INDUSTRY AND MINERALS
Seventh Plan Performance 5.1 The Industrial Policy Statement of July 22, 1991 has set out the broad outlines of the nation's industrial policy in the near-term future. In many respects, it signifies a return to the 1956 Industrial Policy Resolution with only one major exception, viz., the reduction of the industrial activities exclusively reserved for the public sector from 17 to 8 industries. Indian industry has developed a highly diversified structure, considerable entrepreneurship and a vastly expended capital market. All this makes it possible or the public sector to vacate many areas hitherto exclusively reserved for it and throw them open to private sector initiative. This will free scarce public resources for investment in priority sectors. Also, the new Policy emphasizes deficiency and surplus generating capability in the public sector, a larger entrepreneurial and managerial freedom for both domestic private sector and foreign investment, a more open access to technology and greater reliance on the capital market for raising resources.
5.2 India stands totally committed to a policy of mixed economy as propounded by Nehru and other founding fathers under which both the public sector and the private sector enterprises co-exist and function side by side. But both need to be efficient. It is this strong motive for inducting efficiency which has partially prompted the recent policy of partial disinvestment of the shareholding in the public sector enterprises. The other consequence will be to free part of the public resources locked up in these enterprises for deployment else- where where it is needed more.
5.3 The relatively open foreign investment policy has been dictated by the following considerations:-
(i) A general awareness that foreign investment in India has been abysmally low and that the country has substantial absorptive capaci- ty;
(ii) Realisation that foreign direct investment is less costly but more productive than international non-concessional credit at commer- cial rate;
(iii) Knowledge that to a limited extent foreign direct investment can provide both balance of payment support and ensure the inflow of latest technology.
5.4 There is, however, no intention to permit foreign investment indiscriminately in all areas, but to welcome it selectively in de- sired or priority areas.
5.5 The Eighth Plan starts against a backdrop of impressive industrial growth during the eighties, a rate which was higher than that achieved by the great majority of other nations. The average annual growth rate of the industrial sector including mining, manufacturing and electric- ity generation during the Seventh Plan period was 8.5% which though marginally lower than targetted 8.7% was much higher than the 3.5% achieved during the Sixth Plan.
5.6 The manufacturing sector which achieved an average annual growth rate of 8.9 per cent during the Seventh Plan period contributed sig- nificantly to this higher growth rate in the economy. Within the manufacturing sector, manufacture of electrical machinery and chemi- cals and chemical products achieved growth rates of 25.8% and 11.7% respectively. These two groups contributed about 61% of the industrial growth in the manufacturing sector.
5.7 Table 1 below shows the average annual rate of growth recorded in 17 selected industry groups during the Seventh Plan period and 1990- 91:
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Table 1
Growth rates of index of industrial production
(Base: 1980-81 = 100)
Code- Industry Group Weight % Growth Rate
Group
Seventh Plan 1990-91
Average
1 2 3 4 5
20-21 Food Products. 5.327 5.0 12.5
22 Beverage, Tobacco 1.571 -1.1 1.3
& Tobacco products.
23 Cotton Textiles, 12.309 1.8 14.7
24 Jute, Hemp & Mesta 1.999 0.3 4.4
Textiles.
25 Textile products. 0.817 11.8 -32.0
(incl. wearing apparel)
26 Wood & Wood products 0.448 -2.5 12.7
& Furniture & Fixtures.
27 Paper & Paper products. 3.235 6.7 9.0
28 Manufacture of Leather 0.489 6.4 3.1
& Fur products.
29 Manufacture of Rubber 4.000 3.6 -0.1
Plastic, Petroleum &
Coal products.
30 Manufacture of Chem. 12.513 11.7 2.7
& Chem. products.
31 Manufacture of Non 2.299 6.7 1.7
metalic Minerals.
32 Basic Metals & 9.802 6.1 10.8
Alloy industries.
33 Metal products & 2.888 6.3 0.4
parts.
34 Machinery, Machine 6.240 6.0 8.4
tools & parts.
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Table 1 (contd.)
Code- Industry Group Weight % Growth Rate
Group ----------------------
Seventh Plan 1990-91
Average
1 2 3 4 5
35 Manufacture of 5.779 25.8 22.4
Electrical Machinery.
36 Manufacture of 6.386 6.5 6.3
Transport Equipment
& parts.
37 Miscellaneous Manu- 0.905 23.1 -2.9
facturing industries.
2-3 Manufacturing 77.109 8.9 9.1
1 Mining & Quarrying 11.464 5.6 4.9
4 Electricity 11.429 9.3 8.7
Overall Index. 100.000 8.5 8.5
5.8 It will be seen that compared to the Sixth Plan, the Seventh Plan achieved higher annual growth rates in the manufacturing and electric- ity sectors. The mining sector, however, witnessed a substantial slow down in growth from 12.7 per cent in the Sixth Plan to 5.6 per cent in the Seventh Plan. Among the major industry groups, the annual growth rates of textile products, basic metals and alloys, metal products and parts, electrical machinery and appliances, and other manufacturing products accelerated during the Seventh Plan period, whereas those of beverages, tobacco and tobacco products, wood and wood products decel- erated.
5.9 The significant growth in industrial production during the Seventh Plan is attributable to a number of factors, the most important being improvement in the performance of the infrastructure viz., power, coal, etc. The other contributory factors were :(a) changes in the area of licensing and procedures; (b) import of technology; (c) higher import of capital goods; (d) better utilisation of installed capacities; and (e) allowing broadbending of products in a number of industries. The Seventh Plan also witnessed a higher dose of liberali- sation measures such as (i) raising the assets limit for exemption to companies from the purview of MRTP Act; (ii) exempting 83 industries under the MRTP Act for entry of dominant industries; (iii) grant of exemption from licensing for industrial units with an investment of upto Rs.50 crores in backward areas and Rs.15 crores in other areas on the basis of a negative list; and (iv) delicensing non-MRTP, non-FERA companies for 31 industry groups and MRTP/FERA Companies in backward areas for 72 industry groups.
Performance of Central Public Sector Enterprises 5.10 As on 31.3.1991, there were 246 Central Public Sector Enterprises (PSEs) owned by the Government of India with a total investment of Rs.113,234 crores. Out of these, 236 were operational enterprises with an employed capital of Rs.101,702 crores and employee strength of 23.01 lakhs. Of these, 131 enterprises earned on overall net profit of Rs.5731 crores during 1990-91 and 109 suffered a net loss of Rs.3064 crores. The profitability profile of the PSEs over the last decade is detailed in statement 5.1.
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5.11 The performance of the Central Public Enterprises has been the subject of debate for some years now, and a number of Committees/Working Groups have gone into the matter in detail. In the context of the role which the Public Sector is required to play in the prevailing environment, the Government has taken the following deci- sions:
i) Portfolio of public sector investments will be reviewed with a view to focussing the public sector on strategic, high-tech and essential infrastructure. Whereas some reservation for the public sector is being retained, there would be no bar on areas of exclusivity being opened up to the private sector selectively. Similarly, the public sector may also be allowed entry in areas not reserved for it.
ii) Public enterprises which are chronically sick and which are un- likely to be turned around will, for the formulation of revival/reha- bilitation schemes, be referred to the Board for Industrial ad Finan- cial Reconstruction (BIFR), or other similar high level institutions created for the purpose. A social security mechanism is being created to protect the interests of workers likely to be affected by such rehabilitation packages.
iii) In order to raise resources and encourage wider public participa- tion, a part of the Government's share-holding in the public sector would be offered to mutual funds, financial institutions, general public and workers. This is also expected to bring tin greater public accountability and help create a new culture in the working of PSEs and improve their operational efficiency.
iv) Boards of public sector companies would be made more professional and given greater powers.
v) There will be a greater thrust on performance improvement through the Memoranda of Understanding (MOU) system through which managements will be granted greater autonomy and held accountable. Technical expertise on the part of the Government would be upgraded to make the MOU negotiations and implementation more effective.
vi) To facilitate a fuller discussion on performance, the MOUs between the Government and the public enterprises will be placed n Parliament. While focussing on major management issues, this will also hope place matters on day to day operations of public enterprises in their cor- rect perspective.
5.12 The implementation of these decisions has already started. During 1991-92, it was possible to map up Rs.3038 crores through disinvest- ment of equity of PSEs. Similarly, the number of MOU signing companies is being gradually increased. In 1992-93, 120 PESs are expected to sign MOUs. The Government has also established a National Renewal Fund to provide a social safety net to protect the workers from the adverse consequences of the technological transformation.
State Level Public Enterprises 5.13 There are in all about 1100 State Level Public Enterprises (SLPEs) with an estimated investment of about Rs.50,000 crores. Unfor- tunately, a large proportion of these State level public enterprises has not been working satisfactorily. As a first stop towards making these PSEs more responsive, the Government has decided to disinvest from some of the SLPEs.
Subsidies by the State Governments 5.14 The State Governments have been offering various concessions to entrepreneurs for setting up new industrial units. It is anomalous that while the State Governments are raising power rates to meet the losses of State Electricity Boards (SEBs), they are also offering power subsidy to new units. Similarly, most State Governments have announced deferment/exemption of sales tax for new units, capital subsidy and subsidy for purchase of generating sets. As most States are announcing similar incentives, it is a zero sum game, with the State Governments giving up revenue. It would only be appropriate that a detailed review of the various subsidies/concessions offered by the State Governments is undertaken so that a more rational policy frame is developed.
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New Growth Centres Scheme 5.15 For promoting industrialisation of backward areas Government of India announced in June, 1988, a scheme to develop growth centres in all States/Union Territories. These growth centres will be endowed with adequate infrastructure facilities like power, water, communica- tions, banking etc. so that they can act as magnets for attracting industries to these areas. It has been decided to develop about 70 growth centres during the Eighth Plan. The locations of 63 growth centres have so far been finalised in consultation with the concerned State Governments/Union Territory Administrations. However, the pace of implementation is slow. With the abolition of licensing in most of the sectors, this is the only instrument available for facilitating regional dispersal. Considering the imperative need to minimise re- gional imbalances within the shortest time, intensive efforts would need to be made to ensure that these Centres are fully operational in the next 3-4 years.
Science & Technology in Industry & Minerals Sector 5.16 Research & Development (R&D) is the watch word for maintaining an edge in quality and cost in today's competitive world. Indian industry has made significant strides in building up a strong base for manufac- ture of various goods, largely through acquired technologies. There is an imperative need for assimilation, adaptation and improvement of imported technologies as well as development of indigenous technolo- gies suited to local conditions.
5.17 A large number of industries in the public and private sectors have established corporate R&D facilities. Organisations like Steel Authority of India Ltd, Bharat Heavy Electricals Ltd, Project Develop- ment India Ltd, Hindustan Machine Tools, Instrumentation Ltd, Indian Petrochemicals Corporation Ltd. Petrofils Cooperative Ltd, Hindustan Organic Chemicals Ltd and Hindustan Insecticides Ltd have established in-house R&D facilities for product and process improvement and ap- plied research. In addition, a large number of industry specific research institutes and Cooperative Research organisations are doing very useful work. Moreover, there are a large number of technical consultancy organisations having expertise in operational areas, a resource to be reckoned with for undertaking various developmental activities. Besides, in-house R&D efforts and foreign collaborations with reputed manufacturers abroad, UNIDO/UNDP assistance for frontier technologies is being sought for technological development in the country. However, there is a need to improve the interaction between the industry and the academics.
Outlays and Expenditure 5.18 The Seventh Plan provided an outlay of Rs.19,708 crores, out of which Rs.17,268 crores were for Central sector (excluding coal and petroleum, which from part of the energy sector) and the balance Rs.2,440 crores were in the Plans of States and Union Territories. The actual expenditure (at current prices) is estimated at Rs.23,175 crores in the Central sector and Rs.3,120 crores by States and Union Territories. Expenditure in the Central sector at constant prices has also been higher, being Rs.18,564 crores. Year-wise actual expenditure both at current prices and at constant prices in the Central sector is shown in Statement 5.2.
5.19 The overall outlay envisaged in the Eighth Plan for Industrial and Mineral programmes in the public sector is Rs.40,,911 crores, out of which Rs.35,150 crores are for the Central Sector and the balance of Rs.5,761 crores is for the states sector. The Ministry/Department- wise outlays provided in the Central sector are detailed in Statement 5.3 and the State-wise outlays are detailed in Statement 5.4.
Outlook for the Eighth Plan 5.20 With a view to consolidating the gains already achieved during the 1980s and providing greater competitive stimulus to the domestic industry, the Government has introduced a series of reforms in the industrial, fiscal, trade and foreign investment policies. These reforms are intended to de-regulate or unshackle the industry and enable it to take decisions on its own without the need for Government approvals for specific actions. With these, the industry will be able to take timely steps to adjust to the charges in internal as well as external environment and meet the needs of a dynamic market. These reforms will load to increased globalisation of the economy and its greater integration with the world economy. The freedom and flexibili- ty allowed to the industry will enable it to optimise its operations and improve its competitiveness. In the background, there will be less emphasis on quantitative targets and the planning will become more "indicative". The desired growth of different sectors will
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be achieved primarily through modifications in industrial, trade, fiscal policies and changes in duties and taxes rather than through quantitative restrictions on imports/exports or licensing mechanism.
Role of Public Sector 5.21 The public sector has played a pioneering role in the development of the Indian economy and has a number of achievements to its credit. It deserves a major share of the credit for the self-reliant growth of the economy so far. However, there are some notable weaknesses too, the most important being the inability of the public sector to gener- ate adequate resources for sustaining the growth process. Besides, the private sector has now come of age and has developed considerable entrepreneurial, managerial, technological, financial and marketing strengths. In this background, a review of the role of the public and private sectors is called for in order to enable them to jointly shoulder the responsibility for further development of the economy.
5.22 The new Industrial Policy of July, 1991 has brought down the number of areas reserved for public sector from seventeen -- twelve other areas were to be progressively State-owned with State generally taking the initiative in establishing new undertakings -- to the following eight: arms and ammunition and allied items of defence equipment; defence aircraft and warships; atomic energy; coal and lignite; mineral oils; mining of iron ore, manganese ore, chrame ore, gypsum, sulphur, gold and diamond; mining of copper, lead, zinc, tin, molybdenum and wolform; minerals specified in the Schedule to the Atomic Energy (Control of Production and Use) Order, 1953; and railway transport.
5.23 The private sector is expected to play an increasing role in industrial activities, especially where security and strategic or social considerations are not very important. The public sector will concentrate increasingly on basic and core sectors. Even in these areas, emphasis will be on financing Industrial and Mineral projects primarily through internal and other extra-budgetary resources instead of depending on budgetary allocations. This is in line with the gener- al philosophy of placing greater reliance on competitiveness of indus- tries and efficiency of operations. The undertakings which are in a position to finance their development plans on their own will be allowed greater freedom for growth and diversification as a self- sustaining process. In the case of undertakings which are operating in core areas and are largely dependent on budgetary support, limited support will be provided in the initial years to enable them to stand on their own in the later years of the Plan.
5.24 As a result of the recent policy reforms, the industrial sector is expected to undergo considerable restructuring. First, in the past there has been considerable stress on import substitution at any cost. With the emphasis now being laid on competitiveness, future growth will be more in those sectors where the country has comparative advan- tage. Secondly, the size of individual companies, which is very low by international standards, not a single Indian company figures in the list of first 500 `Fortune' companies, is expected to grow through expansions, amalgamations, mergers, etc. Thirdly, there would be greater integration of indigenous production with outside. Those components/sub-assemblies whose production is uneconomic, will be imported. On the other hand, same other components/ sub-assemblies/ finished products will be increasingly exported. Finally, there will be joint ventures abroad to exploit the complementaries of resource endowments in this country and the concerned foreign country.
5.25 Among the matallurgical industries, the country possesses a good resource base in the case of iron and steel and aluminium. These two industries have the potential to record a very good growth rate in the long-run. However, in the medium-term, the prospects are not so good because of inefficient production and constraints of infrastructure in the case of former and lack of bauxite linkages and inadequate avail- ability of power in the case of latter. In the case of aluminium, it will be worthwhile to explore possibilities of large scale manufacture of alumina in the country, partly for exports and partly for smelting abroad to meet the country's requirements of aluminium. Due to poor resource position, no major capacities are envisaged to be set up in the Eighth Plan in the case of copper, lead and zinc.
5.26 The capital goods industry has recorded impressive gains in the past in terms of quantitative increases in production. From a virtual- ly non-existent base at the time of Independence, today the country is more or less self-sufficient in meeting the requirements of various user sectors. However, the qualitative performance of the industry leaves a lot to be desired. In most of the sectors, the performance of the indigenously manufactured capital goods is nowhere near the con- temporary levels in terms of process technologies, quality of products, productivity and cost of production. This sector decides the efficiency of operations of the various user sectors.
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With increasing emphasis on competitiveness, the user sectors will be anxious to switch over to state-of-the-art technologies and processes. This will, therefore, be one sector which will be adversely affected by the opening up of the economy and allowing freedom to the entrepreneurs to select and import capital equipment and technologies. In due course, the leading capital goods manufacturers can be expected to go in for collaborations, foreign equity and import of technologies to update their products and emerge as suppliers of world class capital goods but in the medium-term, this sector will be adversely affected due to its inability to meet global competition.
5.27 In the areas of machine tools, transport equipment and accesso- ries, electrical equipment and controls and instrumentation, the country has a good base. With upgradation of facilities through col- laboration/foreign equity etc., it should be possible to build on this and achieve good growth in production as well as exports.
5.28 With low levels of capacity utilisation, poor productivity, inadequate ancillarisation, long delivery period and high cost of production, the ship building industry in the country is moribund. On the other hand, the ship repairing industry is reasonably competitive and has the potential to meet the growing demand and to save valuable foreign exchange. With greater attention to modernisation of ship repairing facilities, the industry is expected to achieve reasonable growth.
5.29 The growth of the electronics sector has been rather lopsided. The high growth rate recorded in the past has been largely due to the growth of the Consumer Electronics sector, especially the TV industry. The industry is characterised by a very week components base and consequent high import intensity, grossly uneconomic scales of produc- tion and high cost of production. In the case of controls and instru- mentation, there is considerable capacity in the country for manufac- ture of hardware but the capability to provide the requisite systems design and support is inadequate. The exports software have recorded reasonable increases in the recent past but it has hardly been possi- ble to touch the fringe of the potential. The opening of the economy is expected to lead to restructuring of the entire electronics indus- try, including closure of a number of sub-economic units engaged primarily in screw driver technology, consolidations and amalgamation of units and increased tie-ups with foreign firms to provide a sound base for sustained development of the industry. As this restructuring process will take some time, the outlook in the medium terms does not look very promising.
5.30 The Fertiliser industry will be virtually by-passed by the eco- nomic liberalisation in view of the controls on inputs and adminis- tered prices of inputs as well as outputs of the industry. In the case of nitrogenous fertiliser, a decision on the pricing policy is impera- tive. On the one hand, the existing system of retention prices and subsidy is leading to increasing burden of subsidy on account of increases in production and costs of inputs, which are not matched by corresponding increases in the retail prices of fertilisers and on the other, adequate private sector initiative is not forthcoming because of lack of a clear cut policy and freedom to decide the feed stock as well as uncertainty about the returns from the investments. From time to time, ad hoc adjustments have been made in the norms for fixation of retention prices, creating considerable apprehensions among the potential investors about the viability of the projects. it is pri- marily on this account that there has been very slow progress in the three fertiliser plants which were to come up in the private sector along HBJ pipeline in the Seventh Plan. It is imperative to finalise the feed stock and fertiliser pricing at the earliest. The country may be heading for increased shortages and dependence on import of nitrog- enous fertilisers.
5.31 In the case of phosphatic fertiliser, the country's resource base is very poor and purely on economic considerations, setting up of phosphatic fertiliser capacity is undesirable. In order to minimise dependence on large-scale imports of fertilisers, joint ventures abroad would need to be explored. For production within the country, a judicious mix of import of rock phosphate and sulphur, phosphoric acid and finished fertiliser would need to be adopted.
5.32 The prices of most of the petrochemical products in the country are well above the international levels, partly because of high admin- istered prices of inputs and partly because of high rates of taxes. World over, the petrochemical products are finding increasing applica- tions as substitutes for metals, alloys, etc. Large number of new applications are being found almost everyday. Similarly, in the tex- tile sector, cotton is considered a luxury item and synthetic fibres are used for the common men's clothing abroad because of ease of convenience, durability etc. But in India, the reverse is the case. While the petrochemical industry has been delicensed, its growth will be guided to a considerable extent by the reductions in taxes and duties on its products.
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5.33 India is a large producer of cement and cement machinery. In the last few years, the production of cement has risen substantially. The cement production in the country is internationally competitive. The cement industry is expected to record good growth in production as well as exports.
5.34 The sugar scenario has undergone a significant charge the past two years and the country has become a net exporter of the commodity from being a net importer for many years. The country is also a lead- ing producer of sugar machinery and sugar production is quite competi- tive. With focus on increasing the per hectare yield of sugarcane, the sugar industry is likely to increase its production and exports sub- stantially.
5.35 In spite of phenomenal increase in exports of leather and leather goods in the recent past, India's share in world trade is minimal (0.7 per cent in the case of footwear, 9.5 per cent in footwear components and 4 per cent in leather garments). There is a growing market for leather products abroad and India can increase its exports substan- tially.
5.36 The textile sector has been undergoing a major restructuring. The mills in the organised sector are non able to meet competition from the powerlooms, though spinning continues to be profitable. A number of composite mills have closed down. Increasingly, the mills are modernising their plants and machinery and devoting greater attention to exports. A number of 100 per cent EOUs have also come up. This is a health development. This trend is expected to get accelerated and the textile exports are poised for a quantum jump. With improved avail- ability of quality fabrics at competitive prices, the garments indus- try is also expected to record a healthy growth. The powerloom sector is likely to further increase its contribution and become the prime supplier of cloth for domestic market. The outlook for the handloom sector does not look promising. It will need to switch over to produc- tion of high value items and cater to the sophisticated exports market for specialised products.
5.37 The jute industry is surviving virtually on oxygen being provided by the Government. Unless the industry takes up modernisation in a big way, concentrates on high value products and diversifies into new areas, it has a bleak future.
5.38 Of late, there has been considerable interest in the agro-food processing industry and number of ventures are in the offing, some of them in collaboration with leading foreign companies and others as joint ventures with foreign companies. The marine export has also attracted a lot of attention. With the recent policy changes, these two sectors are poised for a rapid growth.
Targets for the Eighth Plan 5.39 The capacity and production targets for selected industries for the Eighth Plan are contained in Statement 5.5 Brief highlights of industrial programmes and stratgies for major sectors are given in the subsequent paragraphs.
Metallurgical & Mineral Industries 5.40 The metallurgical and mineral industries constitute the bed-rock of industrial sector as they provide basic raw materials for most of the industries. Their easy availability is an essential pre-requisite for growth of most of the other sectors.
5.41 India continues to be a net importer of minerals and metals. The gap between the projected demand and supply of most of the minerals is likely to increase in the coming years.
5.42 Considering the time lag between discovery and eventual produc- tion of minerals, a greater thrust on mineral exploration activities needs to be given during the Eighth Plan particularly towards explora- tion by adoption of improved technology, including remote sensing and geophysical techniques. The exploration strategy has to be reoriented and emphasis should be on those minerals in which the resources are poor e.g. gold, base metals, platinum group of metals, diamond, nick- el, tungsten and rock phosphate, etc.
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5.43 The State sector's contribution in mining of industrial/non- metallic is quite significant. Reorganisation and strengthening of the concerned departments of the State Governments will be accorded prior- ity in the Eighth Plan. Most of the non-metallic minerals are produced through small scale mining which will continue to co-exist with large scale mining.
Iron Ore 5.44 Iron or constitutes one of the major exports of the country with foreign exchange earnings of about Rs.1200-1300 crores in 1991-92. The major exporters are National Mineral Development Corporation (NMDC), Kudremukh Iron Ore Co. Ltd. (KIOCL) and private parties, particularly the Goan mine owners. The one from Bailadilla mines of NMDC is by far the richest in the country. Until recently, the entire Bailadilla output was being exported, with the indigenous industry using inferior grades. It is imperative to reduce the level of exports of very high grade iron ore (+65% Fe) and utilise to increasingly in indigenous steel plants, particularly for direct reduction.
5.45 As a significant proportion of iron ore reserves is in the form of fines and blue dust, greater efforts will have to be made for their utilisation for which necessary R&D work will be taken up. In this context, the NMDC will undertake a project in collaboration with the Department of Electronics (DOE) on development of process technology for manufacture of various types of ferrite powders using indigenous raw materials/blue dust and their pilot plant production.
Iron and steel 5.46 During the Seventh Plan and 1990-92, the expansions of Bokaro and Bhilai steel plants to four million tonnes each, the second phase modernisation/expension of Tata Iron & Steel Company and the first phase facilities of Visakhapatnam Steel Plant (except light and medium merchant mill) were completed. In addition, there has been impressive growth of production capacity in mini steel plants and induction furnace units in the secondary sector. The second phase of Visakhapat- nam Steel Plant is expected to be completed in August, 1992.
5.47 Indian steel industry has been suffering from a number of disa- bilities. Obsolescence of plant, machinery, and technology has been important fator for low capacity utilisation, low productivity, high energy consumption and high production cost. It is interesting to note that in the sixties, the Indian Steel Industry was internationally competitive, but it is no longer so. The programme of development of steel industry in the Eighth plan is aimed at improving the technolog- ical health of the existing integrated steel plants and modernisation and upgradation of technology so as to achieve international competi- tiveness in respect of both cost and quality. Modernisation of exist- ing integrated steel plants at Durgapur and Rourkela in public sector and Tata Iron & Steel Co. in the private sector is expected to be completed in the Eighth Plan. Upgradation of steel making in the secondary sector has been taken up/being contemplated in the Eighth Plan. All these measures initiated in the Seventh Plan will bring the Indian steel industry at per with global standards. The scrapping and rebuilding of the IISDO plant at Burrpur is also expected to be taken up in the Eighth Plan.
5.48 Under the recent policy changes, to licence is required to set up iron and steel units. These policy changes and expected to give impe- tus to Indian steel industry to grow freely and also attract private investment. The initial response of the private sector to these changes appears to be encouraging.
Non-Ferrous Metals 5.49 During the Seventh Plan period, the non-ferrous metals sector made impressive progress with completion of the prestigious, integrat- ed, multi-locational Aluminium complex of National Aluminium Company Ltd. (WALCO), setting up of a captive power plant for Bharat Aluminium Company Ltd. (BALCO), modernisation and debottlenecking of copper smelters and refineries of Hindustan Copper Ltd. and expension of Vizag Zinc smelters of Hindustan Zinc Ltd. as well as Binani Zinc Plant in private sector, thereby raising capacities for aluminium, copper and zinc as targeted for the Plan. From a position of depend- ence on imports, India has emerged as a net exporter of aluminium. As far as other major non-ferrous metals are concerned, the share of imports in the consumption of lead and zinc registered some decline, whereas in case of copper, despite expension of the existing capacity, dependence on imports increased.
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Aluminium 5.50 With the commissioning of Orissa Aluminium Complex of NALCO, the country has emerged as a net exporter of aluminium. However, this situation is expected to last only for a couple of years more and by 1994-95, the country may once again turn a net importer of aluminium.
5.51 Considering the advantageous position in the resource endowment and in view of the production being competitive, it would be desirable to maintain an exportable surplus. In this context, the proposed expension of Hindustan Aluminum Company Ltd. (HINDALCO) by 1.5 lakh tonnes would merit a high priority. NALCO's expension by 1.15 lakh tonnes would also need to be considered as soon as they stabilise their production from the present capacity. BALCO would need to con- centrate on energy conservation and setting up of downstream capacity. A number of 100% EOU proposals for manufacture of alumina in the private sector have been made but these have been pending for quite some time now for want of finalisation of bauxite linkages. This needs to be expedited. Such plants could serve as the first step for setting up of aluminium smelters at a later date or joint ventures abroad for aluminium smelting.
Copper 5.52 During the Seventh Plan, a marginal increase in the capacity was achieved by debottlenecking and modernisation of the existing smelters of Hindustan Copper Limited (HCL) with small investments. Production of copper is not internationally competitive because of the low grade of copper deposits and small scale of operations in comparison to world standards. Malanjkhand copper deposit appears promising. After an evaluation of the results of the exploration and feasibility study currently under way, a view will be taken on augmenting copper produc- tion.
5.53 Since the deposits in India are very low in copper content, possibilities of bio-acid leaching need to be examined.
Lead & Zinc 5.54 With the commissioning of Rampura-Agucha-Chanderiya integrated project of Hindustan Zinc Ltd. (HZL) in 1991-92, the country has achieved near self-sufficiency in zinc. The integrated project will need to stabilise its operations before embarking on any large scale expansion in the Eighth Plan. No major new projects are envisaged in the Eighth Plan except for a replacement mine to feed Rajpura Dariba concentrator.
Nickel 5.55 The entire requirement of nickel in the country is imported. Considerable efforts made in the past for commercial production from large low grade nickel resources of Sukinda (Orissa) based on indige- nous technology have not been successful. It will, therefore, be necessary to carefully examine the plans for indigenous production. It would be desirable to look for imported technology for upgradation of ores before taking any investment decision on production of nickel.
Gold 5.56 The gold deposits have been steadily getting poorer and deeper with production costs becoming increasingly uneconomic. The future of gold mining in India will depend on the low grade small scale deposits in which mill recovery is a sensitive factor. Mining of scattered shallow gold deposits will have to be considered. A new approach to gold exploration and recovery of gold from low grade one deposits and tailings deserves consideration.
Engineering Industry 5.57 The engineering industry provides the key to economic growth with its diversified forward and backward linkages with almost every sector of the nation economy. The share of engineering in the total organised industrial activity is about 31.0% of the value of output, 33.2% of value added, 29.7% of employment and 28.4% of
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invested capital. During the Seventh Plan, output of the manufacturing sector as a whole grew at 8.8%, while the engineering industry grew at 10.5% per annum. This sector is mainly based on domestic resources and has good employment potential. The country has comparative advantage in this sector. However, the engineering industry has a number of weaknesses, the prominent being:
- Week Design and Engineering base;
- Inadequate attention to modernisation and continued upgradation of technology;
- Inadequate R & D;
- Absence of companies of international standards which can take up turn-key and consultancy projects;
- Demand constraint leading to low capacity utilization;
- Paucity of domestic financial resources and availability of "tied aid" leading to avoidable imports;
- High cost of raw materials and other inputs;
- High cost of credit/finance and duty structure;
- Absence of sustained export initiative;
- Inadequate attention to training and manpower development;
- Overmanning, which has often prevented modernisation and also increased overheads;
5.58 The stress in the Eighth Plan will be on qualitative and elimina- tion of the weaknesses mentioned above. Greater stress would need to be laid on import of drawings and designs, than on import of equip- ment. Establishment of closer linkages between academic institutions, manufacturers of equipment, users of equipment, national laboratories and the Government is also necessary.
Ship-Building and Ship-repair Industry 5.59 At present there are about 40 shipyards in India. Out of these, seven are in the public sector, two in the State sector and the re- maining in the private sector. The private sector shipyards are al- lowed to construct vessels of any size. However, at present the pri- vate sector shipyards are not capable of building more than 10,000 DWT size crafts. In spite of so many shipyards in the country, ship-build- ing industry is in doldrums partly because of very high cost of in- digenous ships, unduly long delivery periods and poor viability of the shipyards and partly because of the ability of foreign shipyards to offer ships at marginal cost and shorter delivery period consequent on world-wide recession in ship-building industry. Hence, it is not proposed to set up any new shipbuilding yards in the Eighth Plan. Efforts would, however, be made to improve productivity and viability of the existing yards. Certain other measures under consideration and introduction of revised pricing formula as recommended by BICP, treat- ing the ship-building industry as 100% export oriented industry with all related benefits, allowing duty free imports up to a limit of 60% of the realisable price of the vessel, providing working capital loans to shipyards on soft term, etc.
Ship Repair Facilities 5.60 The ship repair activity is far more profitable than ship-build- ing. At the same time, substantial outgo of foreign exchange (to the tune of Rs.50 crores every year) on account of Indian vessels repairs at foreign shipyards can be avoided if domestic capabilities are strengthened. Keeping this in view, most of the units in this sector are drawing up plans to increase their capacities. The Government has recognised the strength of this industry and given it the status of deemed export industry. A number of concessions, as available to 100% export oriented units, have been provided.
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Electronics 5.61 The electronics industry has the potential to be a powerful catalyst for improving productivity and efficiency in all sectors of the economy. It has achieved rapid growth, perhaps the fastest rate of growth among all industries over the past decade. The value of output of the electronics industry grew by about 25 per cent annually during the Sixth Plan and around 35 per cent per annum during the Seventh Plan. However, India's production of electronic goods is presently less than one percent of the world production which is valued at over U.S. $ 750 billion per annum. The industry is employment-oriented and provides direct employment to around 2.60 lakh persons and indirect employment to approximately 5.20 lakh persons. The electronics exports especially software exports have recorded impressive increases but the import intensity of the sector is cause for concern.
5.62 Despite the significant growth recorded by the industry, there are certain notable weaknesses. Firstly, although the growth of con- sumer electronics has been much faster then anticipated, the growth in the sector has been almost entirely due to a single product viz. TV receivers. Secondly, production of components has consistently fallen short of targets. While it was planned to make available about 75% of the electronic components indigenously by 1989-90, the present level of indigenisation is only around 60%. Thirdly, the scale of production of electronic components is much below the minimum economic size (MES) of production as compared to the international standards. This is also true of finished electronic goods. As a result, there is fragmentation f the electronics market with a number of small firms operating below the MES level. Cost of domestic electronics equipment and components is quite high -- about 1.5 to 1.8 times the international level. this is a hindrance to the growth of high technology, capital intensive sub-sectors of the electronics industry. Some areas such as semicon- ductors are stuck with out-of-date technology. The electronics indus- try has a very high obsolescence rate and extreme care is necessary in choosing the technologies and updating them regularly.
5.63 The focus of attention in the Eighth Plan, in electronics indus- try would be on production at internationally competitive scales, encouraging export oriented production, technology development, man- power development, rural industrialisation and application of elec- tronics in key socio-economic sectors. In the area of computer soft- ware exports, where the country has comparative advantage, Software Technology Parks are being set up. These would require certain facili- ties like quick and easy communications, already provided in a few centres. A project on Value Added High Speed Data Communication Net- work for Software Exports is being implemented.
5.64 Electronics has a very significant role to play in increasing productivity and reducing costs in virtually every sector of the economy. Over the last few years certain technologies have been de- veloped for introduction of electronic systems and controls in a number of industries such as steel, cement, paper and pulp, sugar, tea and power and also in the areas of agriculture, social infrastructure and strategic electronics, which are appropriate for the needs of the country. In the Eighth Plan, efforts will be made for intensive appli- cation of these technologies in various sectors.
5.65 Another area needing attention is the training of manpower re- quired for the electronics industry. In order to achieve the desired growth and to attract foreign investors, it has become necessary to ensure that adequately trained manpower is available. At present, training in electronics is being imparted both in Government and private institutions. Government has supported more than 450 institu- tions during the Seventh Plan. In the Eighth Plan, this aspect will be given special emphasis by introducing more and more job oriented courses at ITI level and Post Diploma/Degree level in the area of repair/maintenance of consumer electronics, industrial electronics, electro-medical equipment and computer systems. Same institutions like Centres for Electronics Design & Technology (CEDIs) etc. will generate special manpower in this field. Government is giving recognition to a number of private institutions engaged in various courses in computer education. Keeping in view the future requirement of manpower, there is an imperative need for augmenting and improving the training facil- ities available in ITIs, Polytechnics, Engineering Colleges and other institutions.
Fertilisers 5.66 During the Seventh Plan, four gas-based nitrogenous fertiliser plants at Aonla, Vijaipur, Jagdishpur (on HBJ line) and Namrup Expen- sion II and DAP project at Paradeep were commissioned. Four gas-based projects are under implementation at Babrala, Shahjahanpur and Kota along HBJ line and at Kainada in Andhra Pradesh. Even after this,
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there will be a shortfall of about 3 million tonnes of nitrogen in 1996-97.
5.67 As the expansion of the existing units provide considerable sav- ings in infrastructure and utilities, doubling of plants at Bijaipur, Aonla and Jagdispur should be undertaken without further loss of time. Discovery of gas in Krishna-Godavari and Cauvery basins offers an opportunity to add small--sized gas--based plants in these regions. Subject to finding an effective transport route, surplus gas available in North Eastern region can be utilised for fertiliser production. There is also a need to promote use of low cost bio-fertilisers.
5.68 The raw material for phosphatic fertilisers in the country are negligible. The choice is to import either rock phosphate and sulphur or intermediates like phos-acid or phosphatic fertiliser itself. The policy of a judicious mix of import of finished fertilisers and pro- duction of fertilisers through new materials and intermediates would continue.
5.69 The prices of fertilisers are controlled. As retail prices are considerably lower than the fair cost of production plus freight, the manufacturers are compensated for the differential under the produc- tion-cum-transfer subsidy system. Calculation of fair prices is based on reasonable norms of production level, energy consumption, working capital margin etc. The pricing norms have been gradually tightened over successive pricing periods, each lasting 3 years. Despite this, the subsidy burden has been steadily increasing due to (i) escalations in the costs of inputs which are not compensated by corresponding increases in the retail prices of fertilisers; (ii) increase in the volume of production of fertilisers and (iii) high capital costs of new fertiliser plants. On the other hand, the fertiliser industry has been complaining that though it is assured of a 12 per cent post--tax return on net worth, in actual practice, a number of items are exclud- ed. Besides, there are inordinate delays in the release of the subsi- dy, adversely affecting the financial position of the fertiliser companies. There is a general feeling that the system of retention prices is not conducive to optimisation of the capital costs and operating efficiencies.
5.70 Complete de-control of prices can end the subsidy and pricing problem altogether. This will be in line with the philosophy of great- er reliance on market forces and appears to be the most desirable option for solving the problem of mounting subsidies on the one hand and ensuring healthy growth of the fertiliser industry on the other. This will, of course, have to be accompanied by suitable increases in the procurement prices of agricultural products. However, this can have an adverse effect on the consumption of fertilisers especially by small and marginal farmers in the initial years. Phasing out subsidy will, therefore, have to be done gradually, giving time to farmers to adjust.
5.71 Group retention prices for newer plants based on gas can be introduced as an interim measure. This will be the second best option and it will give incentive to the new fertiliser plants to optimise the capital and operating costs.
5.72 There is a need to promote the use of slow release fertilisers through appropriate fiscal measures so as to optimise the nutrient usage. The use of bio-fertilisers also needs to be encouraged. These are environment friendly, low cost inputs.
Petrochemicals 5.73 The petrochemicals industry, mainly based on a range of products derived from petroleum and natural gas, is highly capital and technol- ogy intensive. Being relatively new, the industry has the advantage of using state-of-the-art technologies, the production being internation- ally competitive. However, the industry suffers from the disadvantages of high input costs and high rates of taxes and duties. The result is that the prices of petrochemicals in the country are way above the international prices.
5.74 During the Seventh Plan, implementation of Maharashtra Gas Cracker Complex (MGCC) at Nagothane, with a capacity of 300,000 tpa of Ethylene, was taken up by IPCL. Because of an unfortunate accident, the project got delayed and was commissioned only in the last quarter of 1991-92. Besides, IPCL has implemented a number of schemes for rehabilitation/expansion of its Polypropylene (PP) plant, revamping of its nephtha cracker, additional Xylenes production, Bicomponent Acrylic Fibre, etc. at its Baroda Complex. The other facilities commissioned are:
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Aromatics plants of Bharat Petroleum Corporation Ltd. (BPCL), Bombay and Cochin Refineries Ltd.(CRL), Cochin and a number of downstream units based on availability of propylene from refineries at Vizag, Madras and Bombay.
5.75 The petrochemicals industry has now been delicensed. Letter of Intent were earlier issued for setting up crackers at Hazira, Auraiya, Gandhar, Vizag, Haldia and Assam and for expansion of NCCIL cracker. The work on these crackers is in initial stages. It is expected that based on market considerations, these crackers would get phased suit- ably.
5.76 During the Eighth Plan, greater emphasis would be laid on performance plastics, (polyamides, polyacetals, polycarbonates, ABS) consumption of which is linked to the growth of automobile, electronics, telecommunication and other consumer items. The changing Indian scene with multi-fold growth of above industries would push the growth in consumption of these performance plastics Application Development Centres are being set up to propagate use of performance plastics. Petrochemicals industry is technology intensive and linkages between research, manufacturing, design, engineering and academics are proposed to be strengthened.
Drugs and Pharmaceuticals 5.77 Indian drug industry manufactures a wide range of basic drugs and pharmaceuticals covering almost all therapeutic regimes. These include antibiotics, bacterials, steroids and hormones, vaccines, psychotropic preparations and a wide variety of synthetic drugs, including herbal preparations. The industry is quite widely distributed among FERA companies, public and private sector units and other medium scale units specialising in a few drugs. There were about 14,000 units producing drugs/formulations at the end of 1991-92. More than 30% of production of bulk drugs comes from units in the small scale sector, which, in turn, base their production on penultimate intermediates for a large number of items.
5.78 There are five public sector units namely, Indian Drugs and Phar- maceuticals Ltd. (IDPL), Hindustan Antibiotics Ltd. (HAL), Bengal Immunity Ltd. (BIL), Bengal Chemicals & Pharmaceuticals Ltd. (BCPL) and Smith Stanistreet Pharmaceuticals Ltd. (SSPL). All of them, except HAL, have been in the red mainly due to outmoded plants, inefficient technology, high labour costs, weak marketing efforts, concentration of bulk drugs manufacture and excessive reliance on institutional or traditional sales outlets etc.
5.79 Since introduction of the Drug Price Control Order (DPCO), 1986, the pharmaceuticals industry has witnessed a good growth and for the last three years, the country has been a net exporter of drugs. In line with the prevailing economic environment, there is a need to review the DPCO and allow greater freedom to the industry in the matter of price fixation and boost its production and exports.
5.80 A strong technology base for the drug industry is necessary for its healthy development. This calls for vigorous and sustained R&D efforts. So far, the main thrust has been on process improvement and not much effort has been made to produce new drugs from the basic stage. During the last decade, processes for some of the important intermediates and raw materials have been developed within the coun- try. A number of R&D Programmes have been identified to be taken up in a co-ordinated manner in the national laboratories, public sector undertakings and private sector units. Development of sophisticated formulations such as slow release forms, advanced drug delivery sys- tems, etc., will also receive due attention. Research and development in the are of bio-technology by an understanding of DNA replication mechanism related to the country's needs will also receive due empha- sis. Pollution control measures, industrial safety and energy conser- vation will be considered as integral parts of production activities.
Pesticides 5.81 As more and more farmers are adopting multi-cropping practices using hybrid seeds, pesticides have become an important input to minimise crop losses and also as part of public health programme. Pesticides are first manufacture as technical grade chemicals, which are subsequently formulated in ready-to-use form both in the organised sector and small industries. As many as 137 pesticides have been approved for use in India, out of which, two (i.e. DDT/BHC) are high volume pesticides. The others are largely used by farmers for fighting pests of a variety of crops such as fruits, vegetables, cotton, groundnut, sugarcane, rice, wheat, etc.
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5.82 The country is largely self-sufficient in the manufacture of pesticides but some of the intermediates as also new varieties of insecticides are being imported. During the Seventh Plan, a number of new pesticides such as Butachlor, Isoproturon, Monocrotophos as well as Pyrethroids were taken up for manufacture to meet the specialised needs of the agricultural sector.
5.83 There is now greater awareness of environmental pollution and safety aspects and the new pesticides have to satisfy these criteria before being certified for use. DDT has been banned in Europe and U.S.A. as it was found to enter the human food chain ultimately. DDT production by Hindustan Insecticides Ltd. would also need to be gradu- ally phased out. Existing centres in the country dealing with environ- ment and health monitoring of toxic substances under CSIR, ICMR and ICAR need to be upgraded to create facilities for regular monitoring of pesticides in the environment, with a view to minimising environ- ment and occupational health problems.
5.84 A UNDP aided Pesticides Development Programme has been taken up. The main objectives of this are:
(i) Development of new formulations of pesticides, suiting the requirement of crops and agro-climatic conditions of India;
(ii) To upgrade technical competence of personnel engaged in production, quality control and hazard management in the pesticide industry; and
(iii) Conducting training programmes on quality control for the industry personnel.
Cement 5.85 The gradual de-control of cement has resulted in progressive increase in cement production as well as upgradation of technology. The country has now emerged as an exporter of cement. Besides, a good resource base, India has locational advantage in respect of cement trade as a number of neighbouring countries are importers of cement. The newer cement plants compare well with the plants in the world in terms of productivity and production cost and the country can easily export about 5 million tonnes per annum by 1996-97.
Sugar 5.86 India is the largest producer of sugarcane as well as sugar in the world. The sugar industry is the second largest agro-based industry in India. While the new generation of 2500 tpd mills produce better results, a number of old mills are in need of modernisation. Introduction of co-generation, electronic controls is being encouraged to optimise production parameters and improve productivity. Future Sugar Complexes should provide for down-stream industries using molasses and bagasse as raw-materials. To facilitate this molasses should be decontrolled so that the Sugar Complexes can be developed for optimal benefits. After many years, the country has resumed sugar export. Such exports should be on a continuous basis and should not be determined on a year to year basis.
Leather and leather goods 5.87 Leather and leather goods industry has emerged as one of the important foreign exchange earners in recent years. During the Seventh Plan, the value of exports rose from a level of Rs.584 crores to Rs.2030 crores. The exports in 1991-92 are expected to be around Rs.3200 crores.
5.88 There is a constraint on the availability of hides and skins, especially for export production. To bridge the gap between the re- quirement and availability of hides and skins, a series of measures would be necessary. These include setting up of a network of mini- modern carcass recovery centres all over the country, use of improved flaying tools and techniques and viable modern slaughter houses.
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Textiles 5.89 Textile industry is the single largest industry in India, accounting for about twenty per cent of the total industrial output and providing employment to around 15 million people. It is also an important contributor to India's exports, accounting for 26 per cent of the total value of exports in 1990-91. The textile industry passed through a severe crisis in the early part of the Seventh Plan mainly due to high cost of raw materials and labour, obsolete machinery, demand recession and competition from the powerloom sector. In order to promote modernisation of the industry, Textile Modernisation Fund (TMF) was introduce in 1986 with a corpus of Rs.750 crores. The re- sponse of the industry has been quite encouraging and it is proposed to continue TMF during the Eighth Plan.
5.90 The progress and implementation of the Textile Policy, 1985 were reviewed by high powered committee set up in May, 1988 under the Chairmanship of Shri Abid Hussain, the then Member, Planning Commis- sion. The committee has focused on the institutional arrangements needed for restructuring of textile industry for its integrated devel- opment. The major recommendations of the Committee include restructur- ing and modernisation of the organised mill sector and institutional arrangements for area based development of handloom and powerloom sectors; upgradation of cotton processing facilities; pre-eminent role of cotton as the main raw material, realistic pricing of synthetic fibres/yarns; devising ways and means for increasing textile exports; and upgradation of technology in the readymade garments and textile machinery industries.
5.91 In the Eighth Plan, greater emphasis will be laid on production f value-added, diversified and quality goods for export and increasing capacity utilisation, sophisticated design and product-mix and appro- priate technology. The organised mill sector would concentrate in- creasingly on exports with bulk of the indigenous demand being met by the powerloom sector. The handloom sector will concentrate on high value products for domestic as well as export markets. The textile exports are expected to be Rs. 28,000 crores in 1996-97 at a compound growth rate of 18% per annum. To achieve this, emphasis will be laid on exports of non-quota items, higher unit-value realisation and better marketing techniques.
Jute 5.92 The jute industry passed through a severe crisis in the early part of the Seventh Plan due to demand recession, imbalance in cost- price structure and competition from synthetic packaging materials. The absence of desired thrust on modernisation/diversification and widespread sickness in the jute industry led to closure of a number of mills. In 1986, the Government announced a package of policy measures consisting of Jute Modernisation Fund Scheme (JMFS) of Rs.150 crores, Special Jute Development Fund (SJDF) of Rs.100 crores, duty free import of identified jute machinery items for modernisation and manda- tory usage of jute packaging materials by specified enduser sectors. However, the pace of modernisation has been rather slow. Not only is this to be speeded up but jute industry will have to concentrate on diversification and production of high value products. The mandatory usage of jute for packaging should only be a temporary feature. Ulti- mately jute must compete on its inherent strengths.
Paper and Paper Board Industry 5.93 Paper Industry in India is more than a century old. The capacity is almost evenly divided between the large units (organised sector) and a number of small paper mills scattered throughout the country and mostly based on non-wood materials such as bagasse, fibrous crop residues, jute cuttings, cotton waste, cotton rags and waste paper, etc.
5.94 The main problems facing the large paper mills are inadequate availability of forest-based raw materials, technological obsoles- cence, high energy consumption, high capital cost of modernisation, high cost of inputs, management deficiencies and scarcity of skilled labour. In the case of small paper mills, the problems are inefficient chemical recovery systems leading to high production cost as well as environmental pollution, absolete equipment with low productively and high energy consumption and shortage of raw materials. The National Forest Policy has ruled cut captive industrial plantations and re- quires paper and other forest-based industries to procure their raw materials by establishing direct relationship with individual growers of trees. However, this arrangement has proved to be unworkable be- cause growing trees takes 7-8 years. It is, therefore, imperative to review this
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aspect and consider making available degraded and waste lands to the industry for captive plantations. Privately owned lands should also be allowed to be used for plantations. The paper industry would also need to switch over as much of the existing capacity as possible to the use of bagasse and other agricultural wastes and modernise its equipment accordingly.
5.95 With steady increase in sugar production, there is a need for forward planning and integrating paper production with sugar produc- tion, using bagasse as the raw material. Such a plant has already been operating successfully in Tamil Nadu. Many more such plants need to be planned. This requires adequate supply of coal or same other alterna- tive fuel, for feeding the boilers of sugar mills and co-generating power for paper production.
Newsprint 5.96 There are two major projects under implementation -- Uttar Pra- desh bagasse based newsprint project of NEPA with a capacity of 89,000 tonnes per annum and 200 tpd composite newsprint and printing and writing paper project of Punjab Agro Newsprints Ltd. Both these projects are scheduled to be completed by the end of the Eighth Plan. The newsprint manufacture is capital intensive and involve long gesta- tion period. Even though the prices are not administered, profitabili- ty is cooperatively low and the private sector s not coming forward to take up manufacture of newsprint. The country is spending about Rs.300 crores of foreign exchange per annum on newsprint import. There is a need to encourage creation of bagasse based additional capacity in tandem with new sugar capacity. Such "Integrated sugar/newsprint units" would have many external economies and would improve viability of both the industries.
Atomic Energy 5.97 The activities of the Department of Atomic Energy under Industry & Minerals sector pertains to requirement of heavy water, nuclear fuel, instruments and controls, spent fuel recovery and waste disposal for the nuclear power reactors.
5.98 During the Seventh Plan, the on-going heavy water project at Thal was completed and commissioned in 1986. The Manuguru project got inordinately delayed. It commenced production in March, 1991 alongwith the heavy water plant at Hazira taken up during the Seventh Plan.
5.99 The production of heavy water has been well below the capacity at most of the plants due to a variety of reasons such as feed limitation (Talcher, Nangal and Thal), steam and power limitations (Kota), re- duced level of deuterium in the feed (Baroda, Tuticorin and Thal), etc. Efforts should be made to eliminate these limitations for a reasonable level of production.
5.100 The performance of Hazira and Manuguru Plants is expected to be quite good in view of the improvements made over the previous plants and provision of a captive power plant at Manuguru.
5.101 The Nuclear Fuel (NFC) has undertaken two schemes for augmenting nuclear fuel supply : Expansion phase-I and Augmentation of Fuel and Zircaloy capacity. The NFC Expansion phase-I for raising production capacity of zircaloy from 35 tpa to 50 tpa and of fuel from 90 to 225 tpa, has been considerably delayed due to deficiencies in the design of equipment and delay in the import of sophisticated equipment like sintering furnaces and vaccumarc melting furnaces. The scheme is now expected to be completed in 1992-93.
5.102 The capacity of NFC is being further augmented from fuel capacity 225 tpa to 300 tpa and zircaloy capacity from 50 tpa to 80 tpa. The project is now expected to be completed together with phase-I expansion in 1992-93.
5.103 Augmentation of Nuclear Fuel capacity also requires additional mining and mill for uranium concentrates for which a Rs.495 crores project at Narwapahar & Turamdih was taken up in the Seventh Plan. The project, however, suffered a set-back due to two years' delay in getting environmental clearance. The project is now scheduled to be completed by the end of 1993.
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5.104 The Orissa Sands Complex (OSOOM) Project of Indian Rare Earths Ltd. (IRE) in Orissa was delayed and commissioned in October, 1987. Due to various technical problems, plant performance remained in the range of 10-20% of capacity before suspension of operations in 1991. Rectification of these problems is proposed to be taken up in the Eighth Plan.
5.105 The following new units are proposed to be taken up during the Eighth Plan:
i) A new Uranium Oxide Fuel Plant at Hyderabad;
ii) A new Uranium Oxide Fuel Assembly Plant at Hyderabad;
iii) Zirconium and Titanium Sponge Plants;
iv) A Spent Fuel Reprocessing Plant at a greenfield site.
5.106 Titanium Sponge Plant and Zirconium Sponge Plant will be put up in same premises as a number of facilities are common. The possibility of setting up these units in the private sector is being explored.
STATEMENT No. 5.1
PROFITABILITY PROFILE OF PUBLIC SECTOR ENTERPRISES
(Rs. in Crores)
SL.No. DETAILS 1980-81 1985-86 1986-87 1987-88 1988-89 1989-90 1990-91
1. No. of operating Enterprises 168 211 214 220 226 233 236
2. Capital Employed 18 207 42965 51835 55617 67629 84760 101702
3. Gross Margin 2401 8270 9897 11082 13438 16412 18510
4. % of gross margin to 13.19 19.25 19.09 19.93 19.87 19.36 18
capital employed
5. Depreciation & Deferred 983 2983 3376 4142 4866 5790 7151
Revenue Expenditure
6. Gross Profit 1418 5287 6521 6940 8572 10623 11358
7. % of Gross Profit to 7.79 12.31 12.58 12.48 12.68 12.53 11
Capital Employed
8. Interest 1399 3115 3420 3587 4167 5329 7539
9. Pre-Tax Profit/Loss 19 2172 3101 3353 4405 5293 3820
10. Tax 222 1000 1329 1323 1411 1504 1452
11. Net Profit/Loss 203 1172 1772 2030 2994 3789 2368
(a) Profit of profit-making 557 2857 3478 3775 4917 5651 5432
enterprises
(no. of enterprises) (94) (119) (108) (114) (117) (131) (124)
(b) Loss of loss-making 760 1685 1706 1745 1923 1962 3064
enterprises
(no. of enterprises) (74) (90) (100) (103) (106) (98) (109)
(c) No. of enterprises making 2 6 3 3 4 3
neither profit nor loss
12. % of Net Profit/Loss to 1.11 2.73 3.42 3.65 4.43 4.47 2.33
Capital Employed
13. Dividends 83 191 297 320 353 323 365
14. Retained Profit 286 981 1475 1710 2641 3466 2003