Export Potential Of Small Scale And Cottage Industries

Export Potential of Small scale and cottage industries

With the establishment of a large number of modem small-scale industries in the post-independence period, the contribution of the small-scale sector in export earnings has increased by leaps and bounds.

What is heartening to observe is that the bulk of the exports of the small-scale industries (in fact, around 93 percent) consists of such non-traditional items like readymade garments sports-goods, finished leather, leather products, woollen garments and knitwear, processed foods, chemicals and allied products, and a large number of engineering; goods.

The total export of the small-sector industry products increased from Rs. 150 crore during 1971-72 to Rs. 48,979 crore in 1998-99. This implies, an increase in the share of small-scale industries in the total exports of the country from 9.6 percent in 1971-72 to 34.9 percent in 1998-99. The share of the small-scale sector in manufacturing exports is about 45 percent. Exports of the small scale sector are estimated at $ 13 billion in 2000-01 which was about 30 percent of total exports in that year.

According to a study based on the annual report of The Central Cottage Industries Corporation of India Ltd. for the financial year 2016-2017, the gross income received from this sector during the year 2016-2017 increased from Rs. 4551.13 lakh in the previous year to Rs. 4583.46 lakh. The overheads of the corporation increased from Rs. 4452.27 lakh in the previous year to Rs. 4623.82 lakh in the current year. The current year ended with a pre-tax profit of  Rs. 13.87 lakh as against corresponding profit of Rs. 98.50 lakh in the previous year. The gross turn-over of the corporation for the year under report was Rs. 8763.48 lakh as against Rs. 8592.44 lakh in the previous year, i.e., is 2015-16. This increase has been observed, apparently because of the increase in the total exports of the corporation. The exports of the corporation during the year 2016-17 were Rs. 341.45 lakh as compared to Rs. 288.20 lakh in the previous year.

The total foreign exchange earnings and out go during the year were Rs. 3201.35 lakh in terms of foreign exchange earnings by way of exports and sales in India for which money was realised in foreign currency. The foreign exchange out go is estimated to be Rs. 8.16 lakh.  During the F.Y. 2016-17, 65 numbers of new designs were developed. Special initiatives were taken during the year to enhance the sales including online sales. 526 numbers of additional products were showcased on the website of CCIC during 2016-17. 34 numbers of new corporate customers (mostly foreign based) were also added during the financial year 2016-17 to whom sales of Rs. 1 lakh and above was made during the year.

Moreover to facilitate the sale of these products on a global level, 65 theme based exhibitions were organised in and outside Emporia, whereby new range of products were displayed to expand the patronage of the Corporation. CCIC also participated in four overseas fairs sponsored by DC (Handlooms)/ DC (Handicrafts) at Hong Kong, Italy, Malaysia, and Germany.  

The products of these industries are exported to countries like the US, the UK, the UAE, Germany, France, and Latin American Countries (LAC), Italy, The Netherlands, Canada and Australia. The US alone accounted for approximately 26.1% of India’s total exports from this sector in 2014-15. It was followed by the EU which accounted for approximately 24.7%. The UAE was the third largest importer of Indian cottage industries products with imports worth $410 million in 2014-15. But having said that, a heavy import surge affecting cottage industries for the worse, has also been observed in this case. The import of various goods from abroad, in the country is on the rise that has hit hard the local cottage and micro industries. This trend has been observed, mostly in the northern parts of the country, significantly in the state of Punjab, to be specific..

Challenges in front of Small scale and cottage industries

Financial problems

The paucity of adequate and timely finance and credit is the main setback in the development of SSI units. It is even worse in case of cottage and village industries. The capital base of the small industrial units is usually very weak since they generally have partnership or sole proprietorship form of organization. The initial investment of these units mainly comes from their own fund or borrowed fund from unorganized sectors like friends, relatives and professional lenders. Much lesser proportion of required investment comes from organized sectors like banks, financial institutions and government channels. The artisans running cottage industries either run their units with whatever capital they posses or take loan from local moneylenders or the traders who supply raw material to them. Such types of credits are often obtained at a very high rate of interest and are thus exploitative in nature.

Marketing constraints

Market is the ultimate destination of all industrial concerns whether small or big where the produced are being bought and sold. Marketing is a broad process of linking the gap between the producer and consumer. The vital role of marketing in accelerating industrial development lies in selling the goods and services produced by these units. The goods have no value for the manufacturing units unless these are sold. Marketing is a tricky technique involving detection of what the consumers wants, then planning and developing a product or service which satisfies those demands and ultimately determining the best way to price, promote and distribute that product. The expertise of entrepreneurs in marketing their product plays a vital role in the success and growth of his enterprise.

Infrastructure bottlenecks

Infrastructural adequacies are necessary to subsist in order to aid the smooth and continuous economic growth in general and industrial growth in particular. Industrial production requires not only machinery and equipment but also skilled manpower, management, energy, banking and insurance facilities, marketing facilities, transport services which include railways, roads and waterways, communication facilities, etc. All these facilities and services which facilitate industrial and agricultural production and accelerate the overall economic development of a country constitute collectively the infrastructure or economic and social overheads of the economy.



Transport problems

Efficient, cheap and quick means of transport of wide varieties is essential for the expansion of trade and commerce. Inadequate transport system in the entire region have resulted in crippling disincentives of excessive transportation cost, undue delay in movement of materials and problems of marketing. It has been observed that the study area- Uttar Pradesh suffers from inadequate transport facilities, which is the major obstacle to the socio-economic development of this region.

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