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The changing industrial landscape

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Transformation in process: A file picture of a powerloom unit.
Transformation in process: A file picture of a powerloom unit.

R.Y. Narayanan

A typically agrarian district in Tamil Nadu, Erode, is slowly transforming itself with a large number of small and mid-size industries, basically relating to textiles, trying to change the industrial landscape of the district. For long, the district was famed for handlooms and powerlooms, dairy industry and sugar factories. The district also was known for its edible oil units and is home to Uthukuli that is well known for its delicious butter. But development in its wake has brought problems of pollution with which the district is wrestling.

Despite its proximity to Coimbatore and Salem, Erode was not able to attract significant big ticket investment in industries, barring a few established in the SIPCOT Industrial Growth Centre at Perundurai and in proximity to it. The State Government also, apart from starting the SIPCOT complex, did not make any substantial investment in industries in the district.

Agriculture

“The Industrial Potential Survey Report – Erode (2001-02)’ published by the Development Commissioner, Union Ministry of Micro, Small and Medium Enterprises (MSME), points out that agriculture was the backbone of the economy of the district providing employment to nearly 60 per cent of the work force. The district figures among the top cultivators of oilseeds, mainly groundnut and gingelly, is a major producer of sugar cane and tobacco and occupies the first place in the production of turmeric. It has significant area under onion, horsegram and ragi in Tamil Nadu. No wonder, nearly 75 per cent of the population is rural as against the State average of 65.85 per cent.

Edible oil industry

The study pointed out that the Technology Upgradation Scheme for the modernisation of the textile sector did not benefit the SSI sector and powerloom units because of the stiff lending norms. With the liberalisation of import of edible oils, the edible oil industry in the district too has been facing problems.

The district ranks among the top milk producing districts in the State and there is ample scope for starting food processing industries. While there are some masala powder manufacturing units, the scope for turmeric products is yet to be fully exploited. Leather goods are another area where the district offers potential. Manufacture of plastic products and electrical and electronics goods also merited attention.

Mr K. Paramasivam, Chairman and Managing Director of the Maharaja Group and President, Erode District Chamber of Commerce and Industry, said Erode is home to a host of industries such as edible oil, spinning and weaving mills, garment and knitting, sugar, textile processing, granite and leather units etc. But of late, the industries have been facing a host of problems including raw material and labour shortage, tightening of norms on pollution etc.

Labour problem

He said the main problem on the labour front is the high wages workers are able to get in garment manufacturing and knitting units while working in air-conditioned comfort. The daily labourers in many such units were able to get Rs 150 a day to begin with that goes up to Rs 300 a day after a few months. This could not be matched by other industries even within the textile industry and the workers also want to be free from physical strain that working in a spinning or weaving mill would cause.

Erode was once famous for its tanneries but the outcry over pollution has made many of the tanners to go to Karnataka for processing.

Mr R. Krishnamoorthi, Managing Director, Agni Steels Private Ltd, Ingur near Perundurai said because of the shortage of local labourers, his company has to hire workers from States Orissa. He could not recall investment in any large project in the district other than by the Sakthi Sugars group in recent times. Mr M.P.A. Mahalingam, President, Perundurai SIPCOT Industries Association, said the development of the industrial estate has picked up momentum in recent years and it is almost full. Some of the new units that have come up in recent years were the Gangotri Textiles, Rangaraj Steels and Parryware unit at SIPCOT and Maxwell unit at Thingalur. He felt there was scope for starting more such industrial estates in the district. The Centre and the State Governments should offer incentives for starting industries. The handloom sector should be reserved certain products and the weavers should be given loans at concessional rate of interest. Mr A. Raja, Managing Director, New Hope Food Industries (P) Ltd, Erode, which makes the Milka brand bakery products felt that the Government by offering tax concessions and easing the norms of starting industries could provide a fillip to the industrial development of the district. He suggested reduction in taxes on imported machinery and ensuring continuous power supply to give a push to development.

Pollution factor

On the problem of pollution, Mr Paramasivam said the industries would be willing to invest up to 10 per cent of the project cost on effluent treatment plants. While Mr Mahalingam suggested that the effluents could be transported through pipelines to be let into the sea near Nagapattinam, Mr Raja wanted greater Government involvement and felt industries such as tanneries that were located close to the Cauvery river may be re-located.

(This article was published in the Business Line print edition dated February 8, 2008)
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