Preface

It gives me immense pleasure to share study on Role of Engineering Industry in

Punjab :Large vs small sector.Industrialisation is a wide ranging process and
implies, not merely development of certain industries, but certain basic changes
in the structure, technology and organisation of economic activity. Thus , it
has wider connotation than the establishment of productive industries, because
it includes the mineral base, energy, transport, scientific research and the supply
of technical and scientific manpower also. It involves the basic changes that
accompany the mechanisation of an enterprise, the building of a new market and
the exploitation of a new territory. The strategies and policies for industrial
development had to be planned and shaped taking into consideration the existing
circumstances and the broad political -social -economic objectives. As such, the
major issues before Indian Planners regarding industrial development after
independence were —Large versus Small industries, Competition and
Complementarity between them , Public versus Private sector, location of
industries in various regions. There is a strong case for the development of small-
scale industries in a country like India. Small scale units are employment
oriented, whereas large scale units with larger gestation period, would take
more time to generate employment as compared to small sector. The small scale
sector, with its labour intensive techniques would not only preserve scarce
capital resources for better utilisation in comparison with basic and heavy
industries but also ensures the productive use of abundant labour resources of
the region. Small industry can fill in the gaps between large-scale production and
standard output caused by large scale units. Small industry
plays complimentary role to its large counterparts. Small scale units can be
seen proliferating in respect of number of industries like watches, clocks, cycles,
refrigerators, motor vehicles, radio and television sets. Large industries also play
an important role in promoting the growth of ancillaries and sub- contracting units
and can provide the technical assistance, market information and undertake
development activities introspect of quality and packing methods etc to small-
scale industries. Linkages between small-scale and large-scale industries would
therefore definitely improve prospects of growth of small-scale sector.

In the changing economic environment, the Indian engineering industry has

emerged as one of the most important basic industries. Of all the industries,
which have contributed to the economic growth of the country in general and that
of the industrial service sector in particular, the contribution of engineering
industry has been probably the most significant. The engineering industry covers
a large number of heterogeneous, but closely inter-connected groups of
firms. The industry is primarily a metal using industry, though other materials
like plastic, nylon, rubber etc are also used as inputs. The main function of the
industry is to purchase the end products of iron and steel, nonferrous metal
industries and assemble the processed parts into final products. Generally, and
engineering industry may be classified into two groups, that is, the heavy
engineering industry and light engineering industry. Industry producing capital
goods, such as industrial machinery, ships, power generators, machine tools,
railway wagons etc are classified as heavy engineering industry. On the other
hand, industry producing consumer goods such as cycles, sewing machines,
fans, razors, wristwatches etc. are termed as light engineering industry.The
development of an economy and achievement of self-sufficiency in various
sectors depends to a large extent on the development of engineering industry.
More advanced the engineering industry in a country, the higher is the level of
industrial sophistication in that country. Over the years, the scale and scope of its
activities have not only diversified but scaled new heights in response to the
changes that have been taking place in the social, political and economic
environment. Engineering industry in India provides the key to economic growth
with its diversified forward and backward linkages with almost every sector of
the national economy. The engineering industry has put India on the map of
industrial world and given us a much needed self-reliance in vital areas. Its
contribution towards improving technical skills of labour, upgrading indigenous
technology and designs, is probably more than that of any other industry. Today,
the industry is engaged in selling consultancy services, technical knowhow by
itself and also in joint ventures with developed nations to a number of African and
Arab countries. In the post- independence era, the industry has not only achieved
significant enlargement of production capacity, but has also attained a high
degree of technical competence, sophistication and product diversification. The
status of engineering industry in any country provides the barometer to judge its
economic growth. In India, the engineering industry contributes nearly 2.5
percent to the gross domestic product and accounts for 27 percent of the total
industrial units of the country.

Punjab’s performance in the field of industry is characterised by predominant role

of small-scale industries. The state has registered a remarkable progress in the
development of small-scale industries during the past few years. In the small-
scale sector, Punjab has been the traditional leader in engineering industries in
the cluster of bicycles and parts, auto parts, machine tools and agricultural
implements etc. About 23% of total industrial output comes from engineering
sector in the state and exports of light engineering goods from small scale sector
is about 13%.Engineering industry has grown in the state both in large sector
and small sector. There are thousands of small scale units all over the state
manufacturing components for other units. The assembly is done mostly in large
scale units. These units manufacture some component themselves and purchase
others from the market. In some categories, like auto parts, some components
and manufactured by both the sectors. The study is based upon large and small
scale units from bicycle and auto mobile( two wheeler) industry existing in the
state of Punjab. For the purpose of this study both secondary and primary data
has been used.The present study has focussed on general pattern and growth of
engineering industry in Punjab, the relationship between large units and small
units in engineering industry, relative importance of input and output relationship,
pricing policy for transfer of output from small units to large units and analysis of
problems faced by both sectors in relation to their independence upon each other.

About the book

The present study aims at studying the kind of relationship which has been
coming up between large sector and small sector in engineering industry over a
period of time and is based upon large and small scale units from bicycle and auto
mobile (two wheeler industry) existing in the state of Punjab.
Small scale units have played a significant role in the development of the country
and more specifically the development of Punjab state. Primary and secondary
data has helped to come out with various issues of small scale units and some
suggestions are made in this regard. State government should devise a policy to
protect small units from the adverse affects of various policies. Small-scale units
do not have enough working capital funds to store their output for a longer period
of time to keep them operative. It is therefore suggested that either large
units should take delivery of the output immediately on production by small units
or alternatively should assist them to store the items for the intervening period.
To solve the problem of procurement of raw materials in time the small unit
should devise suitable inventory planning and control mechanism depending upon
the requirements. Large units should also provide necessary assistance to them
in this regard. The government agencies should also provide testing facilities to
procure the raw material of right specifications. To solve the problem of power
in the small-scale units, there is a need to ensure power supply for at least fix
number of hours every day without any tripping. Financial institutions and banks
should also provide liberal loans and subsidy for the purchase of diesel
generators. To solve the labour problem, there is a need to improve the skills of
labourers and their efficiency. Like Small Industries Service Institute which
concentrates mainly on technical advice, there is a need to set up management
institutes to impart managerial knowledge to the owners /managers and conduct
training programmes for workers. Keeping in view the limited financial resources
of small-scale sector, a venture capital fund should be promoted by government of
India to meet their margin and credit problems. Current financial limits of
working capital should be revised to ensure that small units can take loans to the
extent of their requirements. It is proposed that a well-defined monitoring
mechanism for the credit delivery to small scale sector may be set up. The small
units generally do not have proper marketing facilities. In many cases, they do not
have adequate information about product demand as also the specifications in
which may be needed. Hence an extensive programme of product market
research is required with the assistance of
state or in cooperation with group of small scale units. The establishment of
trade centres with adequate technical capability, will also be a step in the right
direction. Although various quality control facilities have been provided by
government in certain industrial estates, but small units are not able to avail of
these facilities due to lack of quality consciousness on their part. To meet the
global competition in the present day, the products of small units should meet
the international quality standards. Although there is a network of quality marking
and industrial development centres in Punjab state, but the centres need to be
updated with latest equipment so as to ensure high-quality standards. The
projects taken by research and development centres should focus on functions
relating to marketing, technology transfer, ISO 9000 management concept, total
quality management, product improvement, standardisation etc. Entrepreneur
Development Programme should also be conducted by various agencies like
banks, Small Industries Service Institute etc so that they can have up to date
information regarding the latest developments in the production processes.
Although Punjab state is the third state in India to set up cleaner production
centres, but units are not aware of this. Guidance should be provided to industrial
units to control the pollutants and wasteful emissions during the manufacturing
process rather than treating the effluents at the end of pipeline. Thus, it will not
only control pollution but also improve the productivity and bring down the
operational cost. Small units should also make the provisions of chimneys and
treatment plants in their organisations as per requirements. Such units should be
provided with necessary equipment at subsidised
rate to deal with the problem of pollution.Covid-19 has escalated problems to
small scale as well large scale units in the context of procurement of raw
materials,labour availability,provision of finance ,transportation and oil prices etc.