Ad Here  
For whom the MIDS bell tolls? Convulsions in The Hindu Don’t seem to feel the pulse… An inexplicable neglect Adharma of opposition politics TELANGANA at last…BUT MHC should not return to its old indisciplined ways EEC at the National Media Centre Wanted: a second airport for Chennai For whom the bell tolls? Fall in crude prices help in oil sector reform New IT products of Ramco in the pipeline… Tatas moving out of urea production... Funding the un-funded Bihar – Nitish Kumar adopts the Lalu model There was flood of milk. Reason: no milk commissioner! Quality education through the PPP mode Strengthen the base... Sweeter prospects for sugar Computation of GDP – conundrums continue CII projects higher growth… F C Kohli - his concerns all embracing When the President was rendered homeless… Mersal magnified Making ‘my Amaravati’... When TN politicians can emulate Kerala's TN accounts for the largest recruits by the IT sector Online not in line with brick and mortar businesses... Eternal support for capitalisation of PS banks Rahman at CIC When online building permits work…. Silver Years of Madras Musings London, London Narayan Editor's Says He saved millions from starvation... More tributes to GR B H Kothari - a tribute R Sridhar steps down as CEO of Shriram Capital Fortune 500 review An enemy’s enemy is a friend Welcome GST Delhi is distant… L&T- the specialty of special purpose vehicles Cleaning Ganga – relocate tanneries and install electric crematoria Boy, can you beat these? A glass full of corruption Poor representation for Kerala and TN in Cabinet Mu Sigma – is no more Cutting the nose to spite the face Naidu will soon build a new Hyderabad The power-full Hindujas Reliance’s TV – 18 ready to launch Tamil News Channel Should we change the official year? TIAM turns a full cycle Gas is the way forward GM Technology at last! A more liberated TN… West Bengal: mindless malignancy Padma Bhushan for A Ramakrishna Vibrant Gujarat Return to king coal for urea... The Ports’ Pasha expands into Tamil Nadu Air Asia India will set new benchmarks for budget travel Muffled voices for merit… Russi Mody – a tribute SoA @ 80 S Ramanathan – a versatile musician, musicologist Measuring roof tops in terms of KW/MW Put expensive assets created to use... Tribute – UCAL Selvan… Align crops to agro climate endowments… Noble nonagenarians... Tihar, Puzhal not different from Parappana Agrahara ONGC at KG Basin The ‘Ayyo-yes’ is no more Revive development banks... Fortune for Indian Airlines Plummeting profits of PSBs Robber barons everywhere Rs.1600 crore paper board plant of TNPL Alexa – Talking Wikipedia No Maha Koottani in TN... Insurance companies bleeding, yet no decision on increasing FDI limit! Increasing non co-operation of state leaders Solar, solar everywhere … CIPET hqrs to stay at Guindy – for the present? Bihar elections - the Rajaji formula worked Multi-faceted Venkat Maximising the micro pricing … Fuel for thought Road development slows down A Grand Finale for SN’s MS centenary at the US… Welcome thrust on trade in Modi’s foreign visits... Protest masters... The brown list of Venkitaramanan Things happen by accident and not by design... Kudos to NDTV... A rich pool of talent not utilised…. The nuclear option Lalu’s envy, India’s pride The why of tax incentives L&T: focus on infrastructure and more infrastructure… Permanent secretariat for TN GIM Breaththrough in malaria control Intellectual of rare qualities Wise Presidents Medical costs hit the roof... A professional at the helm of IRDA... Nuclear power at the nucleus Discoms deserve better… Solar thermal shines… Why this malaise in medical education? Why land prices zoom in TN? Kulandai was a giant The Swadeshi Trump A yen for wastage… Tax agriculture Telangana in top gear… Auto components surge… Tatas moving out of urea production... A welcome initiative by the judiciary Adapt Vajpayee dinner diplomacy EVM is tamper-proof Sweet news for TN sugar mills Parliament in paralysis... The balancing act Secularism and anti-Hinduism More heat than light The star of Spencers is no more Modi and the lady Tribute Engineering seats go abegging Music happens Liberal imports idling indigenous capacities The ‘Jayanthi Tax.’ Sri Lanka votes for change Tribute – M V Murugappan Contrarian cousins Demise of a media baron... Modi storms Silicon Valley Whistle-Stop Tour of Raghuram Rajan Kinetic Karnataka Shale gas and its shallow future He continues the focus on social amelioration Not just in-laws (and outlaws); they’ve renowned academics at the helm! …and of a popular trade leader Tough task taking states together Colour-Chem’s colourful KRVS Land reclamation from sea appears cheaper! Airlines in India: cost and space Polls and promises S V Raju – a ‘good’ true liberal A friendly business group Banning booze... to the lack of interest on the part of these to focus on original research. This despite the much lower costs of such research in India. The industry which thrived on the protection of a closed economy and the advantage of a vast domestic market, has failed to organise its evolution on healthy lines More Shakti to resource mobilisation... CSR and CMI: promise of another Srinivasan Ramanujan... Cement prices continue to rise… Five star activism stalls development activity Streamlining mandatory third party cover Come elections, come advertisements... Make standards certification mandatory... IAS invades NDDB... Editor's Notes TN – agglomerate land holdings without alienating ownership Building loyalty through the stomach Preserving for the future Small units prefers to remain small... The sea- saw battle continues... Delhi returns to BJP A proud Madrasi Inflation: are we emulating Argentina and Brazil? The rise and fall of Annamalai University Welcome changes that testify to Jayalalithaa’s return to health Excel Generators provide the vital back-up Limit foreign borrowings to hi-tech, export potential projects... Roaring Ro-Ro facility Welcome focus on core competence Pharma – overdose of copying Delhi Chalo... No engine for this car Chennai and Kolkata miss opportunity to grow as Delhi and Mumbai Focus on quality of power - its only around 170-180V A C Muthiah – his munificent bequeaths to science Quality silica from Neyveli Shanti and Sadhana through Music Another Indian music maestro at the UN Naidu’s return augurs well for Seemandhra Remembering Indira Sivasailam... Lesson from Chandrababu Naidu Tribute – Manikam Ramaswami Gay abandon in pricing Readers' Mail Moily’s bold thrust How Air-India loses customs... TN-leverage strength of BHEL, NLC... IPL - no surprise this scam Revving up the manufacturing sector Where is Rajaji? WTO Meet: resolved to meet again CRS, a jewel among managers, is no more. Dr C Rangarajan returns to Chennai Infrastructure funding – lessons learnt Godspeed, Chief Minister JJ All eyes on Sankara Nethralaya A think tank for Chennai The few handicaps... Varuna (rain) in 2015; Vaayu (air) in 2016. Chennai devastated Shipping woes of Chennai companies The Jan Dhan bonanza Towards speedy justice The rise and rise of KCP PPP mode for upgrading Corporation Hospitals Like Hinduism: many paths to reach God... Where a state respects its litterateurs… Of course, Gujarat is vibrant Waning interest in public discussions… No mega rail project for Tamil Nadu When Ratan Tata visited SRM Recognition to role of NBFCs.... Marketing expert Balagopal is no more PC’s preference for professionals China invests in India TGS- The king storyteller Build close rapport with business leaders Delhi is distant Paytm karo... When small is no larger beautiful.. Shaming of Tamils by Tamil farmers at Delhi When nations steal growth from one another… Diamond jubilee of Egmore Samskrt School Scientists urged to take up farmer-oriented research Valli, they are more marginalised IPL type auction for VCs? More Shakthi to Das’ elbow An informal presentation - analytical, forward locking... This scant respect for Law The Gulf aviation boom Haul over the coal GNS - 100: our first subscriber A Grand Finale for SN’s MS centenary at the US… Odisha: spectacular win by Naveen Patnaik Which side are you, Montek? Poor quality of university VCs
When small is no larger beautiful..

Professor R Vaidyanathan of IIM Bangalore and S Gurumurthy of Swadeshi Jagran Manch have been quite active in recent times in re-establishing the small is beautiful concept. In his book India Uninc., RV points to the substantial contribution of the unorganised sector to the country’s GDP.

    I belong to the small sector, entering this over five decades ago. I have been operating in the Industrial Estate, Guindy for 34 years. Guindy pioneered the concepts of industrial estates and the small sector in the country. The small sector was designated a priority sector status. For decades this did enjoy concessional rate of lending from banks, lower rate of excise duties and more moderate tariff for power. In the liberalisation era these have vanished. Interest rates of 14 per cent are much higher than the return on capital most of these units get. A huge power tariff of over Rs 7.50  for kwh is poised for further rise. With existence a struggle, very few have scaled up their operations or bothered to  induct technology. The result: most of these units have disappeared from the landscape. When I set up shop in the 1980s, 15 others were allotted sheds. Of these 16, just two of us have survived in the same line of activity. The rest have sold off their properties or moved out. One saving grace for these was the huge spurt in real estate prices. Many of them handed the property to developers to great profit. The estate, which was once a centre for engineering excellence and innovation by small units, is now totally devoid of these.

The crucial lesson: businesses today needs large capital to scale up operations, technology and management. In all these the small, unorganised sector suffers severe handicaps.

China built its economy by scaling up production. When an enterprise produces a million steel chairs a year, it is miles ahead of a small unit in India producing a few hundred pieces a month and cannot obviously survive the competition. Most units that were producing steel chairs in the city, today trade in chairs imported from China (not often of reliable quality) but priced at half of their own cost of doing it.

Large  scale production would take demand for basic commodities like steel to dizzy heights. Four decades ago production of steel in China was comparable to that of India. Today China is the largest producer of steel . She produced last year 779 million tonnes. India produced 81.2 million tonnes.  This scale makes China offer steel at much lower prices to hundreds of manufacturers of steel products. This in turn makes Chinese products extremely competitive. Go to any large mall in the US; most of the products ranging from textiles to computers to electrical goods and to a vast range of consumer products carry the label, Made in China.

Reliance Industries provides yet another instance of economics of scale. The two refineries, set up by Reliance at Jamnagar import crude and refine it to a wide range of products at modest cost and exports these at high profit. Last year the company exported 41.2 million tonnes and earned for the country $ 44.1 billion. Despite crude oil and petroleum products accounting for over a third of the import bill, thanks to Reliance,  petroleum product exports have the largest share in foreign exchange earnings. We need to build scale in production.


Author :
Reported On :
Sector :
Shoulder :
IE, the business magazine from south was launched in 1968 and pioneered business journalism in south. Through the 45 years IE has been focusing on well-presented and well-researched articles. When giants in the industry stumbled to keep pace with the digital revolution, IE stayed affixed embracing technology.
Read more
Economist Communications Ltd is committed to ensuring that your privacy is protected.
Read more
You agree that your use of this Website and the purchase of the magazine will be governed by these terms and conditions.
Read more
S-15, Industrial Estate,
Chennai - 600 032.
PHONE: +91 44 22501236