The Big Move to Boost Small Industries
Kerala’s small and traditional industries have always been a strong feature of the state’s industrial profile. The small coir processing units dotting Alappuzha’s verdant green landscape and a thriving rubber industry in picturesque Kottayam made their presence felt even during an era when Kerala was noted more for its slow and sluggish industrial growth.
Today Kerala’s vibrant economic landscape has hi-technology IT/ITES firms and futuristic biotech units. There is hope and optimism in the air as a new breed of young entrepreneurs flood the emerging knowledge sector with their brave, innovative ideas. But even as the state steers itself in a new direction, the traditional, small industries continue to put in a strong performance.
Policy Initiatives to Encourage the Small Sector: The ASSOCHAM report prepared by Frost & Sullivan titled “Kerala: Roadmap for Inclusive Growth 2012” points out that successive state governments have created policies that focused on strengthening the base of small and medium industries in the state. This special support provided to the small sector is an acknowledgement of their vital role in employment generation and creation of higher growth rates for the manufacturing sector.
One of the crucial factors that gave a boost to the small scale sector in Kerala was the introduction of cluster development in 2003. In the initial stages, the District Industries Centres were given the responsibility of identifying and developing various clusters. Out of the 75 initial clusters developed, the successful ones included coir and rubber clusters at Alappuzha and Kottayam, garment clusters in Idukki, Ernakulam, diamond & tile clusters in Thrissur and ethnic food clusters at Kozhikode and Palakkad.
The cluster development proved to be a boon for the small scale units. It created strong linkages among the units and brought in major benefits like technology upgradation, better marketing support, easier access to credit and stricter quality control. This opened up new markets for the small scale units including exposure to the global market. In fact, so successful was the Kerala government’s implementation that the state soon set the benchmark for the Union Government’s industrial cluster development programme. This fact was acknowledged in media interviews by then Central Development Commissioner of Small Scale Industries. The so-called Kerala Model became a pioneer in the area.
Keeping the Focus on the Small Sector: The government has followed up the success of the cluster development programme with a series of strong policy moves. The Frost & Sullivan report credits these policies with creating an incentive towards entrepreneurship and investment among small and medium industries. The initiatives identified by the report as being crucial in giving a boost to the sector include:
(i) Fast tracking project clearances with the setting up of an Investment Promotion Board
(ii) Passing the Micro, Small and Medium Enterprises Development Act that did away with SSI registration
(iii) Creating special investment regions in the state
(iv) Giving priority allotment to MSME in industrial estates
(v) Protecting MSMEs from rising cost of production, for example by exempting them from power hike tariffs for a specified time period
(vi) Introduction of easy exit schemes
The Statistics: The proactive role played by the government in encouraging the growth of micro, small and medium industries has had the desired impact. According to a report produced by the MSME Development Institute at Thrissur, the growth figures are healthy. The total number of Small Scale Industry / MSME units registered in Kerala as on March 31, 2010 is 21,3740. Out of this, 7334 are promoted by Scheduled Castes, 1449 by Scheduled Tribes, 46621 by women and 158336 by others. The total employment generated was 831847.