The Hindu : Tiny units paying a price for `progress'

Online edition of India's National Newspaper
Thursday, Mar 06, 2003

Southern States

Southern States - Karnataka

Tiny units paying a price for `progress'

By Our Staff Correspondent

MANGALORE MARCH 5. Tiny industries in Dakshina Kannada are paying the price for the "industrial progress" achieved by the district. Based on the investment on industries and the employment generated by them, the Government has classified the district under Zone B for determining the subsidy for these units. This deters investors from opening units here.

The issue figured prominently at the recent quarterly meeting of the Karnataka Development Programme chaired by the district in-charge Minister, B.Ramanath Rai, and at the investors' meet organised by the District Industries Centre (DIC) subsequently. The demand for reclassification of the district or some of the taluks under Zone C has gained momentum as a result.

The Government provides a grant of 25 per cent of the investment made on land, plant, building, and machinery subject to a maximum of Rs. 12.5 lakh for tiny industries set up in Zone C.

This is limited to Rs. 5 lakh or 10 per cent of the investment in case of Zone B. Taluks affected as a result of this classification are Belthangady, Bantwal, Puttur, and Vittla.

The problem is accentuated as no entrepreneur has shown the resolve to set up a small-scale industrial unit for which the grant given is Rs. 1 crore in these taluks. Industries with investment of up to Rs. 25 lakh are classified as tiny.

According to the data furnished by the DIC, there are around 5,000 tiny units registered with it in the district. A clear picture on their actual status is likely to emerge only after a survey being carried out by the Department of Commerce and Industries of the Union Government is completed this month. Many of them are either sick or have been closed down.

P. Prabhudeva, Joint Director of DIC, told The Hindu that the department was pursuing the resolution adopted at the KDP meeting with the Government.

Even various taluks in Tumkur had been affected by improper classification. Udupi had been unaffected as all its taluks had been classified under Zone C. He said the department had urged the Government to specifically consider the case of the four affected taluks.

He noted that the classification was based on the Government's new industrial policy which was valid up to March 31, 2006. Under the policy, developed areas are classified under Zone A, developing areas under Zone B, and backward area under Zone C. Zone D comprises growth centres, mini growth centres, and specialised industrial areas.

This investment subsidy would be available to all existing tiny and small-scale units undertaking expansion, diversification, or modernisation without exceeding the prescribed monetary ceiling as applicable to these units.

Mr. Prabhudeva noted that this was also subject to the condition that grant of this facility would be available only on additional investments made.

He said reclassification of the taluks would provide help entrepreneurs planning to set up tiny and small-scale units here. This would reduce the pressure on the available resources in Mangalore taluk, which was home to mega industries such as MRPL (petroleum products), MCF (fertilizers), and BASF (chemicals).

Mr. Prabhudeva hoped that the Cabinet would take a decision on a request from the elected representatives of the district and the entrepreneurs here and pave the way for equitable industrialisation of the district. This would help reduce regional imbalances in employment generation and investments in the district.

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