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INDUSTRIALIZATION IN ASSAM AND ECONOMIC REFORMS

Introduction

Assam is situated at the North-eastern Himalayan Sub-region of India. In spite of having huge development potential, the economy of Assam remained underdeveloped as it is characterized by poverty, under-utillised man power and untapped natural resources. The economy of the state is depending too much on agriculture. In Assam, cultivators and agricultural labourers together account for 64.0 percent of the total working population, whereas workers of manufacturing an other household industries constitute only 2.8 percent of the total worker of the state.

Assam is one of the industrially backward states of the country. In spite of being blessed with a high potential for development of resource-based and demand-based industries in the state, the pace of industrialisation in Assam had not been satisfactory. The industrial sector in the state had been centralised around some particular sectors, like tea, petroleum, coal, jute and forests.

Industries in Assam can be broadly classified into four heads :

(a) Agro-based industry,

(b) Mineral-based industry,

(c) Forest-based industry, and

(d) Other industries.

Agro-based industries of Assam include-Tea industry, Sugar industry, Grain mill products industry-(Rice, Oil and Flour Mill), Food processing industry and Textile industry.

Mineral-based industries of Assam includes-Railway workshop, Engineering industry, Re-rolling mill, Steel Works, Motor Vehicle Workshop, Galvanized wire units, cycle factory, Aluminum utensils industry, Cycle spare parts, Steel Trunk, Tubewell pipe, Steel wire net, Barbed wire, cement industry etc. Moreover, the non-metal based industries include oil industry, Natural Gas-based industry etc.

Forest-based industries of Assam include-Plywood industry, sawing mill, Paper and Paper-pulp industry, Match industry, Leather industry, Hard board industry etc.

Other industries of Assam include-Power industry, Fertiliser industry, Printing Press,Brick and Tiles industry, Chemical industry etc. Shyness of capital due to high cost of production, vulnerability of the region, inadequate economic and basic infrastructural facilities, derth of technical personnel, lack of entrepreneurial motivation on the part of local people and low level of central sector investment etc. are responsible for poor industrial development of the State. During the decade of planning the industrial sector practically remained stagnant. It was during the Third Plan that the industrial development programmes were accelerated alongwith the development of infrastructural facilities. It is also encouraging that over the past few years persistent efforts are being made for increasing and improving various infrastructural facilities which are paving the way for gradual industrialisation in the State. Besides, the State Government is also providing technical training undertaking surveys and investigation of raw materials, developing industrial sites and participating in the share capital of private enterprise. These developments created a favourable climate for industrial investment in the State.

Trends of Industrial Production

Industrial production in Assam has been increasing at a slow rate. Major industrial products in Assam include Tea, Coal, Matches, Plywood, Sugar, Fertilizer, Jute Textiles, Petroleum Crude, Refinery Products, Wheat Flour, Paper and Cement. The following table shows the production of some important industries in Assam :

Production of some important industries in Assam

Item

Unit

 

Production in

     
   

1975

1981

1985

1991

1994

1. Tea

2. Sugar

3. Jute Textile

4. Fertiliser

5. Refinery

Products

6. Petroleum

Crude

7. Plywood

 

8. Match

 

9. Cement

10. Paper

11. Wheat Flour

12. Coal

Million Kg.

‘000’ M.T.

‘000’ M.T.

‘00’ M.T.

‘000’ M.T.

 

‘000’ Tonnes

 

Million Sq.

Meters

Million gross Boxes

‘000’ M.T.

‘000’ M.T.

‘000’ Tonnes

‘000’ Tonnes

263

7

4

141

1295

 

__

 

23

 

4

 

110

__

__

__

305

6

6

204

1566

 

4386

 

31

 

5.4

 

197

14

149

651

352

3

6

187

1910

 

4791

 

42

 

5

 

169

0.5*

337

835

388

4.2

5.3

326

2531

 

4838

 

26

 

4.7

 

179

__

283

946

399

1.5

5.0

129

__

 

4861

 

42.7

 

4.1

 

275

__

249

1292

Source : 1. Economic Survey, Assam, 1981-82, 1985-86 and 1989-90

2. Statistical Hand Book, Assam, 1993 and 1995

3. Figure related to 1983

The above table reveals the trend of production of some important industries of Assam in recent years. Production of Tea, which was 263 million Kg. in 1975 gradually increased to 352 million Kg. in 1985 and then fell to 390 Million Kg. in 1994. Production of sugar stood at 1.5 thousand M.T. in 1992 as against 6 thousand MT in 1975. Production of Jute Textiles shows an increasing trend from 4 thousand M.T. in 1975 to 6 thousand M.T. in 1985and then declined to 5.0 thousand M.T. in 1994. Fertiliser production in Assam which reached the peak level of 32.6 thousand M.T. in 1991 gradually declined to 12.9 thousand M.T. in1994. The volume of refinery products in Assam gradually increased from 1295 thousand M.T. in 1975 to 2531 thousand M.T. in 1991. Production of plywood in Assam also increased from 23 million sq. metre in 1975 to 43 million sq. metre in 1994. Production of match which reached the peak level of 6 million gross Boxes in 1979, gradually declined to 4.4 million gross boxes in 1994.

In the case of Cement industry, total production gradually increased from 110 thousand M.T. in 1975 to 275 thousand M.T. in 1994. It is also expected that total production of Cement will also increase further in the coming years. Total production of paper which reached the peak level at 17 thousand M.T. in 1978 gradually declined to 11 thousand M.T. in 1980 due to the closure of Ashok Paper Mill at Jogighopa. In 1983 total production of paper again declined to 0.5 thousand M.T. in 1983 and it declines further in recent years due to near sick condition of two paper mills of Hindustan Paper Corporation.

Total production of coal in Assam also maintained an increasing trend i.e., from 584 thousand tonnes in 1979, the production increased to 1292 thousand tonnes in 1994.

Index of Industrial Production in Assam

The Directorate of Economics and Statistics (Assam) has been preparing an index of industrial production, with base 1970=100, based on 25 items of products representing 13 industry groups at 3 digit level of National Industrial classification (NIC) 1970. These 13 industrial groups accounted for 81.9% of the value added by Manufacture in the registered factory sector in 1970. The following table shows the index of industrial production for the period 1971 to 1994.

Table No. 8.2

Index of Industrial production in Assam (Base 1970=100)

Industry Group

1971

1976

1981

1991

1994

1.Grain Mill products

2.Manf. and refining

of sugar

3.Manf.of other edible

oils and fats

4.Tea processing

5.Manf. of Cotton

textiles

6.Manf.of Jute

textiles

7.Manf. of veneer

plywood & their

products

8.Sawing & planking

of wood (other

than ply)

9.Petroleum refineries

10.Manf. of products of

petroleum not else

where classified

11. Manf. of Fertilizers

and pesticides

12. Manf. of Matches

13. Aluminum manu-

facturing

14. All Industries com-

bined

92.34

 

72.54

 

101.78

105.49

 

62.35

 

104.98

 

 

120.43

 

 

147.53

92.79

 

 

108.70

 

117.29

96.85

 

96.15

 

103.57

 

 

99

 

76

 

103

130

 

89

 

266

 

 

175

 

 

130

106

 

 

85

 

189

104

 

119

 

124

64

 

54

 

76

145

 

119

 

275

 

 

315

 

 

152

136

 

 

36

 

382

100

 

198

 

145

114

 

40

 

159

183

 

128

 

353

 

 

278

 

 

144

238

 

 

71

 

72

87

 

122

 

190

98

 

15

 

57

188

 

107

 

302

 

 

454

 

 

115

265

 

 

77

 

47

76

 

188

 

204

Source : Directorate of Economics and Statistics, Assam.

The above table reveals that the industrial production in Assam evidenced a continuous upward trend since 1971, the annual rate of growth being about 4 percent. But the increase in the industrial production varies in different years. The index of industrial production (base 1970=100) in the registered factories increased by over 20 percent during 1970-77. The increase in 1976 over 1975 was 6 percent while that in 1977 over 1976 has been estimated at 2 percent. The table further shows that the indices of I industrial production (Base 1970=100) of the industrial groups like-grain Mills product, Manufacture and refining of Sugar, Manufacture of other edible oils and fats and Manufacture of products of petroleum not elsewhere classified have been gradually declining and reached the level of 64, 54, 76 and 36 respectively in the year 1981. Again in 1991, the same indices changed to 114, 40, 159 and 71 and in 1994, these indices again reached the level of 98, 15, 57 and 17 respectively.

But the indices of industrial production of the industrial groups like Manufacture of Jute textiles. Manufacture of veneer plywood and their product, Manufacture of Fertilizers and pesticides and Aluminimum manufacturing have been increasing satisfactorily and reached the level of 275, 315, 382 and 198 respectively in the year 1981. In the 1991, these same indices increased to 353, 278, 716 and 122 and in 1994, these indices again increased to 302, 454, 47 and 188 respectively. The indices of other industrial groups like Tea processing, Sawing and planking, Petroleum refineries, Manufacture of Cotton textiles have been increasing at a slow rate and reached the level of 145, 152, 136 and 119 respectively in the year 1981. Whereas the indices of production of Match industry remained more or less stationary. In 1994, these same indices again increased to 188, 115, 265 and 107 respectively.

It is also observed that the indices of production (Base=1970) of All industries combined in the State gradually increases to 133 in 1979 and then to 145 in 1981. Again in 1991, the indices of production of all industries increased to 190 and in 1994, the same indices further rose to 204. The index also reveal that the index was lower by 7.5 percent in 1980 over 1979 and 8.9 percent in 1979 over 1978. But the production performance in the manufacturing sector of the State which suffered a slowing down in the year 1979 and 1980 has regained the lost ground in the year 1981. Again, the indices of industrial production (all industries combined) has recorded an 3.8 percent increase in 1991 over 1990 and recorded a marginal increase of 1.5 percent in 1994 over 1993. It is also evident from the available data that during 1981 production of fertilizer, refinery products, jute textiles, Plywood and Cement have increased in varying proportions as compared with the preceding year. Production of sugar fertilizer, paper and match displayed some fall during the year.

Role of Organised and Unorganised Industries in Assam

Assam got its berth in the industrial map of India since the pre independences period. During the British period, the process of industrialisation was initiated in Assam with the growth of tea and oil industry. With the development of these two industries, the industrialisation process gained its momentum in the last half of the British period and subsequently after independence.

The industries in Assam can be broadly classified into- (a) Organised industries and (b) Unorganised industries. The organised industries of Assam includes Tea, Petroleum, Paper, Cement, Plywood, Coal, Jute, Sugar etc. The unorganised industries of the state include the small and cottage industries, Khadi and village industries etc. Both the organised and unorganised industries are playing a very important role in the economy of the state. Tea and Petroleum industries are the two important organised industries of the State which has been playing an important role of sustain the economic development process of the State. Moreover, the other organised industries alongwith unorganised industries like various small and cottage industries and the Khadi and village industries are also playing a very important role in the state, especially, in the rural economy of the state. The following are some of the important roles played by these organised and unorganised industries of the state :

1. Utilisation of huge volume of natural resources has become possible with the development of these various types of organised and unorganised industries in the State. Assam is still possessing a huge volume of various types of mineral, forest and agro-based resources which are mostly remain unutilised. Development of these industries can tap these resources to the fullest extent.

2. Development of these industries would increase the job opportunities for huge number of population of the State. Agro-based industries and the unorgansed industries, being labour intensive, are providing a huge number of employment opportunities in the state. Tea industry aloe provides direct employment to more than 5 lakhs of persons daily. If more such industries materialize fully, the problem of unemployment could be solved easily in the state.

3. Organised and unorganised industries are contributing a good portion state income. The manufacuting industries has contributed 15.5 percent of the total state income in 1993-94.

4. Organised industry like tea industry of Assam are supplementing a good volume of export requirement of the country. Assam’s share of tea export was more than 55.0 percent of the country’s total sales abroad. Similarly, the petroleum and Petro-chemical industry of Assam has also a considerable import-substitute component.

5. Development of organised industries has led to the growth of a good number of ancillary industries in the state.

6. Development of these different industries has to the development of markets for various raw materials and finished product in the state.

7. Finally, development of various organised and unorganised industries will help good in the creation of industrial climate in the State. The expansion of tea industry in Assam has led to the growth of many small industries viz, industries producing tea machineries and implements, tea chests plywood industry etc.

Contribution of Manufacturing Sector to State Income

The manufacturing sector of Assam is very poor in its size. Thus its contribution to state income is also very poor. Being industrially poor, the State’s economy cannot expect sufficient income out of this sector. Ths the percentage of income derived from manufacturing (including tea processing, factory establishments and small enterprises) out of total state income remaind at a poor level as the economy of the state is mainly an agrarian one.

In 1950-51, contribution of the manufacturing sector to the state income was around 15.6 percent and then its contribution increases to 17.2 percent in 1955-56 and further to 17.7 percent in 1960-61. In 1965-66 the contribution of the manufacturing sector the state income (at 1948-49 prices) stood at Rs. 64.6 crores which came around 17.4 percent of the total state income. In 1969-70, the contribution of this sector although increased marginally to Rs. 77.4 crores but its contribution declined to 15.1% of the total state income.

From 1970-71, the state income has been calculated at 1970-71 (constant) prices. Taking the manufacturing, construction, Electricity, Gas and Water supply within a particular group its share in the state income of 1970-71 was to the tune of Rs. 108.0 crores, contributing 13.9 percent of the total state income of Assam. In 1973-74 although its share remained at the same level of Rs. 108.7 crores but its contribution declined to 12.5 percent of the state income. In 1977-78 the share of this manufacturing and allied sector gradually increased to Rs. 130 .0 crores but its contribution remained at the same level of 12.7 percent of the state income.

The contribution of the manufacturing sector alone to the state income of Assam (at 1970-71 prices) was Rs. 92.4 crores in 1977-78 then it increased to Rs. 98.7 crores in 1978-79 and then gradually declined to Rs. 97.8 crores in 1979-80 and Rs. 92.0 crores in 1980-81. Further, the share increased to the level of Rs. 104.9 crores in 1981-82 (provisional). The shares of this manufacturing sector alone to the total state income of Assam were 9.8 percent in 1978-79, 10.0 percent in 1979-80, 8.4 percent in 1980-81 and 9.4 percent in 1981-82

The share of manufacturing sector to the net state domestic product at current prices has increased from 6.9 percent in 1980-81 to 10.2 percent in 1990-91 and to 10.56 percent in 1991-92. The same share at constant prices(1980-81) has also increased from6.9 percent in 1980-81 to 13.37 percent in 1990-91 and then to 15.50 percent in 1993-94.

Again the contribution of the entire secondary sector which includes manufacturing industry, construction, electricity, gas and water supply to the net state domestic product of Assam at 1980-81 prices has increased from 11.8 percent in 1980-81 to 19.45 percent in 1990-91 and then to 23.00 percent in 1993-94.

Thus from the above fact it reveals that the contribution of this manufacturing sector to the State income of Asam has been gradually increasing at a slow rate. The reason behind this trend is that the manufacturing sector could not expand at a desired rate and thus the agricultural sector is still dominating the show accounting 33.5 percent of the total state income of Assam. Thus the economy of the State is yet to be diversified. This required that the industrial sector should expand at a rapid scale and new industries both large and small scale, should be developed on the basis of available natural endowments.

Plan wise Achievements of Industrial Sector

During British period the industrial development in Assam was very poor. Even the basic infrastructural facilities which were essential for industrial development were more or less absent. After independence, although planning started in Assam along-with the other states of the country but the aims of the State plan were tilled towards the development of agricultural sector neglecting the industrial sector.

During the first decade of planning the industrial sector practically remained stagnant. It was during the Third Plan that the industrial development programmes were accelerated to provide much needed boost to the growth-including factors. The State Government also directed its vigorous efforts with its limited resources towards creation and development of adequate infrastructure like expansion of the facilities of power, transport, providing technical training, and also undertaking surveys and investigation of raw meterials, developing industrial sites, and participation in the share capital of private enterprise. Thus a favourable climate for investment in industries had been created with all these development. But the response of the private investment was not so much encouraging. Public investment of the central sector in the State was also meagre. But prospect has brightened with the decision taken later by the Government of India to set up number of resource based industries in the State.

Towards the latter part of the Second Plan and the early part of the Third Plan a number of new industries, namely a bicycle factory, a spun silk mill, two cotton spinning mills, a house service meter factory, some re-rolling and fabrication units, a mixed fertiliser plant, a Jax board factory, a hard board factory, a sugar mill (a Co-operative enterprise) and a fruit-processing plant were set up in the small or medium scale sector. The capacity of the existing industries notably in plywood and saw mills, flour and oil mills, motor repairing and general engineering was also expanded.

Besides two major projects viz : Noonmati Refinery (Third Plan) and Namrup Fertiliser Plant ( spilled over to Annual Ad-hoc plans) both in the central Government sector and the third, the Gas Distribution Project- Assam Gas Company inthe State Government sector were established. All these above mentioned projects are resource-based which supported a number of ancillary and subsidiary units. The most prominent among these is India carbon products Limited (based on Noonmati Refinery). Late in the Third Plan, the State Government took over from the private sector, implementation of the Cherra Cement Projects which started production in 1966.

During the Fourth Plan, the pace of industrialisation in the State was accelerated with the establishment of number of resource-based industries mostly in the public sector located in some of the relatively backward areas of the state. During the Fourth Plan, some new industries were set up which included Assam Co-operative Jute Mill at Silghat, Assam Alkali Allied and Chemicals Ltd., at Jogighopa, Ashok Paper Mill at Jogighopa. Further, some of the existing industries in the State were also expanded during this plan period. Among those included were the Cherrapunjee Cement Factory whose production capacity was expanded from 250 tonnes to 850 tonnes per day. The Assam Gas Company has laid down another pipeline connecting Moran Gas grid with Namrup to meet the requirement of natural gas of the Namrup Fertiliser Plant for its expansion. The production capacity of the Namrup Fertiliser Plant has also been increased by three times in terms of ammonia production.

The setting up of Assam Co-operative Jute Mill at Silghat in Nowgong district at a cost of Rs.1.65 crores with 150 looms, sufficient to produce 7,000 tonnes of Jute Products was an important step towards industrialisation of Assam. Then the Ashok Paper Mill was set up at Jogighopa with production capacity of 120 tonnes of pulp and 90 tonnes of paper per day at the cost of Rs.15 crores. But due to mismanagement this mill incurred a huge amount of loss and now the mill is closed. A huge mechanised company is gradually being wasted due to lack of maintenance. Along with this the Assam Alkali Allied and Chemicals Limited was also set up at Jogighopa as a captive unit for the Ashok Paper Mills Limited at a cost of Rs. 2.5 crores. But the fate of the company is also similar to that of Ashok Paper Mill.

Further, the Assam Petro-Chemicals Limited was set up at Namrup with Japanese Collaboration at cost of Rs. 5 crores. This project is based on natural gas for manufacture of methanal formaldehyde, urea formaldehyde, resins etc. A sugar mill was also set up at Cachar at cost of Rs. 2.60 crores.

Thus during 19 years of planning till the Fourth Plan the number of registered factories in Assam increased from 911 in 1951 to 1588 in 1969 and employment in these factories increased from 65.1 thousand to 79.4 thousand over the same period. The backwardness of the State in industrial sector can be gauged from the fact that her share in the total national net output from manufacturing industries which was barely 2.35 percent in 1960-61 gradually came down to 1.68 percent in 1965-66 and then to 1.62 percent in 1968-69.

Some of the important industries which were commissioned during 1976-77 and 1977-78 i.e., during Fifth Plan are the Bokajan Cement Factory belonging to the Cement Corporation of India, the Assam Petro-chemical complex, Namrup and the Cachar Sugar Mills Limited . Among the factories registered during 1978 are the Bongaigaon Refinery and Petro-chemicals Limited (BRPL) which has the highest number of employees (1000) . It was proposed to establish a cement plant at Garampani, a spinning mill of 25,000spindles-based on BRPL polyester fibre at Bongaigaon. It was also envisaged to set up a vanaspati plant, a finished leather project, a drug formulation project of IDPL . In the mean time the vanaspati plant has started its commercial production in 1985.

The State Government of Assam is not only patronising establishement of industries in the private sector but also increasingly involved itself in undertaking many industrial venture of its own . Due to these efforts, a few important resource and demand-based industries have come up in the state in the recent past and a few more are in the offing.

Recently, the state government has identified five sectors for state investment and major thrust areas in the coming years. The five sectors are down stream units of the gas-cracker project, plastic-based industries, textile industries, lime-stone based industries and the electronic sector. The state government has also formed an Industrial Advisory Committee to guide the state government in formulating its policy for the development of industrial infrastructure, identifying priority sector for generation of maximum employment and other field f industrial development in the state.

Registered Factories in Assam

Total number of industrial factories registered in Assam is also an important Indicator for the progress of industrialisation in the state. The following table shows the total number of registered factories in Assam since 1971.

Table No. 8.3

Number Registered Factories in Assam

Year

Number of Factories

1971

1975

1980

1985

1986

1987

1988

1989

1990

1991

1993

1604

1715

1987

2462

2503

2604

2523

2567

2677

2670

2438

Source : Chief of Factories, Assam.

The table given above reveals that over the past few years there have been a steady increase in the number of registered factories in the state. Total number of such factories in the State which was 1604 in 1971 increased to 1897 in 1980 and then to 2462 in 1985. Since then again the number of registered factories started to increase during the Seventh Plan and accordingly the total number increased from 2503 in 1986 to 2523 in 1986 to 2523 in 1988 and then to 2567 in 1989. Another set of 110 new factories were registered in the year 1990 bringing the total number of registered factories in the state to 2677 at end end of the year 1990. In 1994, total number of registered factories declined to 2438. Total number of workers employed in these factories has increased to 90.1 thousand in 1988 as against the number of 90.7 thousand in 1981 and about 87.7 thousand in 1980. There are very few large scale employment-oriented industries in the state.

There are, at present only four factories which employ 1000or more workers. Tea factories account for about one-fourth of the total registered factories in the state. Total number of tea factories in Assam was 570 in 1990 and average number of labourers employed daily in tea industry was 5.42 lakhs.

Further, for accelerating the process of industrial development in the state a host of organisations have been set up by the state Government viz.; the Assam Industrial Development Corporation, the Assam Small Industries Corporation, the Assam Small Industries Development Corporation etc. During the first year (i.e.1980) of the Sixth Plan a new organisation under the name of the Assam Industrial Promotion and Infrastructure Corporation has been set up for developing infrastructural facilities in the state. Besides, another organisation, viz ; the Assam State Textile Corporation Ltd. has recently been incorporated as a Government Company for promoting textile industries based incorporated polyester staple fibre made available from the Bongaigaon Refinery and Petro-Chemicals Ltd.

Assam Industrial Development Corporation (AIDC)

The Assam Industrial Development Corporation (AIDC) was established on 21st April, 1965,i.e., during the Third Plan. The main objective of this corporation is to accelerate the pace of industrial development in Assam. The AIDC, which is a State Government undertaking, is reported to be taking various steps for the promotion and development of large and medium scale industries in the state, Till February 1990, the AIDC is reported to have provided financial assistance to 61 number of projects under the IDBI refinance scheme, of which 32 projects reported completion and 28 projects under implementation. The volume of term loan and seed capital sanctioned by AIDC under the aforesiad scheme amounted to Rs. 44.36 crores and Rs. 1.12 crores respectively upto the end of February, 1990. According to the information available from the Directorate of Industries, Assam, a total of 15 large and medium scale industrial units and 285 number of SSI units were assisted by sanctioning capital investment subsidy to the tune of Rs. 91.62 lakhs and Rs. 4.95 crores respectively during 1988-89.

The Assam Industrial Development Corporation has taken the following industrial Projects in the State : (a) Spinning mill, (b) Phthalic Anhydride Project, (c) Methanol Expansion Project (d) Expansion of Assam Gas Company etc. Constructionwork of some of these projects has already been started during the Seventh Plan. Works on the rest of these projects are now being taken during the Seventh and Eight Plan.

In the mean time, the area and the size of operation of AIDC has been enlarged to a large extent. The construction and installation works of some industrial Projects completed by this Corporation include-Assam Petro-chemicals Limited, Fertichem Limited, Cachar Sugar Mill, Assam Syntex Limited etc.

Functions : In recent times, the AIDC is performing the following functions :

1. Indentification, implementation and promotion of large and medium scale industrial projects in the state both of state public sector and joint sector.

2. To Participate in the equity capital of private sector industrial units so as to provide them financial assistance.

3. Implementation of package scheme of incentives like disbursement of capital subsidy and transport subsidy for the benefit of entrepreneurs.

4. Providing term loan assistance to medium scale entrepreneurs under IDBI’s Refinance Scheme.

5. Providing Seed Capital Assistance to new entrepreneurs.

6. Management and rehabilitation of sick industrial units.

7. Development of Industrial area and Growth Centres.

8. Imparting in-plant training to educated unemployed youths.

9. Operation of Udyog Sahayak.

AIDC is now working with the following industries which are at various stages of implementation and planning :

1. A 2000 TPA Polyester Film Plant.

2. A 15000 TPA Polyester Filament Yarn Plant.

3. A 35000 TPA Galvanised Plain and Corrugated Sheet Plant.

4. Weaving Complex.

5. Sack Kraft (Extensible Paper) Project.

6. Textile Processing Unit.

7. Sponge Iron Project.

8. One million tonne Cement Plant.

9. Finished Leather Project.

10. A Jute Mill

11. A Gas Separation-cum-Cracker Project (including Petro-chemical Project).

12 A Drug Formulation Unit.

Thus AIDC has been contributing a lot in respect of industrialisation in Assam.

Task Fource

The Government of India set up a Task Fource in October 1980 and it identified a number of Projects based on down strame products of BRPL. The Task Fource suggested establishments of 20 spinning mills in the State exclusively for producing blended yarn and also for full use of 30 thousand tonnes per annum of polyester staple fibre produced, at BRPL. If these projects materialise during the Seventh and Eight Plan, the process of industrialisation in Assam is expected to get a boost besides generating employment avenues for about 1. lakh persons. Already work for setting up 6 spinning mills both in the public and Co-operative sectors in the State are progressing satisfactory. Among hese mills, three mills, will have the capacity toproduce 25,000 metres of cloth daily. Thus we can hope that if everything runs suitably, industrial development in Assam will have a boost in near future.

But in the mean time, the spinning mill established at Noapara under the Bongaigaon district and which was sponsored by AIDC has already transferred to the private sector after incurring a huge loss due to its organisational problems.

The Task Force set up by the Government of Assam (as per clause no.7 of Assam Accord) submitted its report on 5th April, 1988. The suggestions forwarded by this Task Force for the industrialisation of the State Include- to set up a highly sophisticated electronic industry in Assam, to establish ancillary industries which are directly and indirectly related to tea and petroleum industry, to establish domestic and government demand based industrial projects and to set up agro-based industries. Moreover, this Task Force suggested to establish a new industrial development centre- "Industrial Town" having 2000 hectares of land and other infrastructural facilities in the central part of the state.

Prospect of Industrial Development during the Seventh and Eight and Ninth Five Year Plan in Assam

In respect of Industrial development, Assam is lagging far behind the other industrially developed states of India. Although Assam is endowed with different types of natural resources but its utilisation are miserably poor. Until and Unless these natural resources are being used within the territory of the State, the State cannot expect a boost in the level of development in its economy.

Industries developed till the end of the Sixth Plan in Assam are not at all satisfactory considering the degree of economic problems faced by the State. Traditional Tea industries and oil industries are still dominating the economy of Assam. If we want to develop the economy of the State, the industrial diversification on the basis of natural endowments of Assam.

The Government of Assam had taken a decision in February, 1985, to set up one industrial area ineach district headquarter of Assam during the Seventh Five Year Plan. Thus the schemes have been prepared and the following places ‘Lolabari’ and ‘Bihupuria’ of North Lakshimpur district, ‘Malinibil’ of Cachar district, ‘Rani’ of Kamrup district and ‘Lahowal’ of Dibrugarh district have been selected for the purpose.

Further, the Government of Assam has also selected some Petro-chemicals Project for its successful installation during the Seventh Plan period. These projects includes :

(a) Polyester filament yarn project

(b) Polyester film project

(c) Phthalic anhydride project

(d) Methanol Project

In their memorandum, submitted earlier to the Central Government, the State Government demanded establishment of another oil refinery and a Gas processing unit. Besides, the Plan to establish one ‘Gas grid’ and a ‘sponge’ iron project’ based on natural gas was also examined.

The Government of Assam and the Central Government has also examined another plan to develop ‘Assam Electronics Development Corporation’, for producing various types of electronic goods. This Corporation will produce various electrical inputs for tea industry, drug industry and for agricultural sector of Assam. In the mean time, this corporation has started its production.

Further, the State Government of Assam has also taken a decision to establish one mini-steel industry in which they have planned to establish one ‘Sheet Plant’ in Assam during the Seventh Plan period.

Bwsides, the work of establishment of six spinning mills, which started during the Sixth Plan Period, are now progressing well. Some of these mills have started their commercial production during the Seventh Plan period and some others are expected to do so during the Eight Plan. With the Commissioning of the petro-chemical Section of B.R.P.L. many new small textile units will come up on the basis of polyester fibre produced by B.R.P.L.

Prospect of the development of many downstream industries on the basis of the petro-chemicals from B.R.P.L. is quite bright. This includes the products like plastic, pesticides, photo film, resin, detergent, P.V.C. compound etc. The prospect of developing other industries in Assam includes forest based industry, mineral-based industry, agro-based industry and textile industry. It is expected that some of these projects will be developed during the Eight and Ninth Plan period.

In the mean time, the Numaligarh Refinery Limited under the join sector has started its construction works. On 22nd April, 1993, this company was formed officially. As per the primary estimate, total investment of this company would be around Rs. 2000 crores and the total refining capacity would be around 2 million tonnes. Moreover, it has been decided that the State Government will hold 10 percent of the equity capital, Indo-Burma Petroleum Company will hold 51 percent of the equity and the remaining 39 percent equity capital will be collected from the primary market.

Moreover, the efforts to set up a Gas Craker Project in Assam has been progressing satisfactorily. Again, the expansion programme of Bongaigaon Refinery and Petrochemicals Limited has been almost completed in May, 1995. With the completion of this expansion programme the refining capacity will just double from the present level of 1.35 million tonnes per annum to 2.7 million tonnes per annum. The Government of India approved this expansion programme for the BRPL on 31st December, 1991 and alloted Rs. 223 crores for the project, which has already been completed in May, 1995, Moreover, the Central Government has taken steps for the modernisation of Digboi refinery and Namrup fertilizer unit.

Moreover, the State Government has identified five sectors for state investment and major thrust areas in the coming years. The five sectors are down stream units of the gas- Cracker project, Plastic based Industries, textile industries, lime-stone base industries and the electronics sector. The state government has also formed an Industrial Advisory Committee to guide state government in formulating its policy for the development of industrial infrastructure, identifying priority sector for generation of maximum employment and other fields of industrial development in the state.

Moreover, under the peresent scenario of economic reforms introduced throughout the country, the state government has been exploring the possibilities of disinvestment and privatisation of some of the existing state public sector undertakings. In the mean time, a few state public sector udertakings have already privatised by the State Government.

Besides, the State Government and Central Government are also trying to develop some resource-based industries during the ensuring Ninth Plan with the participation of some Indian private sector companies and some foreign companies. Thus if a conducive atmosphere can be created for the industrialisation of the State, then the benefit of economic reforms, which has not yet been reached the state, can be expected to prevail upon during the Ninth Plan. This needs an all-out efforts from difficult angles.

Industrial Policy of Assam

Industrial Policy of Assam,1986

In December, 1986 the new Industrial Policy of Assam was announced by the A.G.P. Government for serving the local interests. The new policy aims at encouraging growth and promotion of all industries based on local resources, local demands, local scarcity conditions and local environment. In this new Policy, the State Goverment attaches priority to speedy industrial development of the state as well as generation of adequate employment opportunities through self-employment opportunities through self-employment in the industrial sector.

In the new industrial policy, special provisions have been made to protect the interests of the local people by making the state incentive schemes availablein the case of the small sector. Iin order to become eligible for the benefits under the state incentive scheme thre should be hundred percent employment of local people in the small industry sector. In the medium and large industry sector, local employment would have to be ensured in 80 percent in the managerial cadre and 90 percent in the non-managerialcadre. Over a period of five years from the date of commencement of production, these medium and large units would have to take effective steps to ensure 100 percent employment of local people in the non-mamagerial cadre and least 90 percent in the managerial cadre.

In the new industrial Policy, the State Government has announced a package of incentives for the benefit of the entrepreneurs to start industries in Assam. The package of incentives include subsidy, allotment of factory sheds to small sector industrial units, manpower development of local entrepreneurs, equity participation in assisted sector, exemption of stamp duty, sales tax exemption, reduction of Assam Finance Tax, Power subsidy, subsidy on drawal of power lines, rehabilitation of viable sick industrial units, contribution to feasibility study cost, subsidy on generating set, risk capital formation, special incentives for industries being set up in no industries district and for electronic industries.

The new industral policy makes provision for single windows facilities through "Udyog Sahayaks", This "Udyog Sahayaks" has been created at each District Industries Centre and in Directorate of Industries sector and at the Assam Industrial Development Corporation for medium and large scale industrial sectors. The Udyog Sahayaks provide single window facilities to entrepreneurs and also ensure expeditious identification of enrepreneurs and projects, registration, processing and forwarding of financial proposals to the agencies concerned, issue eligibility certificates coordination, sanction, delivery of incentives and follow up steps for rapid implementation of projects.

It is now expected that the prospect of speedy industrialization in Assam will be brightened with the various industrial projects coming up during the Seventh Plan Period in the public sector, Joint Sector, Co-operative sector, assisted and private sector. This prospect will be further brightened with the development of industrial infrastructure in the State in a phased manner and also with the Central Government setting up major industrial and other projects in a big way.

Industrial Policy of Assam, 1991

After the announcement of new industrial policy in July, 1991 by the Narasimha Rao Government at the Centre, the Government of Assam has also announced its new industrial policy keeping conformity with the Central policy. Although the initial notification of the policy was made on 6th April, 1991 but the final notification of the Policy was made on 1st July, 1992. While framing this new policy, although the state Government has followed the central policy directions but it has also duly considered the local issues and problems faced by the State.

Policy Guidelines and Objectives

The new industrial policy (1991) has set certain definite policy guidelines and objectives to meet its requirement of industrial development along with generation of employment opportunities. In view of the priorities attached by the Government to the speedy industrial development of the state as well as generation of adequate employment opportunities through self emploment in the industrial sector, it had been considered necessary to review and revise the existing industrial policy and incentive scheme which became operative from 1st January, 1987.

The New policy has been formulated with the experience of the 1986 policy and keeping in view the shortcomings of the 1986 policy which have come to notice. While framing the new policy, recommendations made in a seminar held in February, 1990 to review the 1986 policy have also been kept in view so that the genuine aspirations of the people can be met within a time frame through economic and industrial development of the State. The new policy aims at encouraging growth and promotion of all industries based on local scarcity condition, local environment and to the extent possible by utilising locally available raw materials.

In the new industrial policy, 1991, the Government of Assam has accepted the following policy guidelines and objectives :

1. To ensure balanced regional development throughrapid promotion of a host of Khadi and Village industry, cottage industry, tiny, small and ancillary industries throughout the state on the basis of techno-economic potential surveys.

2. To set up/promote setting upof Medium and Large Industries in the State/Joint/Co-operative/Assisted and Private Sectors, using the advantage of local availability of Petroleum, Natural gas, Coal, lime-stone and other minerals, agricultural products and other resouces of the State. High priority will be given to the utilisation of natural gas for setting up gas-based industries which have a high downstream potential.

3. To create a suitable environment by taking effective steps for the development of basic infrastructure facilities for industrial development.

4. To ensure that there is proper development of local skills and entrepreneurship through intensive publicity, motivation and training programmes at district, sub-division and block level.

5. To promote and protect the interests of the people of Assam by making the various incentives available on the condition of the unit satisfying certain laid down conditions of a minimum percentage of employment of the people of Assam.

6. To ensure that local entrepreneurship is given preference in setting up medium and large industrial units under the Refinance Scheme of I.D.B.I. as well as under the "Assisted Sector" Scheme which is being operated by the A.I.D.C. Ltd.

7. To encourage the traditional artisan and handdicraft sector covering items, such as, cane and bamboo products, brass and bell metal, etc. by providing common facilities service centres, raw-materials, marketing, technical and other supports, as may be required from time to time.

8. To ensure viable growth and to give positive guidance to local entrepreneurs, by building up a data bank at the Directorate of Industries and at A.I.D.C. with a shelf of specific project profiles and other vital information.

9. To give a special attention to the less developed districts and the Hill Districts in developing the industrial infrastructures and esablishment of medium and major projects.

10. To extend all possible assistance for shifting of the Head Offices of the Tea Companies to Assam for ensuring continued growth of the tea industry and additional employment avenues for unemployed youth. The Inland Container Depot, Guwahati Tea Auction Centre and Guwahati Stock Exchange would be encouraged and supported in their efforts for industrialisation and creation of employment opportunities for local people.

11. To provide for a single windows clearance agency at each District Industries Centre for the small sector and at A.I.D.C. for the medium and large sector.

12. To provide for the revival of viable sick units through proper identification and provision of comprehensive package of assistance and to take steps for periodical and regular monitoring and guidance to new units to avoid sickness.

Definitions and Criteria for Eligibility in the Incentive Scheme as Incorporated in the New Industrial Policy

The new industrial policy has finalised its incentive scheme and its eligibility limit for the successful implementation of the policy. The new package of incentives herein after referred to as ‘1991 Incentive Scheme’ shall remain in operation for a period of 5(five) years commencing from 1.4.1991 or till such time as the Government may consider fit and proper.

Effective Date : The effective for 1991 Incentive Scheme is 1.4.1991 and from this date the 1986 Incentive Scheme and 1982 Incentive Scheme under the 1986. 1982 and other relevant Industrial Policy resolutions will cease to be operative unless otherwise provided for.

Units enlisted under 1986 Incentive Scheme but completing final effective steps after the effective date of 1991 Incentive Scheme will be governed by the 1991 scheme.

All industries which are to be notified as non eligible by the Government will be entitled to assistance under the 1991 scheme. Incentive under the 1991 scheme will be available to eligible units in the Private Sector. Assisted Sector, Joint Sector, State Public Sector and the Co-operative Sector Central Public sector undertakings will not be considered as eligible for incentive under the scheme either for their own ventures or for their joint ventures. Such units will however be eligible for manpower development subsidy.

Eligible Unit :

Only new units set up on or after 1.4.1991 and existing units, undertaking expansion, modernisation or diversification at the same location or at any other place in the State of Assam will be eligible for incentives under 1991 Scheme provided that the following conditions are fulfilled :

(I) A unit shall have employment of 80 percent people of Assam in the managerial cadre and 90 percent people of Assam in the non-managerial cadre and that over a period of 5 years from the commencement of production such units would take all effective steps to ensure 100 percent employment of people of Assam in non-managerial and at least 90 percent in managerial posts. They would further give an undertaking that if these conditions are violated, the State Government Subsidies/Incetives so availed by them would be fully refuned.

(ii) In exceptional cases where the industrial units can prove to the satisfaction of the State Level Committee that persons with required skill and expertise are not locally available, relaxation of the above clause will be allowed by the State Level Committee as deemed fit.

(iii) The location of the registered office shalll be within the State of Assam.

New Unit :

An industrial unit which has taken all the initial effective steps on or after 1.4.91 would be considered as a new unit.

Existing Unit :

A unit which is or was in commercial production at any time prior to 1.4.91 will be considered as an existing unit for the purpose of the 1991 Scheme.

Expansion/Modernisation/Diversification :

Expansion/ Modernisation/Diversification of an existing industrial unit will also be eliglble for all incentives if the total capital investment on plant and machinery in the expansion/modernisation or diversification, as the case may be, is more than 25 percent of the total fixed capital investment of the existing unit. For the purpose of calculation, Gross value of all the capital investments made on land, builiding, plant and machinery of an existing unit will be taken into consideration. Expansion modernisation diversification will imply an increase of at least 25% in the existing installed capacity as well as increase of additional employment at least by 10%.

The fact that existing unit has availed itself of incentives will not disqualify the expansion/modernisation/diversification project to get incentives for the extra investment made.

Sick Unit :

A unit declared as asick unit by the State Govt. under Assam Industries Relief undertaking (Special Provision) Act, 1984 (Assam Act No. VII of 1984) from time to time.

Effective Steps :

Effective steps will comprise of initial effective steps and Final effective steps.

A unit will be deemed to complete the initial effective steps if all the following conditions have been achieved :

(a) effective possession of land.

(b) registration of the firm or the company or the soiety or the trust with the approprite authority.

(c) provisional SI registration/SLA registration or any other statutory registration with the appropriate authority.

(d) project Report has been prepared.

(e) power has been sanctioned.

(f) the means of finance for the project is completed including sanction of term loan.

A unit will be deemed to have completed the final effective steps if the following targets have been achieved :

(a) Disbursement of term Loan to the full extent.

(b) Mechanical completion of the plant.

(c) Receipt of all relevant approvals and clearances from the appropriate authorities e.g. pollution clearance C.G. clearance, Explosive clearance, Municipal clearance etc.

(d) Connection of power.

(e) Allotment of raw materials wherever applicable.

(f) Sanction of working capital.

(g) Commissioning of the plant.

(h) Receipt of local employment certificate.

No right or claim for any incentive under the scheme shall be deemed to have been conferred by the scheme merely by virtue of the fact that the unit has fulfilled on its part the conditions of the scheme. The incentives under the Scheme cannot be claimed unless the Eligibility Certificate has been issued under the Scheme by the implementing Agency concerned and the unit has complied with the stipulations/conditions of Eligibility.

Eligibility Certificate :

Eligibility Certificate is the certificate which will be issued by the Udyog Sahayak of the Directorate of Industries/District Industries Centre for the SSI sector and Assam Industrial Development Corporation Ltd. (AIDC LTD.) for the medium and large sector. This will be issued after ensuring that all the norms for eligibility have been fulfiled.

Certificate of local employment will be issued by the Officer incharge of the concerned implementing agency.

Completion of initial effective steps will qualify the unit for issue of a provisional eligibility certificate based on which disbursement of contribution of feasibility study cost as well as development subsidy can be made.

Completion of the final effective steps will be required for issue of a final eligibility certificate and disbursement of the remaining incentives of the subsidy.

Implementing Agencies :

The implementing agency for the 1991 Incentive Scheme in respect of the SSI Sector will be the Directorate of Industries and for the medium and large sector the implementing agency will be the Assam Industrial Development Corporation Ltd. (AIDC).

Incentive Scheme under the Industrial Policy, 1991

The new Industrial Policy of Assam, 1991 has incorporated various incentive schemes for the establishment of different types of new industries in the State. The following are some of these incentive schemes included in this policy :

Subsidy on Infrastructural Facilities :

(A) Developed land will be alloted on long term basis for intial 30 years, subject to payment of rent as fixed by the Govt. from time to time renewable for subsequent period as deemed fit by the Govt. The lease land will be permitted to be utilised by the unit for mortgage/hypothetication for obtaining loans from the banks and financial institutions.

(B) In appropriate cases, developed land will be alloted on hire purchase basis also. The cost of land including cost of development and cost of creating the infrastructural facilities like, Power Water and approach road will be recovered in equal annual installments over 15 years from the date of handling over of the land, with a moratorium of five years. Such land will be permitted to be utilised by the unit for mortgage/hypothetication for obtaining loans from banks & financial institutions.

In case developed land as stated in (A) above is not available for allotment the entrepreneurs will be alloted undeveloped land. In such case, actual land development cost will be provided as an interest free loan to the eligible units.

The above loan and cost of land will be recovered in equal annual instalments from the date of disbursal of loan over a period of 15 years with a moratorium five years.

Allotment of Factory Sheds to SSI Units :

For new small scale industrial units, built up factory sheds would be allotted to the entrepreneurs on annual rental basis and the State Govt. will subsidise 50% of the economic rent for a period of five years from the date of allotment of the shed. While alloting industrial areas/industrial shed, preference would be given to entrepreneurs of Assam.

Manpower Development of Local Entrepreneurs :

Subsidy on manpower development will be provided in respect of local persons trained and employed in the industrial units at the following rates, to compensate for the amount spend on training :-

For Management Personnel Rs. 7500 per person

For Supervisory Categories Rs. 5000 per person

For Skilled Category Rs. 3000 per person

For Unskilled Categories Rs. 1500 per person

This is subject to the following ceilings :-

Unit with investment                                          Total ceiling

Upto Rs. 2 crores                                               Rs. 75,000

Rs. 2 crores to 5 crores                                     Rs, 1,00,000

Rs. 5 crores to 10 crores                                   Rs. 2,00,000

Above Rs. 10 crores                                          Rs. 5,00,000

Eligibility Certificate for the above subsidy will be issued on the basis of initial effective steps taken by the unit but disbursal will be after final effective steps.

Equity Participation in the Assisted Sector :

Assam Industrial Development Corporation Ltd. (AIDC)/ Assam Small Industries Development Corporation Ltd. (ASIDC) would participate in the equity contribution upto 15 percent of the issued capital of the company subject to a ceilling of Rs. 15 lakhs in any viable project where the project cost does not exceed Rs. 5 crores. Preference would be given to the company floated by entrepreneurs of Assam. AIDC would participate in the equity share in respect of medium and large scale and ASIDC in respect of SSI sector.

Interest Subsidy :

Entrepreneurs will be provided interest subsidy on working capital above 8 percent and subject to maximum of 5% for SSI and Sick Industrial Unit for such loans taken from banks and financial institutions. This benefit will be available for the first three years from the date of commercial production/revival of the unit respectively.

Sales Tax Exemption :

Sales Tax will be exempted on purchase of raw materials and sales of finished products for a period of seven years.

Reduction of Assam Finance Tax :

To encourage the local manufactures, Assam Finance Tax will be lowered from 12% to 4% bringing it at per with 4% CST so that such manufacturers can compete with products coming from outside the State. Such reductions will be limited to certain selected items which are being manufactured locally within th State and the same will be identified by a committee to be constituted for the purpose.

The committee will review the list of items to be brought under the provision of these incentives from time to time, atleast once in a year. Further, the above incentives will be made available to those units which are either non-eligible for incentives under Sales Tax Exemption  above or have already availed the incentives under Sales Tax Exemption  above.

Power Subsidy :

Power subsidy will be granted as follows :-

Connected load

Amount of subsidy

Ceiling on Subsidy

(Per Industrial Unit

per year)

Upto 1 MW

Above 1 MW &

Upto 5 MW

Above 5 MW

50%

 

30%

20%

Rs. 5.00 Lakhs

 

Rs.15.00 Lakhs

Rs. 30.00 Lakhs

The above subsidy will be avialable for a period of 5 (five) years from the date of commercial production.

Rehabilitation of Viable Sick Industrial Units :

All incentives under 1991 Incentive Scheme declared for the new industrial units will also be available for revival of the viable sick industrial units.

Contribution to Feasibility Study Cost :

In the case of medium and large scale industries, AIDC will provide 90% contribution towards the cost of preparation of Feasibility Report prepared by Agencies approved by the State Government/ respective Udyog Sahayak subject to a ceiling of Rs. 2,00,000/- in each case. The contribution shall be treated as an interest free loan for a period of five years from the date of commercial production or from the date of disbursal of the loan, whichever is later. If the project is not implemented within the prescribed period. Feasibility Report shall become the property of AIDC and the Entrepreneur for whom it was prepared shall have no right to  the Report or any part thereon.

For small scale units the cost of Feasibility Report prepared by an Agency approved by the Directorate/Udyog Sahayak will be subsidised to the extent of 100% in case of projects whose total project cost is within Rs. 10 lakhs and 90% in case of projects above Rs. 10 lakhs. Ceiling of Subsidy will be Rs. 20,000/- in each case. The project Report will become the property of the Government if the project is not implemented within the prescribed time.

Subsidy on Generating Set :

The Subsidy on the Generating Set including non-conventional energy generating sets will be given @ 50% of the cost of the Generator, subject to a ceiling of Rs. 10 lakhs (Rs. 10,00,000/-) per industrial unit.

Development Subsidy :

Development Subsidy up to an extent of 10% of the fixed capital investment subject to a ceiling of Rs. 3 lakhs per unit, or the actual expenditures on the item listed below, whichever is the least, will be paid to the eligible unit to cover the following expenses :

(I) Stamp Duty paid for purchasing or taking lease of land for the unit.

(ii) Stamp Duty paid for registration of documents for availing of loans.

(iii) Cost payable to Assam State Electricity Board for drawal of HT/LT line upto the premises of the unit and installation of Transformer for power supply to the unit.

(iv) Charges payable to local body, Municipal Board, Panchayats etc. or any statutory body for any permission or registration .

(v) Fees payable for conversion of land from annual patta to periodic patta.

(vi) 50% of the fees (excluding recurring royalty) paid for procurement of Know-how from National Research & Development Agency, recognised by the Udyog Sahayak.

(vii) Cost of pollution control and Monitoring equipments and quality control measures etc.

The Development Subsidy shall be released only after actual expenditure is made by the unit. The above is applicable for all sectors of industries where fixed investment does not exceed Rs. 5 crores.

Drawal of Power Line :

In case of projects located in areas which require drawal of power line of 66 KV and above, such line, including associated transformers, will be drawn at the cost of the Government subject to the condition that the location of the unit as such area is approved by the Government.

State Capital Investment Subsidy :

A special State Capital Investment Subsidy @ 30% of the cost of land and building and plant & machinery subject to a ceiling of Rs. 10 lakhs will be made available till the Central Capital Investment Subsidy Scheme is reintroduced or till such time Govt. may decide to continue State Capital Investment Subsidy Scheme which ever is earlier.

Pioneer Unit :

A new unit with fixed capital Investment exceeding Rs. 3 crores set up in a District where there are no Medium or Large Scale Industries will be given pioneer status. Such unit will be eligible for additional State Capital Investment Subsidy of 5% of fixed capital investment subject to a ceiling of Rs. 10 lakhs.

Implementing Agencies for the Implementation of New Industrial Policy of Assam, 1991.

In order to implement the various clauses as well as incentive schemes under the new industrial policy, 1991, the Government of Assam has introduced the following implementing agencies.

1. Udyog Sahayak :

In order to provide single window clearance facilities which will ensure proper delivery of all services, a separate wing known as "UDYOG SAHAYAK" is already functioning and this will continue.

The primary objective is to provide single window facility to the entrepreneurs and to ensure expenditious identification of entrepreneurs and projects, registration, processing and fowarding of financial proposals to concerned agencies, issue of eligibility certificates, co-ordination, sanction,delivery of incentives and follow-up steps for rapid implementation of projects.

2. In order to ensure effective and proper implementation of the 1986 Incentives Scheme, committees have been constituted at the Divisional level as well as the State Level. Such Committees will continue under the 1991 Scheme.

3. The implementing agency for the small and tiny sector would be Directorate of Industries through the District Industries Centres and for the medium and major sector it would be the Assam Industrial Development Corporation Ltd. (AIDC).

4. A separate wing in the Directorate of Industries has been opened known as "UDYOG SAHAYAK".

4.1. The "Udyog Sahayak" in the Head Quarter will continue to be under an Additional/Joint Director of Industries, with one Deputy Director and two other officers at the ADI level with necessary supporting staff.

4.2. The "Udyog Sahayak" shall continue to have a similar cell in each District Industries Centre and a Functional Manager will be in charge of such a cell.

5. For large and medium sector industries, AIDC is having a separate Division known as "Udyog Sahayak" for implementation of the 1991 Incentive Schemes.

6. All administrative Departments shall refer all issues related to the implementation of 1991 Incentives scheme to the Udyog Sahayak and keep the Udyog Sahayak appraised of all actions taken in this regard.

Accordingly, all administrative departments shall issue Instructions to all Heads of Departments/Officers/Corporations/Boards under their administrative control to co-ordinate effectively with the Udyog Sahayak in the implementation of the 1991 Incentive Scheme.

7. Functions of "Udyog Sahayak" :

"Udyog Sahayak" will perform the following functions :

(a) Proper and adequate publicity of the Incentives Scheme 1991 as well as render all assistance to the entrepreneurs to avail of the same.

(b) Identification of prospective entrepreneurs, building up of a data bank to guide and motivate the potential entrepreneurs. This shelf of specific project reports would take into account the market potentialities of the product availability of raw materials and technical man power as well as the investment required for the project. Viable project reports would be prepared in different categories of investment.

(c) Enlistment of application and issue of eligibility certificates.

(d) Co-ordination with the connected agencies/administrative department, including processing and forwarding of financial Proposals.

(e) Proper and effective Implementation of all incentive schemes and issue of sanctions thereof.

(f) To refer all relevant issues to the Divisional Committee State Level Committee which require clearance/approval at their levels and or any other matter connected with implementation of the Policy.

(g) To keep the two committees well apprised of the progress of implementation of the incentive schemes.

8.Industrial Infrastructure Development Corporation :

An Industrial Infrastructure Development Corporation would be created which shall be the Nodal agency regarding provision of infrastructural facilities such as land (both developed and undeveloped), water, power and build-up industrial sheds. All existing Industrial estates, industrial areas, commercial estates, growth centres etc. shall be transferred to this Corporation.

9. Divisional Committee :

Govt. will constitute Divisional Committee for the following purpose.

(i) To review the implementation of the Incentives Schemes.

(ii) To ensure effective and close supervision over implementation of the schemes.

(iii) To collect feed back information from the public and ensure remedial measures.

(iv) To invite entrepreneurs/connected non-official organisations to appear before the committee for stating the diffculties, if any faced by them.

(v) To refer issues involving policy decisions to the State Level Committee.

(vi) To refer to the State Level Committee matters which have been pending or which require clearance/approval of the State Govt.

(vii) To keep the State Level Committee apprised of the Implementation of the 1991 Incentives Scheme.

The committe will meet as and when required and atleast once in every quarter.

10. State Level Committee : The state level committee is to be formed with the following purpose :

(a) To review the entire implementation of the New Industrtrial Policy and 1991 Incentives Scheme by obtaining feed back from the Divisional committees, Udyog Sahayaks as well as from non-official organisations,connected with industries such as Assam Entrepreneurs Association, Assam Manufactures Association etc.

(b) To direct various Government departments/institutions/agencies concerned to expedite required clearances, within stipulated time and to give such other directions as deemed fit with regard to the implementation of the incentives.

This committee will also meet as and when required and atleast once in every quarter.

Other Policy Measures

Moreover, as per the new industrial policy of the Central Government, the Government of Assam has taken various steps for the adoption of delicensing system, to provide various facilities to the industrial units through the policy of liberalisation and to revive the state public sector industrial projects through disinvestment of its shares in the hands of private sector. Moreover, the maximum limits of investment of the small scale industrial units, ancillary industry and export-oriented small industry have been raised to Rs. 60 lakhs, Rs 75 lakhs and Rs. 75 lakhs respectively. Again, this investment limit of tiny industrial units has also raised from Rs. 2 lakhs to Rs. 5 lakhs.

Thus in order to accelerate the pace of industrial development in Assam, the successful implementation of this new industrial policy is very essential. The success of this new industrial policy depends upon the sincere effort of the Government, sincere co-operation of the Government officials and also on the successful participation of the local entrepreneurs of the state.

Therefore, it can be expected that with the implementation of various industrial projects in the public sector, joint sector, co-operative sector and private sector during the Eighth Plan, the prospect of industrialisation at a quicker pace will become bright. Again, with the development of infrastructural facilities in Assam and with the establishment of different industrial projects by the Central government, the prospect of industrialisation will become brighter in near future.

Industrial Policy of Assam, 1997

The Industrial Policy of Assam, 1991 has failed to make much headway in the industrial development of the State and the state has also failed to reap the benefit of economic liberalisation adopted throughout the country, under the new regime of economic reforms. Under this precarious situation, it has become imperative on the part of the State Government to redraft its new industrial policy considering its emerging problems and potentialities. In this regard, the need for adopting a new practical concept for growth and development oriented approach was also stressed by a number of industrial and economic experts of the State at the time of finalizing the draft policy by the State Government. Therefore, it has become imperative for the state to embark upon the high road of liberalisation, privatisation and globalization.

Accordingly, on 29th March, 1997 the State Government introduced its New Industrial Policy, 1997 with great promise. The AGP led alliance Government’s new industrial policy is aimed to provide an effective thrust for "expeditious promotion and growth of all industries with a view to creating a strong industrial base and employment opportunities in various directions."

Basic Thrust : The basic thrust of the Industrial Policy, 1997 is to create an environment for maximum, possible utilisation of locally available raw materials and human resources for industrialisation and to offer competitive advantage to all investors including the foreign ones in setting up industries in the State.

Identification of Priority or Key Areas :

The raw industrial policy has indentified some priority or key areas which require more attention in the process of industrialisation. Accordingly, as many as 199 priority areas have been identified in this policy to set up industries in the State. These priority areas include- (a) development of local skills and entrepreneurial abilities ; (b) maximum employment generation for the local people ; (c) development of women entrepreneurs ; (d) development of food processing industry ; (e) growth of export-oriented units ; (f) promotion of rural non-farm sector ; (g) attaining balanced regional development within the State by giving special attention to the less developed areas and the hill districts ; (h) revival of sick industrial units ; (i) development as well as promotion of village and small scale service and business enterprise (SSSBEs) ; (j) establishment of medium and large scale industries in public, private, joint and assisted sectors to create an industrial base etc.

Infrastructural Development :

The new policy has identified the lack of infrastructure in the region as one of the main reasons for poor growth of industries in Assam. In the new Industrial policy, the State Government has proposed to give top priority to the development of infrastructural facilities in the State.

Land : Considering the shortage of developed land in the state for industrial purpose, the Assam Industrial Development Corporation (AIDC) Ltd. has been allotted Government land at a number of places for developing industrial areas. There is also a proposal to set up tree growth centres in the state within the next five years.

Power : Regarding the power position, the policy observed that the total available power in the state is around 315 MW which is less than peak demand of 375-400 MW, but the off-peak demand is around 270 MW only. Therefore, there is surplus power during the off-peak season. The policy observed that the Government with the help of ASEB and NEEPCO woud take steps to increase the availabilty of power during the next five years by facilitating completion of power generation projects, under implementation in State. Such projects are Kathalguri gas based project, Amguri gas-based project, Karbi-Longpi Hydro Electric power project and lower Kopili Hydro-Electric power project. Once these projects are commissioned within the next few years, the state as well as north-eastern region will become a power surplus area. The Government in its package of incentives also proposed to provide subsidy for generating sets apart from subsidy on power tariff.

Surface Transport : The new Industrial Policy also include provision for the development of surface transport system of the state. To remove transport bottlenecks priority will be given to the development of roads leading to industrial areas. Focus will be given on conversion of meter gauge railway lines to broad gauge. The state Government has taken up with the centre for upgradation of existing broad gauge Railway line upto Guwahati from single track to double tracks.

In view of the high priority given by the Government to the export oriented units, the State Government is already pursuing with the Union Government the matter of declaring Guwahati Airport as an international airport at least from giving custom clearance facilities to the industrial units at Guwahati itself. The State Government will also take up the matter to develop the Brahmaputra river for the improvement of water transport facilities in the state.

Lack of skilled manpower is one of the most important factors for industrial backwardness of Assam. The Government will take steps to ensure development of skills among local people through various technical schemes.

Development of New Industries :

The new Industrial Policy proposes to encourages setting up of new industries in the area of fruit processing, vegetable processing, spice processing, aquaculture, horticulture based projects in the State. The policy also proposed to promote environment friendly industries and projects. In this regard the AIDC has also identified several viable projects for the coming years. For developing the electronic industry, the Government proposed to declare the Assam Electronic Development Corporation Ltd. (AEDC) as a nodal agency for overall development of this sector.

In a bid to tap the vast resources of oil and gas, the fourth oil refinery at Numaligarh had already been sanctioned and the policy observed, in this connection, that the State Government would take special care in order to ensure its implementation at the earliest.

The policy has also attempted to cover new areas like facilities for women entrepreneurs, emphasis on food processing industry, encouraging the export promotion industries through simplification of procedure and the delivery systems etc.

State Level Public Sectors Units (SLPSU) :

Considering the poor financial condition and mismanagement of State Level Public Sector Units (SLPSU), the new Industrial Policy, 1997 has observed that henceforth all state level PSUs would have to survive on their own. State public sector undertakings which were for a long time enjoying budgetary support from the State Government, will now have to change their strategies and discover new avenues of their survival. The State Government would help the PSUs in their revitalization strategies and urged the managements to find out ways to make profit. The State Government recently (in 1997) declared six public sector units in the state as sick and initiated efforts for revival of these sick PSUs by handling them over to joint sector.

The Government has incorporated various incentives in the industrial policy, apart from liasoning with banks and financial institutions to finalize packages for revival of potentially viable sick PSUs.

Small Scale Industries (SSI) :

Keeping in view the employment potentiality in the small scale sector, the new policy observed that the State Government would give top priority to setting up of industries in the small scale and tiny sector in which the State Government proposes to give additional incentives. In this connection, the Government has underlined the need to strengthen the District Industry Centres (DICs) in view of the vital roles played by these in the growth of small scale industrial units.

Assam is traditionally known for its rich handloom and handicraft products and the Government has promised several development schemes for promoting this sector. All possible steps would be taken for securing technical and financial assistance from the centre to develop handloom and handicrafts industries. Moreover, the Government also proposes to conduct a survey on various handicraft products and registration of handicraft units which will be undertaken by the Deputy Commissioners. The Government also proposes to encourage setting up of fruit processing, vegetable processing, spice processing,aquaculture, horticulture based projects in the state under this small scale and tiny industrial sector.

New Package of Incentives- "1997 Incentive Scheme" :

In tune with the Industrial Policy Resolution, 1997 the State Government has also formulated a package of incentives for the promotion of industrial units and revitalisation of sick industrial units in the state. The new package of incentives reffered as "1997 Incentive Scheme" shall become operative from April 1, 1997 for five years. Thus the new policy carries a package of incentives which will be available for eligible units, especially in the small scale sectors, including sick units, units set by women, export oriented units etc. The following are the various incentives offered under the "1997 Incentive Scheme".

Power Subsidy : Power subsidy for industrial units upto a maximum of Rs. 30 lakh per year per unit is included in this incentive scheme. Industrial unit with connected load upto 1 MW will be allowed power subsidy of 50 percent subject to a ceiling of Rs. 5 lakh per industrial unit annually. In case of connected load ranging from above 1 MW to 2 MW, the subsidy will be 30 percent subject to a ceiling of Rs. 15 lakh per industrial units per year. Industrial Units with connected load above 5 MW, 20 percent subsidy will be granted subject to a maximum of Rs. 30 lakh per unit per year. This power subsidy will be available for a period of five years from the date of commercial production :

Interest Subsidy : Five percent interest subsidy shall be provided to the SSI units with an investment upto Rs. 60 lakhs on interest on working capital for the loan obtained from the banks and financial institutions. This benefit shall be available for a period of three years from the date of Commercial production and the maximum benefit shall be of Rs. 3 lakh per year.

Capital Investment Subsidy : The new policy also offered a special state capital investment subsidy at the rate of 30 percent of the capital investment on land, building, plant and machinery subject to ceiling of Rs. 10 lakh.

Subsidy on Generating set : The new policy has made provision for subsidy on generating set including non-conventional generating set which will be given at the rate of 50 percent of the cost of the generator subject to a ceiling of Rs. 10 lakh per industrial units.

Sales Tax Exemption : As per provision of the new policy, all new industries and existing industries going for expansion, diversification and modernisation will be granted sales exemption for sale of finished product and purchase of raw materials. For new SSIs, tiny industries and SSSBEs, exemption will be for 7 years to the maximum of 150 percent of fixed capital investment. Again for new medium and large units, the sales tax exemption will be for 7 years subject to a maximum of 100 percent of fixed capital investment. Moreover, in case of electronic industry, tax exemption benefit is extended upto 250 percent of the fixed capital investment for a period of seven years.

Other Subsidies : The new policy has also made provision for some other subsidies which include- (a) 20 percent subsidy for ASEB connection and installation of transformer for power supply to a maximum of Rs. 2 lakh ; (b) 50 percent subsidy on cost of pollution control and monitoring equipment to a maximum of Rs. 2 lakh ; (c) 5.0 percent subsidy on cost of quality control equipment subject to a ceiling of Rs. 1 lakh.

Industrial Support : The new policy has also made provision for institutional support. Accordingly, AIDC and ASIDC will participate in the equity contribution upto 20 percent of the issued capital on the company subject to a ceiling of Rs. 20 lakh to any viable project where the project cost does not exceed Rs. 5 crores. Preference will be given to companies floated by entrepreneurs of the state. Moreover, the AIDC will further provide 90 percent contribution towards the cost of feasibility reports, subject to a ceiling of Rs. 2 lakh in each case of medium and large scale industries, while 100 percent subsidy in case of small scale industries, subject to a ceiling of Rs. 50 thousand in each case.

Appraisal of the New Industrial Policy and the Steps to be Followed to keep the Benefit of Liberlisation :

The State Government has again come out with another new Industrial Policy,1997 to embark upon the high road of liberalisation, privatisation and globalisation as the State has totally failed to reap any benefit from the present system of economic liberalisation and globalisation process adopted throughout the country. Although the Industrial Policy of Assam, 1991 was proclaimed by the previous Government with much funfare but it has totally failed to implement as well as to reap any considerable benefit from the policy unlike the other industrially developed states of the country. Although, the industrialists of the State had maintained a high hope on this policy under the present regime of economic reform but all these remained in vain to dismantle the vicious circle of licence and permit raj. The policy also failed to attract the required flow of investment from private investors, both Indian and foreign, due to unstable socio-political conditions arising out of defective socio-political set up, exploitation, extremist movement, corruption and bureaueratic obstacles.

The New Industrial Policy, 1997 of the Government of Assam, by no means can be considered as a fresh attempt to help out entrepreneurs. The policy makes some pious attempts and proclamations about the need to bridge the gaps and backlogs in the process of industrialization to achieve this end. The policy has also failed to make clear about how to go about industrialization of the state.

While all the previous industrial policies framed by the earlier state Governments failed to achieve the objective of industrialisation in the state, thus one fails to understand as to why the government of Assam required yet another industrial policy for the industrialisation of Assam and how far this new policy will become successful to attain its goal. The new industial policy is a rehearsal of what had been formulated in the policies proclaimed earlier. Under the present situation, when the State Government is groaning under a tremendous fund crunch, its present attempt to assist the entrepreneurs in setting up industries is itself quite anachronistic. Entrepreneurs in Assam had already tasted the bitter experience to set up industrial projects attracted by the promises of incentives and subsides incorporated in all earlier industrial policies. All their investments and schemes could not proceed satisfactorily due to the usual practice red tapism in the department concerned. Subsidies and incentives promised by the Government do not flow when they are required and the power scenario remained grim. Under such a sitiuation, the entrepreneurs had to give up the project in the midway, sunken in deep debt. Naturally it is questioned, whether the Government is capable enough to keep its commitments to the entrepreneurs.

The schedule of industries drawn up by the new policy is a pointer to the fact that the Government is yet to emerge from the hackneyed concept of industries being saw mills, brick kilns, roller flour mills etc. The policy also failed to point out about how the Government would help the entrepreneurs by developing infrastructural facilities. Although the preamble to the policy stressed on how it had become imperative for the state to embark upon the high road of liberalization, privatisation and globalization, but it simply assures the prospective entrepreneurs that the State Government would prevail upon the Centre and different financial institutions to provide them the required financial back-up. The policy is quite silent on how it would help the export-oriented units. The policy did not mention about the steps to be followed by the departments concerned for lessening the paper work and the move to attend swiftly to the problems of clearance of the schemes and projects. Moreover, the Government should try to attract private capital, both domestic and foreign, considering the problem of its capital deficiency. Otherwise, the Government can do very little as an agency to help the industrialisation process. The officials and staff maintaining the ‘Udyog Sahayak Kendars’ should try to understand about what industry means and how urgent it is for them to attend to the entrepreneurs. The Government should trainup its officials and staff accordingly. In order to attain a smooth passage to industrialisation, the need of the hour is to dismantle the licence and permit raj completely.

The Government, both at the Centre and the State, should take into consideration the fact that liberalisation had made no difference to the North-east and, in fact, only widened the gap between the forward and backward states. The various corporations like AIDC and ASIDC should act as a catalyst in the economic development of the state, rather than merely establishing industries. A body should be instituted to review the implementation of the policy once in every three months to sort out any problems involved in it. Infrastructure development should be given topmost priority and an infrastructure development corporation should be formed and start functioning immediately. The industrial estates should be handed over to such corporation and the State Government should earmark land for future development and hand it over to the corporation. After developing land and providing all facilities like electricity, water etc. the corporation can sell the plots to the entrepreneurs.

Under the present socio-political condition of mistrust, instability, chaos and confusion, leading to huge capital flight from the state and stardy inflow of capital resources any new policy will find it difficult to achieve its goal unless sufficient confidence building measures are taken by the Government as well as the people, in general, to gain the confidence of the investors. This will pave the way for smooth passage of large investment in the industrial sector to tap the huge industrial development potential of the state as well as to reap the benefit of liberalisation. Otherwise, the goal of attaining industrial development and the practical implementation of the policy will remain a distant dream for a industrially backward state like Assam.

Some Important Industries in Assam

Major industries of Assam include Tea industry, Petroleum industry, Plywood industry, Paper industry, Fertiliser industry, Cement industry, Coal industry, Leather industry, Shellac industry etc. The following analysis reveals the brief outline of some other industries of Assam.

Tea Industry of Assam

Tea industry, being the largest single industrial sector of the state, is playing a dominant role in the economy of Assam. It is the largest single industrial sector in the State. Which is contributing a bigger share in the state income of Assam. The importance of tea industry can be realised from the fact that Assam alone produces more than 50 percent of country’s total tea production. Further, Assam tea also contribute substantially to the national exchequer every year in the shape of foreign exchange earnings through its export.

It has a remarable breakthrough when tea bushes were first discovered in Assam in 1823. It is a story of success and fulfilment heralding the age of new economic activities that brought Assam to the industrial map of the world. It has also made significant contribution to the economic regeneration of the state unfurling the door for an ever increasing export trade. Assam is now the second largest tea producing area in the world. Assam now produces about 20 percent of the world’s tea production and 53 percent of India’s total production.

In 1835, the East India Company established the first tea garden in Assam on experimental basis. Again in 1844, this garden was sold to Assam Company. Since then the number of tea garden started to increase gradually and it was spread over to a large part of Assam valley and also to a considerable part of Surma valley.

The total number of tea gardens in the State was 848 during 1991 which covered an area of 2.31 lakh hectares. The average number of labourers employed daily in these tea gardens was as high as 5.54 lakhs in 1991. Estimates of tea crop for the year 1991 reveal that during the year, Assam produced 396 million kilograms of tea as against 305 million kilograms produced during the year 1981.

In Assam, the total production of tea has maintained a gradual increasing trend since 1951. Total production of tea which was 150 million kgs. in 1951, gradually increased to 183 million kgs. in 1961 and then reached the level of 223.7 million kgs. in 1971. In 1981, the total production of tea in Assam reached the level of 305 miollion kgs. showing an increase of 37.6 percent in comparison to that of 1971.

Table No. 8.4

Some Statistics of Tea Industry of Assam

Subject

1970

1975

1980

1985

1990

1991

1.Total number of

Tea garden

2.Total number of

Tea Factories

3.Area under Tea

cultivation(in

thousand hectares)

4.Total production

of Tea (in million

kgs.)

5.Average yield per

hectare (in kg.)

6.Daily average num-

ber of labour

employed (in

thousand)

7. Average price of

tea per kg. in

GTAC

N.A.- Not Available

751

 

 

587

 

 

180

 

 

212

 

1178

 

 

 

394

 

 

 

N.A.

756

 

 

589

 

 

189

 

 

263

 

1398

 

 

 

402

 

 

 

9.52

777

 

 

575

 

 

200

 

 

300

 

1499

 

 

 

449

 

 

 

12.69

848

 

 

576

 

 

216

 

 

352

 

1631

 

 

 

484

 

 

 

22.87

848

 

 

570

 

 

230

 

 

388

 

1685

 

 

 

541

 

 

 

43.09

848

 

 

568

 

 

233

 

 

396

 

1700

 

 

 

554

 

 

 

40.78

Sources : 1. Economic Survey, Assam, 1982-83, 1989-90

2. Statistical Hand Book, Assam, 1995 and earlier issues.

The table no. 8.4 reveals that total number of tea gardens in Assam has increased from 751 in 1970 to 777 in 1980 and then 844 in 1985 and fiinally to 848 in 1991. Total number of tea factories which was 587 in 1970, gradually rose to 589 in 1975 and since then it started to decline to 575 in 1980, 563 in 1989 and then slightly rose to 568 in 1991. Total area under tea cultivation which was 180 thousand hectares in 1970, gradually increased to 200 thousand hectares in 1980 and then to 233 thousand hectares in 1991. Total production of tea in Assam has increased significantly from 212 million kgs. in 1970 to 300 million kgs. in 1980, which then further increased to 352 million kgs. in 1985 and finally to 396 million kgs. in 1991. In respect of productivity, the average yield per hectare which was 1178 kgs. in 1970, gradually increased to 1499 kgs. in 1980 and then it rose to 1631 kgs. in 1985 and finally to 1700 kgs. in 1991.

The table further reveals that the average number of labour employed daily has also increased considerably from 394 thousand in 1970 to 449 thousand in 1980 and then the same figure rose to 484 thousand in 1985 and then to 554 thousand in 1991. Again the average ruling price of per kg. of tea in Guwahati Tea Auction Centre (GTAC) has also increased from Rs. 9.52 in 1975 to Rs. 22.87 in 1985 and then to Rs. 40.18 in 1991. These are all, no doubt, a good trend for the tea industry of Assam.

In 1995, Assam produced about 3999.0 million kgs. of tea, which was 53.0 percent of the country’s output of 754.0 million kgs. cut, tear and curl (CTC) tea contributed the maximum with 315.4 million kgs., orthodox tea provided 68.2 million kgs. and the other tea productions made up 4.2 million kgs. of the state’s total production. In this year, Assam’s share of orthodox tea exports was 55.4 percent of the country’s total sales abroad, while CTC shared 55.5 percent.

In 1995, there are 844 tea estates (gardens) covering an area of 2.31 lakh hectares of land. Daily number of labourer engaged directly in tea industry in Assam is about 7.0 lakh. Indirect employment has also been provided to large number of workers, engaged in ancillary industry and also in tea warehousing, marketing, transport etc. The tea industry is generating resources for industrial development in the state and is helping the country in maintaining ecological balance of the environment. The tea industry has helped in the growth of 45 satellite townships in and around the tea estates in Assam and is the catalyst for the growth of several ancillary industries. The tea industry has contributed to the growth of the Inland Container Depot (ICD) at Amingaon which today handles around 25 million kgs. of tea meant for direct exports. Assam tea contributes around Rs. 200 crores in terms of Assam Agricultural Income tax, land revenue, sales tax, green leaf cess etc. Moreover, the tea industry of Assam has been disbursing more than Rs. 1000 crore to the income stream in terms of salary, wages, bonuses, gratuity etc.

Recent Problems of Tea Industry in Assam :

However, all is not running well in respect of tea industry in the state. Tea industry of the state is now facing certain peculier problems.

Age Old Gardens :

As the tea gardens in Assam are becoming age old, thus the productivity of these old gardens are declining. Data relating to area under tea according to different age group of bushes in Assam shows that in 1990 about 43 percent of the gardens was in the age group of over 50 years.

Looking at the future, the growth prospects of the tea industry of Assam valley appear to be limited. In the past decade, the tea gardens in Assam put out 27,000 hectares of new tea area and the production increased by 70 million kgs., showing an annual increase of 1.6 percent in area and 2.6 percent in production. In Assam valley most of the plantable areas within the registered tea area have been planted out and there may be only about another 3000 hectare of plantable land, still left, which will be fully used up within next two years. Under the present circumstances, the Assam Branch of Indian Tea Association (ABITA) will have to direct its energies to counter this stagnation and the approach will be two pronged one :

(a) To substantially push up the yields from old areas and low yield areas through replantation, rejuvenation and consolidation and (b) to initiate serious effort to bring more lands under tea. To implement the first point, the industry needs investible surpluses and the second point involves revesting denuded forests and waste land to the gardens by the State Government.

In a survey conducted by the Indian Tea Association (ITA) in 1987, it appeared that there were large tracts spread all over the tea growing areas,- lands that were taken under ceiling act, denuded forests and waste land unsuitable for agriculture. This land is lying, doing nothing, a national wealth just lying unused, unattended uncared for- a source that can be converted into a resource. Such vacant land may be allotted among the small tea growers for the production of green leaf and the ITA and ABITA must extend all technical expertise and managerial guidance and assistance to make them viable. This small growers scheme, formulated by ITA, some years ago, will solve unemployment problem as well as provide a green cover, preventing top soil erosion and consequent loss of fertility (as suggested by a NABARD study).

Scanty Rainfall :

Scanty rainfall has been creating a problem in the tea gardens of Assam in recent years. Out of 848 tea gardens in the State, only about a hundred tea gardens have their own irrigation system and out of this hundred, fifty gardens have partial irrigation facilities. Most of the tea gardens located in areas which have normally lesser rainfall as compared to other districts are without irrigation system. In districts like Sonitpur, Darrang, North Lakhimpur, Nagaon and Golaghat, only 30 percent of the gardens have their own irrigation system. Others have to depend on rains. Due to this scanty rainfall, the production of tea in Assam has declined from 403 million kgs. in 1993 to 30 million kgs. in 1994.

Rise in the bed of Brahmaputra :

Another problem faced by about 100 tea gardens of Assam is that they get inundated every year due to flooding of Brahmaputra arising out of rise in its bed. If Brahamaputra bed keeps on rising at the present rate of 9 to 12 inches every year then more and more gardens along the river will face this problem and suffer gradually.

General fall in the price of tea :

Another serious problem faced by the tea industry in Assam is the general fall in the price of medium and plain tea. For some time there were no buyers of such tea. This is mostly resulted from the break-up of the USSR leading to a loss of market of 120 million of tea for the country as a whole. Cacher tea suffered the most, as out of 104 tea gardens producing nearly 40 million kgs. of tea, most of it was medium and plain quality which got only Rs. 25 to Rs. 28 per kg. at the auction as compared to Rs. 40 being the cost of production in 1994. In 1973, the same tea got Rs. 45 to Rs. 48 per kg. in the GTAC. The 94th annual general meeting of the Surma valley branch of Indian Tea Association (SV-ITA) held on March 11, 1995 has focused this problem. The crisis in the Cachar tea industry is much more real than it is generally perceived in official circles. About 52 tea gardens are already on the sick list and some of these are, in fact, on the verge of closure. Financial chaos is looming large over most of the gardens. Such a situation was created due to the downward slide of price all over the country following over production accompanied by shrinking of market. In 1993, there was a target of exporting 200 million kgs. of tea whereas they could export only 160 million kgs. leaving a surplus of 40 million kgs. In addition to this, there is nearly 20 percent of unsold tea meant for domesticmarket, which are lying in the warehouses. Notwithstanding the other problems, it is the low price which is a matter of serious concern for the tea industry of Assam.

Increasing trend in the Cost of Production :

Another problem faced by the tea industry in Assam in recent years, is that the industry is facing an increasing trend in its cost of production. As per the study made by the RBI and NABARD, it is observed that the average cost of inputs as well as increase in the price of food grains leading to increase in the share of subsidy given to labourer by the tea estate management.

Excessive Rate of Taxation :

The rate of taxation imposed on the tea industry is excessive and discriminating. Tea industry is paying a higher rate than any other industry. When all other industries are paying at a rate of 51.75 percent but the rate of tax on the tea industry is 70.50 percent. Moreover, the imposition of time bound payment of advance agricultural income tax, levy and cess is also creating a serious financial problem for the weak tea gardens. Thus this high rate of taxes has been reducing the investible surplus of this industry.

Again, the Cachar tea gardens has traditionally been given the benefit of a differential rate of excise duty. The Cachar tea was previously subjected to excise duty of 33.3 percent of what used to be charged for the Assam valley tea on consideration of the former’s lower yield, lower price and higher cost besides its logistic disadvantage. But recently, the Government of Assam has been treating the tea estates of Cachar valley at par with those in Brahamaputra valley. Accordingly, the green leaf cess at 18 paisa per kg. is now required to be paid in advance throughout Assam. This high rate of cess has been creating a serious problem for tea gardens of Surma valley in Assam.

Another peculiar situation faced by the industry is that more than 200 tea companies have been showing perennial loss and avoiding agricultural income tax to the tune of about Rs. 40 crore. The State Finance Department is moving ahead with the proposal to cancel the lease of at least 200 "loss making" tea gardens of the State and hand over the land to willing small and medium planters. The State Government had already made up its mind not to renew the lease agreements with these companies after the expiry of the agreements in a couple of years from now. The tax authorities of the State Government found that out of the 653 tax assessess, altogether 208 were showing "suspect" perennial loss. It is being regretted that despite the State Government’s reduction of agricultural income tax from 65 percent to 45 percent, the tax compliance of these suspect companies did not improve.

For the majority of the tea companies, the 99- year lease agreement is coming to an end in the next couple of years. A new lease agreement will have to be incorporated before its expiry. Under such a situation, the state government’s proposal to cancel the lease of about 200 "loss making" tea gardens of the State may create confusion and apprehension in the mind of tea planters, which may dampen the spirit and incentive of the tea producers of the state. It is also true that the tea gardens should pay their necessary taxes and should not evade the taxes any more. Tea gardens, therefore, should bring transparency in their audited accounts and increase their tax compliance adequately. The State Government should also take care that the tea planters of Assam should not be unnecessarily harrassed during the renewal of their land lease. Both the tea planters and the State Government should sit together to sort out differences amicably so as to remove all confusion and apprehension. Any deviation from such natural and logical course may retard the growth of the biggest industry of the State, which may invite a serious complication in the economy of the State.

Thus we have seen that bad weather conditions, poor sales at the auction houses, low sale price, low exports, below target increase in the domestic market, increasing cost of production, low yield of age old gardens and excessive rate of taxation are some of the serious problems faced by the tea industry of Assam in recent years and which seems to be out of their control.

Small Tea Growers in Assam and their Problems :

Another recent development in the history of tea plantations in Assam is the inclusion of small tea growers for production and supply of green leaf to the tea factories owned by bigger tea gardens. The Indian Tea Association (ITA), some years ago, formulated a small tea growers scheme for deserving entrepreneurs. Development of small tea gardens by small tea growers is very important in a state like Assam where unemployment among the youth is creating law and order related problem for the people of the State and more particularly in a state where tea industry is presently providing employment to atleast one lakh people in Assam and still possess a huge employment potential.

As per the record of All Assam Small Tea Growers Association there are nearly 5064 small growers in Assam who are having membership with the association. Again 286 small growers of Assam are registered with the Tea Board and out of these only 200 are getting subsidy. In 1993, these small tea growers produced 492 lakh kgs. of green leaf. The quality of tea leaf produced by the small tea growers is much superior as compared to most of the bigger tea gardens in the state. This is mainly due to the fact that the small growers pluck their leaves after 6 to 7 days and the bigger tea gardens pluck after 7 to 8 days when the size of cloan increases affecting the quality of tea. The All Assam Small Tea Growers Association has chalked out a plan to create about 1 lakh small tea growers and thereby to employ at least 4 lakh educated youths and 12 lakh labourers by the end of 2006. Small tea growers has already established about 11,135 small gardens where about 2.46 lakh educated and unemployed youths have been engaged and about 1.0 lakh labourers have been directly employed. A good number of families have also been benefitted by getting indirectly engaged in these gardens. In 1996, the small tea growers produced nearly 600 lakh kgs. green leaves.

Problems :

The small tea growers in Assam are having special problems of their own. Firstly, the biggest problem faced by these small tea growers is the shortage of land and non-allotment of land. Out of the total 2,50,800 bighas of land under tea plantation with the small tea growers, the actual amount of land alloted to them is 25,623 bighas, which is just 10 percent of the total area under plantation by small tea growers. Most of the land under plantation by small tea growers is either government land, surplus under Land Ceiling Act or VGR. Under such a situation the district administration is sometimes issuing eviction notices to small tea growers leading to a peculiar problem of insecurity among these growers. Although the State Government has recently appointed one-man commission under Addl. Dy. Secretary to go into the possibility of allotting degraded forest land for tea plantation. But the bigger tea gardens have also been staking their claims for the degraded forest land.

Secondly, small tea growers of Assam are facing acute financial problem as they failed to secure loan from commercial banks.

Thirdly, there is acute shortage of tea factories to process the green leaf produced by the small tea growers. Thus for want of such factories, they are forced to sell their green leaf to the capitalists who have no garden of their own or to bigger tea estates.

Fourthly, the small tea growers of Assam are not getting remunerative prices of their tea leafs as they are at the mercy of bigger tea estate owners or other factories. In 1993, there was huge increase in the price of tea but the benefit was never passed on to them.

Fifthly, the small tea growers are not getting proper technical guidance and training. The apex body Tea Research Association (TRA) does not give any technical know-how to their members for they cannot afford to become members of TRA. But this problem can be easily tackled jointly by ITA, ABITA, TAI and other tea associations in league with the State and Central Government. Establishment tea estates in the membership of ITA and ABITA must also extend all technical expertise, managerial guidance and assistance to the small tea growers in Assam.

Potential of Growing Tea in Non-traditional Areas of North-eastern Region :

Although Assam is the pioneer state in respect of development of tea industry in Assam, but there is a huge potential for growing tea in the non-traditional areas of North-Eastern region. In recent years, this immense potential of growing tea in non-traditional areas of North-Eastern states came to light following the initiatives taken in the states like Nagaland, Arunachal Pradesh and Meghalaya.

This standing committee on Commerce Ministry in its report submitted in April, 1995, emphasised the urgent need to expand tea cultivation to north-eastern states like Arunachal Pradesh, Mizoram, Nagaland and Manipur which have the "climate and soil conducive" for this purpose. The standing committee has also strongly recommended revisal of subsidy for replantation of tea to keep pace with the growing demand growth failing which it will "spell disaster" and exports might be the "first casuality" as happened in the past.

According to the Standing Committee report, tea industry provides one million jobs. And an additional one million are indirectly employed in ancillary occupations. Therfore, to boost tea production, it is necessary to revise subsidy for replantation as most of the tea bushes are well over 50 years old and yields are no longer at their best.

Realising the potential, the Tea Board had announced a new tea unit financing scheme for these areas. For getting benefit of the new scheme, farmers would have to work out a technically feasible and commercially viable project report. Seventy five percent of the consultancy fees, subject to a ceiling of Rs. 2 lakh, would be borne by the Tea Board.

In the mean time, Agriculture Department of the Nagaland Government has brought nearly 60 hectares of new areas under tea plantation and distributed five lakh tea plants among the farmers free of cost.

In Arunachal Pradesh, tea plantation has also been taken up by the administration, forest corporation, Agriculture Department and local tribals in Arunachal Pradesh in a large scale. The State Government and banks are rendering assistance to interested farmers for this purpose. The tribals had taken up tea plantation on community and co-operation basis. In Changlang and Tirap districts of the state hill slopes, once famous for jhuming and shifting cultivation, were carpeted green with tea plants.

Recently, a privately owned tea company, the Siang Tea Company which took up large scale plantation at Oyan near Pasighat, was producing export quality tea and has also set up a mini tea processing unit at the plantation site. The Namshum Tea Company with a total grant area of 478 hectares in Changlang and a NABARD financed investment of Rs. 1.6 crores was set for a large output.

Tea plantation has also been taken up in Lohit, Siang and Dibang valley districts by various agencies and private individuals.

In Meghalaya, steps also have been taken to popularise tea plantation. Meanwhile, 500 hectares of land have been identified in Naya Bunglow, Rongran and Sonapahar area of Meghalaya as suitable for tea cultivation. Two nurseries had been set up at Rongran and Naya Bunglow with a grant in aid from the Tea Board. The financial grant provided for the purpose upto March 1993, was Rs. 33,66 lakhs. During the financial year 1993-94, a further sanction had been accorded for setting nurseries at Umsming and Rongran areas for raising plants at an estimated cost of Rs. 31.16. In these areas, plantation had been taken up by small farmers also.

The Tea Board has been encouraging entrepreneurs for undertaking activities of extension planting by providing long term loans and interest subsidy on bank loans since 1962. During the course of last three decades, about 88,000 hectares of land had been brought under extension planting of tea in various tea growing states.

Thus as the potential of growing tea in non-traditional areas of North-eastern region is quite rich thus it can be be expected that with the the continuation of such initiatives, the entire north-eastern region will be quite rich in the production of tea in near future.

Government Efforts for the Development of Tea Industry in Assam :

In order to improve the condition of tea industry in Assam, various steps have already been taken by the Government. In 1991, Assam Tea Corporation was established for the maintenance of sick tea gardens in Assam. In the mean time, this corporation has been able to bring some tea gardens within its control. In this respect, another important step was to open the Guwahati Tea Auction Centre on 20 th September, 1970.

In order to increase the demand for tea in the national and international market, the Government has set up "Tea Board". This Board is trying to increase the demand for Indian tea in England, Canada, America, Germany etc. through various type of publicity. On the other hand, "Indian Tea Board’ has been trying to increase the domestic demand for tea within the country and also advancing financial assistance to the tea gardens.

Moreover, for plantation, expansion and replantation works of the tea gardens, one Tea Finance Committee was formed. Again, the National Bank for Agricultural and Rural Development (NABARD) has also been set up by the Reserve Bank of India in July 1982, so as to supply adequate volume of credit to the agricultural and plantation sector. In the mean time, NABARD has extended a good volume of credit to the tea gardens of Assam.

Guwahati Tea Auction Centre : One of the historic event for the tea industry of Assam was the commissioning of the tea auction Centre at Guwahati on 25th September, 1970 at the initiative of the Government of Assam. The planters of Assam are deriving number of benefits from the Guwahati Auction Centre. Apart from making a saving in freight charges, the planters of Assam are also saving the payment of West Bengal entry tax. Chances of damage and pilferage of tea in transfit are now less in the case of consignment to Guwahati. The buyers are getting the advantage of exemption from sales tax and facilities for quick inland transport.

The sale of tea at the Guwahati tea auction centre increased from 21,998 thousand kgs.in 1971-72 to 26,626 thousand kgs. 1974-75. Due to its encouraging performance, this auction centre has become an established market in the country where both the quantity of offerings and returns to producers are increasing year by year. It is heartening to note that Defence forces, Tea Trading Corporation of India and even foreign buyers like Iraq and U.K. etc. are participating in this centre. In the first part of eighties, the volume of sales through the Centre which received set back during the previous two years, reached a new height of 75.34 million kg. during 1982. The total sale during 1981 and 1980 stood at 64.97 million and 62.56 million kgs. respectively as against 73.3 million kgs. and 74.85 million kgs. respectively during 1979 and 1978. The average price fetch per kilogram of tea at the centre also displayed an upward trend during 1982 being Rs. 15.00 per kg. compared with Rs. 12.69 and Rs 12.83 per kg. in 1981, 1980 and 1979 respectively.

In recent years, the volume of sales through the centre increased considerably from 120.25 million kgs. in 1985 to 136.20 million kgs. in 1986. Again the volume of sales of tea has again increased to 141.51 million kgs. in 1991 and then rose considerably to 151.32 million kgs. in 1993. The average price fetch per kilogram of tea at the centre (GTAC) also displayed an upward trend from Rs. 22.87 per kg. in 1985 to Rs. 40.78 per kg.1991. But since 1992, the prices started to decline due to general fall in the demand for Indian tea in export market arising mostly from loss of captive market from USSR.

Accordingly, the average price of tea fetched at GTAC stood at Rs. 50.07 in 1993 and Rs. 43.46 in 1994.

Thus we have seen that the operations of Guwahati Tea Auction Centre (GTAC) continued without interruption throughout the period. Even during the years of Assam agitation, there was no closure in the activities of GTAC rather the rate of progress was much higher than in the comparable centres elsewhere in the country. At present, the Guwahati Tea Auction Centre is the largest CTC tea auction centre in the world.

During the extremist problem, there was considerable loss of confidence, especially among the buyers, both domestic and foreign. The darkest day came in November 8, 1990 when two buyers- Brooke Bond and Lipton-unilaterally taken decision to withdraw their staff without giving any notice to the State Government or GTAC. But with the combined efforts of the GTAC members, local tea traders, entrepreneurs and workers’ unions, the situation was controlled and the normalcy was returned by early 1991.

The GTAC has also faced another crisis when a few officers of Gujrat Government, allegedly in co-operation with some entrepreneurs made an attempt in 1993 to set up a new centre at Ahmedabad. But this move was averted with the opposition from various corners.

It is quite worth mentioning that the State Governments support for GTAC continued throughout the period. The steps taken by the Government to foster GTAC’s growth was the exemption from sales tax of all teas sold in GTAC in the initial years. This has encouraged the producers to send their tea output to the centre throughout the period. The prudence shown by the State Government has paid good dividend by helping the GTAC to grow its strength year after year. Since 1987, the State Government has levied a sales tax, which is bringing in revenue of Rs. 12  to Rs. 15 crores per year to the state exchequer.

Since its inception, the GTAC has contributed immensely towards generation of employment opportunites as its members provided nearly 3000 full-time jobs besides part time and occasional ones and has also contributed towards the activities related to the development of transport, banking, housing, hotel and construction. Local educated youths have also gained knoledge and skills in different relevent aspects of tea trade.

With the development of GTAC, the infrastructural facilities have also been developed. The transport infrastructure for tea has substantially improved. Besides transportation by barges, through the riverine route, by railway wagons and also by trucks to various destination of northern and western India, the recently developed Inland Container Depot (ICD) at Amingaon has increased its activities satisfactorily during the past few years. The ICD is almost exclusively handling tea where the tea is mechanically loaded to containers in palletized form. The containers are licensed by the Tea Board and sealed by customs so that these cannot be opened anywhere else till they reach their ultimate destinations all over the world. Total number of containers sent through ICD, Amingaon has increased from 861 in 1986 to 1674 in 1989 and then to 1718 in 1993. In 1994, it was anticipated that about 2100 containers would be sent out from the ICD.

The recent spurt of liberalization has encouraged tea producers to sell more teas directly and outside the auction system. However, it is observed that a substantial quantity of Assam tea, particularly of the orthodox varities, are still being sold in the Calcutta auctions. In an effort to attract such orthodox teas to GTAC, sales tax on such teas was withdrawn and a workshop was held on April 11, 1992, which was largely attended by all the senior representatives of the different segments of the tea trade and industry. However, the promises of representatives to send more orthodox teas to GTAC has not yet materialised.

Thus the development of GTAC has helped the process of concentrating a part of the tea trade in Guwahati and accordingly accruing and passing a portion of benefits of the tea industry, however small, to the people of Assam. The GTAC is also having a bright prospect for further growth in its activities in near future if the socio-political situations in the State allow the things to happen and the Centre (GTAC) gets co-operation from all concerned. Thus it is necessary that all concerned should remain alive and vigilant so that the opportunity is not missed any further.

Petroleum Industry of Assam

As Assam is having sufficient deposit of Petroleum crude four oil refineries have already been established in Assam. These four refineries are, Digboi Refinery, Noonmati Refinery, Numaligarh Refinery and Bongaigaon Refinery. Total production of refinery products has increased from 1390 thousand metric tonnes in 1979 to 1566 thousand metric tonnes in 1981 and then to 2531 thousand metric tonnes in 1991.

Digboi Refinery

Digboi refinery was originally commissioned in 1901, when the petrol driven vehicles were yet to enter the Indian transport scenario. Therfore, the refinery produced only Kerosene, Wax oil, fuel oil and greases. It then had a annual capacity of 28000 metric tonnes. The refinery was rebuilt in 1923, when its oil field production and refining capacity was increased and it emerged as a cost-efficient commercially viable unit. Addition of two distillation towers in 1932, by the Foster Wheeler Company of U.K., gave the Digboi refinery, the distinction of being the first modern refinery in Asia. Two more distillation units were installed in 1940, further increasing the capacity. Thus till 1950, Digboi was the only refinary in India.

At present, Digboi refinery is one of the six oil refineries operated by the Indian Oil Corporation (IOC). Digboi refinery is still in production even after 94 years of its installation. In this refinery, items produced from crude oil include- motor spirit (23.2%), Diesel oil (17.4%), Kerosene (16.9%), Furnace fuel (16.8%), Wax (7.9%), Lubricant (3.8%), Bitumen (2.2%), Coke (1.7%), Gas (2.4%), Others (4.4%) and unutilised part (3.2%). At present the refining capacity of Digboi refinery is 0.50 million tonnes only.

Despite the fact that Digboi oil refinery, Asia’s first and perhaps even the world’s oldest continuously operating refinery, is producing in excess of its capacity every year, the need to modernise this age old refinery has been long felt.

On October 14, 1981, this Digboi refinery and the marketing assets of the erstwhile Assam Oil Company came under the wing of Indian Oil Corporation Ltd. Since then a number of projects have been undertaken. Four refinerly linked projects at an investment of Rs. 11.04 crores have already been completed by June, 1990.

After that the modernisation project of the Digboi Refinery of the IOC was approved in June, 1989 at an original cost of 143.74 crores, which is expected to be commissioned by July, 1996. Work for the project was affected due to infrastructural deficiencies and local disturbances. The projects which are under implementation against Digboi Refinery Modernisation Project include- Digboi refinery modernisation project, Catalytic reforming unit and wax hydrofinishing unit. The revised cost of this modernisation project is estimated at Rs. 478.80 crores. With the completion of this modernisation project, the production capacity of this age old refinery would increase and it would emerge as an cost efficient commercially viable unit.

Noonmati Refinery

Establishment of another new refinery became necessary after the discovery of crude oil in the Naharkatiya area. But there was a great deal of controversy about the establishment of this refinery in Assam. At last, it was decided to establish this refinery with a production capacity of 0.75 million tonnes at Noonmati area of Guwahati. To meet this purpose one agreement was signed between the India Government and the Rumanian Government. Rumania Government sanctioned Rs. 52.38 crores long term loan at the interest rate of 2.5 percent. Besides, Rumania Government supplied machineries and thus the refinery was established with the help of their skilled personnel. In 1961, establishement work of Noonmati Refinery was completed. This refinery is also under the control of Indian Oil Corporation (IOC) Ltd.

Since then this refinery is producing various types of petroleum products such as motor spirit, HSD, lubricant, Kerosine, wax etc.and the total refining capacity of this refinery is 0.85 million tonnes.

The Noonmati Refinery (Guwahati) is expected to soon go for a massive expansion programme as a hydro-treatment plant has been approved by the Indian Oil Corporation (IOC) for the refinery. The plant will be set up at a cost Rs. 391 crore and the proposal will soon be approved by the Union Petroleum Ministry. The refinery is also now planning to increase its refining capacity to 1.5 MMTPA from the present 0.85 MMTPA. The other proposals include the hyrdo treatment plant and a Rs. 81 crore ISOSIV plant for production of lead-free petrol in the refinery. The other expansion proposals of this refinary include a Rs. 32 crore delayed coking unit (DCV), a crude distillation unit (CDU) and a parafin wax unit (PWU) at a cost Rs. 500 crore. The total cost of all these expansion programmes is estimated to around Rs. 1200 crore.

Bongaigaon Refinery and Petro-chemicals Limited (BRPL)

With the increase in the production of crude in Assam Oil fields and also with the increase in the demand for petroleum products in the North-Eastern region, the demand for the establishment of third refinery in Assam was mooted. Considering the requirement position, the Petroleum Ministry finally came to a decision to set up the third refinery in Assam in the public sector. Accordingly, the Bongaigaon Refinery and Petro-chemicals Limited (BRPL) was formed as a public sector limited company. On 19th January, 1972, the foundation stone of Bongaigaon Refinary and Petrochemicals Limited (BRPL) was laid by Late Indira Gandhi, the then Prime Minister.

BRPL, a government of India undertaking , under the administrative control of the Ministry of Petroleum and Natural Gas was registered on February 20, 1974 with its headquarter at Dhaligaon under Bongaigaon District. Originally, total cost of construction of this refinery was estimated at Rs. 81.10 crores with Rs. 24.37 crores worth of foreign exchange component. But ultimately this multi-product company was commissioned at a cost of Rs. 450 crores.

The refinery units which includes- Crude Distillation Unit (CDU), Kerosine Treating Unit (KTU), Delayed Coker Unit (DCU) and Coke Calcination Unit (CCU) were commissioned one by one in phased manner by 1979. Initially, total production capacity of this refinery was 1.35 million tonnes.

The petrochemicals units which includes xylene, deimethyl terephthalate (DMT) and polyester staple fibre (PSF) plants were commissioned by 1988 with xylene plant commissioned in 1984 and the DMT unit in 1985.

Products Spectrum of BRPL : The main refinery products of BRPL today include- SR Naptha Motor spirit (Petrol), MR Naptha, Aviation Turbo Fuel (ATF), HSD, LDO, Calcined Petroleum Coke (CPC), Kerosine (SKO), RPC (Net), Reformer Naptha, BRPSOL-100.

The petrochemical products produced by BRPL include- Para-xylene, Ortho-xylene, Cee-nine Solvent, DMT, Polyester Staple Fibre (PSF) and PSF Waste. Among these, the most prestigious product is the PSF under the trade name "Bonpoly". The production capacity of PSF is 30,000 MT and that of DMT is 45,000 MT.

Production Position of BRPL : Total production of various refinery products and petrochemicals of BRPL have been increasing at a satisfactory rate. In 1992-93, total production of some of the petrochemicals were as follows :

1. Para-xylene - 26,074 MT

2. DMT - 40,625 MT

3. PSF - 10,397 MT

4. Calcined Petroleum Coke - 28,372 MT

5. Crude Throughput - 1.16 million tonnes

Again in 1996-97, the production position of BRPL has improved further. The production report of BRPL shows the following figures of refinery products and Petrochemicals in 1996-97, which had shown an upward swing on all fronts.

Table No. 8.5

Refinery and Petrochemical Production Report of BRPL in 1995-96 and 1996-97

Items

Volume of production (in MT)

 

1995-96 1996-97

A. Crude Throughput

B. Refinery Products :

(i) SR Naptha

(ii) Motor Spirit

(iii) MR Napatha

(iv) BRPSOL -100

(v) Reformer Naptha

(vi) ATF

(vii) SKO

(viii) HSD

(ix) LDO

(x) RPC (Net)

(xi) CPC

(xii) LPG

C. Petrochemical Products :

(i) Para-xylene

(ii) Ortho-xylene

(iii) Cee-Nine

(iv) DMT

(v) PSF

(vi) PSF Waste

1215714 1542032

 

1 01424 121224

46546 41255

11692 20623

5418 5410

69760 69760

67231 71767

95171 140866

433487 55813

150672 191806

34771 63126

28869 22112

11887 14553

 

28581 27003

360 2061

8490 10330

41523 37089

21068 21871

1209 1210

Source : Refinery and Petrochemical Production Report, as on April, 1997.

The above reveals that the total crude (processing) throughout in BRPL refinery has increased from 1.216 million tonnes in 1995-96 to 1.542 milliontonnes in 1996-97 which was 26 .8 percent higher than that of previous year. The total production of various refinery products in 1996-97 inculde- S.R. Naptha 121224 MT, Motor Spirit -41255 MT, Naptha -20623 MT, BRPSOL-5410 MT, Reformer Naptha-69760 MT, ATF-71767 MT, SKO-140866 MT, HSD-558138 mT, LDO-19806 MT, RPC-63126 MT, CPC-22112 MT and LPG-14553 MT.

Again the total production of various petro-chemical products produced by BRPL during 1996-97 were as follows-Para-xylene-27003 MT, Ortho-xylene-2061 MT, Cee-Nine-10330 MT, DMT, 38089 MT, PSF-21871 MT and PSF waste-1210 MT. Among the various petrochemicals produced by BRPL the production of Cee-Nine and PSF has increased by 21.6 percent and 3.81 percent respectively, whereas the production of other petro-chemicals have either remained constant or declined to some extent.

Gross Sales : The gross sales turnover of BRPL gradually increased from Rs. 534 crores in 1992-93 to Rs. 624 crores in 1993-94 and then to Rs. 725 crores in 1994-95. Again the net profit of the company had also increased from Rs. 29.03 in 1992-93 to Rs. 37.92 crores in 1993-94 and then to Rs. 60.12 crores in 1994-95.

Marketing of Products : Refinery products of BRPL are marketed properly and the petrochemicals produced by the Company are also getting its market gradually. The most prestigious petrochemical produced by BRPL, i.e., the polyester staple fibre (PSF : "Bonpoly" ) has not only achieved operational stability but has also been able to generate quality products which are well accepted in the market throughout the country. Spinning mills of Assam particularly, Assam Polyester Co-operative Mills (APOL) at Rangia depends entirely on BRPL for its requirement of fibre. The other three spinning mills in Tilu, Noapara and Jagiroad are also the main buyers of PSF from BRPL. Again the Prag Bosimi Synthetics Ltd. which is recently set up in Assam in the joint sector is also utilising PSF produced by BRPL for the manufacture of PFY/POY. These mills of Assam consume only 9 percent of PSF and the remaining 91 percent of PSF has been marketed in Bombay and Western part of the country.

Exports : With the increase in the production of polyester staple fibre (PSF), BRPL started regular export of PSF from the 1993-94. The volume of export of BRPL fibre has increased from 901 tonnes in 1993-94 to 2906 tonnes in 1994-95. In the year 1993-94, the total PSF export was worth US$ 1 million. In 1994-95 with the increase in the volume of export of PSF to countries like Belgium, Bangladesh, France, Nepal and Iran, total value of export would beabove $3 billion (US). Meanwhile, efforts have been made to start exporting to South-east Asian countries like Indonesia, Philippines and Vietnam. The products exported by BRPL includes regular fibre for appareal use and speciality fibre, i.e., fibre fill PSF, which is used for making pillows, mattresses, quilt and for stuffing purposes in upholstory.

Product Application Centre (PAC) : A Product Application Centre has been commissioned which are providing application research on PSF (bonpoly) in the fields of spinning, weaving and wet processing. PAC would help in achieving the highest quality norms and assurance for "bonpoly" fibre and also diversify the uses of petrochemical products produced by BRPL.

Installation of New Projects : Over the last three years since 1992, BRPL has invested Rs. 205 crores in developing certain new projects. Accordingly, a glycosis plant for recycling of wastes generated during the production of PSF was commissioned in 1993 ; additional crude oil and POL product tankages have been built and facilities for rail and road despatch of different products were commissioned in 1993-94 ; a new product ‘Cee Seven Solvent’ was developed by modifying the aromatics plant in 1994 ; facilities for storage and despatch of bulk LPG were constructed in 1994 and a digital control systems were installed for captive power plant operations, improving the reliability of power supply and resulting in optimum use of fuel.

BRPL Expansion Project : BRPL proposed a refinery expansion project to raise its production capacity from 1.35 MMTPA to 2.35 MMTPA involving the capital outlay of Rs. 223 crores, including foreign exchange component of Rs. 32 crores, which was subsequently approved by the Cabinet Committee on Economic Affairs (CCEA) and Public Investment Board (PIB). The project was sanctioned by the Government of India on December 31,1991.

The refinery expansion project consists of two unit- (i) crude distillation unit (CDU) and (ii) delayed coker unit (DCU). The project also includes LPG recovery facility and debottlenecking of reformer in the existing aromatics plant.

The BRPL has been executing these expansion schemes since January 1, 1992. The work of the refinery expansion project has been completed by May, 1995 and this will now double the refining capacity from 1.35 million tonnes per annum to 2.7 million tonnes per annum. Another major project, i.e., LPG recovery project has already been completed.

Significantly, while the original cost of this expansion project was Rs. 223 crores, but the same is almost completed within Rs. 190 crores, resulting in a saving of Rs. 30 crores. In the mean time, the production has also been started.

In addition, BRPL’s xylene production capacity would also be increased from 29,00 TPA to 35,000 TPA at acost of Rs. 5 crores.

In the mean time LPG plant with 22,000 million tonne per annum capacity has already started commercial production at this complex. Besides, a crude distillation unit (CDU) and a delayed Coker Unit were commissioned in 1995-96. This has increased the crude processing capacity from 1.35 MPTA to 2.35 MTPA and the gross fixed asset of the company from Rs. 480 crore to Rs. 659 crore. Other expansion programmes of BRPL include PSF and DMT expansion plant, Methanol plant, Benjin plant, and the Aromatic plant.

In the mean time, although the refining capacity of BRPL has been expanded to 2.35 MTPA but the actual crude throughout in 1996-97 in its refinery unit was only 1.54 MTPA, leading to under-utilisation of its refining capacity to the extent of 0.81 MTPA which was about 34.5 percent of the total refining capacity of the BRPL. If immediate steps are not taken to utilise its untilised expanded refining capacity, then it will create a serious impact on the financial health of the NRPL. Thus steps must be taken to increase the crude throughout in the refinery as per its expanded refining capacity.

Moreover, another impending problem of BRPL is that with the commissioning of the Numaligarh refinery, the BRPL will cease to receive crude produced in the state and will have to depend on imported crude. Of the 5.08 million tonnes per annum (MTPA) or crude oil produced by OIL and ONGCL in the State, 3 MTPA would be required for Numuligarh refinery and theremaining 2.0 MTPA would have to be distributed between Digboi and Guwahati refineries, whose respective capacities are at present 1.6 MTPA and 1.0 MTPA. This would compel the BRPL to import crude to keep the refinery functioning. But as the imported crude has different components, the BRPL refinery, designed as per indigenous crude component, do not possess that much of flexibility to adopt imported crude immediately. In that case, some necessary changes are to be made in the refinery structure.

Besides, the financial condition of BRPL is also greatly strained in recent years. One of the major reasons is the low refinery margin of Rs. 308.41 per tonne paid to the BRPL barely covers the operation expenses and thus it needs to be revised without any delay. Another factor responsible for this financial strain is the downfall in the profitability of the petrochemicals division resulting from the increase in the price of naptha, fall in the prices of para-xylene and DMT in naptha, fall in the prior of para-xylene and DMT in both domestic and international markets and the reduction of import duties of DMT PSF. Thus considering the situation immediate steps must be taken to restore financial discipline in BRPL.

Perspective Plan of BRPL : The public sector Bongaigaon Refinery and Petrochemicals Limited has also chalked out a perspective plan to consolidate its growth through various expansion and diversifiaction programmes which after completion will increase the annual sales turnover of the company to Rs. 2000 crores.

Accordingly, the refinery expansion scheme is almost completed. Meanwhile, the BRPL has also received approval for expansion of its DMT plant capacity from 41,000 TPA to about 60,000 TPA and PSF plant capacity from 30,000 TPA to 36,000 TPA at a cost of Rs. 90 crores. nother project to recover methanol and costly catalysts from waste stream of the DMT plant is now in an advanced stage of completion. This would help in reducing the cost of raw materials and minimise discharge of particles to the atmosphere, thus improving the air quality. Another step to reduce environmental pollution is being taken with the commissioning of a tertiary treatment plant within a year. After the commissioning of this plant, there would be no liquid effluent disposal as the treated water would be reused. All these recently completed and on-going projects would result in an increase of the sales turnover of the company to more than Rs. 1000 crores.

This perspective plan finalised in 1994, involved growth in the petro-chemicals field by taking advantage of additional quantities of aromatic-rich naptha that would be available with the expansion of the refinery as well as setting up of the Numaligarh refinery.

Failure of BRPL to Develop Down-stream Industries in Assam and its Future Prospect :

BRPL was established with a high hope of developing various downstream industries based on the petrochemicals and refinery products produced by it. Accordingly, the people of Assam expected that a chain of downstream industries would come up so as to utilise the various petrochemicals and refinery products produced by BRPL. But unfortunately, people’s expectations remained a distant dream, as the state has completely failed to develop these downstream industries. The factors which are mostly responsible for such failure to develop down-stream industries in Assam are as follows :

(a) Inappropriate product mix of the BRPL is highly responsible for such failure to develop downstream industries in the state. Present product mix of the BRPL would never permit the development of small scale down-stream industrial units within the state.To start an industrial unit with such product mix, requires a huge investment, which is very much difficult in a state like Assam.

(b) State sector participation in the application of such product mix for the development of down-stream industries has been totally missing.

(c) Capital Intensive : Development of down-stream industries with the present product-mix of BRPL will be a capital-intensive one. Such type of capital-intensive investment project is unlikely to develop in a state like Assam.

(d) Co-operative sector has also failed to develop down-stream industries in Assam,excepting APOL project established at Rangia.

(e) Lastly, the lack of involvement of local entrepreneurs is also highly responsible for such failure to develop down-stream industries based on the products produced by BRPL.

Prospect : But the amount of polyester staple fibre (PSF) produced by BRPL has a high prospect of developing textile industry within the state. The only textile project that has been successfully developed in Assam is the APOL textile project established at Rangia. But the amount of PSF produced by BRPL (21871 MT in 1996-97) could be utilised to develop and run 25 numbers of spining mill within the state. One such spining mill could have 25 thousand looms and can employ about 1 to 1.5 lakh people both directly and indirectly. In such spinning mill, blending of polyster yarn with cotton yarn is quite necessary. Moreover, with the development of spinning mill, a good number of weaving, dying, printing etc. can also be developed within the State. All these projects, if implemented, would create ample employment opportunities to millions of people within the state. Thus instead of establishing any more new refinery, the state should try to develop a good number of spinning mill and other associated projects, both in small and medium scale, so as to develop a broad-based textile industry within the state, on which the people of the state has their inclination from its origin. If this textile industry can be developed in Assam then only it can serve the real purpose of establishing a capital intensive project like BRPL and thereby the benefits of establishing BRPL can percolate to the local people at the grass root level. This will also create an ample scope for income and employment generation within the state. But in order to materialise these projects, the private sector participation is highly essential and also the only alternative, which demands a conducive investment climate within the state.

Numaligarh Refinery :

The Government of India has finally decided to set up the fourth refinery in Assam at Numaligarh under the Golaghat district of Assam. This new company, Numaligarh Refinery Limited (NRL) was formed in April 22, 1993 and the construction work of this mega project has already been started. This refinery is being set up in the joint sector. Total refining capacity of this refinery (NRL) would be around 2 million tonnes.

This refinery is promoted by Bharat Petro Chemicals Ltd. (BPCL), Indo-Burma Petroleum (IBP) and Government of Assam with equity participation of 32 percent, 19 percent and 10 percent respectively. The remaining 39 percent of the equity will be offered to public and other financial institutions. The required loan for this project is to be obtained from the Central Government through Oil Industry Development Bank (OIDB).

This refinery is being set up in the assisted sector in pursuance of the commitment in the Assam Accord of 1985 with major equity participation of the IBP and Assam Government. After much hue and cry and dilly-dillying of seven years, the State Government has finally agreed to accept 10 percent equity participation while the IBP got 51 percent leaving the rest to the primary market.

The original cost estimation of this refinery was Rs. 1830 crores including the foreign exchange component of Rs. 323.50 crores. This Rs. 2000 crores joint venture NRL, an of shoot of Assam Accord was completed in 1998. Though the cost of the project was estimated at Rs. 2000 crores but taking the other link projects and cost escalation into account, the ultimate cost of the entire project was higher by another Rs. 1000 crores.

The acquisition of land for the project being completed, the State Government  formally handed over 509.7 acres of land for the project in April, 1993. The soil investigation work, awarded to Regional Research Laboratory (RRL), Jorhat.  Initially the detailed feasibility report of the project was prepared by Engineers India Limited (EIL) and the approval for the site was accorded by the Ministry of Environment in 1991.

EIL has been appointed as prime consultants and the process of design, basic engineering and detailed engineering for the indigenous technology based plants had almost been finalised.

The volume of crude oil for the Numaligarh refinery would be supplied from the nearby oil fields of Oil India Limited (OIL) and the Oil and Natural Gas Commission (ONGC). It is expected that the refinery would be completed by the end of 1998.

The high tech. refinery is designed to process 3 million metric tonnes per annum of Assam crude oil. It will have various processing units viz., Crude Distillation Unit (CDU), Vaccuum Distillation Unit (VDU), Delayed Coker Unit (DCU), Hydro Cracker Unit (HCU), Hydrogen Unit (H2 U),Coke Calcinnation Unit (CCU), Sulphur Recovery Block (SRB), Catalytic Cracking Unit (CCU) and a Capitive Power Plant (CPP). The refinery will meet the objective of maximising middle distillates like kerosene and diesel. Besides this, the refinery will produce LPG, naptha, high speed diesel, aviation turbine fuel (ATF), Kerosene and Calcined Coke.

The NRL has already initiated steps to enter the capital market from which it expects to realize Rs. 707 crore. Of the funds already realized, part has come from equity contributions and part from an OIDB loan of Rs. 438 crore.

The total project cost of NRL is now revised at Rs. 2,722 crore, of which Rs. 225 crore is for setting up a marketing terminal adjacent to the refinery. The centire cost of the project will be realized through debt (Rs. 1,815 crore) and equity (Rs. 907 crore) at a ratio of 2:1. The Centre has allocated Rs. 100 crore in the revised budget estimate and committed to provide adequate funds during the new two years to ensure completion of Numaligarh Refinery project as scheduled.

It may be mentioned that the refinery will annually process three million tonnes of Assam crude. The crude will be tapped off at Badalipara from the pipeline which supplies to Bongaigaon from the oil fields at Lakwa and Duliajan. OIL is providing 60 percent of the crude and the ONGC the remaining 40 percent. Moreover, the refinery can absorb around 700 people through direct employment and around 5,000 people through indirect employment. At present, the project spans a total area of 1,000 acres, including 250 crores of the maketing terminal plot.

Demand-supply Gap of Petroleum Industry in Assam and its Impending Danger:

The Petroleum industry of Assam is at present facing a serious shortage in the supply of petroleum crude due to the prevailing demand supply gap. At present, the petroleum crude crisis is reflected from the fact that although the refining capacity of BRPL has already been expanded from 1.35 MTPA to 2.35 MTPA but the actual amount of crude through input in 1996-97 in this refinery was only 1.54 MTPA , leading to under-utilisation of its refining capacity to the extent of 0.81 MTPA, which was about 34.5 percent of total refining capacity of the BRPL such under-utilisation of the expanded refinery capacity has been creating a serious impact on the financial health of BRPL.

With the Commissioning of the Numaligarh Refinery scheduled on December 1998, the demand-supply gap of the petroleum industry would be worsening further, if no immediate steps are taken to avert the crisis.

Statistics reveal that crude oil production in the North-east, both by Oil India Limited (OIL) and Oil and Natural Gas Commission Ltd. (ONGCL), stood at 5.08 million tonnes in 1995-96. The production is again not likely to increase until exploration efforts are intensified, which is again unlikely considering the ground situation of the country.

The combined capacities of the refineries at Digboi, Guwahati (both belonging to Indian Oil Corporation), Bongaigaon(BRPL) and Numaligarh(NRL), after completion of their on going schemes,will be around 7.5 million tonnes.

The present crisis in the supply of crude arises due to the fact that the OIL and ONGCL have failed to increase the production of petroleum crude in the entire North-eastern region. Although the Petroleum Ministry has projected the total crude production in the North-east to be around 7.0 million tonnes at the end of Eight Plan and accordingly planned for the expansion programme of BRPL refinery and commissioning of Numaligarh but due to the failure of ONGCL to increase crude production both in Assam and Nagaland, such projection could not materialise. Now the ONGCL is planning to tap the oil reserves available of the North Bank of Brahmaputra, mostly in the Lakhimpur district as the oil reserves in Arunachal Pradesh could not be tapped due to its peculiar geographical problem and infrastructural bottlenecks.

In order to avert the crisis of petroleum industry of Assam, the Ministry of Petroleum proposed a Rs. 130 crore project to supply imported crude to the crude-starved refineries in Assam. Moreover, the Oil Co-ordination Committittee and Engineers India Ltd (EIL) have been asked to work out a strategy to examine the various alternatives to supply the refineries with imported crude via Haldia port.

As per the Ministry’s plan, Assam will stop crude supply to Barauni the moment Haldia-Barauni pipeline is commissioned. In this connection, the IOC has already started bringing in crude, though in small quantities in wagons from Haldia to Barauni.

Both the Oil Co-ordination Committee and the Engineer’s India Limited have jointly submitted a proposal to the Petroleum Ministry with three options. (a) to bring in imported crude from Haldia port in wagons ; (b) to use bargens to carry imported crude via Bangladesh (option is already in existence as Numaligarh refinery is using barges to transport equipment to Assam) and (c) utilize the BRPL’s existing Naharkatiya-Guwahati-Barauni pipeline to pump back imported crude brought from IOC’s 4.2 million-tonne Haldia-Barauni pipeline.

It is understood that the ministry is in favour of the third option, considering the fact that the Haldia-Barauni pipeline capacity can be increased to six million tonnes with the help of boosters. Moreover, the BRPL has also proposed to the Petroleum Ministry to increase the Haldia-Barauni pipeline capacity to 7.5 million tonnes per annum at an additional cost of Rs. 400 crore, so as to meet the future scarcity of crude for achieving full capacity utilisation. The Ministry is not in favour of transportation of crude by rail, since it is not feasible on a long term basis, considering the existing inadequate railway network. Under the present situation, it would be better to use the existing pipeline between Barauni-Bangaigaon-Naharkatiya pipeline which is economically and environmentally safe and more importantly on the consideration of the utilisation of the existing costly pipeline.

Assam Petrochemical Complex, Namrup :

In order to utilise the petroleum waste available from refineries in Assam, the Assam Petrochemical Complex was established at Namrup with a total investment of Rs. 5 crores. This complex was established with the help of a Japanese Company. This complex was based on the natural gas available from Lakwa and Moran Oil fields at Sibsagar District.

Based on natural gas as main feed stock, the company started its commercial production of methanol and formaldehyde in 1976 from its two plants of 21 mt. per day and 37 mt. per day capacity respectively. The methanol unit of the company had the distinction of being the country’s second producer of methanol, pioneering production of the chemicals from naturalgas in India.

The company entered the market through tough competition coupled with locational disadvantages. It also suffered major interruption in power and natural gas supply during the peak period of Assam agitation, resulting in under utilization of plant capacity.

However, the company survived the competition, gained advantages and marched ahead and within 14 years operation the company expanded its manufacturing capacity of methanol and formalin from 7000 TPA to 40,000 TPA and 12,000 TPA to 16,500 TPA respectively. Besides, successfully commissioning capacity by another 100 TPD was being implemented.

APL is making sustained profit since 1990-91 on the average of Rs. 5.00 crore per year. The main product specturm produced by this project along with its capacities are as follows :

Itemps produced

Production Capacity

1. Methanol

2. Formalins

3. Non-concentrated Glue

4. U.F. Glue

5. P.V.C. Processed Glue

7,000 tonnes

12,000 tonnes

1,000 tonnes

12,000 tonnes

6,000 tonnes

The Oil India Ltd. (OIL) which was formed in 1959 and was subsequently made a public sector company in 1981 by amalgamating Indian Oil with Assam Oil Company , has now shifted its headquarters from Delhi to Duliajan in Assam. This OIL is providing necessary support to the petroleum industry of Assam. Besides, the Oil and Natural Gas Commission (ONGC) was established in 1959 in order to run the exploration activities for finding oil in India. The ONGC is having its office at Nazira in Sibsagar district and is playing an important role in conducting exploration activities in the region alongwith other parts of the country.

Assam Gas Cracker Project :

There was a long standing demand from the people of Assam to establish a gas cracker project in Assam so as to utilise a huge quantity of unutilised natural gas, being flared up since  long back. Accordingly, after a long exercise, it was finally decided that the Assam Gas Craker Project will be set up as a joint sector project by the Government with Reliance Industries Ltd., Bombay. With that purpose, a memorandum of understanding (MOU) was signed by the Government of Assam and Reliance Industries Ltd. on October 25, 1994 and a company named "Reliance Assam Petrochemicals Ltd." has been formed.

The idea for setting up such a project for utilization of natural gas available in Assam was mooted  far back as in 1982 and the Assam Industrial Development Corporation (AIDC) submitted an application to the Government of India for obtaining the letter of intent in December 1984. Accordingly, the Government of India issued a letter of intent in February 1991.

On 24th November 1995, the then prime Minister, Mr. P.V. Narasimha Rao laid the foundation of the prestigious Assam Gas Cracker Project at Tengakhat, about 22 kms. from Dibrugarh. This gas cracker project, the biggest of its kind in this part of the country would be completed at a cost of Rs. 4,000 crore and the project would provide employment to a huge number of educated unemployed youths besides helping in the growth of numerous ancillary industries in the state. This ambitions gas cracker project, when completed, would directly provide employment to about 2,000 persons and indirectly to more than 1 lakh persons.

The main objective of Assam Gas Cracker Complex is the conversion of natural gas into value-added petrochemical product, promote industrialisation in backward area, import substitution and generation of employment.

Utilising associated natural gas, which is now flared and wasted, this project will convert the petrochemical fractions of the gas into valuable polymers which are substitutes for costlier items such as wood, metal and glass. It will save foreign exchange because polymers are now deficit products and are imported.

What is more significant is the fact that this project will act as a catalysts for the future industrial development of Assam, and the entire North-east. Besides, the tremendous technology impact and fillip to trade with the neighbouring countries it will boost up the investment climate in the state and give moral support to the entrepreneurs to put up new ventures specially in the small scale and down-stream sectors where large-scale employment opportunities can be expected to be created in the near future.

There is enough reason to believe that this natural gas project will go a long way in making Assam a competitive industrial force for years to come. For our, it is highly employment-oriented project with potential for large scale development of downstream industries in the years to come, which include chemicals, packaging, implements, paints, foam, rubber etc. It is also a highly attractive investment proposition, and in the time to come, will invite a lot of financial support. Secondly, this project is a step in keeping with declared national policy of speedy industrialisation of North-eastern region.

The Assam Gas Cracker Project will be converting valuable fraction of natural gas flared into valuable petrochemicals. It will also meet the deficit of petrochemicals in the country and save foreign exchange. But, most of all, it is a project based on readily available local resources  that can use local manpower.

The feedstock of the project is the associated gas available from the oil fields of Upper Assam to the extent of 7 million SCM per day. The annual capacity product pattern of this project is :- Ethylene-3 lakh tonnes, Propylene-51,000 tonnes, Polythylenes-3 lakh tonnes, Oxo-Alchohols -65,00 tonnes. The completion schedules of this project is 3 years from zero date.

The down stream units of this gas cracker project include mainly polymer processing units in the small and medium scale sectors in the areas like-Packaging, Household, Industrial, Agricultural, Building construction, Wires and Cables etc.

But the implementation of this project is delayed due to problem of shortage of required quantity of natural gas available from oil fields in Upper Assam. It is now revealed that the amount of gas to be supplied by OIL and GAIL would facilitate the production of no more than 2.3 lakh tonne per annum (TPA) of ethylene for the project whose capacity, as per MOU should be three lakh TPA. This shortage of natural gas has thus created a problem in the implementation of the project. Alternative proposals are also mooted which are expected to be finalised soon. The Central Government has already granted a cost subsidy of Rs. 377 crore to this project in view of the regional constraints to be faced by the project. In the mean time, the Reliance has proposed to raise the capacity of 4.5 lakh TPA of ethylene (based on composite feedstock) and sought the Petroleum Ministry’s Commitment on allotment of surplus naptha, a costly alternative fuel. The Government of India has very recently given final clearance for setting up the ambitions Assam Gas Cracker Project at Tengakhat in Dibrugarh district by M/s. Reliance Industries Ltd., which is expected to contribute significantly to the industrial and economic development of the state.

Thus we have seen that the petroleum industry is the biggest industry of Assam. This industry is doing a lot for the improvement of both national economy as well as the economy of the State. With the establishment of four refineries and petrochemical complex it is now expected that this industry will earn a special position in the industrial development of the country as well as of the state.

Plywood Industry of Assam

Plywood industry is one of the forest-based industry. For manufacturing plywood, several piles of veneers are combined with glue in order to prevent shrinkage. System of plying increases the strength and thickness of the ply board. Commercial plywood and tea chest are main products of plywood industry. Plywood is mostly used in the manufacture of tea chest, boxes, furnitures, panels, boards, flush doors, bodies of vehicles and railway compartment etc. With the increase in the demand for plywood, the plywood industry of Assam is gradually expanded in recent years.

In 1984, there were 52 plywood factories in Assam of which 13 belongs to large and medium scale. Moreover, about 40 factories were located in the districts of Dibrugarh, Jorhat and Sibsagar. Total production of plywood in the state gradually increased from 31 million sq. metre in 1982 to 43 million sq. metres in 1986 and then gradually declined to 42.7 million sq. metres in 1994. At present there are about 48 plywood factories in Assam, which has generated employment opportunities to nearly 5,600 persons directly and nearly to 1.0 lakh persons indirectly.

Initially Assam had plenty of woods suitable for the production of plywood. But unplanned cutting of trees has resulted huge deforestation in the state resulting in ecological imbalance. The State Government has, therefore, imposed severe restrictions on unplanned cutting of trees, which has threatened the prospect of plywood industry due to shortage of raw material. The plywood manufactures, therfore, has been forced to import a large part of their raw material from Malaysia by ship. In order to solve this scarcity of raw material, the plywood indistry should go for captive plantation of soft wood in the state.

The manufacture of plywood which originated in Assam as early as in 1917, has been transformed into a major industry with the gradual growth and development of private enterprise, particularly after independence with the assistance and encouragement from the Government and the people of the State. The plywood industry is now the second largest industry in the private sector in Assam after tea industry. This plywood industry of Assam approximately meets 60 percent of the country’s total need for plywood. At present the annual turnover of this industry is Rs. 200 crores. This industry has got immense employment potential for the people of Assam. Thus more plywood factories should be established on the basis of suitable timber available inthe forets of Assam.

But unfortunately, the plywood industry of Assam is now facing an imminent closure following the interim injunction issued by the Supreme Court of India on December 12, 1996, banning movement of all forest goods in the north-eastern region.

The industry, which is the second biggest in the state, after tea, has altogether 48 mills scattered in the upper Assam districts and many of them closed down following paucity of raw materials.

Notably, the state produces 60 percent of the total requirement of plywood of the entire country and most of the leading brands of plywood market have their facories located in Tinsukia district. Plywood is basically made of holong and mekai timber which is solely available in the reserve forest of Upper Assam, neighbouring Nagaland as well as Arunachal Pradesh. The plywood industry consumed only 4 percent of the total consumption of timbers in the country. Though working on 55 percent of the rated capacity, this plywood industry of Assam meets 60 percent of the country’s requirements. Given the adequate supply of raw materials, it has the potential to meet the entire requirement. The Rs. 200 crore annual turn-over industry is credited with producing the finest variety of plywoods in the country.

But recently, Supreme Court’s interim order banned felling of trees in Changlang and Tirap district of Arunachal Pradesh beside closing down of all plywood mills situated within 100 km. of the Arunachal Pradesh border. This process literally hammered the final nail in the coffin of the plywood industry which was already facing the shortage of good quality timber. The Rs. 200 crore annual turnover of plywood industry of Assam, whose functioning has come to a grinding halt since December 12, 1996, following the verdict of Supreme Court is going to incur a huge loss of several crore of rupees due to stocks of inventories becoming useless for the mills.

Accepting the reality and the necessity of the ban, the wood workers have urged authorities to allow controlled felling as well as import of timber from South-east Asia for the survival of this large industry. Thus considering the grave crisis faced by this industry, immediate steps must be taken on alternative lines, so as to save this industry from its imminent closure. Moreover, on the long term basis, the State Forest Department and the Plywood Manufacutres should also take up plantation of those trees required for the production of plywood.

If we can properly develop this plywood industry on scientific and long term basis with easy flow of raw materials produced within the State in collaboration with the State Government, this industry will no doubt contribute immensely towards the economic development of Assam.

Paper Mill of Assam

On the basis of the plenty amount of forest products like bamboo, soft wood etc. Assam has a good potentiality for establishing a good number of paper and paper pulp mill. The forests of Assam are supplying raw materials to different paper, paper pulp mills within and outside the state. During the Fourth Plan Period Ashok Paper Mill Ltd. was established at Jogighopa with a total investment of Rs. 15 crores. Total production capacity of this mill was 90 tonnes of paper and 120 tonnes of paper pulp. But due to various irregularities, this mill had to face huge loss and ultimately it was closed. Considering the huge potentiality for the growth of paper industry in Assam, another two paper mills has come up in the public sector. One of this Mill is established at Jagiroad of Nagaon District under the patronage of Hindustan Paper Corporation Ltd. This Jagiroad Paper Mill has started its Commercial production. Another paper mill is established at Panchagram in the Cachar District of Assam. This has the production capacity of 150 tonnes of paper per annum which will be ultimately doubled within a short time. This Cachar paper mill has started its production. Both of these two mills are controlled by Hindustan Paper Corporation. Besides Bengal Paper Mill Private Ltd. is also trying to set up another paper mill at the North Cachar Hill District. In 1981, total production of paper in Assam was 14 thousand metric tonnes. But since then the total production of paper in Assam started to decline particularly after the closure of Ashok Paper Mill at Jogighopa and it reached to only 0.5 thousand metric tonne in 1983. Moreover, the two paper mill run by HPC in Assam are also struggling for survival.

Although the Jagiroad Paper Mill of HPC was set up with a capacity of 300 tonnes per day, but due to various problems, the mill was producing only 230 tonne per day. During the past few years, the mill had a capacity of utilization of just 55 percent but presently this had been improved to 70 percent. Accordingly total production of paper in this Jagiroad Paper Mill has also increased from 57,544 MT in 1991-92 to 72,000 MT in 1994-95. This paper mill is still running under loss. It is expected that once the mill could reach the mandatory 80 percent production mark, it would start making profit. Recently, the Government of Assam has signed a memorandum of understanding (MOU) with Sanghi Group of Industries, Hyderabad for the revival of sick Ashok Paper Mill at Jogighopa. In the mean time the renovation work of the mill has also been started.

Renovation of Ashok Paper Mill :

After 13 years, Sanghi Textile Limited, a Hyderabad based private business house, came forward to take over the mill by signing a MOU on a lease contract for 25 years. On April 1, 1995 the Sanghi Textile Limited (STL) shouldered the responsibility of bringing the mills back on the rails. Ultimately, with the untiring efforts of STL team, the mill became operational after a prolong gap of 13 years. After remaining idle for a period of 13 years, the machines became useless and needed major renovation and replacement. The three boilers are modified and are brought back to operational level.

After the overhauling of the major parts, the production of paper mill had been restarted from November 1, 1996 to a tune of 50 to 60 metric Tonnes (MT) of paper per day. The STL management has planned to increase the production phase by phase and the final target is 110-120 MT of paper per day and 30 MT of pulp-sheet per day.

Although the expansion programmes was progressing smoothly, but suddenly the Sanghi Textiles Ltd has declared ‘Lock out’ in its Ashok Paper Mill at Joggighopa with effect from 6 A.M. of May 2, 1997 following the strike resorted by the workmen resulting stoppage of operator of the entire unit. This is really a setback for the APM, when the paper mill was revived after a stalemate of 13 years. Thus immediate steps must be taken by all concerned to reopen the mill as soon as possible.

Fertiliser Industry of Assam

For the proper utilisation of Natural Gas at Naharkatiya Gas, Utilisation Committee of Government of India permitted to establish one fertiliser plant at Namrup on the basis of natural gas available at Naharkatiya oil field of Assam just after that Namrup Fertiliser Plant was established in Assam. This is a public sector plant under the control of Hindustan Fertiliser Corporation Limited (HFCL). The commercial production of this plant started in March, 1965. In the initial stage the plant was expected to produce 50,000 tonnes of Urea and 50,000 tonnes of Ammonium sulphate. In 1970 this plant produced 27.5 thousand metric ton of Urea and 60.5 thousand metric ton of Ammonium sulphate. Later, to increase the production of fertiliser Plant Assam Gas Company set up another pipeline from Moran Gas grid to Namrup in order to supply necessary amount of gas to this fertiliser plant. Due to this, the production capacity of Ammonium sulphate by this Namrup Fertiliser Plant was increased by nearly three times: At present the total production capacity of this fertiliser plant is 16.7 million metric tonnes of Urea and 304 million metric tonnes of Ammonium sulphate. But the total production of fertiliser in Assam has gradually declined from 31.6 thousand metric tonnes in 1992 to 12.9 thousand metric tonnes in 1994.

The giant gas based Hindustan Fertilizer Corporation Limited (HFCL), Namrup Unit, once the pride of Assam, is on the verge of total collapse with its last working unit, Namrup III, virtually gasping for every cubic metre of natural gas to its self functioning. The Namrup III, set up with a cost of Rs. 285.55 crore, and which began commercial production on October 1, 1987 is today running at a minimum load of 60 to 70 percent due to a severe natural gas crisis, which has been on the rise since June 1987. The operation of the other two units Namrup I and II had to be suspended in 1986 and 1993 respectively for the same reasons.

The Namrup plant was established on the basis of an assurance by Oil India Limited (OIL) to supply required amount of gas to the extent of 1.76 million metric standard cubic metres (MMSCMD) per day from its Naharkatiya and Moran field. But much to the surprise of all concerned, OIL started to reduce the pressure and reached the level of 0.05 MMSCMD during 1992-93. This has resulted in shutdown of the production of urea and ammonium sulphate in Namrup I, built at a cost of Rs. 24.26 crore. Shortly after, the second unit had to shut down after the total gas shortage raised to 0.70 MMSCMD which was the required pressure for this unit.

The gas supply agency OIL and GAIL has also lowered its pressure from the assured amount of 0.45 MMSCMD to 0.39 MMSCMD in August 1994, resulting in shutdown of Namrup II which could not be restarted after a prolonged suspension of operation.

But as the demand supply gap of gas remained wide, the high powered  Task Force intervened in 1995 to sort out the crisis. But all these remain in vain. In January 1996, total amount of gas supplied by OIL and GAIL remained at 1.25 MMSCMD which was of no help for any of the three units as the requirement of plant I and II alone was 1.35 MMSCMD at full load. It is observed that unless the required amount of 2.21 MMSCMD of gas are met, the three plants of Namrup will fail to survive.

It is really a very sad situation where on the one hand, a huge number of gas is being flared up by the ONGCL and OIL at their oil-fields and on the other the gas-based fertiliser unit of Namrup is facing an imminent closure due to scarcity of gas supply. Under such a situation, proposals are mooted from different corners to set up a National Council for Oil Development headed by the Union Peroleum Minister and comprising Ministerial and company representatives from all the oil-producing states. However it remains to be seen whether the proposals would to acceded to by the centre as it would mean giving up its proprietary rights over the oil and gas. The same can be said of the demand that the State Government should have proper representation on the boards of OIL and ONGCL as well as the plan to introduce a law by which the State Government would have adequate control and say over its natural resources.

Enough harm has already been done to HFCL plant at Namrup by OIL and ONGCL by cutting down repeatedly the supply of gas, causing in shut-down of its first two units and the third one is gasping for every cubic metre of gas.

Under such a situation, formation of such a council would result in transparency over the availabilty of gas and would also result in rational utilisation of oil and gas and maximum capacity utilisation of all existing gas and oil based industrial units lying within the State’s territory.

Jute Industry of Assam

Assam is one of the famous state of India in respect of Jute production. Every year a good quantity of raw jute is produced in the Nagaon, Goalpara, Barpeta and Darrang Districts of Assam. Previously as there was no jute mill in Assam the whole amount of raw jute produced in Assam were exported to Calcutta. As there was sufficient demand for various jute products viz., gunny bag, rope etc. in Assam, Co-operative Jute Mill was established at Silghat of Nagaon district. In 1970 this mill started its commercial production. In 1971-72 this jute mill produced 729 tonnes of jute products. After that total production of this jute mill was increased to 4299 tonnes in 1979 and then to 5951 tonnes in 1981. Total production of jute products has further increased to 6 thousand tonnes in 1982 and then it declined to 5.0 thousand tonnes in 1994. At present Assam is regularly exporting about one million tonne of raw jute per annum to Calcutta.

In the mean time the Government of Assam has laid foundation stone for two jute Mills, one at Mangaldoi and another at Barpeta area. The jute mill of Mangaldoi area will be established at Dalgaon under the co-operative sector. In December, 1994, the AIDC has set up another Jute mill in Assam.

It is really a matter of pity that Assam in spite of being the second largest jute producing state in India has not been able to draw sustenance from development and diversification of jute products. About 70 percent of total jute produced in Assam is purchased for processing outside the state. Unfortunately, the State’s efforts for starting and operating jute mills have not been a happy experience, in spite of having a good potential for the same.

At a time when Assam has been making endeavours for promoting industrial development and investment, jute holds a promise which can be translated into a reality provided private entrepreneurship  developed by various entrepreneur assistance schemes introduced by National Centre for Jute Diversification (NCJD).

Sugar Mill of Assam

Among the various districts of Assam a good amount sugar cane farming is done at Kamrup and Sibsagar district. At present there is only one sugar mill at Barua Bamungaon of Golaghat district. The commercial production of this sugar mill started in 1958. This mill has the capacity to press 320 quintals of sugar cane daily. In 1959-60, the total production of sugar by this mill was 48,000 maunds. The major problem of this mill is that it has to collect sugarcane from far flung areas. However, sugar cane cultivation is gradually being extended at good rate in the Golaghat District. Total authorised capital of the Assam Co-operative sugar Mill Limited of Barua Bamungaon is Rs. 2 crore and the working capital of this mill is Rs. 40 lakhs. Total share of the Government of Assam is to the extent of Rs. 27 lakhs. This mill has generated employment opportunities to nearly 1000 persons.

Considering the bright prospect for the growth of sugar industry, the foundation stone of another sugar mill was established in 1971 at Ratabari in Cachar district of Assam. This sugar mill is having the capacity to press 1250 tonnes of sugarcane per day. This mill had started its commercial production and soon after became sick and had to be closed down in its initial stage. In 1986, another co-operative sugar mill was started at Kamrup in Nagaon district. During the Fifth Five Year Plan, the Government of Assam had decided to establish another 6 sugar mills in Assam under the public sector. With that intention it was proposed to set up a separate corporation to meet this purpose. But the work could not proceed much in this regard. In 1982, total production of sugar in Assam was 12 thousand metric tonnes and the total number of sugar mills in Assam was 3. After that, total production of sugar in Assam declined to 6 thousand metric tonnes in 1989 and then in 1991 it declined further to 1.5 thousand metric tonnes. In the mean time, the Central Government sent a Expert Committee to study the problems of these two sick sugar mills of Assam and the committee has suggested certain measures for the revival of these sick sugar mills.

Match Industry of Assam

In 1925. one Swedish industrialist established one match factory at Dhubri of Assam. Initially the match factory was known as Assam Match Company. The name of the company is now changed to "WIMCO". about 7 percent of the total match produced in India is being produced by this company. At present, the company has been modernised. In the Cachar district of Assam, another match factory is established. In 1982, total production of match was 6 million gross boxes. In 1994, total production of match has declined gradually to 4.5 million Boxes. In the forests of Assam a good quantity of raw materials is available for the production of matches. At Bijni of Bongaigaon district one match splint factory was established for the production of match sticks. Further, it is expected that more match factory will be developed in Assam very soon.

Cement Industry of Assam

Assam Cement Company was established with the intention to establish and develop cement industry in Assam. The State Government contributed a good amount towards the share capital of this company. The Assam Cement Company established its first cement factory at Cherrapunjee. This is the first cement project in the North-East India. This factory has total production capacity of 68,000 tonnes of cement per annum. Now this factory is lying within the state of Meghalaya.

Cement corporation of India has established another cement factory at Bokajan of Karbi Anglong district. Total production of cement of the Bokajan cement factory was 110 thousand metric tonnes in 1978 and then the production increased to 196 thousand metric tonnes in 1981.

Total production of cement in Assam which was 129 thousand metric tonnes (MT) in 1980, suddenly increased to 197 thousand MT in 1981 and then it started to decline to 169 thousand MT in 1985 and to 156 thousand MT in 1988. With the inclusion of few mini cement plants, total production of cement in Assam gradually started to increase and reached the level of 178.8 thousand MT in 1991 and then to 275 thousand MT in 1994.

Considering the huge reserve of limestone available in the Karbi Anglong and North Cachar Hill districts of Assam some more cement production units have been set up in Assam in recent years. Besides Bokajan cement factory of CCI, the other mini and micro cement production units of Assam include- Vinay Cements Ltd. (Umrangshu), NECL (Umrangshu), Prag Shiv Cements (Sonapur). Moreover, two VSK Cement plants of 7500 TPA capacity were set up at Guwahati and Lanka (Nagaon).

Development Efforts : Considering the huge potential for the development of cement industry in Assam along with its growing demand, the Government agencies are trying to set more mini cement plant in the state. A few cement plants and paper grade lime plants have already been proposed on the basis of raw materials to be made available by the Assam Mineral Development Corporation Ltd.

The Regional Research Laboratory (RRL), Jorhat has developed Vertical Shaft Kiln (VSK) technology for production of ordinary portland cement, which has been commercially accepted in our country. RRL, Jorhat has developed the VSK technology for different plant capacities ranging from 6000 TPA to 30,000 TPA. The cement plants based on this VSK technology are low capital intensive having a short gestation period resulting in quick return on investment. Two such VSK cement plants have already been set up in Assam at Guwahati and Lanka. Again the RRL, Jorhat has entered into an agreement for a turnkey consultancy assignment worth Rs. 50 lakhs with Karbi Anglong Chemicals Limited (KACL) for a 30,000 TPA VSK Cement plant at Karbi Anglong in Assam.

Accordingly, the Karbi Anglong Chemicals Ltd. is going to establish a mini cement plant in the village Amlokhi in Diphu. The project is of a 100 TPD cement plant based on VSK technology of RRL., Jorhat. The Assam Hills Small Industries Development Corporation Ltd. is also the holder of equities of the project on direct fund participation. Means of finance has been arranged from IDBI, promoter shares, Assam Government subsidy and bank borrowing for working capital. The total cost of the project comes around Rs. 8.67 crores.

Moreover, a large cement plant of one million tonne per annum capacity is also proposed by the AIDC Ltd. in joint sector with private entrepreneurs, at N.C. Hills in Assam and the work of which has already started.

Production of Cement in the North Eastern Region

The North-Eastern region is having a rich potential for the development of cement industry. Side by side, the demand for cement is also increasing at a fast rate in the entire north-eastern region. The major cement production industrial units in Assam includes-Bokajan Cement Factory under CCI, MCCL at Cherrapunji (Meghalaya), Vinay Cements Ltd. and NECL at Umrangshu of N.C. Hills district of Assam, Virgo Cements Ltd. at Garo Hills, Prag Shiv Cements at Sonapur and VSK Cement Plants at Guwahati and Lanka.

In spite of the fact that 10-odd cement industrial units are on production in the entire north-eastern region at present and 3 more are to begin commercial production shortly, there is a standing shortfall of 3.70 lakh tonnes of cement in the north-eastern states as upto 1993. In 1994 the gap between the demand and supply ratio went far more. Total demand for cemant in the entire north eastern region is projected at 10 lakh MT and all the cement producing units could contribute hardly 3 lakh tonnes. The remaining 7 lakh MT is met by the cement manufacturing units from outside the north-east.

Under the present demand supply scenario of cement in the north-eastern region, is now-a-days facing frequent scarcity in the supply of cement due to non-availability of cement from other parts of the country. Thus considering the huge demand-supply gap and sound development potential for cement projects, the North-Eastern states must take adequate steps to set up more medium mini and micro cement producing units within the region.

Coal Industry in Assam

Coal is one of the major mineral resources of Assam. Coal was first discovered in Assam in 1925. A good quantity of coal is available at Makum, Margherita, Ledo, Nazira, Lanka Daman, Jaipur and Namdam area of Assam. The Assam coal has a good demand for railway, water transport, tea gardens, cement plants and for domestic uses. Thermal electricity can also be generated with the help of these coal. Total production of coal has increased from 5.75 lakh tonnes in 1980 to 9.82 tonnes in 1991 and then to 12.92 lakh tonnes in 1994. The coal fields of Assam are under the control of Coal India Ltd. The sulphur content of Assam coal is quite high.

Shellac Industry of Assam

Shellac Industry of Assam was established at Chaparmukh, Nagaon district. A good amount of shellac would be produced in Assam and the major portion of this shellac would be utilised at the shellac industry of Chaparmukh. In future, this industry has a very good prospect. There is a good demand for shellac products in the foreign countries like America, Great Britain etc. With the help of these shellac, gramaphone record, French Polish, Lekars, electric insulator etc. are being produced in Assam.

Leather Industry of Assam

A good amount of raw leather is available in Assam. Thus a few tannery factory could be established in Assam. On the basis of these tannery, Assam could develop a good number of shoe making factory. Although there are some small tannneries in Assam but there is no factory for producing shoes. Assam is regularly exporting all these leather to other states of India. There is a small unit of tannery processing industry in existence at Jorhat of Assam. But its actiity is centred round processing of raw materials only which it supply outside the state. At present there are 2 leather and leather products factories in Assam.

Recently, the East India Tannery Co-operative Society Limited at Badarbhita near Barpeta road township of Assam has undertaken a project of a multi-million worth of tannery, the first of its kind in entire NE region. Total investment of this project would be about Rs. 153 lakh. The tannery society of Barpeta road will not only process the raw material but also convert them into finished products. In the mean time, 10 bighas of land has already been acquired and the construction work is going on in full swing. Out of the total investment of Rs. 153 lakh, 60 percent will be met by Assam Financial Corporation, Rs. 62 lakh by the Apex Bank and Rs. 32 lakh will be given by the State Government and the remaining Rs. 20 lakh will come from ownership shares.

Moreover, there is a proposal to set up a tannery at N.C. Hills in Assam. These units will supplement the growth of a viable leather industry in Assam like packing and utility consumer materials.

Other Factory Establishments

Besides these major industries developed in Assam, a good number of medium and small scale industrial units are also operating within the state in scattered manner. These includes- two medium sized railway workshops at Bongaigaon and Dibrugarh, and engineering workshop at Tinsukia, aluminium ware factories at Bongaigaon and Karimganj, Assam Carbon Limited, India Carbon Limited, Spun Silk Mills, Cotton Spinning Mills, Assam Syntex Limited, Tihu, The Prag Bosimi Synthetics Ltd., Fruit Processing Plants, Hard Board Factory, Jax board factory, Glass factory, Vegetable (Vanaspati) factory of STATFED at Amingaon, Assam Asbestos at Bonda, Assam Ispat at Amingaon, Sawing Mills, Flour Mills, Motor repairing and engineering workshops etc.

Assam Steel Plant (SAIL) : The Authority of India Limited (SAIL) has finally decided to set up a steel plant in Assam. The name of plant is finalised as "Assam Steel Plant". The first phase of this plant will cost Rs. 44 crore which will manufature 40,000 tonnes of galvanised plain sheets as well as galvanised corrugated sheets. The foundation of this project has already been laid on 23rd March 1997, at Dagaon in Kamrup district. This plant will go a long way in filling the demand-gap for galvanised corrugated sheets in the north-eastern region.

Although the project was initially stated to cost around Rs. 200 crore, that will become a reality only after the first phase started production. The initial plant capacity of 40,000 tonnes per annum of galvanised sheets would go up to 1,00,000 TPA in due course. The plant will not only contribute to the economic and infrastructural development of the seven states but also open up new avenues for employment. The plant is cited to have direct man-power requirement of 231persons besides having the potential to generate indirect employment for 1,000 other persons.

At present, there are only two galvanising units operating in the North-eastern region which together have a total capacity of 40,000 tonnes with a projected availabilty of only 32,000 tonnes. Fulfilling the need for a third plant, SAIL is setting up its Assam STEEL Plant at Dagaon in Kamrup district.

Industrial Estates : Moreover, the Industries Department of Assam has also developed 17 industrial estates in different parts of the state for the development of small scale industries. In 1993-94, total number of sheds constructed in these estates was 279, out of which 255 sheds were allotted and again out of this 164 sheds were functioning. In the mean time, 4 new industrial estates are also being constructed by the Govt.

Growth Centres : Again for the promotion and development of small scale (SSI) and tiny industrial units the State Industries Department has so far opened 7 Growth Centres in the state, the location of which being at Barpeta, Goalpara, Duliajan, Kalapahar, Bonda, Lilabari and Sariharjan. In 1993-94, total number of sheds constructed and allotted in these centres stood at 52 and 46 respectively, However, of the 42 number of sheds occupied till 1993-94, only 31 sheds were actually functioning.

Thus with the development of existing industries alongwith the development of infrastructural facilities in the state, it can expected that Assam will be able to develop a powerful industrial sector, provided a sound socio-political atmosphere prevails in the state.

Over the last couple of years, a good number of large and medium sector industries have been set up in the state and a few more are in the offing. Some such projects under various stages of implementation include : Industrial Papers (Assam) Ltd. at Ding, Polyester Filament Yarn project at Sipajhar, Textile Processing House at Nalbari, Cement Project at Amlokhi near Diphu, Tannery project near Barpeta Road and Galvanised Plain and corrugated sheet project at Changsari. Moreover, the fourth oil refinery at Numaligarh and the massive Gas-cum-Naphtha Cracker project in the state, when materialised, are likely to usher in a new era of industrial development in Assam in near future.

Prospect of Diversification of Industries in Assam

Industrial development in Assam is largely confined to tea, jute, and oil. While other states have a more diversifed industrial structures, Assam’s industrial sector is still dominated by "miscelleneous food products"  the most important of the group being tea factories which alone account for more than 50 percent of the net output from manufacturing industries of the state. But the state is possessing various natural resources which can be utilised for the diversification of industries in Assam. Yet the state could not achieve a diversified industrial development in the following areas :

(a) Forest-Based industry- This includes paper and pulp industry, plywood industry, match industry, tanning and finished leather goods industry, hard board industry, furniture and construction etc.

(b) Petro-chemicals based industry- This includes polyester textile industry, plastic, pesticides, photo film industry, resins, PVC compounds, detergents etc.

(c) Mineral-based industries- This group covers Coal processing plant, potteries and Cement industry etc.

(d) Agro-base-industry- This includes growth of sugar, jute, medicines and chemical industry and expansion of tea based industry.

(e) Textile industry- This includes expansion of Eri, Muga, silk industry and establishment of polyester fibre from B.R.P.L.

(f) Small scale industry-This can cover a wide area covering handloom, bell-metal, match, hand made paper, soap, candle, straw, fruit processing, leather goods, chemicals, garments, bread, biscuits, pencils, ropes, steel trunk, exercise books, surgical bandage, plug pins, plug socket, tyres and tubes, cement pipes, garment, spices, carpentry, jewellery etc.

The development of above mentioned industries naturally demands active interest from the Central sector, active intiative from the State sector and active participation of the private sector.

The State Government is also patronising establishment of various industries in the private sector. Besides, the State Government is also being increasingly involved in undertaking many industrial ventures of its own. As a result of these efforts, a few important resource and demand industries have come up in the State in the recent past and a few are in the offing. The process of industrial development in the State is expected to get further fillip in near future with the completion of a few diversified range of industries being set up under public and Co-operative sectors.

Since the last few years, a steady growth is observed in the number of registered factories. Total number of registered factories in the State which was 1604 in 1971 increased to 2670 in 1991. Tea factories account for about one-fourth of the total registered factories in the State. At present, only 8 factories are there in the state which employ 1000 or more workers. The product-wise classification of the factories can throw some light about the present status of diversification of industries in the State. There are Tea factories numbering 570 which account for the highest number of registered factories in the State followed by saw mills and plywood factories (461), rice/flour/oil mills (419). Among the large and medium industries, there are ten oil and oil products industry, 7 Cement and Cement product factory, 1 Fertilizer factory, 24 Cotton and Cotton products industry, 3 sugar mills, 4 Jute mills, 2 Bicycle factory, 2 Oxygen units, 3 Paper mills, 3 Steel and Steel products unit, 1 Rods & Wire Unit, 22 Wood products factories and 10 wheat products factories. Total numberof large and medium size factories in Assam, as on 31st March, 1994, was 116.

The Regional Laboratory at Jorhat one of the chain national laboratories has started functioning in 1994. The charter of laboratory includes development of technology for effective utilisation of immense natural resources of the north-eastern region and to undertake long as well as short range problems which would help in the economic development and industrialisation of the region. This Laboratory with its R&D ativities, has identified a number of projects along with processes, which could be developed for effective utilization of various raw materrials available in this region. The identified projects are mentioned below :

(a) Chemical Industries :

(I) Phyto Chemicals : Medicinal and economic Plants which include plants like Bassil, Citronella, Eucalyptus Citriodora, Japanese unit, Lemon grass, paper mint-essence oil-mostly needed in perfumery pharmaceuticals and cosmetic industries.

(ii) Agro-chemicals-Which includes pesticides, furfural and organic chemical.

(iii) Inorganic and Mineral based chemical projects- Which includes project like-Mini Cement plant with the capacity of 35 to 100 tonnes per day, oil-well cement additives (required for drilling operation in oil exploration), cement-like product from paddy husk ash. Molecule sieves from paddy husk, silice gel, silica sol and potassium silicate, water filter candles, petro-chemicals from petroleum waste.

(b) Utilisation of cellulosic raw materials and Recycling of waste products : This includes the projects for production of matrix poard, Low cost roofing sheet, paper Board and paper like carbon-less copy paper.

(c) Utilisation of coal in the N.E. Region : Which includes production of Carbon Blacks. Fluidised Bed combustion for power generation.

Thus the Regional Research Laboratory, Jorhat has identified a long list of projects along with the preparation of project design and process. On the basis of these designs and processes, a good number of a small and medium scale industry could be developed in Assam. Already some of these projects have been selected in the private sector for its development on the basis of raw materials available in Assam. If all these projects could be developed in Assam within the shortest possible time, a wide range industrial diversification in Assam would be possible soon.

Development efforts :

With the intention to accelerate the process of industrial development and diversification of the State. The State Government announced a package of incentives so as to attract investments, promote the establishment of new industries and to facilitate the expansion and diversification of existing industries in Assam. The package of incentives offered consists of mainly :

(i) Contribution towards preparation of feasibility reports.

(ii) Subsidy on industrial housing.

(iii) Concessional power tariff for new industries and for existing units undertaking expansion and diversification.

(iv) Sales tax exemption on purchase of raw materials and sale of finished goods for the first five years of Commercial production.

(v) Capital investment subsidy on the line of central investment subsidy scheme in the non declared backward district.

(vi) Allotment of developed lands in industrial areas etc. This package incentives comes into effect since Oct.’ 1982 and those were further included in the Industrial Policy (1991) of Assam.

The State Government of Assam has set up a host of organisations for carrying out the task of industrial development Corporation, The Assam Small Industrial Development Corporation. The Assam Hills Small Industries Development Corporation, The Assam Industrial Promotion and Infrastructure Corporation. The Assam State Textile Corporation (AIDC) has set up three industrial projects under the public sector in the State viz ; the Assam Conductors and Tubes Ltd. and the Chemical units of Associated Industries(Assam) Ltd. have also been revived and taken over by the Corporation. Other projects undertaken by AIDC and which are either commissioned or under implementation are : a 17,280 spindle capacity polyester blended yarn spinning mill Nathkuchi (Tihu), a 100 TPD Methanol plant (Expansion project of APL) with foreign know-how, a cigarette factory in Joint sector, a 7,200 TPA phthalic Anhydride plant based on raw materials from BRPL with foreign know-how and 200 TPD Mini Cement Plant at Umrangshu (N.C. Hills district). The Assam State Textile Corporation Ltd. is designed for setting up spinning Mills and other textile industries in the State. The corporation was engaged for setting up spinning mill of 15,552 spindle capacity at Noapara in the district of Bongaigaon and the project is now transferred to a private sector company.

The Assam Small Industries Development Corporation (ASIDC) is also actively engaged in building up small scale industrial base in the State and have opened a number of small scale units under its own management. Besides, the Corporation is also rendering services for the promotion of various schemes such as seed money assistance scheme. Scheduled caste/tribe development scheme, marketing assistance scheme, raw materials scheme, stipendary training programme etc.

Besides, after announcement of new industrial policy by the Central Government in July 1991, Assam Government introduced various schemes in order to accelerate the industrial development in the State through the development of local-resource-based industries. Besides providing incentives to new entrepreneurs for attracting them to establish new industrial units, the State Government has also undertaken various measures to develop infrastructural facilities in the state.

Initially for the implementation of various schemes, Assam Government made provision of Rs. 250 lakh in 1992-93. Again the Eighth Five Year Plan has made provision for Rs. 1,200 lakh for the industrial development in Assam.

Under the new industrial policy, 1991, various schemes undertaken by the State Government includes : equity participation in the industrial projects of the Government assisted sector, sales tax exemption, advancing industrial subsidy, providing factory sheds to small industrial units, development of human resources, revival of sick industries, subsidy on electricity bill, investment of Government capital and reduction in the rate of State Finance tax.

In 1990-91, in total 2746 small scale industrial units were set up which have generated additional employment potential for 11,000 persons. On the other hand, in this year 2,201 hand trade and cottage industries were set up. Moreover, considering the increasing demand for readymade factory sheds and infrastructural facilities, the Government of Assam set up 4 Industrial Estates, i.e., one each at Digboi and Dimoh and the other two at Guwahati.

Due to giving increasing priority on large and medium scale industrial units in the Eighth Plan, in the mean time about 114 such industrial units were set up in the private and co-operative sector.

Moreover, responsibility to create market of 15 items produced by local small industrial units of Assam has been given to Assam Small Industrial Development Corporation (ASIDC). The Assam Industrial Development Corporation (AIDC) has been playing an important role to set up large and medium scale industrial projects in Assam and it set up a cement project at Umrangshu on the basis of limestone reserve of North Cachar hills at the cost of Rs. 2.40 crores. Moreover, by utilising 1.5 lakh tonnes of cement grade limestone and paper grade lime, some mini cement industrial units will also be set up.

In the mean time, the Central Government has taken a decision to set up a Gas-cum-Naphtha Cracker project in Assam. The estimated amount of expenditure of this project is fixed at Rs. 2,118.30 crores and it will generate employment directly to the extent of 2000 persons. AIDC with the help of private sector company (Reliance Group) will set up this project.

In order to set up large and medium scale industrial unit, AIDC is playing an important role through subsidised term loan and equity participation scheme. In the mean time, the Corporation (AIDC) has set up successfully the Prag-Bosimi Synthetics Limited in the joint sector near Guwahati at the total investment of Rs. 330 crores. On the basis of raw materials available from BRPL, this plant having the production capacity of 25,000 TPA has started producing Polyester Filament Yarn (PFY) and Partially Oriented Yarn (POY), which will give a boost to the vast weaving population of Assam.

In the mean time, it has become imperative for the State to embark upon the high road of liberalisation, privatisation and globalisation. Accordingly, on 29th March, 1997 the State Government introduced its New Industrial Policy, 1997 with a great promise for adopting a smooth path for rapid industrialisation in the State. The new industrial policy provide an effective thrust for "expeditious promotion and growth of all industries with a view to creating a strong industrial base and employment opportunities in various directions".

Small scale and Village Industries of Assam

Importance

In a backward State like Assam, Small scale industries have a big role to play. There is ample scope for the development of small industries on the basis of factor endowments available in the state. This development of small industries will not mobilise local resources but will also increase income and generate employment opportunities. Cottage and small industries have great importance in a agrarian economy like Assam. Rural agricultural families of the state are getting subsidiary occupation from these village industries. As these industries require minimum capital and ordinary tools and implements, thus rural families can run these industries.

At the end of December, 1995 Assam had a total of 18,637 registered small scale industrial units (i.e. units registered with the Diectorate of Industries, Assam) with an employment of approximately 84 thousand persons. These included industries engaged in manufacturing various products such as tea machinery, commercial and tea chest plywood, building materials, chemicals, textile, transport equipment, food manufacturing, printing, publishing etc.

The village and cottage industries include handloom weaving, rope-making brass and bell-metal, cane and bamboo work, gold and silver work etc. these industries provide subsidiary employment to good number of people in the rural areas. Some of these industries are organised and managed by artisans and Craftsman.

With the growth and development of these Cottage and village industries, many poor families have been able to raise their income and improve their standard of living. This subsidiary occupation also promote the habits of thrift and investment among the poor families in the rural areas of the state. Cottage industries of Assam are producing different types of artistic goods, e.g., muga and silk products which have wide market throughout the country.

In Assam, there is ample scope for the expansion of small and village industries. These industries would be able to produce different types of consumer goods to meet the demand for both the rural urban people of the state.

Growth of small industries

With the development of infrastructural facilities in the State, there is a gradual growth of small industries both in its number and sizes. In 1951, there were only 94 registered factories in Assam. The number of factories again increased to 146 in 1958. Total number of workers employed in these factories of Assam was also increased from 4,908 in 1951 to 5,320 in 1958.

A survey of small industries in the unorganised industrial sector of the state, undertaken by the Directorate of Economics and statistics, Assam, revealed that the number of small industrial units in the urban areas of the state stood at 91 in 1971-72. These small industrial units provided employment of 6,286 persons. These industrial units were in the production group of cotton textiles, Silk, Bakery, Wooden furnitures, Letter Press, Biri, Saw milling, Soap, welding, Bell metal, Motor vehicle repairing. Among these industries, textile manufacturing industry had the largest number of units (365 units) followed by manufacture of transport equipments (104 units).

A Census of small scale industries, conducted in 1973-74, shows that there were only 1984 registered units in Assam in 1975-76 and the largest number were accounted for by metal products followed by units engaged in manufacture of timber product.

At the end of March, 1978, total number of small industries registered with the Directorate of industries of the State Government stood at 7562 units. These include industries engaged in manufacturing various products like tea machinery, commercial and tea chest, Plywood, building materials, chemicals etc. Again, at the end of December, 1994, Assam had a total of 17,048 registered small scale industrial units with an employment of approximately 84 thousand persons. A total of 1751 units were registered with the Directorate of Industries, Assam during 1994 as against 2310 units registered during 1993. This shows the trend in the growth of small industries in Assam. Classification of these small industries shows that in 1984 there were 2350 Agro-base industrial units, 1290 Forest-base industrial units, 2633 Engineering base industrial units, 1275 chemical base industial units, 1326 Textile based industrial units and 8079 miscelleneous based industrial units in the State. After that, at the end of December, 1995, the total number of registerred small scale industrial units increased to 18,637.

With a view to promoting and developing a chain of small industries in the State, the programme of establishment of Industrial Estates has been taken up by the State Government. These Estates will provide infrastructural estate have been set up. These are located at Guwahati, Nalbari, New-Bongaigaon, Dhekiajuli, Nagaon, Jorhat, Sibsagar, Tinsukia and Badarpur, Lahowal, Bihupuria, Gauripur, Bokajan, Digboi, Dimow and two more at Guwahati. These industrial estates have provided a total of 269 sheds for setting up small scale units, out of which 255 sheds were in occupation till March, 1994. However, only 164 factory sheds were actually functioning on that date.

Further, a number of growth centres have also been identified which aim at reduction or elimination of time lag between the date of completion of the factory shed and coming up of an industrial unit through provision of infrastructural facilities like road, power etc. Upto March 1994, the State had seven such Centres, one each at Kalapahar (Guwahati), Barpeta, Goalpara, Duliajan, Bonda, Lilabari and Sariharjan under the management of State’s Industry Department. A total of 52 sheds were provided by these centres upto that date, of which 42 sheds were in occupation.

Besides, in February 1985,the Government of Assam had decided to develop one industrial area in every district headquarters in the Seventh Plan Period. This has no doubt, created a congenial atmosphere for the successful growth of small industries in the State.

During the Seventh Plan, about 8,000 small industrial units were set up in Assam.

After that, in August, 1991 the Central Government introduced a special New Small Sector Industrial Policy. On the basis of this policy, the Government of Assam formulated and announced its own industrial policy, 1991. In this policy, special measures were undertaken to set up various types of Khadi and village industries, small, tiny and ancillary industries.

As the State Industrial Policy, 1991 has failed to initiate the process of industrialisation in the State under the regime of economic reforms, thus the new AGP Government has introduced its New Industrial Policy, 1997 to embark upon the high road of liberalisation, privatisation and globalization with a great promise for adopting a smooth path for rapid industrialisation in the state.

Industrial Growth Centres :

In the mean time, the union Ministry of Industry has approved three industrial growth Centres in Assam in February 1997, for the first time and the first of which will be set up in the Sonitpur district. A total outlay of Rs. 30 crore has been sanctioned for the entire Sonitpur project to be developed and completed during the Ninth Five Already 1500 bighas of land have been handed over for this industrial growth centre. The proposed industrial growth centre would greatly benefit and brighten the prospect of industrialisation of this most backward region in the north bank of Brahmaputra. The centre will act as the agency to facilitate provision of all kinds of requirement for setting up various small and medium industries in the complex. Assistance will be given for preparation of investment and proposals, banking and financial support, infrastructure facilities like electricity, telecommunication, transport etc. and also for the development of technical and managerial skills. The centre is also expected to serve as a catalytic agent for the promotion of industries and business ventures outside the Balipara complex to feed the units in the centre and also in marketing their products.

Moreover, in order to advance financial assistance to small scale industries of Assam, the Assam Small Industries Development Bank of India (SIDBI) sanctioned loan to the extent of Rs. 75 crores in 1991-92 and 1992-93, out of which Rs. 65 crore has been disbursed. This bank has prepared a long term plan to assist the cottage and small industries of Assam in different manner.

Rural Industries Programme of SIDBI :

The Small Industries Development Bank of India (SIDBI) inaugurated the Regional Development Centre (RDC) Guwahati on March 16, 1996 for the development of small scale industries in the state.

A comprehension Rural Industries Programme (RIP) is currently being implemented in Assam by the SIDBI, together with ten other states in the country, which have been identified on the basis of the largest concentration of rural population below the poverty line. The programme aims at commercial exploitation of local resources in order to set up rural industries with the involvement of local institutions for effective co-ordination and implementation. Fund support is given to NGO’s for on lending to the rural poor as well as for generating employment for women under Mahila Vikash Nidhi. Besides, support is also given for conducting Entrepreneurship Development Programme (EDP) in rural areas. SIDBI has so far provided funds amounting to Rs. 258.28 lakh to 33 NGOs in the country which would help about 12000 rural people in their income generating activities.

Growth of Khadi and Village Industries

Khadi and Village Industries are playing a very important role in the economy of Assam. Different types of Khadi and Village industries are operating in the various parts of the State. As per information made available by the Khadi and Village Industries Board, Assam, a total of 660 bee keeping centres, 488 oil extraction centres, 2125 pottery centres, 177 hand pounding (rice processing) centres, 1476 gur and khandsari centres, 59 khadi (cotton & silk) production centres, 26 soap making centres, 15 cottage match and agarbatti factories, 180 footwear unit, 17 hand paper unit, 765 cane and bamboo centres and 44 gobar gas plants were in operation in the State during 1994-95. These Khadi and Village Industries provided employment to nearly 93 thousand persons. Following are the values of production by a few of these centres during 1994-95 : Bee keeping centres- Rs. 123.35 lakhs, oil extraction centres- Rs. 468.75 lakhs, pottery centres- Rs. 173.50 lakhs, gur and khandsari centres-Rs. 330.00 lakhs, Khadi production centers-Rs.122.81 lakhs and soap making centres Rs. 49.14 lakhs.

Total value of the production of Khadi and village industrial units under the Assam Khadi and Village Industries, Board has increased from Rs. 15.67 crores in 1989-90 to Rs. 20.98 crores in 1994-95. Total number of employment generated by these industrial units was 0.94 lakhs in 1994-95.

In the field of khadi and village industries, various schemes are under implementation in the State. For the development of handicrafts in the State "Common facility centre" have been initiated for red glazed pottery at Barpeta, brass-casting at Hajo, brass-bell metal at Sarthebari and dying of yarn at Soalkuchi. The Assam Khadi and Village Industries Board are running 20 training-cum-production centres in the State. Further, for the marketing of khadi and village industries goods, the board has been running 34 Khadi Bhandars in different commercial areas of the State.

The Khadi and Village Industries Commission (KVIC) has recently decided to set up a raw material bank in the north-eastern zone for storing cotton, eri muga etc. The raw material bank forms a part of the development strategy drawn up for the north-eastern zone to give a boost to KVIC activities in the NE region.

The KVIC has also proposes to set up a central "Vastragar" as well as central godown for village industries for extension on marketing assistance to tiny units.

The other measures undertaken for strengthening KVIC in the NE zone included introduction of special funding patterns for infrastructural facilities and managerial support, enlargement of organisational base for rapid implementation of activities by enlisting new institutions and setting up of mother units to feed small and weaker units by extending all input supports to viable institutions in the NE zone, out of which 38 are in Assam, one each in Meghalaya and 15 Mizoram, two in Arunachal Pradesh, four each in Nagaland and Tripura and in Manipur.

Handloom Sericulture and Weaving

Handloom, sericulture and weaving play an important role in the rural economy of Assam. The State is particularly famous for her variety of handloom products such as eri, muga and silk fabrics. It is worthy to mention here that almost every household in the rural areas of the State are connected with the weaving industry. Being a production and employment oriented industry, it can reshape the rural economy to a great extent. The State Government is taking this opportunity through the establishment of a number of eri-seed grainages, eri-concentration centres, sericulture farms. Tassar farms, muga farms, huge food plantation centres and mulberry silk farms etc. in different parts of the State.

The Sericulture Training Institute and the sericulture research station at titabar are the two institutions which are imparting training and undertaking research works on sericulture in the State. The Training Institute has continued to impart training to trainees not only from Assam but also the neighbouring states of the Region.

The handloom industry of Assam is well known for its quality and originality. It is estimated that there are more than 7 lakhs of handloom in the State which provides part time and full time employment to nearly 8 lakhs of people. It is also worth mentioning here that almost every household in the rural areas of the state are connected with the weaving industry. But only a small proportion of State’s 7 lakhs looms (estimated in 1974-76) are operated on commercial lines. A good number of these looms are operated mostly for self-utilisation.

The use of modern technology in the textile industry of Assam is far from being satisfactory. In order to revitalise the handloom sector, various schemes have been introduced which includes providing avenues for the production of quality fabrics, modernisation of looms, motivation of weavers for taking up the industry on commercial lines, extension of training facilities to artisans etc. During 1994-95 there were 263 Weaving Demonstration Circles under the supervision of the Directorate of Sericulture and Weaving, Assam, which covered a total of 7819 villages of the State. A total of 2.81 lakh part-time weavers and 26171 whole-time weavers were engaged through these circles during 1994-95, and the Directorate also distributed 7254 handlooms in different areas of the State.

Assam’s Handloom and Textile Industry which support nearly 20 lakh people both directly and indirectly is now facing a tough challenge. Massive irregularities, continued negligence and lack of forsightedness due to which this important industry which has still remained unorganized despite engaging nearly 10 percent of the total population of state, at least partially, have forced the industry towards its premature death. It may be mentioned that against a target of producing 155.50 million metric tonnes (MT) of clothes, the Handloom and Textile Industry could produce only 133.44 million MT of cloth in 1993-94 and Department has also failed miserably to supply adequate powerlooms ; and there are only 1372 powerlooms all over the state. Due to shortage of electricity, many industries like handloom and textile industry in Assam are now facing premature closure.

The department for last several years failed to supply the required quantity of yarn to the weavers the department requires 165.25 lakh kg. of cotton, 90,000 kg. of silk, 1.80 lakh kg. of Wool, 42,000 kg. of muga, 95,000 kg. of eri and15,000 kg. of other varieties of yarn every year. The industry is incurring losses due to failure to supply required quantity of yarn to the weavers in time.

In respect of sericulture, there are 389 institutions engaged by the Department of Sericulture for the development of eri, muga, mulberry and tasar, but it also a common fact that the silk industry of Assam has not progressed as expected. Assam, with about 2.70 lakh persons engaged in sericultural activities offers good scope for development and is also the major muga and eri silk production state in the country and enjoys monopoly in the production of muga silk. The Central Silk Board (CSB) has already ten institutions for the development of mulberry non-mulberry silk in Assam. The prominent among them are Regional Muga Research Station, Boko, Regional Sericulture Research Station, Titabar and a Muga Seed Development Project, Guwahati.

In the mean time, the state had developed some basic infrastructure for the production of different types of silk, i.e., muga, mulberry etc. In 1995-96, for the development of eri, the state has about 26 eri seed grainages, 91 eri concentration centres and 22 eri spinning units. For the production of muga, the State has 23 muga forms, 61 village grazing reserves and 15 muga reeling units and also for mulberry, the State has 12 mulberry farms, 102 collective mulberry gardens, five mulberry gardens and 27 reeling units. There are also 5 tasar centres in Assam.In the case of Sericulture, the State had 8,127 sericulture villages under the supervision of the Directorate of Sericulture & Weaving in 1994-95. These villages engaged nearly 1.28 lakh families in eri-culture. 28 thousand families in mugaculture and about 39 thousand families in pat-culture. In 1994-95, the production of silk yarn from the sericulture villages were of the order of 75,477 kg. of muga, 23,500 kg. of pat. Besides, the Directorate also maintains a number of sericulture farms, eriseed grainages, basic muga seed farms, eri-concentrations centres, reeling units etc. In 1988-89, total production of Raw Silk and silk yarn in Assam were 12.67 lakh kgs.

In order to activate the sericulture industry, the state Government had at the instance of Central Silk Board requested Agricultural Finance Corporation Ltd. to formulate the integrated sericulture development project for Assam, covering mulberry, muga and eri 1986. Though the report was submitted in 1987 but it could not be implemented due to administrative and other constraints. In view of the progress and developments that had taken place in sericulture industry during the liberalization era, a need was felt to update the report. The AFC prepared a fresh project report in 1994 and submitted the same in 1995. But the implementation process has not yet been started.

The project aims at increasing the production of eri, muga and mulberry over a period of 10 years from the present level of 75,416 tonnes to 2,75,777 tonnes and in terms of value, the value will increase by five fold i.e., from Rs. 23 crore to Rs. 108 crore. The total investment called for is Rs. 177 crore and the total employment generation will be 75,000 man years. The project, if implemented, will also improve the socio-economic condition of the people from the present yearly income level of Rs. 1,225 to Rs. 5,750 per family adopting sericulture and will also change the present practice of kitchen garden sericulture to commercial sericulture.

Thus considering the high potential and suitable environment for the development of sericulture industry, it is expected that concrete steps be taken by the concerned agencies to develop the sericulture industry in such a manner so that it can attain the commercial viability at its earliest.

Bell Metal Industry

Among the Cottage Industries of Assam the position of bell metal industry is next to handloom industry. Sarthebari of Barpeta district is the main Centre of this hereditary cottage industry. This is household industry where workers are mainly unpaid family members. The industry produces various types of utensils made of brass and bell metal and other decorative pieces with the help of simple traditional tools and equipments. But the industry has not been modernised due to want of finance and lack of technical know-how. This industry is facing competition from large scale bell metal, aluminium and stainless steel industries. There is no definite system for supplying raw materials to these industries at a reasonable price and also to supply cheap bank credit. Thus due to all these difficulties faced by this industry the very existence of this industry is at stake.

For the development of this bell metal industry one "Common facility service Centre" has been established at Sarthebari. This centre provides some modernised common facilities to these bell-metal artisans. Besides, the Khadi & Village Industries Board is also helping in marketing its product through their Khadi Bhandars established at various commercial areas of the state.

Besides, the Small Industries Development Bank of India (SIDBI) has decided to boost the bell metal industry at Hajo. The Bank has plans to help improve the design, production and marketing of the bell metal products in big way. For this purpose artisans will be brought from Moradabad. The entire cost will be borne by the SIDBI. In 1993-94, this modernisation works has already been started.

North East Handloom and Handicrafts Development Corporation (NEHHDC)

The North East Handloom and Handicrafts Development Corporation (NEHHDC) has been playing an important role in the promotion and growth of handloom and handicrafts industry of Assam and other North-eastern states. This corporation was established in 1977. This corporation offers the facility of -(a) supply of raw materials, (b) advancing working capital and (c) marketing arrangements to handloom and hanicrafts industrial units of this region. With the patronage of this corporation, the handloom products of Assam and North-eastern states has been sent to Brussels, Tokyo, NewYork, Berlin etc. for exhibition. Moreover the handloom products of Assam is also having a good market in the countries like England, Italy, France, Switzerland, Singapore, Saudi Arabia etc. Like the handloom industry, the handicrafts industry of Assam as well as of other north-eastern states is also a potential industry. The Assam Government Marketing Corporation and North Eastern Handloom and Handicraft Development Corporation have taken the responsibility for the modernisation and market diversification of the products of handicrafts industry like bamboo and cane works, wooden works, doll making, ivory works etc.

Problems of Cottage and Small Industries of Assam

Although the heritage of small and cottage industries in Assam is very rich but these industries are handicapped with innumerable difficulties . Some of these important difficulties and problems faced by cottage and small industries are enumerated below :

Firstly, ignorance, illiteracy and conservative attitudes of the people connected with these industries are standing in the way of modernisation and expansion of cottage and small industries in Assam. Due to ignorance these industries are using outdated tools and old methods of production and thus could not keep pace with other sectors of the economy. They fail to adopt newer and scientific methods of production and thus produce old designed traditional goods. This is no doubt a big problem for this industry.

Secondly, dearth of capital is the next problem of the cottage and small scale industries in the state. Rural artisans and craftsmen are very poor and thus they depend on village money lenders to meet their financial needs. As the village money lenders charge high rates of interests  the cost of production of these industries is raised. Necessary funds are not made available to the rural artisans and craftsmen from the commercial banks and other financial institutions like Assam Financial Corporation. Thus for the want of of finance, these industries cannot modernise their production process.

Thirdly, scarcity of raw materials is next major problem faced by cottage and small scale industries in the State. As they are facing the difficulty of getting regular supply of raw materials at a reasonable price, this creates a problem for smooth functionning of these industries. This retards the growth and expansion of these industries.

Fourthly, absence of proper training facilities to the artisans is the next hurdle which these industries are facing. Thus in the absence of proper training, the artisans are still following outdated methods and produce goods of old design and styles.

Fifthly, lack of proper marketing facility stands in the way of expansion of these small and cottage industries. Due to this absence of proper marketing arrangements these industries sometimes go for distress sell of their products to the private dealers at a poor price.

Lastly, the cottage and small industries of the state are facing increasing competition from the large scale organised industries. Due to this high cost structure poor quality and design, they cannot stand in the competition with the organised industries and thus their very existence has been threatened.

Remedial Measures to solve the problems of Cottage and Small Industries.

The cottage and small industries of the state have been playing an important role in building the state’s economy. Even with the growth of large and medium industries these small industries are still maintaining their importance, providing a good volume of income and employment in the rural areas. As these industries are suffering from may loopholes, to plug these loopholes following remedial measures are important :

Firstly, efforts be made for modernisation and expansion of these industries. Workers engaged in these industries should be acquainted with modern scientific technique and methods of production. Steps  must be taken to provide improved tools and implement it  at fair prices.

Secondly, commercial banks and other financial institutions should come forward with various schemes of short term and long term credit for the cottage and small industries in the state. Moreover, credit should be made available at cheaper rates, these will help in other expansion and divesification of these industries in the state.

Thirdly, proper agencies and scheme should be developed for supplying raw materials to small and cottage industries at convenient time and rates.

Fourthly, necessary efforts should be made to train workers of these industries. Thus arrangements are to be made for setting up training institutes at different places of the state for the said purpose.

Fifthly, proper marketing arrangements should be developed in different parts of the state for the smooth sale of the product of these industries. This arrangement will save the workers and artisans from the clutches of middleman.

Sixthly, more "common facility service centre" should be developed in the state in and around these small and cottage industries from where these industries would get all the necessary common services in times of their need.

Lastly, Industry Department of the state should chalk out plan for the modernisation and expansion of these small and cottage industries and involve all these industries into such plan.

Government’s effort

The State Government of Assam has introduced different measures to sort out difficulties of the small and cottage industries of the state during these 44 years of planning. Steps have been taken with some specific measures to revive and develop these industries during the plan period.

The state Government has introduced a long-term scheme of advancing loans at cheaper rates to these industries. Besides, Assam Financial Corporation, Co-operative Apex Bank and the nationalised Commercial banks are also offering long-term credit to these small and cottage industries.

Further, the Government has taken steps to offer basic infrastructural facilities for the smooth growth of small industries in the state. With this purpose, 17 industrial estates have been built up at different parts of the state to extend basic facilities. The Government has also taken the initiative to supply improved quality of adequate raw materials at fair prices to these industries. Besides, some "conmmon facility service centre" have been established in some selected places where there is a concentration of small and cottage industries. These centres are offering some common facilities to these industries. Some Growth centres have also been developed by the State Government for the speedy development and growth of small industries in the state. Moreover, some training centres have also been created by the Government throughout the state to impart necessary skill and knowhow to the artisans, craftsmen and workers. The State Government has also set up emporiums and Khadi Bhandars in various towns to provide a good market for the product produced by these small and cottage industries.

Further, the state Government has set up a host of organisations for the development of small and cottage industries in the state. These includes : The Assam Small Industrial Development Corporation, The Assam Hills Small Industries Development Corporation, Assam State Textile Corporation and Khadi and Village Industries Board.

The Assam Small Industries Development Corporation (ASIDC) is actively working for building small scale industrial base in the state. The Corporation has also opened a number of small scale units under its own management. The Corporation has also been engaged in the promotion of various scheme, marketing assistance scheme, scheduled caste/tribe development scheme, marketing assistance scheme, raw materials assistance scheme, stipendary training programme etc.

During the Seventh Plan about 8000 small industrial units were established. In 1990, about 2,030 new SSI units were set up. In 1990-91 all total 2746 new SSI units were established which have generated employment of more than 11,000 persons. In 1992 about 2835 new SSI units were established in Assam. On the other hand, in 1990-91, about 2201 cottage and handicrafts industries were established. Moreover, considering the growing demand for factory sheds and other infrastructural facilities, the State Government has started to develop 4 more industrial estates-one each at Digboi and Dimoh and two more at Guwahati. Taking these new 4 industrial estates, the total number of industrial estates in Assam would be now 17. Moreover, in order to create demand for the sale of 15 commodities produced by local small scale industrial units, the State Government has assigned the responsibility to Assam Small Industries Development Corporation (ASIDC).

Further, the State Government announced a package of incentives to attract investments, promote establishment of new industries and to facilitate the expansion and diversification of existing industries in the state. These incentives include, contribution towards preparation of feasibility reports, subsidy on industrial housing, concessional power tariff, sales tax exeption on the purchases and sales of the company, capital investment subsidy and allotment of developed land in industrial areas.

In the mean time, on August, 1991, the Government of India announced one new Small Sector Industrial Policy, 1991 separately for the development of small industries. On the basis of this policy, the Government of Assam has announced its Industrial Policy, 1991. This policy has undertaken certain special measures to provide incentive to set up various types of khadi and village industries, small, tiny and ancillary industries for the balanced regional development of the state.

During the Eighth Plan, the State Government has introduced 14 schemes in order to provide incentive to local entrepreneurs to set up industries and for accelerating the pace of industrialisation of the state. As per Government estimate, about 2610 industrial units in the handicrafts sector has been established which have generated emploment to 7,492 persons. During this period, scheduled caste and scheduled tribe entrepreneurs have set up 504 and 567 small industrial units respectively.Through another industrial scheme, 3480 educated unemployed youths have received certain benefits. Moreover, the State Industries Department has selected 12 entrepreneurs to produce paper grade lime for supplying it to Hindustan Paper corporation. Again this department has also selected 10 entrepreneurs to set up mini and micro cement plants in Assam on the basis of local available resources. Therfore, due to all these efforts, total number of registered small scale industrial units has increased to 20,552 in January, 1994. As per this new industrial policy the State Government has taken certain steps to set up new industrial units in the rural areas. Thus the future of this small scale industry sector depends upon the successful implementation of these measures.

Thus all these reveals that an industrial climate is being gradually created in the State and thus the state will be able to develop a solid base of small scale and cottage industries in the years to come.

Future Prospect of Small Scale Industries in Assam in view of the Current Economic Reforms

Assam is endowed with huge volume of different types of natural resources like mineral forest resources, water resources etc. However, the state is yet to experience industrial development on a scale achieved by many states in the state of the country. The current economic reforms introduced in India in the form of industrial policy reforms, fiscal policy reforms, monetary policy reforms, foreign investment policy reforms, foreign trade reforms etc. with the sole objective to bring a new element of dynamism in the process of economic growth of the country. Economic reforms has broadly widened this scope of industrialisation in the country.

Assam being a industrially backward state, having a huge potential for industrial development, can be able to make much headway in the path of industrialisation under the current process of economic reforms. In this respect, small scale industries have a special role to play in the industrial development of the state. The new Small Sector Industrial Policy, 1991 introduced by the Central Government has made ample provision to boost the growth of small scale industries. Moreover, keeping in conformity with the Industrial policy of the Centre, the State Government had also formulated its Industrial Policy, 1991where it made ample provision to ensure balanced regional development through rapid promotion of a host of Khadi and village industry, cottage industry, tiny, small and ancillary industries throughout the state on the basis of the technoeconomic potential surveys. But unfortunately, the Industrial Policy, 1991 could not create much impact on the development of industrial sector of the state. Thus in order to embark upon the high road of liberalisation, privatisation and globalisation, the State Government introduced its New Industrial Policy, 1997 with a great promise for adopting a smooth path for rapid industrialisation in the state. Thus under the new industrial policies introduced by both the central and the State Government, the future prospect of small scale industries in Assam is quite bright.

Secondly, under the fiscal policy reforms, the Central Government has made provision for either tax holiday or tax concession to the newly developed industries in a backward state like Assam. Such tax reliefs has brightened the scope for the promotion and development of small scale industries in an industrially backward state like Assam.

Thirdly, the Central Government in its 1995-96 Budget has made provision for setting up the North Eastern Development Finance Corporation Ltd. (NEDFi) and accordingly, on 23rd February, 1996, the NEDFiI was set up with this main object to provide finance and other facilities for the promotion, expansion and modernisation of industrial and infrastructural project in the North eastern region. NEDFi has also made special provision for financial support, data bank etc. for the small scale industries of the state, which has already brightened the prospect of the development of small scale industries in Assam. The NEDFi will concentrate on downstream petrochemical units, plantations, sericulture cane and bamboo projects.

Thus in view of the current economic reforms, it is observed that the prospect of small scale industries in Assam is quite bright. But the ultimate success of economic reforms in promoting small scale industries in the State depends finally on the improvement of law and other situation of the state which will simply create suitable environment conducive for industrial development of the state. Moreover, in order to promote different types of small industries based on local resources, local entrepreneurs should come forward and participate actively in the industrialisation process of the state.

Considering the current situation prevailing in the state, it can be finally observed that although the current economic reforms has already created a favourable impact on the industrialisation process of some of the industrially developed states but it could not create any considerable impact on the process of industrialision in Assam. But considering the rich resource base, it can be observed that the prospect of industries, especially of small scale industries, is quite bright, provided an investment-friendly climate is created in the State.

Agro-industries of Assam

Introduction

Agro-industries include all those industries which could be developed on the basis of agricultural produce. Assam being an agricultural state, posseses wide scope for the development of agro-based industries in its various parts. These include tea, Jute, Sugar, fruit processing, medicines, chemicals sericulture and weaving, paper boards, hard boards, inscenticides, building materials, coffee, rubber etc. The Agro-industrial potentialities of some crops have already been exploited in the State and these include tea, Jute, Sugarcane, fruits. The other potentialities  still largely remain untapped. If all these potentialities could be developed, the economy of the state would be much benefitted out of it.

Role

Agro-industries of Assam are playing a very important role in the economy of the State. Tea industry is the biggest agro-industry of the State. The economy is dominated by this tea industry, influencing both the income and employment of the State. Following are the important roles of this agrobased industries in the State :

1. Utilisation of huge volume of agro-based raw materials and agro-waste is possible with the growth of agro-industries in the State. Assam is possessing huge volume of agro-based raw materials and agro-waste which  still largely remain unutilised. Utilisation of these resources could supplement income of the agriculturists in the State.

2. Development of agro-industries would increase the job opportunities for huge number of population in the State. Agro-industries, mostly being a labour-intensive industry can engage a good number of workers both male and female. Tea industry of Assam alone provides emploment to more than 5 lakhs of persons daily. If other agro-based industries materialise fully, the problem of unemployment could be easily solved in the State.

3. Agro-based industries of the State are contributing a good portion of State income. As these industries can provide employment to huge number of workers thus a huge section of rural people derives their income from these industries. Thus it is a source of livelihood to a good number of people and their level of living have been improving with the gradual growth of these agro-industries in the State.

4. With the growth of various agro-industries in the State many agricultural produce and agricultural waste are gradually getting market easily. If all these industries could not be developed in various parts of the State, a good market for agricultural raw materials and agricultural waste would be created. This would, no doubt boost the State’s economy.

5. Agro-based large and medium industries have an important role in the development of cottage and small industries of the State. A good number of cottage industries would also be revitalised with the growth of these agro-industries.

6. This will help good in the creation of industrial climate in the State. The expansion of tea industry in Assam has led to the growth of many small industries viz., industries producing tea machineries and implements, tea chests and plywood industry etc.

Problem of agro-based industries

Although there is a huge potential for the growth of agro based industries in the State but problems faced by these industries are always going against its expansion and growth. The main problems of these industries are enumerrated below :

1. Inadequate investible resources : Agro-based industries in the State are facing the problem of getting investible fund from external sources. They cannot collect sufficient fund for their modernisation. They are not getting sufficient bank credit for meeting their purposes. Further, in spite of huge development potential, many agro-based industries could not be developed due to lack investible resources.

2.Lack of transport and communication facility : Inadequate transport and communication facility in the State is the next major hurdle for these agro-industries in the State. This creates problem for their collection of raw materials and in the sale of their products. Further, the transportation cost in this state is also quite high in comparison to other states which always goes against the growth and expansion of both and old agro-industries in the State.

3. Problems of marketing : Inadequate marketing arrangements is the next drawback which these agro-industries are facing. Excepting tea industry, other agro-industries in the state are facing acute problem of marketing of their products. There is no proper marketing arrangements for these product of agro-industries and transport and communication gap is also adding to this problem. In the absence of marketing facilities these industries are sometimes bound to go for distress sale. This creates disincentive for its expansion and growth.

4. Lack of technology : Agro-based industries in the state are also suffering from lack of technical knowhow. Proper technology has not been developed which always goes against the modernisation of these industries in the state. These agro-industries are still following old technique of production and thus producing old style products. This creates difficulty in the marketing of their products.

5. Lack of initiative and enterprise : Agro-based industries in the states could not achieve sufficient rate of growth and expansion due to the lack of initiative and enterprise from the part of local entrepreneurs in the state. In spite of possessing a huge development potential for the growth of agro-industries, the state could not achive sufficient development in the field of agro-based industries. Proper utilisation of these huge agro-industrial potential require active initiative and enterprise from the local entrepreneurs.

Agro-industial potentialities

Assam is blessed with vast agro-industrial potentialities. Some of these agro-industrial potentialities have already been exploited. These include tea, jute, sugercane, pineapple, orange and some other fruits. But other potentialities are still largely remain unutilised. The richest agro-industrial potentialities which can be developed in the state are mentioned below.

Citronella, an aromatic crop, recently has emerged as an important crop with much industrial potentiality. Similar to this, rubber and coffee are two other crops which has shown potentiality of large scale cultivation in the state. Another important group of crops which is yet to be explored but having a high potential is the spice crops. These include ginger, black-pepper, turmatic, large cardamom and cinnamon.

There are plants like yams, tapioca, sweet potato and maize which are widely grown in this state. These plants are important sources of carbohydrate and starch and thus can be utilised for producing starch power and ingredient of livestock feed. Soyabean also grows extremely well in some hilly parts of Assam along with other North-Eastern States. Oil and nutritious soya protein food can be produced from soyabean. Besides, soyabean can also be used as an ingredient of livestock feed as it possess high protein contain.

Ramie is another underutilised plant. It has a great prospect of being grown in Assam which could be utilised as a source of blendable fibre for the polyester complex proposed to be established there. Besides there are huge variety of orchids growing wild in the various parts of the state which have sufficient potentiality in the export market.

Utilisation of agro-waste is the another area on which a good number agro-inustries could be developed in the state. The Regional Research Laboratory (RRL) established at Jorhat has prepared many schemes for the development of agro-based industries of different types. The laboratory has already prepared the technique and designs necessary for these projects. These includes ;

(a) Phytochemicals : The laboratory has developed know-how for the cultivation of various medicinal essential oil bearing and other economic plants like Baseil, citronella, Eucalyptus, citriodora, Japanese mint, lemon grass, pepper mint etc. The Laboratory has already designed a suitable distillation plant for these above projects.

(b) Agro-chemicals : The laboratory has also developed technology and necessary design for producing agro-chemicals like pesticides (phosphamidon, quinophas), furfural (industrial chemical) and organic chemicals on a commercial basis by utilising agro-waste of the state. Rice straw, paddy husk, jute stick and bagase have been used for the production of furfural.

(c) Building materials and others : The laboratory has developed a process for making masonary cement using paddy husk ash on commercial basis. Molecular sieves has also been produced by the laboratory from paddy husk. Similarly, jute stick, bagasse, paddy straw and decaffenated tea waste have been utilised for making paper boards and building materials. The laboratory has already prepared manufacturing details along with information for machineries etc. for setting up small as well as medium size paper board mills from cibrous raw materials and agro-industrial waste.

Besides those Agro-chemicals identified by the R.R.L (Jorhat) Assam has the potentiality of producing certain other agro-chemicals. Ethanol and its derivative can be produced from sugarcane and tapioca.

Citric Acid is the another chemical which can be produced in good quatity from a large number of citrus species available in Assam alongwith other North-Eastern states. Some of these species contain very high percentage of citric acid. Production of enzymes is the next prospective area which need exploitation. These includes pramalin from pineapple waste and papain from papaya. Engenol a suitable ingredient for preparation of perfumary chemicals, can also be produced in the state from Tezpatta (cinnamomum taranta) which is available in large quantity both in Assam and Meghalaya.

Further, for producing biomas as a source of energy as well as for making paper boards weeds like water hyacynth has been successfully utilised.

Another established agro-industry of Assam is sericulture. Assam has the potentiality of raising of all the four varieties of silk worm, namely, eri muga, mulberry and oak tassar. Thus the development potential of these sericulture industry is very good.

Assam is also well known for its huge forest resources. Proper utilisation and management of these forest resources like bamboos, canes, soft wood etc. will be able to develop a good numer of land based enterprises which in turn will generate sufficient employment opportunities.

Steps needed

Considering all the potentialities and problems of these agro based industries some steps need to be taken for converting the endowments into assets. These steps includes developing - (a) a package of feasible technology, (b) a package of service to the people involved in growing in and utilising the technology for developing suitable enterprises and (c) a package of public to create the needed environment of growth. Steps are also needed to solve the problems of transportation, communication and marketing. Sufficient incentives in the form of subsidies, duties, tax exemptions etc. have to be offered for providing initial impetus. Steps are also to be taken for avoiding internal competition within the region for the market.

It is also necessary to gear up research and development (R&D) efforts in this area. More  investments are required in this field. It is important to consider the use lf land and water resources (agro materials) in a scientific way after paying due consideration to ecology, energy consumption, economies and employment generation.

Considering the inherent problems of the State, sufficient stress must be laid for the development of various types of land and water resources potential. If these agro-industries can be developed properly, these will help the State in increasing production, generating gainful employment and also in the increase of income of rural people of the State.

Industrial Finance in Assam

Intitutional finance is an important part of industrial finance everywhere. Sufficient flow of institutional finance is extremely essential for the successful development of industries in an area. Institutional finance is also playing a vital role in the process of industrial development in various states of the country. But the flow of institutional finance in Assam is still at a very low ebb in comparison to its flow in other states of the country. Thus one of the basic reasons for industrial backwardness of the State is the inadequate availability of required finance.

Commercial banking sector is advancing a big portion of institutional finance for the industrial development of each State. In Assam, total outstanding credit of scheduled commercial banks to the industry sector of the State, at the end of December, 1979, stood at Rs. 75.4 crores only of which Rs. 18.3 crore were meant for small scale industry sector. The share of this industry sector out of total outstanding blank credit was nearly 40 percent. This share of State compares very unfavourably with Rs. 2442 crores (58 percent) of Maharashtra, Rs. 1334 crores (70 percent) of West Bengal, Rs. 815 crores (66 percent) of gujarat, Rs.979 crores (57 percent) of Tamil Nadu, Rs. 295 crores (55 percent)of Haryana, Rs. 638 crores (47 percent) of Uttar Pradesh and Rs. 9863 crores (48 percent) for all India. At the end of December, 1980 total outstanding credit of scheduled commercial banks to the state increased to Rs. 104.7 crores which includes Rs. 21.3 crores for the small scale industry sector. Thus, the industry sector shared nearly 46 percent of the total outstanding bank credit in the State.

So far as the role of scheduled commercial banks in the State’s industrial sector is concerned, it is revealed from RBI publication, "Basic Statistical Returns, Bank Credit, Quick Estimates, June 1986" that the share of the industry sector in the total outstanding bank credit in the state stood at 40.4 percent at the end of June, 1986 as against a comparatively higher share of 47.2 percent at the end of December 1982 was 45.8 percent. Of the total outstanding credit, as at the end of June, 1986, the small scale industrial sectoraccounted for nearly 12 percent of the total.

Industrial Credit and Investment corporation of India Ltd. (ICICI) opened a development office at Guwahati in February 1982 with the intention to serve the needs of north eastern region. The ICICI has so far assisted 18 industrial projects of which 14 projects are established in Assam. While looking at the figures of financial assistance sanctioned and disbursed by various all India financial institutions it is found that Assam compares very unfavourably with many other states in the country. For example, the average per capita assistance sanctioned by these all-India institutions upto the end of March 1982 amounted to only Rs. 61.9 lakhs in Assam compared with Rs. 213.9 lakhs in Gujarat, Rs. 458.0 lakhs in Maharashtra, Rs. 292.6 lakhs in Tamil Nadu, Rs. 287.1 lakhs in Karnataka and Rs. 270.5 lakhs in Punjab.

In respect of performance of Industrial Finance Corporation of India (I.F.C.I.) during the plan periods, it is found that during the First Plan I.F.C.I. sanctioned financial assistance increased to Rs. 165.29 lakhs during the Second Plan and to Rs. 363.00 lakhs during the Third Plan in Assam. During the Annual Plans assistance was Rs. 78.50 lakhs only. During the Fourth Plan the net financial assistance from I.F.C.I. to Assam came down Rs. 203.00 lakhs and then to Rs. 249.00 lakhs in the Fifth Plan. Thus the aggregate assistance from I.F.C.I. to Assam till the Fifth Plan was Rs. 1103.79 lakhs.

The track record of this financial institution (IFCI), like that of any other operating from this region is a dismal one. During the period from 1948 to 1995, the IFCI had sanctioned only Rs. 125.44 crore to some industrial projects in Assam which is as low as 0.5 percent of its sanctions vis-a-vis the rest of India. Moreover, the North-eastern regional office of the IFCI is recently on the verge of closure following a directive from its higher authorities to transfer all its files to the Calcutta regional office as a part of restructuring of the IFCI.

It would be better to look into the position of Assam vis-a-vis some other states of country in respect of amounts sanctioned and disbursed by various all India financial institutions (covering IDBI, IFCI, ICICI, LIC,UTI,GIC, IRCI, SFCs and SIDCs) upto the end of March 1982 as well as during 1981-82 from the following table :

Table No.8.6

Assistance sanctioned and disbursed by all-India Financial Institution

(amount in Rs. Crores)

States

Sanctioned

 

Disbursed

 
 

1981-82

Cumulative upto end-March 1982

1981-82

Cumulative upto end- March

1982

1

2

3

4

5

Assam

Maharashtra

Gujarat

Tamil Nadu

Karnataka

West Bengal

Uttar Pradesh

Andhra Pradesh

Rajasthan

All India

11.99

488.34

321.07

362.69

176.15

184.65

200.43

268.94

148.51

2820.47

123.11

2872.80

1745.25

1413.39

1063.56

1030.00

1002.87

1001.59

619.32

14022.22

7.42

397.18

262.33

187.35

152.48

164.47

162.34

135.63

98.34

2079.39

108.75

2097.88

1259.61

982.40

770.18

807.33

741.09

646.53

404.78

10033.41

Source : Operational Statistics, 1981-82" by IDBI.

The table reveals that the financial assistance sanctioned and disbursed by all-India financial institutions to Assam is lowest among all the states.

In 1981-82 total amount of industrial loan sanctioned by these financial institutions to Assam was Rs. 11.99 crores against which Rs. 7.42 crores was only disbursed. Out of cumulative amount of loan sanctioned to the extent of Rs. 123.11 crores by these institutions to Assam upto the end of March 1982, the total cumulative disbursement was only Rs. 108.75 crores, which was 88.3 percent of the total amount sanctioned.

Further, this cumulative amount of loan sanctioned to Assam upto the end of March 1982 was only 1.08 percent to that of all-India as against 20.9 percent of Maharashtra, 9.7 percent of Tamil Nadu, 8.04 percent of West Bengal and 4.03 percent of Rajasthan. Thus Assam’s figure compared very badly, to that of above mentioned state in this respect. This reflects the prospect of industrial development in Assam.

Moreover, the "Report on Development Banking in India, 1989-90" published by the Industrial Development Bank of India, reveals interesting statistics on state-wise voume of assistance sanctioned and disbursed by the term lending institutions. According to this Report, the volume of per capita cumulative assistance sanctioned and disbursed by term lending institutions ( compirising IDBI, IFCI, ICICI, LTC, NTC, TIC, IRBI, SFCs, SIDC) stood at Rs. 191.40 only in Assam as at the end of March, 1990, while it is as high as Rs. 1950.21 in Gujarat, Rs. 1632.53 in Maharashtra, Rs. 1206.88 in Punjub, Rs. 1108.16 in Haryana and Rs. 797 at all India level. However, over the recent few years, the volume of assistance sanctioned and disbursed by the term lending institutions in the State is recording a steady upward trend as it increased from Rs. 24.75 crores and Rs. 48.16 crores respectively in 1985-86 to Rs. 21.82 crores and Rs. 64.04 crores respectively in 1989-90. As a result, the total cumulative assistance sanctioned and disbursed to the State stood at Rs. 622.62 crores and Rs. 380.89 crores respectively as at the end of March, 1990. Thus it is revealed that the state continued to enjoy a very meagre share (less than even 1 percent) of the total volume of assistance sanctioned and disbursed for the country as whole.

North Eastern Development Finance Corporation Ltd. (NEDFi)

The entire North-eastern region comprising seven sister states is endowed with rich natural resources like oil, gas, limestone, other minerals, forests resources and water resources. In spite of that the Region is yet experience industrial development on a scale achieved by many states in rest of the country. The reasons for such backwardness consist of infrastructure bottlenecks, inadequate finances low level of local entrepreneurship and complex local systems. The local entrepreneurs, although very small in number, are not familiar with complex banking procedures and thereby failed to take full advantage of the presence of various financial institutions and banks. Considering the situation, it has become imperative to set up an institution with special knowledge of the Region and dedicated exclusively to its requirements.

Accordingly, Union Finance Minister, in his Budget speech for the year 1995-96, announced the setting up of a separate development bank for the Region. Keeping in conformity with such announcement, the North-Eastern Development Finance Corporation (NEDFi) Ltd. was incorporated on August 9, 1995. After receving a certificate to commence business operation from September 1995, the North-Eastern Development Finance Corporation Ltd. (NEDFi) was inaugurated on 23rd February, 1996 with headquarters at Guwahati with the objective of providing focussed attention to the industrial and infrastructural development of the Region. The Board of Directors of NEDFi is also constituted by inducting eminent persons from the North-Eastern Region and also from outside the Region, having widening experience in industry, economics, finance and management.

Role of NEDFi :

The main object of NEDFi is to provide finance and other facilities for promotion, expansion and moderisation of industrial and infrastructure projects in the region. Eventually, the NEDFi will provide a wide range of facilities and services, tailor made to meet various requirements of industrial units, including discounting or re-discounting of bills, guarantees, subscription to and/or underwriting of shares and securities, issuing letters of credit and providing consultancy, information and research facilities NEDFi will also help first generation entrepreneurs during implementation and early operation stages of their projects by providing hand holding services so as to mitigate the problems arising out of inexperience. The corporation will prepare and from time to time, update profiles of projects that have been identified as having good scope for success in the progress of the region and would be able to solve the problems of small investors to a large extent.

NEDFi’s mission is to be dynamic responsive organisation for assisting the development of the Region by identifying and financing commercially viable industrial and infrastructure projects so that it leads to fixed capital formation without causing any significant enviromental degradation and through this maximise the wealth of the Region and the well-being of its people. Thus NEDFi got underway with the promise to the people to make a disinct improvement in the industrial and infrastructure development scenario of the region within the shortest possible time. In short, NEDFi is considered as the development bank of the North-East, for the North-East.

Resources :

NEDFi has been incorporated with authorised share capital of Rs. 500 crore and IDBI, SIDBI, IFCI, UII, LIC, GIC, and its subsidiaries and SBI have agreed to contribute Rs. 100 crore towards etc initial capital. This would enable NEDFi to raise further resources by way of borrowings through issue of fixed deposits, bonds, Government loans, grants etc. To meet its requirement NEFDi will also raise further equity as required for its operations in due course. NEDFi can draw upon the wealth of experience financial strength of its promoter institutions to raise resources to meet its requirements. The Government of India with its commitment for development of the Region will provide all support and is sure to extend necessary concessions to NEDFi to enable it to achieve its objectives.

Scope for Industrial Development :

In spite of having vast natural resources the North-Eastern Region is quite dependent on supplies from other parts of the country even for food items such as cereals, fish, eggs etc ; besides other requirements. Goods coming in from other parts of the country and those going out of the Region have to bear additional transport cost; this state of affairs offers considerable scope for producing the goods within the Region so as to meet the local demand. The Region can also process its available resources and serve the markets outside of region. NEDFi has made detailed study on the scope of industrial development in the Region and has identified a fairly wide spectrum of industries having potential in the region.

Target Activities and Functions :

The following are the important target activities and functions of NEDFi :

Firstly, NEDFi will assist all industrial concerns in the North Eastern Region promoted by limited companies or co-coperative societies, for setting up new units or expansion and modernisation of existing enterprises. NEDFi will provide assistance in the form of term loans, direct subscription/underwriting of equity and/or debt instruments, provide financial guarantees and participate in deferred payment guarantees. It will provide term loans to eligible industrial concerns to start with and will also selectively extend direct subscription/underwriting facilities, both independently and in co-ordination with other institutions. As NEDFi may provide finance in consortium with other institutions and banks, their norms may generally be followed while assessing viability of the projects to be assisted. One of the main objects pursued by NEDFi is encouraging and promoting private capital both internal and external. The corporation will not dilute its norms of project viability comprising break-even point, debt repayment, servicing capacities for determining their eligibility for financial assistance.

Secondly, NEDFi will idependeltly finance small scale industries ordinarly with a minimum loan component of Rs. 25 lakh and assemble a consortium of commercial banks and other financial institutions for projects with loan component for exceeding Rs. 25 lakh ; the minimum term loan from NEDFi will, however, be Rs. 25 lakh. NEDFi will consider smaller and medium scale projects costing upto Rs. 2 crore independently and may join a consortium with other institutions and banks for assisting larger ones. NEDFi would provide underwriting/direct subscription to share capital to the maximum extent of 25 percent of the share capital of the industrial concern with a maximum limit or Rs. 1 crore.

Thirdly, the NEDFi considers prorviding the entire working capital requirement of small scale industrial (SSI) units promoted by any first generation, entrepreneur till the point of time the project is expected to reach optimum level of operations. The corporation may explore a consortium arrangement with other institutions or banks for such working capital term loans.

The NEDFi will concentrate on downstream petrochemical units, plantations, sericulture, cane and bamboo projects.

Fourthly, the NEDFi will build up and maintain a data bank of the natural, human, and technological resources, market opportunities incentives available in this region for helping industries in identifying new technolgies, markets, trends in economy and other relevent informations. It will also compile profiles of projects with sound research for the benefit of entrepreneurs. It will soon be a think tank for the region and for this an elaborate information system and technology plan is being operationalised to support the setting up and operation of the data bank.

Fifthly, the business plan of the NEDFi has already been prepared by Tata consultancy Services (TCS), which has identified 62 projects which would be feasible industrial projects in all the seven North-eastern states. Out of these projects identified by TCS, 31 industrial projects are identified for Assam followed by 21 in Meghalaya, 19 each in Nagaland and Arunachal Pradesh, 15 each in Manipur and Tripura and 9 projects in Mizoram.

The identified projects, included fruit and vegetable processing, rubber processing, handloom and handicraft, meat and milk processing, lime stone, petrochemicals, urea fertilizer plant, minipower plant, woodbased plant, bamboo mat board and silk processing. The 62 projects have been located and updated to prepare brief pre-investment studies which could be used by the eligible entrepreneurs to put tegether a few bankable proposals with the help of independent industrial and technical consultany organisation.

Two major agreements that were arrived at the first anniversary of NEDFi include-firstly, a pact for joint financing in the small scale industries sector with Small Industries Development Bank of India (SIDBI) and secondly, a promise by the State Bank of India (SBI) to provide working capital to NEDFi assisted projects.

The Corporation (NEDFi) has approved assistance aggregating Rs. 12.18 crore to two projects both engaged in oil exploration and production sectors of the region. It disbursed its first assistance of Rs. 20 lakh towards form allotment of shares to premier Cryogenics Ltd. a Guwahati based firms for a project on liquid nitrogen, in July 1996. The second project which is being financed is for the working of oil well under ONGC, OIL by SVUI Projects Ltd. The NEDFi was helping the company with a loan of Rs. 12 crore.

The NEDFi, after the completion of the one year of its incorporation had received 30 inquiries for projects involving total investment of Rs. 46 crore with an employment potential for 1,500 persons and covering wide areas of industrial activity which include sectors like tea, food processing, textiles, cement, hosiery, hotels and nursing homes. These projects are mainly from Assam, Meghalaya, Manipur and Tripura.

It may be mentinoned that the NEDFi has been registered as a Category I merchant banking institution by the Securities and Exchange Board of India (SEBI) and will provide project advisory service and take part in merchant banking, including lead management. It has also taken up compilation of a data bank for all the seven states of the region to help local as well as outside entrepreneurs to take investment decisions.

Thus it is expected that NEDFi with the support from Government of India and the state Governments of the Region will work actively towards catalysing industrial development of the Region. This would facilitate the progress of the North-Eastern Region towards its rightful place on the industrial map of the country.

State Level Public Sector Units (SLPSUs) Assam- Large Scale Sickness Causes and Remedies

Like the other states of India, the government of Assam has already established a good number of State Level Public Sector Units Enterprises (ALPSUs) and also invested a considerable amount of resources on it, with a high hope of getting a rational rate of return. But unfortunately, things are not moving in right direction. There are at present 51 State PSUs in Assam. But the state of affairs of these PSUs are not at all encouraging. At the end of 1996-97, 48 PSUs of the State had taken monetary assistance worth about Rs. 2,500 crore over the past years and their accumulated losses stood at a total of about Rs. 1500 crore. Barring 3 units, all PSUs in the State were incurring losses continuously over the past years and had become dependent on budgetary support from the state government. This is no doubt an unhealthy practice adopted by these PSUs. In order to face the situation, the State Government had to cut plan budgets for various departments which was affecting the development activities seriously.

The accumulated loss has eroded the capital base of SLPSUs completely and negative rates of return on capital and paid-up capital have been 12 and 30 percent respectively. The turn-over of the SLPSEs has been poor and it is in the range of 20 percent of the capital investment while in terms of paid-up capital, it is only about 50 percent thereby implying that a very significant portion of the investment have gone into fixed costs. The growth of turnover has been of the order of only 10 percent against the growth in investment of the order of 20 percent per year.

The dividends have been declared by only three of the state public sector units (PSUs), namely the Assam Mineral Development Corporation, Assam State Warehousing Corporation and Assam Financial Corporation. The contribution to the State exchequer by 24 SLPSUs as on March 31, 1992 has been a meagre Rs. 11 crore. About 30 of the SLPEs retain positive networth of Rs. 170 crore, but the remaining SLPEs brought down the net negative net worth to about Rs. (-) 270 crore. This would have been in the order of Rs (-), 110 crore had the capital structure of the ASEB been not changed by conversion of loan of Rs. 800 crore to equity in 1991-92.

Among the State PSUs, the ASEB is responsible for the highest amount of loss. The ASEB alone accounts for 66 percent of the total accumulated loss of Rs. 1500 crore incurred by SLPSUs. The growth in the emploment in theemployment in the SLPSEs during the period from 1987-8 to 1991-92 has been of the order of five percent except in 1991-92. The turnover per employee has remained almost constant at around Rs. 0.7 lakh per employee per year. The total employment in the SLPEs have increased from 56,200 in 1987-88 to 64,490 in 1991-92.

The following are the 30 losing SLPSEs : Assam Electronics Development Corporation Ltd. (AMTRON), ASEB, ASTC, Statfed, Assam Syntex Ltd., Assam State Textile Corporation Ltd., Assam Polytex Ltd., Cochar Sugar Mills Ltd., Fiertichem Ltd., Assam Plantation Development Corporation Ltd., Assam Co-operative Spinning Mills Ltd., Assam Small Industries Development Corporation Ltd., Assam Fisheries Development Corporation Ltd., Assam Statre Housing Board, Assam State Minor Irrigation Development corporation Ltd., Assam State Fertilizer and Chemicals Ltd, Assam Seeds coporation Ltd., Assam Conductors and Tubes Corporation Ltd., Assam Tourism Development Corporation Ltd., Assam Khadi & Village Industries Board, Assam State Development Corporation for Scheduled Castes, Assam State Development Corporation for OBC Ltd., Assam Hills Small Industries Development Corporation Ltd., Assam Polyester Co-operative Society Ltd., Assam Film (Fin.Dev.) Corporations Ltd., Assam State Weaving and Manufacturing Co., Ltd., Assam Co-operative Sugar Mills Ltd. and Nagaon Co-operative Sugar Mills Ltd. However, a few of the above SLPSEs have already been handed over to the private sector. The report of the Comptroller and Auditor General of India (CAG) for the year 1996 reveals that out of 38 government companies in Assam, 28 suffered losses during the past two years or more. The 38 companies included 10 subsidiaries and four statutory corporations as on March 31, 1996. The companies had total investment of Rs. 477.47 crore (equity Rs. 248.27 crore, long term loan Rs. 46.15 crore) at the end of March 1996. As per the latest finalized accounts of these companies, 28 companies had incurred accumulated losses of Rs. 124.27 crore and the remaining five companies earned accumulated profits of Rs. 1.11 crore. Three companies have not yet started commercial function and two companies have not finalized accounts since inception. Almost all the 38 private sector undertaking of the state have been unable to finalize their annual accounts for a period over 14 years due to non-appointment of a statutory auditor by the Comptroller and Auditor General of India since 1981-82, resulting in non-accumulation of profit and dividend incurred by PSUs of the State.

It may be noted that SLPSEs were created  to export the natural resources of the state, to produce goods and services and to implement development programmes for the weaker sections of the society and were expected to yield reasonable rate of return on investment. However, the rate of return has been negative over the years and therefore, creation of new SLPSEs was restricted.

Causes of Large Scale Sickness of State PSUs

The public entreprises in Assam are suffering from major problems which are mostly responsible for their large scale sickness. The following are some of the important causes of such large scale sickness of state PSUs :

1. Loss incurring enterprises are suffering from endowment constraints as the selection of sites of SLPSEs were done on political considerations rather than rational considerations.

2. Under-utilisation of production capacities of SLPSUs are quite common.

3. Absence of rational pricing is also responsible for large scale sickness of state PSUs.

4. The state PSUs are suffering from technolgical gap as these enterprises could not adopt up-to-date technolgies.

5. Mismanagement and unimaginative functioning of State PSUs in the past years.

6. Much government interference in the day to day activities of state PSUs reduced their degree of autonomy of the managements in respect emploment pricing, purchase etc.

7. Heavy social costs of SLPSEs is also responsible for their large scale sickness.

8. State PSUs are suffering from operational and managerial inadequacies.

9. Evil competition from the private sector units and sabotaging of State PSUs are also responsible for their large scale sickness.

10. Marketing constraint of state PSUs is a big problem for which they could not collect good market for their commodities, resulting huge losses.

11. State PSUs are suffering from surplus manpower, which is creating drainage of resources unnecessarily, followed by sickness.

12. Workers engaged in the State PSUs are lacking sincerity and devotion to their job leading to wastage of productive capacities. Moreover, external factors like trade unionism, union rivalries and labour troubles are also responsible for dirsuption in smooth functioning of State PSUs.

13. Non-updating of accounts and non-holding of annual general meeting or Board meetings for years together are the two deterrent practices resorted to by most of the State PSUs, which are also largely responsible for their growing sickness.

14. Inefficiency in management and poor corporate plan have been also largely responsible for growing sickness of SLPSEs.

15. Finally, management of the PSUs have been politicised over the years to subserve the interest of the ruling party and they have been made to employ too many people to make them unviable as economic entities.

The status report on the state PSUs prepared by the exports observed that "the inefficiency in management has led to the poor planning ......... In spite of repeated avdvice most of the SLPSEs have failed to draw up a corporate plan to justify their continuance in existence."

Remedial Measures to be followed for the Revival of SLPSUs

The following measures are worth-mentioning for bringing a dynamic change in the horizon of state level public sector units in Assam :

(i) optimum utilisation of capacities of all the state PSUs in Assam ;

(ii) technological upgradation of these revivable enterprises to make it more competitive and viable ;

(iii) diversification of product mix ;

(iv) adoption of rational pricing policy for the improvement of economic performance of these undertakings ;

(v) withdrawing subsidisation policy atleast from unproductive channels :

(iv) removing evil competition between the public and private sector units by integrating enterprises of both the sector.

(vii) making the management more accountable to the public as well as to the government ;

(viii) relieving the State PSUs from unnecessary government interference in their normal activities ;

(ix) diversifying both internal and external markets for the products produced by the enterprises through standardisation of quantity, advertisement and popularisation of the product through different agencies ;

(x) worker’s voluntary Co-operation and participation for its improvement ;

(xi) gradual privatisation of some SLPSUs, through open mind, where such privatisation is permissible and where crowding out effect takes place ;

(xii) undertaking a time bound programme for the revival of those loss incurring enterprises and also to raise their degree of viability by raising their efficiency and productivity ;

(xiii) State PSUs must not think of keeping themselves running only with governmental support any longer, but should devise means of their own to ensure how they could survive as self-sustained ;

(xiv) attaining sound financial and managerial capabilities to make them stand on their own feet ;

(xv) State PSUs should proceed with limited objectives instead of diversification of business till they become self sustained ;

(xvi) State PSUs should submit review reports regularly to the Government and to take up corporate plans for internal resource generation ;

(xvii) and finally State PSUs should make serious efforts for their revitalization through effective management, innovative ideas, checking of wastages, sincerity and dedication.

New Industrial Policy (1997) Guidelines for State level PSUs and Government Efforts

Considering the poor financial condition and mismanagement of State Level Public Sector Units (SLPSUs), the new Industrial Policy, 1997 has observed that henceforth all state level PSUs would have to survive on their own. State public sector undertakings which were for a long time enjoying budgetary support from the State Government, will now have to change their strategies and discover new avenues for their survival. The State Government would help the PSUs in their revitalization strategies and urge the managements to find out ways to make profit. The State Government recently (in 1997) declared six public sector units in the state as sick and initiated efforts for revival of these sick PSUs by handing them over to the joint sector or to private sector.

The State Government has incorporated various incentives in the industrial policy, apart from liaisoning with banks and financial institutions to finalise package for revival of potentially viable sick PSUs.

The advisory Committee appointed by the State Government had also recommended privatization of loss making PSUs excepting two profit making units viz., Assam Petrochemicals Ltd. and Assam Gas Company Ltd. The Committee also suggested that those units which cannot be revived should be sold as scrap and its proceeds be paid to labour and debts. In the second category, in which the State PSUs can be revived, it should be made into co-operatives by workers and management.

The State Government, after deciding to transfer six of its loss-making PSUs to the joint sector, has finally advertised in top business dailies of the country for private particiaption. Among the six loss-making units, three are textile units, two are fertilizer units and four paper unit. These six PSUs are- Assam Syntex Ltd. Nathkuchi ; Assam State Weaving and Manufacturing company Ltd. Katmari ; Assam Spun Silk Mills Ltd. Jagiraod ; Assam State Fertilizer and Chemicals Ltd, Chandrapur, Fertichem Ltd. Bonda and Industrial Paper (Assam) Limited, Dhing.

The policy of privatizing sick PSUs may also be considered as cropper because the objectives for which these PSUs had been set up are either no longer an economic feasibility or the new, private managements are unable to bail them out for obvious reasons. The entire fault, in this connection, lies with the inability of the Government and our policy makers to see development as being much beyond just the immediate need to employ more and more people without any regard to whether employees would be able to generate enough resources to meet their own expenses. Such a far-sighted policy adopted by the earlier Governments is mostly responsible for such uncomfortable situation.

As the State Government has decided to withdraw budgetary support to State PSUs from the year 1998, thus the Government should prepare necessary guidelines for all state PSUs regarding how they could manage their affairs and thereby survive on their own. The State PSUs should also get them ready to face the challenges and prepare a well worked out plant of action to change their strategies for generating resources for their own, without diverting the objectives for which they had been set up. In this connection it can be suggested that while determining the strategies, the rationality appriach should prevail upon the plan of actions to be adopted by the State PSUs.

Low Rate of Industrialisation or Industrial Backwardness

Although the pace of industrialisation in Assam had started during the British period, with the growth of tea and oil industry, but the State could not attain much progress in its industrialisation path even after completing more than four decades of economic planning.

Causes of Low Rate of Industrialisation or Industrial Backwardness

Assam is lagging behind other states in regard to industrial development. This is due to absence of large investments in industry during preceding plans and Assam’s geographical isolation. The volume of private investment in Assam is very low due to heavy risk involved in the investment. These risks are both natural risks, arising through natural calamities and political risks as the State itself is a border State. Thus the factory industries in the State are growing at a very slow rate. Following are the main reasons behind this low rate of industrialisation in Assam :

1. Lack of adequate capital formation : The state is experiencing a very poor rate of capital formation. The volume and rate of savings in Assam are very poor. As the level of per capita income in Assam is very poor, the saving potential is low. Possibly, there are large accruals of additional income in the rural sector. But there are inherent difficulties of mobilising these incremental rural incomes. Thus this lack of capital formation is a very important hurdle on the path of industrialisation of the State.

2. Shyness of capital : Shyness of capital is the another reason behind this slow rate of industrialisation in the State. Investors whether from within or from outside the State are not willing to invest their capital in Assam. Further,geographical isolation and high cost of production of the State inhibit private investment from other regions.

3. Inadequate economic and basic infrastructural facilities : The economic and basic infrastructural facilities which includes power, transport and communication facilities etc., are not yet sufficiently developed in the state. Without a sound infrastructural base, the State cannot develop various industries on the basis of its natural endowments.

4. Derth of technical personnel : There is derth of technical personnel in Assam. In the absence of a good number of technical personnel, the state has always been depending on other states of the country. Further, the industrial activities in the State are suffering due to this derth of technical personnel creating a huge delay in the commissioning of the project.

5. Lack of entreprenurial motivation : There is lack of entreprenurial motivation on the part of local people of the State. Local initiative and enterprise are lagging behind the requirement necessary for the successful industrialisation in the State. This a very important hurdle in the path of industrialisation in the State. Without active entreprenurial motivation on the part of local people the industrial develoment of the State would be incomplete.

6. Lack of credit facilities : Credit facilities in the State are not easy. The problem is more complicated particularly for the small and medium scale industries of the State Banks and other financial institutions in the State are not offering helping hands towards the establishment of small and medium scale industrial projects by offering credit on easy terms. In fine, lack of industrial credit is one of the very important problem of industrialisation in Assam.

7. High cost structure : Cost structure in the State is very high in comparison the other states of India. High cost structure always reduces the profit outlook of the industries. This is mainly due to the existence of higher price level in the State in comparison to other States. This is also aggravated by higher unit cost of transport which acts as a further disncentive to external private investment in the State. Besides, this high cost structure in the State has been raising the cost of all industrial projects in the State which works as a dampener towards the establishment of new industries.

8. Investment risks : Due to heavy risks involved in the investment arising through natural calamities and political risks as the state itself is a border state, the volume of private investment in Assam is very low. Assam is unfortunately one those few states which are every now and then visited by natural calamities such as floods and draughts. Particularly flood has raised the problem of insecurity for the new industrial projects in the State.

9. Disturbed law and order situation : Due to various socio-political reasons, the law and order situation in the State is not always smooth rather it is often disturbed. Thus the industrial development of the State has been suffering due to lack of suitable law and order situation. Besides, the State Government had to spend a heavy amount on police administration for the maintenance of law and order. This unduly heavy expenditure on law and order maintenance has put severe strain on the already slender finances of the State Government and has, to that extent, hampered the Government’s ability to finance various schemes for industrial development.

10. Lack of Markets : Proper market has not yet developed in the State for the marketing of produced by the industries in Assam. Excepting the Guwahati Tea Auction Centre, the marketing arrangements for other industrial sectors are totally lacking. This creates a problem for the industries to sell their products. Thus both these large and medium industries had to depend on the markets outside the State resulting higher unit cost of transport and higher administrative cost.

11. Lack of efficient administrative machinery : The lack of efficient administrative machinery is always going against the industrial development of the State. A sound industrial development always requires an efficient administrative system, the state’s industrial sector is bound to suffer.

12. Low level of central sector investment : The central sector investment on industrial development of the State was all along poor. During the planned period only a few medium and large scale industrial units have been developed under the central sector inspite of having huge development potentialities in the State. Moreover, these investments were mainly centralised around the oil sector only neglecting the other potentialities of the State.

Major Constraints in the Growth of Large Scale Industries in Assam and its Prospect under Economic Reforms

Assam has already established two sets of large scale industries, i.e., tea and petroleum industry from the first stage of its development in spite of having serious constraints. The state is quite rich considering its endowment position having rich potential for the development of some large scale industries. The state is having the prospect of developing some large scale industries in the areas of petro-chemicals and its down stream industries, polyster spinning and textile industry, jute products, cement, food processing etc.

In spite of having rich potential, the state is facing some major constraints in the growth of large scale industries. The following are some of these major constraints :

1. Poor capital formation : Poor rate of capital formation in Assam is considered as one of the major constraints in the growth of large scale industries in the state.

2. Infrastructural backwardness : The state is too much backward in respect of basic infrastructural facilities which include power, transport and communication etc. In the absence of adequate power supply and suitable transport and communication system (viz., improved rail, road and telecommunication network) the development of large scale industries neither desirable nor possible.

3. Shyness of Capital : Another important constraint in the path of developing large scale industries in Assam is the shyness of capital. Investors both from within and from outside are not willing to invest their capital in Assam. The problem has gained its momentum in recent years with the rise of insurgency problem in the stte, leading to huge amount of capital flight, money transfers and increased amount remittances from Assam. Moreover, the investment flow from outside the state has also been obstrcuted seriously by the problems of growing insurgency, geographical isolation and higher unit cost of production.

4. Dearth of skilled and efficient person : There is dearth of skilled, efficient and technical person in Assam which is also considered as an important constraints in the growth of large scale industries.

5. Lack of Industrial Credit : The State is not having adequate credit infrastructure. In the absence adequate credit arrangements, the State cannot expect to develop large scale industries easily.

6. Poor Capital Market set up : The capital market set up in Assam is also very poor. The newly established Guwahati Stock Exchange is yet to play a major role in developing the capital market set up. Therefore, developing large scale industries in the absence of sound capital market would be a difficult proposition.

7. High Cost Structure : High cost structure prevailing in the state not only increases the project cost but also aggravates the problem which also acts as further disincentive to external private investment flow in the State, dampening the spirit of developing large scale industries.

8. Lack of Markets : One major hurdle in the path of developing large scale industries is the lack of proper marketing arrangement for different industrial products excepting Guwahati Tea Auction Centre. Being located in the remote corner of the country, the large industries of the state will always have to bear additional cost of transport for marketing their products in the absence of adequate marketing arrangements.

9. Investment Risks : Another constraints in the growth of large scale industries is the investment risks arising out of natural calamities like flood and political risks as the state itself is a border state. Moreover, growing insurgency has also raised some kind of insecurity in the minds of external investors. Such insecure environment is also a great hurdle in the path of industrialisation in the state.

10. Disturbed Law and Order Conditions : Growth of large scale industries in Assam is also being constrained due to disturbed law and order conditions arising out various socio-political reasons.

11. Lack of Entrepreneurial Motivation : Another important constraint in the growth of large scale industries in the state is the lack of entrepreneurial motivation of the local people of the state, resulting in lack of initiative and enterprise for the development of such industries.

Bright Prospect of the Development of Large Scale Industries under Economic Reforms :

In spite of various constraints the prospect of the development of some large scale industries in Assam is brightened under the ongoing process of economic reforms. The economic reforms introduced in India has paved the way for smooth sailing of some prospective large scale industries in Assam. Economic reforms in the form of industrial policy reforms, foreign investment policy reforms, tax reforms, trade policy reforms etc. have widened the scope of developing large scale industries in Assam in certain specific areas like-Petrochemicals, Natural gas, Power generation, textile, food processing etc. Assam Gas Cracker Project, Tengakhat, to be promoted by Reliance Industries Ltd. is an offshoot of economic reforms introduced in Assam. Assam is also having a wide scope for the development of power generation projects for which some foreign investors have shown their interest. The establishment of North Eastern Development Finance Corporation Ltd. (NEDFi) is an encouraging step in this direction. Thus it is expected that a good number of large scale and medium scale industrial projects may be developed in Assam in near future provided suitable investment friendly climate is created in the state, which requires an active support from both the Central and State governments and also from the local people of the State.

Remedial Measures to Remove Industrial Backwardness in Assam

In spite of having a huge potential for industrial development, Assam remained an industrially backward state even after 46 years of economic planning. Although the industrial development process started in Assam even in the early British period with the development of tea and petroleum industry but the industrial development in the State could not be given its momentum due to various constraints faced by the State. Thus immediate steps must be taken for promoting industrial development in the State. The following are some of the important remedial measures to remove industrial backwardness in Assam :

1. Removing Bureaucratic Obstacles : The first step in the path of industrial development of the state is to remove bureaucratic obstacles by adopting the various policy of deregulation, delicencing introduced under economic reforms. The government should also take adequate steps to simplify procedural formalities on allotment of land, sheds, capital, interest, power subsidy, tax exemption etc.

2. Government support : The State government should provide active support for the promotion of new industries as well as for the expansion of the existing industries of the state. In the mean time, the State Government has announced its New Industrial Policy, 1997 to embark upon the high road of liberalisation, privatisation and globalization. The State Government has also introduced "1997 Incentive Schemes" to provide various subsidies and sales taxexemption benefit for the promotion of new industrial units and also for revitalization of the sick industrial units of the state. The Government should see that the schemes be implemented in proper shape and time.

3. Infrastructural Development : Adequate steps must be taken for the development of infrastructural facilities as early as possible. In this connection the State Government should try to develop power sector by inviting foreign investors for promoting new power projects in the state. Moreover, the State government should also try to develop the transportation and communication facilities, industrial sheds water supply, developed lands etc. adequately. Moreover, the State Government should also encourages private participation infrastructure development.

4. Ensuring Credit Flow : In order to remove industrial backwardness in the state, the various financial institution should ensure easy flow of credit in adequate proportion.

5. Revitalising SLPSUs : Revitalising State Level Public Sector Units (SLPSUs) will be an important step in the direction of removing industrial backwardness in Assam. Moreover, the State Government should try to adopt the path of privatisation of loss-making state PSUs for their revitalisation.

6. Revitalising CPSUs : In order to reorient the industrialisation process in Assam, the Central PSUs should be revitalised immediately. Moreover, the flow of Central sector investment to Assam must be increased considering its poor industrial base.

7. Developing Capital Market : In order to remove industrial backwardness of Assam, steps must be taken develop active capital market in the state for providing easy capital flow to industries. The newly established Guwahati Stock Exchange should be activated to enlarge its area of operations adequately.

8. Export Oriented Industries : The State should also try to develop export oriented industries so as to diversify its industrial base. The State Government may also explore foreign collaborations with the SSI who can make 100 percent buy back from the SSI units of the state.

9. Development of New Industries : The Government should also try to encourage the setting up of new industries in the area of fruit processing, vegetable processing, spice processing, aquaculture, horticulture based projects in the State.

10. Enlarging the SSI Base : In order to remove industrial backwardness of the State, the SSI base of Assam should be enlarged. Considering the huge volume of natural resources and Agro-based potential, the State should try to develop different types of small scale and village industries throughout the State.

11. Reviving Water Transport Route : In order to remove the problem of higher unit cost of transport, arising out of geographical isolation the Central and the State Government should try to revive the traditional water transport route linking Guwahati and Calcutta via Bangladesh immediately. Such revival of water transport routes would increase the competitive strength of industries in Assam to explore market both within the country and also for export promotion.

12. Developing Information Cell and Linkages : The State Government should take necessary steps to develop information Cell or data bank for updating the knowledge on new products, new processes, sources of raw materials, machinery, market linkages etc. in all the District Industry Centres (DICs). Moreover, necessary linkages may be developed with national and international organisations or institutions for information, upgradation of technololy, skills etc.

Finally private investment is considered as one of the most important factors for industrialisation. During the last one and a half decade, Assam has witnessed a series of social and political upheavals. Insurgency problem is on the rise, resulting in a halt to private investment. Besides, the tea industry is not ploughing back its profits in the State. Given a conducive environment, proper infrastructure and a productive labour force, private investment will automatically flow in. Considering the problem of poor capital formation, small such industries seem to be best choice. Countries like South Korea, Taiwan are the best examples of such situation. In order to tap these possibilities, the State government should be able to bring back peace to the State, make the situation industrial friendly, lessen bureaurcratic intervention to pave the way for investments. And, above all, people of the State must be mobilized and motivated to take part in a State-wide industrialisation process.

Considering all these problems of industrialisation in the State, the State Government should take up appropriate schemes for the successful growth of endowment based industries both in the state and private sector. These would include both the infra-structural projects and direct industrial investments in the State. While saying this, it should be equally stressed that the Centre has also a responsibility for Assam in view of the need to fully utilise the practically untapped but huge development potential of the State. If needed the Centre should send a team of experts to prepare project and feasibility reports. Otherwise, it will be just a case of ‘bargaining federalism’ without any serious thought given to the national wastage involved in underutilisation of national resources located within State terriotory.

Finally, the people of the State should also come forward with their inner zeal, active intitiative and enterprise for the establishment and smooth running of various types of endowment-based industries, particularly small and medium scale industries, in the State without further delay. In the absence of such motivation from the people of the State, it would be impossible on the part of the State to achieve a solid base on its industrial sector.

Under the present regime of economic reforms introduced in the country as a whole, the State Government as well as the people of the State should take adequate initiative for accelerating the pace of industrial development in the State so as to reap maximum benefit from the policy of economic liberalisation adopted throughout the country.

Report of the Advisory Committee on Industries in Assam (1996)

The Government of Assam set up a 15-member Advisory Committee headed by the noted economicst and Chairman, North Eastern Development Financial Corporation Ltd. (NEDFi) Dr. Jayanta Madhal to assess the industrial scenario and to recommend long term and short term measures for attracting investment in the State. Dr. Madhal submitted a two-volume report to the State government on 6th August, 1996. The main recommendations of the advisory committee on industries include a strategy to export the state’s untapped potetial in agriculture and allied activities, measures for increasing power generation, tenancy reforms, action plan for industrial growth and the development of tourism as an industry in Assam.

The committee, having reviewed the entire industrial scenario in the terms of reference specifed, has also suggested specific time frames within which it wishes its recommendation to be implemented. Apart from recommending an action plan for the industrial growth of Assam, the report suggest measures for the revitalization of the sick units in the public sector and for smooth flow of credit to industrial units, particularly those of the small scale.

The action plan for development was suggested after a thorough scrutiny of the Dinesh Goswami Report on economic development of the State, the L.C. Jain Committee Report on Clause Seven of Assam Accord and the Coopers and Lybrand report on development strategies for the State.

The report suggested that the Government should take concrete steps towards removing the constraints in getting the project going. Recommending a detailed development strategy through exploitation of agriculture and other untapped potentialities- such as horticulture, livestock farming, pisciculture and floriculture- the report observed that the double cropped area of the state, if increased from the present 20 percent to 60 percent in the next five years, will bring about a large surplus in the agricultural sector. This will provide a strong infrastructure for fostering industrial growth. The report suggests that big tea companies be invited to take up big plot of land and a practical example to farmers about the profitability second and third crops.

Apart from making elaborate suggestions on various measures to be adopted for increasing the volume of power generation from the abundantly available resources, the committee urged the Government for effective suitable tenancy reforms so as to enable industries to acquire as much land as required for their development.

The report finally recommends that tourism be developed as an industry and calls for improvement of transportation facilities, particulalry those for inland water transport.

Economic Reforms

Economic Reforms and Industrial Development in Assam

Economic Reforms in India and in Assam and Industrial Policy Reforms

The entire world economy has been experiencing dramatic and momentus changes during the decade of late eighties and nineties. Various countries of the world are now favouring economic reforms because it promises more rapid and more sustained economic growth.

India has also adopted the policy of economic reforms during eighties and the first phase of economic reforms in India had its origin in 1985. Accordingly, India started to respond to various changes in the nature of marketsand institutions, industrial organisations and structures and social relations of production in relation to increasing globalisation of economic process. But the first phase of economic reforms failed to yield the expected result in most of fronts and the country has been plunged into a serious balance of payments crisis. In order to restore both internal and external confidence, the second phase of economic reforms, comprising a good number of stabilisation measures, were initiated in 1991-92 by the Government of India. The memorandum submitted by the Finance Minister observed that, " The thrust will be to increase the efficiency and international competitiveness of industrial production, to utilize foreign investment and technology to a much greater degree than in the past, to improve the performance and rationalise the scope of the public sector and to reform and modernize the financial sector so that it can more efficiently serve the needs of the economy."

The various policy measures introduced in the second phase of economic reforms include- (a) fiscal policy reforms, (b) monetary policy reforms, (c) pricing policy reforms, (d) external policy reforms, (e) industrial policy reforms, (f) foreign investment policy reforms, (g) public sector policy reforms, (h) trade policy reforms and (I) social policy reforms.

In the mean time, the State Government have also introduced the relevant economic policy reforms. The Government of Assam has also introduced the policy, of economic reforms as a part of national policy. The Government has already introduced New Industrial Policy in 1991 and then recently in 1997 and also incorporated other policy reforms like public sector policy reforms, fiscal policy reforms etc.

Among the various policy reforms introduced in Assam, mention may be made of industrial policy reforms. In 1991, the then Congress Government introduced the Industrial Policy, 1991 wherein various incentives and subsidies offered by the State Government for promoting a solid base of industrial development within the State. But unfortunately, this policy has failed to bring favourable change in the industrial scenario of the state and the state has failed to reap the benefit of economic liberalisation adopted throughout the country. Under the precarious situation, it has become imperative on the part of the State Government to redraft its new industrial policy considering its emerging problems and potentialities. Therefore, it has become imperative for the State to embark upon the high road of liberlization privatisation and globalization.

Accordingly, on 29th March 1997, the AGP-led State Government introduced its New Industrial Policy, 1997 with great promise. The AGP led alliance Government’s new industrial policy aimed to provide an effective thrust for "expeditious promotion and growth of all industries with a view to creating a strong industrial base and employment opportunities in various directions."

Impact of Economic Reforms on the Economy of Assam

It is really frustrating for the people of Assam and the North-East that the economy of the state as well as of the entire region did not face any impact at all of the liberalization process which has been underway throughout the country since the past few years and from which almost all the states, including even the backward ones, have benefited.

Although the process of economic liberlization has already been initiated but the private investors have been very shy of investing in the region. This point may be reflected from the fact that out of the total investment proposals of Rs. 5,88,000 crore received by the country during the first four years of liberalization since 1991, the share of all seven states in the North-East including Assam was only Rs. 4,200 crore. Moreover, total capital raised in the country from public issue of shares was about Rs. 30,000 crore during 1995-96 out of which the share of Assam and North Eastern states was paltry Rs. 5 crore which is as good as nothing.

There has been a lot of talk about the great potential of the food processing sector and development of floriculture, pisciculture. But very little has been done to develop these sectors.

Moreover, Assam is also facing a peculiar problem of flight of capital and exodus of business firms out of the State following insecure environment arising out the problem of insurgency.

Thus the economic reforms introduced throughout the country has failed to create any favourable impact on the economy of Assam. The country’s liberlization policy had no impact on the process of industrialization in Assam. Although industrial development gained its momentum in different states of the country as a result of economic reforms but Assam has completely failed to reap any considerable benefit in industrialisation process out of economic reforms. It needs to be recognized that the constraints coming in the way of industrial development in Assam are geographical isolation, lack of infrastructure shortage of power and lack of surplus capital.

The state has also failed to invite projects for the development of infrastructural sector. The power situation in the state still remained grim despite the state is having a huge potential for the development of hydro-electric projects and natural gas based power projects. The State has also failed to attract both domestic and foreign investors for the construction of highways and bridges etc. under Build, Operate and Transfer (BOT) scheme.

Investment climate in the State has not yet improved considerably. International confidence on the state’s economy is yet to be restored as the foreign investors did not show any active interest to participate in any major industrial and infrastructual projects. The flow of foreign direct ininvestment into the state is also very minimum.

Thus it can be stated that state’s economy has not been able to derive any considerable benefit out of economic reforms. Considering such poor performance, the AGP led alliance Government has taken some steps recently to embark upon the high road of liberalization, privatisation and globalization. Announcement of New Industrial Policy, 1997 is a right step in this direction. Finalisation of investment proposal of Assam Gas Cracker Project at Tengakhat with the Union Petroleum Ministry recently, privatisation of six state PSUs, decision to transfer all loss-making state PSUs to the joint sector, signing of MOU with US-based company Ogden Energy of New Jersey by the State Government recently on June 1997 for taking over a lease of the Bongaigaon Thermal Power Station (BTPS) for its renovation and upgradation, submitting proposals by another US based company, American Power Gen System Association for setting up a 300 MW coal based power project at Borgolai, inauguration of North Eastern Development Finance Corporation (NEDFi) at Guwahati, entry of some new Indian company for promoting new industrial projects like Premier Cryogenics Ltd., SVUI Projects Ltd. etc. are no doubt a strong indication of the change of investment climate in the State to a favourable direction.

Thus it is expected that Assam will soon be able to change the investment environment in the State adequately so that can reap the benefits of economic reforms at least belately.

Present state of Industrial Development in Assam and Future Prospect of Industrial Development in Assam under the Policy of Economic Liberalisations

The present state of Industrial Development in Assam is not up to the mark. Although the pace of industrialisation in Assam had its origin during the British period, with the growth of tea and petroleum industry but the State could not attain the required progress in its industrialisation path even after completing more than four ecades of economic planning. In spite of having a rich potential for the development of different types resources based industries, the state could not achieve much diversification in its industrial base, leading to restriction of its industrial activities mostly into tea and petroleum. The factors which are mostly responsible for such industrial backwardness include-geographical isolation, lack of capital formation, lack of infrastructure, shyness of capital, insecure investment climate, lack of markets, lack of entrepreneurial motivation etc. All these constraints are always standing in the path of industrial development of the state. The poor state of industrial development in Assam can be reflected from the fact that the contribution of the manufacturing sector to the state income which was 15.6 percent in 1950-51, subsequently rose to 17.7 percent in 1960-61, remained at the poor level of 15.5 percent in 1993-94. Moreover, total number of registered factories in Assam which was 2677 in 1990 gradually declined to 2438 in 1993. There are at present 191 large industrial units and 18,637 registered small scale industrial units in Assam, out of which a good number of such units are lying in non-operational stage.

There are at present 51 state PSUs in Assam. But the state of affairs of these PSUs are not at all encouraging. At the end of 1996-97, 48 PSUs of the State had taken monetary assistance worth about Rs. 2500 crore over the past years and their accumulated losses stood at a total of about Rs. 1500 crore. Barring 3 units , all PSUs in the state were incurring losses continuously over the past years and had become dependent on budgetary support from the state Government. Recently, the state Government has taken steps to privatise this state PSUs for their revival.

Moreover, the investment environment in the state is considered to be insecure considering the growing problem of insurgency, prevailing in the entire region. The state is facing the problem of huge capital flight and exodus of business firms out of Assam due to growing problem of insurgency. Such insecure investment climate is always going against the interest of industrial development in the state. International confidence on the State economy is yet to be restored as the foreign investors did not show any active interest to participate in any major industrial and infrastructural projects.

Future Prospect of Industrial Development in Assam under the Policy of Economic Liberalistion :

Although the process of economic liberlisation could not create much impact on the industrial development of the State but the state is still maintaining a bright prospect for tthe development of different industries in the state under the policy of economic liberalisation introduced in the state.

In order to embark upon the high road of liberalization, privatisation and globalization, the State government introduced its New Industrial Policy, 1997 on 29th March, 1997 with a great promise. The new policy aimed to provide effective thrust for expeditious promotion and growth of all industries with a view to creating a strong industrial base and employment opportunities in various directions. With the introduction of this new policy, the prospect of industrialisation is brigtened, considering the new package of incentives introduced in the policy. Thus under the new industrial policies introduced by both the Central and State Government, the future prospect of small scale and large scale industries are quite bright.

Secondly, steps are being taken to develop infrastructural facilities adequatly which will pave the way for industrial development in the State. The announcement of the comprehensive economic package for the development of the North-East involving Rs. 6,100 crore by the Central Government for a number of new and ongoing project will definitely improve the infrastructural status of the region.

Thirdly, the ongoing process of economic reforms has also brightened the prospect of development of both small, medium and large scale industries considering the huge development potential of the state. In a capital scarce economy like Assam, the development of small scale industries will be quite suitable. Besides, economic reforms have widened the scope of developing large scale industries in Assam in certain specific areas like-Petrochemicals and down stream industries, Natural gas based project, power generation, textiles, food processing etc. Assam Gas Cracker Project, Tengakhat to be promoted by Reliance Industries Ltd. is an off-shoot of economic reforms introduced in the State. Assam is also having a wide scope for the development of power generation projects for which some foreign investors have shown their interest. There is also a wide prospect for the development of downstream industries based on petrochemicals already available from Bongaigaon Refinery Petrochemicals Ltd. (BRPL) and would be available from Numaligarh Refinery and Assam Gas Cracker Project.

Fourthly, the establishment of North Eastern Development Finance Corporation Ltd. (NEDFi) at Guwahati has also widened the scope of industrial development under the process of economic reforms.

Finally, it no longer appears to be in vogue to consider the geographical isolation has the potential of turning into an advantage instead. Isolated as the North-east is from the rest of the country, Coopers and Lybrand has taken note of its close proximity to South-east Asia, the fastest growing region in the world. The agency has attributed the North-east with the potential of becoming a strategic base for investors wishing to tap the markets of South-east Asia.

Thus it is expected that a good number of large scale and medium scale industrial projects may be developed in Assam in near future provided suitable investment friendly climate is created in the State. This requires an active support from both the Central and State Governments and also the active participation of the local people of the State. However, the Government of India will have to play a much greater and active role in Assam and the North-east for promoting industrialisation process. The Centre must provide the infrastructure, if not, then provide counter-guarantees and other necessary incentives to private investors in creating the infrastructure, without putting any burden on the State Government. The State Government should also take active steps to promote an investment friendly environment for attracting private investors, both domestic and foreign, so as to develop different small, medium and large scale industries based on the industrial potential of its state. In this connection the steps taken by the Government of India for setting up three Industrial Growth Centres in and an Export Promotion Industrial Park at Amingaon near Guwahati are right steps in this direction.

 

 
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