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DOWNFALL OF INDUSTRIES IN INDIA

Foregoing analysis shows that India has made sufficient achievement in industrial development during the last five decades and has emerged as the tenth largest industrialized country of the world. But considering the size of the country this development is far from satisfactory. There are many areas where despite requisite facilities industrial development is either insufficient or completely absent. The pace of industrial progress has been very slow and the growth has always lagged behind the target (except in 7th Five Year Plan). Despite industrial progress self- sufficiency is a distant dream and import substitu-tion a major problem. Under utilization of existing capacity is another major problem which is due to lack of power, raw material and demand.

TEXTILE CRISIS IN GUJRAT

Historically, manufacturing of cotton textiles was the earliest industrial activity in Gujarat. It was Ranchhodlal Chhotalal (1823 98) who inducted the concept of business enterprise among Gujaratis and laid the foundation of modern textile industry in the city of Ahmedabad. The commercial capital was provided by Jain and Vaishnab Vania merchants who had considerable money and wealth at their command and lent that money for business purposes. For arbitration and conciliation of trade disputes there was the Mahajan system having firm roots in Gujarat. Added to Mahajan was Nagarsheths who kept the Mahajans under one umbrella and integrated them into the mainstream of business activity. Nagarsheths also financed the indigenous manufacturers and extended leadership in times of crisis. Cotton textile which enjoyed predominance between 1960 and 1980 consistently moved downwards as against other major industries. The share of number of factories nose dived form 51 per cent in 1960 to 35

per cent in 1980 to 15 per cent in 1993. The consequent fall in

REASONS OF DOWNFALL:
employment share was from 73 per cent in 1960 to 51 per cent in 1980 to 26 per cent in 1993. In the corresponding period the value of output declined from 60 per cent to 28 per cent to 12 per cent only. The share of net value added by textile downturned from 65 per cent in 1960 to 36 per cent in 1980 to as low as 8 per cent in 1993 (Tables 1 and 1.1). The production of cotton yarn in the mill sector also shows a declining trend from 1985 onward. The yarn production went down from 1365 lakh kg.in 1985 to 1176 lakh kg.in 1994 with corresponding declines in production of cloth from 6184 lakh meters to 2291 meters .

Industry has developed elite oriented pattern. Concentration of economic power in the hands of few, regional imbalances, sickness of industries, loss in public sector industries, unsatisfactory labour relations, lack of capital and industrial raw materials, chang-ing policy of the government, and defective licens-ing policy are some of the problems which are hindering the overall industrial development in the country. In following paragraphs an attempt has been made to highlight some of these problems. 1. Unbalanced Industrial Structure Despite all efforts India has not been able to attain self sufficiency in respect of industrial mate-rial. India is still dependent on foreign imports for transport equipments, machineries (electrical and non-electrical), iron and steel, paper, chemicals and fertilisers, plastic material etc. In the total industrial production consumer goods contribute 38 per cent. In newly industrialised countries like Singapore, South Korea and Malaysia this percentage is 52, 29 and 28 respectively. This shows that import substi-tution is still a distant goal for the country. 2. Low Demand

There is low demand for industrial products in the country due to low consumption level, weak purchasing power and poor standard of living. The domestic market is chronically underdeveloped through lack of enthusiasm generated by the middle and upper class segment who do not wish to raise their standard and improve their living conditions.

3. Regional Concentration In India most of the industries are located in few selected areas leaving out vast expanse of the country devoid of industrial establishments. Most of the industries are located in and around metropolitan cities like Mumbai, Kolkata, Delhi etc. Tables 18.1 and 18.11 present uneven concentration of indus-tries. While the states like Maharashtra, Gujarat, Tamil Nadu etc are well ahead in industrial develop-ment others like Meghalaya, Manipur, Jammu and Kashmir, Himachal Pradesh, Tripura, Orissa, As-sam etc are far behind. This has not only created regional imbalance and regional disparity but has encouraged fissiparous tendency including unrest, violence and terrorism. 4. Loss in Public Sector Industries Owing to focus on socialistic pattern of de-velopment investment under public sector industries increased phenomenally during early five year plans. But due to defective policy of the government char-acterised by redtops and inefficiency and strained labour-management relations most of the public sector enterprises are running in loss. Every year the government has to incur huge expenditure to cover up this loss and meet obligations of paying wages to the employees. 5. Industrial Sickness In the private industrial sector a growing number of industrial units are becoming sick. Wide-spread sickness has, indeed, become a major prob-lem of this sector. The causal factors for this sickness are: (i)

deficient management, (ii) under-utilisation of capacity due to shortage of raw materials, coal and power and transport, (iii) obsolete machinery, equip-ment and production techniques, (iv) uneconomical scale of production, (v) faulty choice of products and processes, (vi) difficulties in selling the products, (vii) diversion of funds to new units under same ownership, and (viii) conflict between different in-terest groups among the owners. As at the end of March 1999 there were 3, 09,013 sick/weak units (3, 06,221 in SSI and 2,792 in non-SSI sectors). A total of Rs. 19,464 crores of bank credit was locked up in these sick units. Sometimes, the government takes over sick units which further worsen the prob-lem. 6. Lack of Infrastructure An inadequate infrastructural facility is another major problem faced by the Indian industries. En-ergy crisis has a great bearing on the industrial development and production. Although the installed capacity of electricity increased from 66.08 million km in 1990-91 to 85.79 million km in 1996-97 but it is much short of the actual demand. 7. Improper Location Base Industrial locations, in several instances, were established without reference to cost-effective points. Each state clamors for the establishment of major industries in the public sector within its boundaries, and the location decisions are often politically motivated. 8. Lack of Capital Indian industrial development is facing acute shortage of capital. The short-term and long-term loans from international agencies like World Bank and Asian Development Bank etc have done more harm to the economy than taking it out from the crisis. A lot of foreign exchange is being utilised in the payment of these loans. 9. Shortage of Industrial Raw Material

Indian Agricore, the major source of indus-trial raw material, is still dependent on the monsoon. Natural calamities like drought, famine, flood etc badly affect agricultural production as well the sup-ply of industrial raw material. Failure of monsoon even affects the purchasing power of the people and also the demand for industrial products. It some-times creates glut in the market and industrial plumpness. Cement industry is recently facing such crisis. 10. Higher Cost of Production and Low Quality of Goods Indian industries mostly survive on home demands. These have been given a number of con-cessions and even protection from foreign indus-tries. Here most of the work is done by hand on old and obsolete machines. This increases the cost of production and brings down the quality of products produced. 12. Lack of Institutional Organization A major development thrust during the Five Year Plans was toward the establishment of a vigor-ous public sector developed hastily without the crea-tion of a base of administrative machinery capable of undertaking this enormous task. Preparatory work for such tremendous institutional regorganization was poor. High performance was rarely insisted on even after the construction of an administrative base. The result was nonachievement of targets. During the Fourth, Fifth and Sixth Plans, achievement lev-els fell short of targets by 15-18 per cent. This malady is still persisting even after liberalisa-tion. There is no clear-cut planning at state level to attract foreign capital and promote industrialisation.

How Indian service providers can survive new downfall in Indian History?
There are number of reports which claim that Indian Outsourcing industry is coming to its end. This might not be the case, but you can expect a great downfall in coming years.

The report analyzed the rolling out of global delivery centres by the UKs 20 largest IT services suppliers Accenture, Capgemini, IBM and HP among them - and found that of the 21 centres opened since January 2007, just two were in India. Findings that offer further evidence of the threat to Indias traditional dominance. At this point, people associated with industry are likely to have some sufferings. However, you can do something to help your career and minimize the effect of this downfall. Here are seven things which small companies or freelancers should consider: 1. Select an Industry & Business domain to serve. Indian Outsourcing was growing since last a few years, and it is pretty matured by now, but there are more countries like China, Morocco and Hungary, which are joining this global market and they might even have lesser prices than where we stand right now. This would result us in failing to compete over price. You can no more expect yourself to serve in multiple business domains or technologies, rather youll have to check for the market imbalances and then exploit them. A PHP developer might be easily available in other countries, but if you present yourself as an experienced Python developer and if there is a demand, then you can charge your regular prices. 2. Public Exposure of your skills. This might be obvious; you might not have got time to write or blog about your technical expertise. But now as more competition enters the market, youll need yourself to differentiate from others in some way. People like to buy from an expert not a follower. You need to show how your expertise can help them or their businesses. If you follow the point above, and target to selected industry only that might even produce better results. 3. Develop passion or leave the Industry. If you are not passionate about the industry, just quit and search for another Industry. Get yourself involved into an open source and let other

people benefit from your passion. In long run, you will be the one who gets more benefits and success. 4. Stretch your skills to your limit. I see a problem with many Indian programmers they are not willing to learn new things. Many programmers Ive worked with are satisfied with their present skill-set and dont want to grow skills. They are happy with the pay-checks and increments they are getting. Some of these increments, if we look into depth are because of the boost in industry, not because a particular guy started working better or effectively. When this boom goes down, you will get lesser than what you are getting now. By continuously growing your technical skill-set you can survive. 5.Automate In order to work more effectively, we have to work more effectively than ever. To do so, you cannot increase time in a day but what you can do is take advantage of the automation. Write your own code generators, reusable classes, or focus on automating and task you would do repetitively. If you spend even 1 hour daily on this chances are you will achieve more for your clients in less time. 6. Start some side projects. This might be a difficult one for many teams or individuals, but developing a side project (like a web app) can be turned as your asset which should provide you not only money but the value to your customers. If you can create success from your own app, then you surely can help them out. Think building your services as a famous brand. Learn to communicate with your clients in their own words. Being too technical with clients sometimes helps, but when you learn their businesses and talk in their business terms it makes them more comfortable in dealing with you.