INDUSTRIALIZATION IN ASSAM AND
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
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
of some important industries in Assam
3. Jute Textile
11. Wheat Flour
Million gross Boxes
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
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)
1.Grain Mill products
2.Manf. and refining
3.Manf.of other edible
oils and fats
5.Manf. of Cotton
7.Manf. of veneer
plywood & their
8.Sawing & planking
of wood (other
10.Manf. of products of
petroleum not else
11. Manf. of Fertilizers
12. Manf. of Matches
13. Aluminum manu-
14. All Industries com-
: 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
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
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
Plan wise Achievements of
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
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
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
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
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.
: In recent times, the AIDC is performing the following functions :
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
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
1. A 2000 TPA Polyester Film
2. A 15000 TPA Polyester Filament
3. A 35000 TPA Galvanised Plain
and Corrugated Sheet Plant.
4. Weaving Complex.
5. Sack Kraft (Extensible Paper)
6. Textile Processing Unit.
7. Sponge Iron Project.
8. One million tonne Cement
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.
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
(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
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
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
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
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
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.
: 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.
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
(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.
An industrial unit which has
taken all the initial effective steps on or after 1.4.91 would be
considered as a new 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.
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.
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
(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
(d) project Report has been
(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
(a) Disbursement of term Loan to
the full extent.
(b) Mechanical completion of the
(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
(f) Sanction of working capital.
(g) Commissioning of the plant.
(h) Receipt of local employment
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 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
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.
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
(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
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
For Supervisory Categories Rs.
5000 per person
For Skilled Category Rs. 3000 per
For Unskilled Categories Rs. 1500
This is subject to the following
Unit with investment
Upto Rs. 2 crores
Rs. 2 crores to 5 crores
Rs. 5 crores to 10 crores
Above Rs. 10 crores
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
Sales Tax Exemption :
Sales Tax will be exempted on
purchase of raw materials and sales of finished products for a period of
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
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 will be granted as
Amount of subsidy
Ceiling on Subsidy
(Per Industrial Unit
Upto 1 MW
Above 1 MW &
Upto 5 MW
Above 5 MW
Rs. 5.00 Lakhs
Rs. 30.00 Lakhs
The above subsidy will be
avialable for a period of 5 (five) years from the date of commercial
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
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
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
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
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
"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.
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
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."
: 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
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.
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.
: 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.
: 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
: 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
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
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
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
: 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 :
: 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
: 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
Some Important Industries in
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
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
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
1.Total number of
2.Total number of
3.Area under Tea
of Tea (in million
5.Average yield per
hectare (in kg.)
6.Daily average num-
ber of labour
7. Average price of
tea per kg. in
N.A.- Not Available
: 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
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
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
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
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
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.
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
Secondly, small tea growers of
Assam are facing acute financial problem as they failed to secure loan from
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
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
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
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
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.
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 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
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.
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
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,
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 -
5. Crude Throughput - 1.16
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
: Refinery and Petrochemical Production Report, as on April, 1997.
Volume of production (in
A. Crude Throughput
B. Refinery Products :
(i) SR Naptha
(ii) Motor Spirit
(iii) MR Napatha
(iv) BRPSOL -100
(v) Reformer Naptha
(x) RPC (Net)
C. Petrochemical Products :
(vi) PSF Waste
1 01424 121224
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.
: 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.
: 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
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
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
: 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.
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
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
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
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
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,
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
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
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
3. Non-concentrated Glue
4. U.F. Glue
5. P.V.C. Processed Glue
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
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
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
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
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
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
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,
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
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
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
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
: 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
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
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
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
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.
: 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.
: 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
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
(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
(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
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.
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
(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.
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
(iii) Concessional power tariff
for new industries and for existing units undertaking expansion and
(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
(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
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
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
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
Small scale and Village
Industries of Assam
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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.
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
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
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
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
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
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
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
(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.
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
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
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
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 :
Assistance sanctioned and
disbursed by all-India Financial Institution
(amount in Rs. Crores)
Cumulative upto end-March
Cumulative upto end- March
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
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.
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
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
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
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
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
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
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
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
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
(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
(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
(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
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
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
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
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
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
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
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
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
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
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
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
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
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
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,
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
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
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
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 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
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
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
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
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
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
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
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
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
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
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
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.