SSI death toll: One in three

The number of SSI units that have closed down is 42.39% of the total units in Mumbai.

We start a series on the state of the small scale industry in Maharashtra, one of India's most industrially prosperous states.

One in three small scale units has downed shutters in Maharashtra, one of the country's most industrially prosperous states. In greater Mumbai, for example, the number of units that have closed down is 7,347 "" over 40 per cent of the total manufacturing units in the region.

The writing on the wall is clear if one goes by the third National Census of SSI units, 2002-03, (the latest figures available). Consider the figures: half of the 3,343 units in Aurangabad have closed down.

In Thane, the toll is more than a third. In the Wagle estate alone, on the outskirts of Thane town, 700 of the 1,000-odd units are shut. Almost 40 per cent of the 44,036 units in Pune have met the same fate.

These are official statistics and the general consensus is that the actual numbers may be far more. This could well be true. Take Thane's Wagle estate, where disused and rusty machine parts are scattered and grease-stained lorries stand by idly. The once-thriving industrial estate has seen 700 of its 1,000 small units downing shutters.

Though small and medium enterprises account for as much as 60 per cent of Maharashtra's industrial production, SME entrepreneurs in the state today are crying for support from the government in terms of favourable credit for technical upgrades, rationalised duty and tax structures and marketing support.

Said RY Angle, former chairman of the Confederation of Indian Industry's (CII's) panel on SME, "The only reason we have survived is because MIDC (Maharashtra Industrial Development Corporation) has given us land and the Maharashtra State Electricity Board (MSEB) provides us power; for everything else we are on our own."

Adds Virendra Gupta, head of the CII's Maharashtra office, "There are three major areas where SMEs need help "" access to credit at reasonable rates, technical upgrades, and repeal of outdated laws that allow excise or factory inspectors to harass."

The CII has just commissioned a study by AC Nielsen to come up with recommendations for revival of the SME sector in the state.

Credit is a major emotive issue. Said NL Shah, a Pune-based manufacturer of microscopy equipment, "Commercial banks have been known to charge us as much 22 per cent interest, sometimes as much as 52 per cent." Shah's solution has been to grow slowly but use family finances. "My brothers sold their flats and gave me the money."

Agrees P Rudran DGM Mumbai, Small Industries Development Bank of India (SIDBI), "Credit has been an issue for the SMEs. The banks have not been sensitive to their needs so far. But now with increased competition, the situation is changing." SIDBI itself is coming up with a series of initiatives to make credit accessible to the sector."

Another issue is octroi. While municipalities across the state are dependent on octroi, entrepreneurs complain that it is killing industry.

Said Sitaram Shah president of the Thane Manufacturer's Association, "Five per cent octroi is what has killed industry in the Wagle estate. Most manufacturers here were doing job work industries outside Mumbai. While we have to pay five per cent octroi on our products, others in the Thane-Belapur belt just pay a two per cent cess. With no access to credit for working capital, we are cash strapped and shelling out five per cent as octroi can really cripple a unit in the long run."

The answer to these woes? Said Mahendra Shah, owner of a Pune based heating solutions company, Litel Infrared lighting Solutions, "A comprehensive SME policy that rationalises duty structures, makes easy credit accessible, and gives us a reasonable government protection in select areas like engineering where we have expertise."

Policy apart, much depends on individual enterprise. Shah for instance ran around years trying to find a steady market for his halogen lamps.

From ISRO to DRDO and Crompton Greaves and Phillips, he has worked with them all in an effort to anticipate the market. Today he is exporting heating solutions for a bunch of customers from South America to South Africa and Germany.

Said Angle, "That is what will keep an SME alive and profitable, though government support in some would help at this stage."

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Small Industries in Maharashtra

Greater Mumbai: The number of SSI units that have closed down is 7,347"" 42.39% of the total units in the region

Thane: Out of 10,649 units, 3,334 (31.31%) have closed down

Aurangabad: Out of 3,343 units, 1728 (51.69%) have closed down

Pune: Out of 44,036 units, 16,951 (38.49%) have closed down

Statewide: The number of closed units stands at 51,343 "" 37.25% of the total units in the state.