Financial Daily from THE HINDU group of publications
Monday, Jun 20, 2005
Financial Daily from THE HINDU group of publications Monday, Jun 20, 2005 |
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Industry & Economy
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Industrial Policy Setting a KLIPP's pace K.G. Kumar
LAST week Kerala's Industries and Social Welfare Minister, Mr V.K. Ebrahim Kunju, announced a new initiative from the Government to be launched on August 15 and designed to give a fillip to the State's industrialisation efforts, this time through the route of ancillarisation or subcontracting. Billed the Kerala Local Industry Promotion Programme (KLIPP), it is meant to be a State-wide exercise to help establish 25,000 small-scale industrial units during the current financial year. KLIPP's employment aims are fairly generous, to say the least - it hopes to generate 100,000 job openings. KLIPP plans to set up industrial units in three categories: (a) export-oriented manufacture; (b) manufacture of goods using locally available raw materials; and (c) manufacture of goods exclusively for the local market. To help potential entrepreneurs, special cells functioning from the District Industries Centres would provide technical assistance. The ancillary industries that could be set up in Ernakulam, Alappuzha and Thrissur districts come almost literally in the wake of the establishment of the Vallarpadom international transhipment terminal, the liquefied natural gas terminal, the international bunkering terminal and the new free trade and warehousing zone, all centred around Kochi, the State's industrial and commercial capital. Kochi will also play host to the second business-to-business meet for the small and medium-scale industrial sectors, to be held in the city from September 6 to 8. According to Mr Kunju, around 400 units have already registered to participate in the meet. Additionally, the Local Investors' Promotion Programme in Kozhikode and the Area Investment Meet in Malappuram would be merged into the KLIPP project. All told, this re-emphasis on ancillarisation - something that has been constantly talked about ever since the Cochin Port Trust and the cluster of industrial units around the Kalamassery belt were established - should be welcomed. Importantly, though, any programme of ancillarisation has to factor in the active motivation of public and private sector units to offload production of components, parts, sub-assemblies, tools, intermediates and services to ancillary units. Such farming out or subcontracting exchanges (SCXs) have long been functioning among many SSIs in the country, resulting in fruitful and lasting contracts between large and medium-scale undertakings and small-scale ancillary units, including those that have indigenised the production of items required by the national defence forces. The spare capacity for different facilities available with the respective small-scale units are registered with these SCXs, which also bring together buyers and sellers through vendor development programmes and buyer-seller meets and exhibitions. Yet, several hurdles exist. The single most problematic issue facing most of the ancillary units in the country is getting timely payments from their parent units. That is where the State government and SCXs can play a defining role, invoking, if necessary, the provisions of a Central Government Act under which interest is payable on the delayed payments by large undertakings. If KLIPP can go even part of the way on this new and ambitious road of ancillarisation, it can help change the landscape of Kerala industry. If it fails, it will probably be due to lack of leadership rather than lack of entrepreneurship.
The writer can be contacted at kgkumar@gmail.com
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