an Industrial Data Bank in the Industrial Extension Bureau, which will be run on a commercial basis.

4.23 Administration

Even the best policy will have limited impact unless it is implemented effectively. Government will therefore aim at strengthening the Industries Administration through computerisation of District Industries Centres and the Industries Commissioners Office and by introducing office automation and modernisation. The State Government will compliment the scheme of Government of India for the computerisation of district Industries Centres so that all the District Industries Centres are computerised and linked to the State headquarters. This would enable not only the flow of data for the proposed Industrial Data Bank, but also allow for effective monitoring of the implementation of all industrial approvals in the State as well as for the operation of the single window clearance system at the district and the state levels.

4.24 Public Undertakings

The State Government undertakings and organisations operating in the industrial sector were set up during the Licence Permit Raj. Their functioning has been influenced by operating in a protected environment. They will be reorganised and reoriented for meaningfully contributing to the efforts of the State Government towards balanced industrial development of the State. The functioning of these undertakings will be on a professional basis with full accountability to the Government for complying with the objectives of the States industrial policy. For this purpose, Government intends to introduce the system of Memorandum of Understanding between the undertakings and the State Government.

4.25 Disinvestment in Public Sector Enterprises

Government has under its consideration various recommendations of the Gujarat State Finance Commission which submitted its report in April 1994 regarding disinvestment in and privatization of State Undertakings. Government intends to take an overall view of these recommendations to decide on the loss-making Public Sector Undertakings (PSUs) which should be wound up. Public Sector Undertakings where part of the Government holding can be disinvested in favour of the general public and those units which can be totally privatised in favour of the general public to be run by a professional management. Government will continue to have dominant stake in only those Public Sector Undertakings which play a critical role in the States development.

4.26 Industrial Rehabilitation

While the Government of India has set up Board For Industrial and Financial Reconstruction under Sick Industrial Companies Act, 1985 (SICA) to decide the revival or the winding up of sick industrial units falling under the purview of the Act, there is no such statutory mechanism at the state level to deal with sick units which do not fall within the purview of Sick Industrial Companies Act, 1985. The State Government had introduced a scheme of revival of non-BIFR and small scale sector units, which provides specific reliefs and incentives as part of package of revival to be decided by a state level committee headed by the Industries Commissioner. The scheme has not had much impact in dealing with sickness in the small scale sector. The Government intends to comprehensively review the scheme and to modify its main provisions so that it plays an effective role in combating sickness in the small scale sector. Revival of sick units will not be possible without the active and full cooperation of financial institutions and banks. In view of this, Government would ensure that the scheme is implemented with the full involvement and participation of the banks and financial institutions. It would also take up this matter with the Government of India and the Reserve Bank of India to ensure that the fullest cooperation is received from

Financial Institutions and Banks for this purpose.

Government feels that the long term solution to tackle sickness in non-BIFR small scale units should be through the setting up of an effective mechanism at the State level. Those units which are not considered revivable should also be wound up without delay. For this purpose, Government will consider setting up of Gujarat Bureau of Industrial and Financial Reconstruction (GIFR).

As far as the sickness of textile mills is concerned, experience in the past has shown that neither nationalisation nor measures aimed at continuing running of these mills through heavy doses of reliefs and concessions have helped to ensure their revival. It is getting established now that nothing short of complete modernisation, often involving total replacement of the old machinery can make these units viable. Policy in future will therefore comprise such measures as can ensure total modernization either by the same management or by taking over of the sick mills by other healthy units.

Cottage Industry Sector

5.1 The importance of the cottage industry sector from the point of view of employment cannot be over-emphasised. Besides employment, this sector has also been responsible for neatly one-third of the countrys export and for continuing traditional skills and cultural heritage of the country in the field of handlooms, handicrafts and other rural based cottage industries. With low level of capital investment, this sector is able to employ a large number of artisans in the rural areas, a large number of whom are women and other weaker sections of society.

The objectives of the industrial policy as far as this sector is concerned are :

1. To enhance the opportunities of the employment and income in the traditional economic activities of cottage industry.
2. To strengthen the marketing infrastructure in this sector to ensure adequate return to artisans engaged in the production and manufacture of large range of articles.
3. To preserve the traditional skill and cultural heritage associated with production in this sector.

5.2 Strategy

The strategy will be two pronged covering both the production and marketing requirements of artisans engaged in this sector.

The activities in this sector being highly diverse and dispersed in remote areas, it has not been possible to service the sector successfully. It is, therefore, proposed to identify pockets or areas of concentration where a number of artisans are engaged in similar or different crafts, who can be clustered together for common servicing by way of design assistance, raw materials, common facilities, etc. This is proposed to be achieved through setting up of Rural Industries Centres to be run either by designated Corporations already working in this sector or by voluntary organisations. The Rural Industries Centre will be a nodal Centre to serve the artisans in a need based manner to help production and improvement in design and technology. It will also have an outlet for marketing, where the exporter or the dealer can get in contact with the artisans.

On the marketing side, the role at present played by the Corporations working in this sector has to be strengthened. The strategy of depending purely on retail outlets or emporia run by these Corporations has touched upon a very limited segment of this sector. It is, therefore, proposed to strengthen marketing by involving the private sector. The Corporations will promote common brand names such as Garvi, Gurjari, Gaurav and Garima, with standardisation and control in quality and collective effort for publicity and advertising. The private marketing network of distributors and wholesalers has to be roped in for the marketing of products in the cottage industries sector to make an impact in terms of adequate return to the artisans engaged in this sector.

5.3 Policy Measures

The following specific policy measures are proposed as part of this industrial policy.

1. The limit of investment of Bankable Scheme and projects in this sector for assistance from Government and financial institutions is proposed to be raised from Rs.60,000/- to Rs.1.00 lakh. This limit will apply to manufacturing, trading as well as servicing activities in this sector. Beneficiaries will be allowed to form groups/cooperatives and the ceiling can be clubbed for higher collective investment.
2. Villagers/Group of Villagers or artisans engaged in similar or different crafts or activities related to cottage industry will be identified as pockets for integrated supply of inputs required for production, such as design assistance, processed raw materials, common facilities for finishing and packaging, etc. As well as providing marketing outlets. This will be achieved through setting up of Rural Industries Centres. These centres will be run by Corporations, Cooperatives or Voluntary Agencies depending on the nature of the activity and the competence of the organisation in relation to that specific area.
3. The scope of activities and organisation of the existing Corporations will be strengthened and these organisations will act mainly as marketing organisations for maintenance of quality and launching of products through common brand names with adequate marketing and publicity efforts.
4. While it is necessary to preserve the traditionality and artistry of many products produced in this sector, it is also necessary to remove drudgery and low productivity by upgrading the technology in a selective manner. The Rural Technology Institute and similar other organisations engaged in this area will be made to take up all crafts/rural industries of the State in a comprehensive manner to achieve upgradation in technology. It is, therefore, proposed to integrate the activities of the technology related institutes such as Rural Technology Institute, Institute of Handloom Technology and State Design Centre and to impart training and reorientation in craft design and rural technology.
5. Women play an important role in the cottage industries sector. The Women Economic Development Corporation will undertake marketing of goods produced by womens organisations.
6. Skilled women will be given priority in bankable and self-employment schemes. Besides, training will be provided to unskilled women.
7. Self employed persons like vegetable vendors, handcart pullers and other such vendors will be offered Interest Free Loan upto Rs.2000/-, of which Rs.1000/- will be offered by way of subsidy.
8. Through workers engaged in handloom sector possess traditional skill and knowledge, large scale employment will be generated through modern techniques in handloom sector with a view to meeting market demand for handloom products. Efforts will be made to improve implementation of Central schemes in this sector. Besides, the State schemes will be reoriented in tune with the requirements of Central schemes. In addition, project based finance will be made available rather than limiting schematic assistance to Industrial Cooperatives alone. For this purpose, it is proposed to strengthen the arrangement of Revolving Fund.
9. Khadi and related activities have witnessed impressive development in the State. These activities have been instrumental in creating large scale employment in rural areas in association with number of institutions. There is a need to strengthen marketing facilities in coordination with all such institutions. In this context, efforts will be made to improve quality of products through upgradation of technology as well as seeking help from experts in this field.
10. Rural artisans, engaged in cottage sector are unable to represent their difficulties to the administration. In order to make them aware of various incentive schemes available for cottage sector, Open Houses will be organised through INDEXT-C.

Implementation

6.1 Government of Gujarat will ensure that the Industrial Policy is implemented expeditiously. To ensure this, it will set up a High Level Committee headed by the Chief Secretary to monitor the implementation of the policy. The Committee will report progress in the implementation to the Cabinet periodically.