|8th Five Year Plan (Vol-2)||<<
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Agricultural and Allied Activities || Rural Development and Poverty Alleviation || Irrigation, Command Area Development and Flood Control || Environment and Forests || Industry and Minerals || Village and Small Industries and Food Processing Industries || Labour and Labour Welfare || Energy || Transport || Communication, Information and Broadcasting || Education, Culture and Sports || Health and Family Welfare || Urban Development || Housing, Water Supply and Sanitation || Social Welfare || Welfare and Development of Scheduled Castes and Scheduled Tribes || Special Area Development Programmes || Science and Technology || Plan Implementation and Evaluation
INDUSTRY AND MINERALS
Seventh Plan Performance
5.1.1 The Industrial Policy Statement of July 22, 1991 has set out the broad outlines of the nation's industrial policy in the near-term future. In many respects, it signifies a return to the 1956 Industrial Policy Resolution with only one major exception, viz., the reduction of the industrial activities exclusively reserved for the public sector from 17 to 8 industries. Indian industry has developed a highly diversified structure, considerable entrepreneurship and a vastly expanded capital market. All this makes it possible for the public sector to vacate many areas hitherto exclusively reserved for it and throw them open to private sector initiative. This will free scarce public resources for investment in priority sectors. Also, the new Policy emphasizes efficiency and surplus generating capability in the public sector, a larger entrepreneurial and managerial freedom for both domestic private sector and foreign investment, a more open access to technology and greater reliance on the capital market for raising resources.
5.1.2 India stands totally committed to a policy of mixed economy as propounded by Nehru and other founding fathers under which both the public sector and the private sector enterprises co-exist and function side by side. But both need to be efficient. It is this strong motive for inducting efficiency which has partially prompted the recent policy of partial disinvestment of the shareholding in the public sector enterprises. The other consequence will be to free part of the public resources locked up in these enterprises for deployment elsewhere where it is needed more.
5.1.3 The relatively open foreign investment policy has been dictated by the following considerations:-
5.1.4 There is, however, no intention to permit foreign investment indiscriminately in all areas, but to welcome it selectively in desired or priority areas.
5.1.5 The Eighth Plan starts against a backdrop of impressive industrial growth during the eighties, a rate which was higher than that achieved by the great majority of other nations. The average annual growth rate of the industrial sector including mining, manufacturing and electricity generation during the Seventh Plan period was 8.5% which though marginally lower than targetted 8.7% was much higher than the 3.5% achieved during the Sixth Plan.
5.1.6 The manufacturing sector which achieved an average annual growth rate of 8.9 per cent during the Seventh Plan period contributed significantly to this higher growth rate in the economy. Within the manufacturing sector, manufacture of electrical machinery and chemicals and chemical products achieved growth rates of 25.8% and 11.7% respectively. These two groups contributed about 61 % of the industrial growth in the manufacturing sector.
5.1.7 Table 1 shows the average annual rate of growth recorded in 17 selected industry groups during the Seventh Plan period and 1990-91.
5.1.8 It will be seen that compared to the Sixth Plan, the Seventh Plan achieved higher annual growth rates in the manufacturing and electricity , sectors. The mining sector, however, witnessed « a substantial slow down in growth from 12.7 per ' cent in the Sixth Plan to 5.6 per cent in the
Table -1 Growth rates of index of industrial production
(Base: 1980-81 =100)
Seventh Plan. Among the major industry groups, the annual growth rates of textile products, basic metals and alloys, metal products and parts, electrical machinery and appliances, and other manufacturing products accelerated during the Seventh Plan period, whereas those of beverages, tobacco and tobacco products, wood and wood products decelerated.
5.1.9 The significant growth in industrial production during the Seventh Plan is attributable to a number of factors, the most important being improvement in the performance of the infrastructure viz., power, coal, etc. The other contributory factors were :(a) changes in the area of licensing and procedures; (b) import of technology; (c) higher import of capital goods;
(d) better utilisation of installed capacities; and
(e) allowing broadbanding of products in a number of industries. The Seventh Plan also witnessed a higher dose of liberalisation measures such as (i) raising the assets limit for exemption to companies from the purview of MRTP Act;
(ii) exempting 83 industries under the MRTP Act for entry of dominant industries; (iii) grant of exemption from licensing for industrial units with an investment of upto Rs.50 crores in backward areas and Rs.15 crores in other areas on the basis of a negative list; and (iv) delicens-ing non-MRTP, non-FERA companies for 31 industry groups and MRTP/FERA Companies in backward areas for 72 industry groups.
Performance of Central Public Sector Enterprises
5.1.10 As on 31.3.1991, there were 246 Central Public Sector Enterprises (PSEs) owned by the Government of India with a total investment of Rs. 113,234 crores. Out of these, 236 were operational enterprises with an employed capital of Rs. 101,702 crores and employee strength of 23.01 lakhs. Of these, 131 enterprises earned an overall net profit of Rs.5731 crores during 1990-91 and 109 suffered a net loss ofRs.3064 crores. The profitability profile of the PSEs over the last decade is detailed in statement 5.1.
5.1.11 The performance of the Central Public Enterprises has been the subject of debate for some years now, and a number of Committees/Working Groups have gone into the matter in detail. In the context of the role which the i.blic Sector is required to play in the prevailing environment, the Government has taken the following decisions:
5.1.12 The implementation of these decisions has already started. During 1991-92, it was possible to mop up Rs.3038 crores through disinvestment of equity cfPSE. Similarly, the number of MOU signing companies is being gradually increased. In 1992-93, 120 PSEs are expected to sign MOUs. The Government has also established a National Renewal Fund to provide a social safety net to protect the workers from the adverse consequences of the technological tranformation.
State Level Public Enterprises
5.1.13 There are in all about 1100 State Level Public Enterprises (SLPEs) with an estimated investment of about Rs.50,000 crores. Unfortunately, a large proportion of these State level public enterprises has not been working satisfactorily. As a first step towards making these PSEs more responsive, the Government has decided to disinvest from some of the SLPEs.
Subsidies by the State Governments
5.1.14 The State Governments have been offering various concessions to entrepreneurs for setting up new industrial units. It is anomalous that while the State Governments are raising power rates to meet the losses of State Electricity Boards (SEBs), they are also offering power subsidy to new units. Similarly, most State Governments have announced deferment/exemption of sales tax for new units, capital subsidy and subsidy for purchase of generating sets. As most States are announcing similar incentives, it is a zero sum game, with the State Governments giving up revenue. It would only be appropriate that a detailed review of the various subsidies/concessions offered by the State Governments is undertaken so that a more rational policy frame is developed.
New Growth Centres Scheme
5.1.15 For promoting industrialisation of backward areas Government of India announced in June, 1988, a scheme to develop growth centres in all States/Union Territories. These growth centres will be endowed with adequate infrastructural facilities like power, water, communications, banking etc. so that they can act as magnets for attracting industries to these areas. It has been decided to develop about 70 growth centres during the Eighth Plan. The locations of 63 growth centres have so far been finalised in consultation with the concerned State Governments/Union Territory Administrations. However, the pace of implementation is slow. With the abolition of licensing in most of the sectors, this is the only instrument available for facilitating regional dispersal. Considering the imperative need to minimise regional imbalances within the shortest time, intensive efforts would need to be made to ensure that these Centres are fully operational in the next 3-4 years.
Science and Technology in Industry and Minerals Sector
5.1.16 Research and Development (R and D) is the watch word for maintaining an edge in quality and cost in today's competitive world. Indian industry has made significant strides in building up a strong base for manufacture of various goods, largely through acquired technologies. There is an imperative need for assimilation, adaptation and improvement of imported technologies as well as development of indigenous technologies suited to local conditions.
5.1.17 A large number of industries in the public and private sectors have established corporate R and D facilities. Organisations like Steel Authority of India Ltd, Bharat Heavy Electricals Ltd, Project Development India Ltd, Hindustan Machine Tools, Instrumentation Ltd, Indian Petrochemicals Corporation Ltd, Petrofils Cooperative Ltd, Hindustan Organic Chemicals Ltd and Hindustan Insecticides Ltd have established in-house R and D facilities for product and process improvement and applied research. In addition, a large number of industry specific research institutes and Cooperative Research organisations are doing very useful work. Moreover, there are a large number of technical consultancy organisations having expertise in operational areas, a resource to be reckoned with for undertaking various developmental activities. Besides, in-house R and D efforts and foreign collaborations with reputed manufacturers abroad, UNIDO/UNDP assistance for frontier technologies is being sought for technological development in the country. However, there is ' need to improve the interaction between the industry and the academics.
Outlays and Expenditure
5.1.18 The Seventh Plan provided an outlay of Rs. 19,708 crores, out of which Rs.17,268 crores were for Central sector (excluding coal and petroleum, which form part of the energy sector) and the balance Rs.2,440 crores were in the Plans of States and Union Territories. The actual expenditure (at current prices) is estimated at Rs.23,175 crores in the Central sector and Rs.3,120 crores by States and Union Territories. Expenditure in the Central sector at constant prices has also been higher, being Rs.18,564 crores. Year-wise actual expenditure both at current prices and at constant prices in the Central sector is shown in Statement 5.2.
5.1.19 The overall outlay envisaged in the Eighth Plan for Industrial and Mineral programmes in the public sector is Rs.40,673.43 crores, out of which Rs.35,150 crores are for the Central Sector and the balance of Rs.5,523.43 crores is for the States sector. The Ministry/Department-wise outlays provided in the Central sector are detailed in Statement 5.3 and the State-wise outlays are detailed in Statement 5.4.
Outlook for the Eighth Plan
5.2.1 With a view to consolidating the gains already achieved during the 1980s and providing greater competitive stimulus to the domestic industry, the Government has introduced a series of reforms in the industrial, fiscal, trade and foreign investment policies. These reforms are intended to de-regulate or unshackle the industry and enable it to take decisions on its own without the need for Government approvals for specific actions. With these, the industry will be able to take timely steps to adjust to the changes in internal as well as external environment and meet the needs of a dynamic market. These reforms will lead to increased global isation of the economy and its greater integration with the world economy. The freedom and flexibility allowed to the industry will enable it to optimise its operations and improve its competitiveness. In this background, there will be less emphasis on quantitative targets and the planning will become more "indicative". The desired growth of different sectors will be achieved primarily through modifications in industrial, trade, fiscal policies and changes in duties and taxes rather than through quantitative restrictions on imports/exports or licensing mechanism.
Role of Public Sector
5.3.1 The public sector has played a pioneering role in the development of the Indian economy and has a number of achievements to its credit. It deserves a major share of the credit for the self-reliant growth of the economy so far. However, there are some notable weaknesses too, the most important being the inability of the public sector to generate adequate resources for sustaining the growth process. Besides, the private sector has now come of age and has developed considerable entrepreneurial, managerial, technological, financial and marketing strengths. In this background, a review of the role of the public and private sectors is called for in order to enable them to jointly shoulder the responsibility for further development of the economy.
5.3.2 The new Industrial Policy of July 1991 has brought down the number of areas reserved for public sector from 29 earlier 17 areas were reserved exclusively for public sector while twelve other areas were to be progressively State-owned with State generally taking the initiative in establishing new undertakings to the following eight: arms and ammunition and allied items of defence equipment; defence aircraft and warships; atomic energy; coal and lignite; mineral oils; mining of iron ore, manganese ore, chrome ore, gypsum, sulphur, gold and diamond; mining of copper, lead, zinc, tin, molybdenum and wolform; minerals specified in the Schedule to the Atomic Energy (Control of Production and Use) Order, 1953; and railway transport.
5.3.3 The private sector is expected to play an increasing role in industrial activities, especially where security and strategic or social considerations are not very important. The public sector will concentrate increasingly on basic and core sectors. Even in these areas, emphasis will be on financing industrial and mineral projects primarily through internal and other extra-budgetary resources instead of depending on budgetary allocations. This is in line with the general philosophy of placing greater reliance on competitiveness of industries and efficiency of operations. The undertakings which are in a position to finance their development plans on their own will be allowed greater freedom for growth and diversification as a self-sustaining process. In the case of undertakings which are operating in core areas and are largely dependent on budgetary support, limited support will be provided in the initial years to enable them to stand on their own in the later years of the Plan.
5.3.4 As a result of the recent policy reforms,the industrial sector is expected to undergo considerable restructuring. First, in the past there has been considerable stress on import substitution at any cost. With the emphasis now being laid on competitiveness, future growth will be more in those sectors where the country has comparative advantage. Secondly, the size of individual companies, which is very low by international standards, not a single Indian company figures in the list of first 500 ''Fortune' companies, is expected to grow through expan- sions, amalgamations, mergers, etc. Thirdly, there would be greater integration of indigenous production with outside. Those components/ sub-assemblies whose production is uneconomic, will be imported. On the other hand, some other components/ sub-assemblies/ finished products will be increasingly exported. Finally, there will be joint ventures abroad to exploit the complementarities of resource endowments in this country and the concerned foreign country.
5.3.5 Among the metallurgical industries, the country possesses a good resource base in the case of iron and steel and aluminium. These two industries have the potential to record a very good growth rate in the long-run. However, in the medium-term, the prospects are not so good because of inefficient production and constraints of infrastructure in the case of former and lack of bauxite linkages and inadequate availability of power in the case of latter. In the case of aluminium, it will be worthwhile to explore possibilities of large scale manufacture of alumina in the country, partly for exports and partly for smelting abroad to meet the country's requirements of aluminium. Due to poor resource position, no major capacities are envisaged to be set up in the Eighth Plan in the case of copper, lead and zinc.
5.3.6 The capital goods industry has recorded impressive gains in the past in terms of quantitative increases in production. From a virtually non-existent base at the time of Independence, today the country is more or less self- sufficient in meeting the requirements of various user sectors. However, the qualitative performance of the industry leaves much to be desired. In most of the sectors, the performance of the indigenously manufactured capital goods is nowhere near the contemporary levels in terms of process technologies, quality of products, productivity and cost of production. This sector decides the efficiency of operations of the various user sectors. With increasing emphasis on competitiveness, the user sectors will be anxious to switch over to state-of-the-art technologies and processes. This will, therefore, be one sector which will be adversely affected by the opening up of the economy and allowing freedom to the entrepreneurs to select and import capital equipment and technologies. In due course, the leading capital goods manufacturers can be expected to go in for collaborations, foreign equity and import of technologies to update their products and emerge as suppliers of world class capital goods but in the medium-term, this sector will be adversely affected due to its inability to meet global competition.
5.3.7 In the areas of machine tools, transport equipment and accessories, electrical equipment and controls and instrumentation, the country has a good base. With upgradation of facilities through collaboration/foreign equity etc., it should be possible to build on this and achieve good growth in production as well as exports.
5.3.8 With low levels of capacity utilisation, poor productivity, inadequate ancillarisation, long delivery period and high cost of production, the ship building industry in the country is moribund. On the other hand, the ship repairing industry is reasonably competitive and has the potential to meet the growing demand and to save valuable foreign exchange. With greater attention to modernisation of ship repairing facilities, the industry is expected to achieve reasonable growth.
5.3.9 The growth of the electronics sector has been rather lopsided. The high growth rate recorded in the past has been largely due to the growth of the consumer electronics sector, especially the TV industry. The industry is characterised by a very weak components base and consequent high import intensity, grossly uneconomic scales of production and high cost of production. In the case of controls and instrumentation, there is considerable capacity in the country for manufacture of hardware but the capability to provide the requisite systems design and support is inadequate. The exports of computer software have recorded reasonable increases in the recent past but it has hardly been possible to touch the fringe of the potential. The opening of the economy is expected to lead to restructuring of the entire electronics industry, including closure of a number of sub-economic units engaged primarily in screw driver technology, consolidations and amalgamations of units and increased tie-ups with foreign firms to provide a sound base for sustained development of the industry. As this restructuring process will take some time, the outlook in the medium term does not look very promising.
5.3.10 The fertiliser industry will be virtually by-passed by the economic liberalisation in view of the controls on inputs and administered prices of inputs as well as outputs of the industry. In the case of nitrogenous fertiliser, a decision on the pricing policy is imperative. On the one hand, the existing system of retention prices and subsidy is leading to increasing burden of subsidy on account of increases in production and costs of inputs, which are not matched by corresponding increases in the retail prices of fertilisers and on the other, adequate private sector initiative is not forthcoming because of lack of a clear cut policy and freedom to decide the feed stock as well as uncertainty about the returns from the investments. From time to time, ad hoc adjustments have been made in the norms for fixation of retention prices, creating considerable apprehensions among the potential investors about the viability of the projects. It is primarily on this account that there has been very slow progress in the three fertiliser plants which were to come up in the private sector along HBJ pipeline in the Seventh Plan. It is imperative to finalise the feed stock and fertiliser pricing at the earliest. The country may be heading for increased shortages and dependence on import of nitrogenous fertilisers.
5.3.11 In the case ofphosphatic fertiliser, the country's resource base is very poor and purely on economic considerations, setting up ofphosphatic fertiliser capacity is undesirable. In order to minimise dependence on large-scale imports of fertilisers, joint ventures abroad would need to be explored. For production within the country, a judicious mix of import of rock phosphate and sulphur, phosphoric acid and finished fertiliser would need to be adopted.
5.3.12 Thepricesofmostofthe petrochemical products in the country are well above the international levels, partly because of high administered prices of inputs and partly because of high rates of taxes. World over, the petrochemical products are finding increasing applications as substitutes for metals, alloys, etc. Large number of new applications are being found almost everyday. Similarly, in the textile sector, cotton is considered a luxury item and synthetic fibres are used for the common man's clothing abroad because of ease of convenience, durability etc. But in India, the reverse is the case. While the petrochemical industry has been delicensed, its growth will be guided to a considerable extent by the reductions in taxes and duties on its products.
5.3.13 India is a large producer of cement and cement machinery. In the last few years, the production of cement has risen substantially. The cement production in the country is internationally competitive. The cement industry is expected to record good growth in production as well as exports.
5.3.14 The sugar scenario has undergone a significant change during the past two years and the country has become a net exporter of the commodity from being a net importer for many years. The country is also a leading producer of sugar machinery and sugar production is quite competitive. With focus on increasing the per hectare yield ofsugarcane, the sugar industry is likely to increase its production and exports substantially.
5.3.15 In spite of a phenomenal increase in exports of leather and leather goods in the recent past, India's share in world trade is minimal (0.7 per cent in the case of footwear, 9.5 per cent in footwear components and 4 per cent in leather garments). There is a growing market for leather products abroad and India can increase its exports substantially.
5.3.16 The textile sector has been undergoing a major restructuring. The mills in the organised sector are not able to meet competition from the powerlooms, though spinning continues to be profitable. Increasingly, the mills are modernising their plants and machinery and devoting greater attention to exports. A number of 100 per cent EOUs have also come up. This is a healthy development. This trend is expected to get accelerated and the textile exports are poised for a quantum jump. With improved availability of quality fabrics at competitive prices, the garments industry is also expected to record a healthy growth. The powerloom sector is likely to further increase its contribution and become the prime supplier of cloth for domestic market. The outlook for the handloom sector does not look promising. It will need to switch over to production of high value items and cater to the sophisticated exports market for specialised products.
5.3.17 A number of composite mills have closed down. In the context of the need to find resources for modernisation and growth of mills as well as paying legitimate dues of workers etc., it will be worthwhile to examine the possibilities of sale of land and buildings, which in many cases are surplus to the requirements of the concerned mills. While there are, no doubt, legal difficulties, the long term interest of the industry demands that all parties i.e., Union Government, State Governments, managements and trade unions should sit together and evolve a workable strategy for realising the full commercial value of the property and utilising it for modernisation/diversification of the concerned mills as well as rehabilitation/re-deployment packages for surplus labour.
5.3.18 The jute industry is surviving virtually on oxygen being provided by the Government. Unless the industry takes up modernisation in a big way, concentrates on high value products and diversifies into new areas, it has a bleak future.
5.3.19 Of late, there has been considerable interest in the agro-food processing industry and a number of ventures are in the offing, some of them in collaboration with leading foreign companies and others as joint ventures with foreign companies. The marine export has also attracted a lot of attention. With the recent policy changes, these two sectors are poised for a rapid growth.
Public Enterprise Reform
5.4.1 Public Enterprises embody a major national capability in terms of physical,financial, institutional and human resources. Their effective utilisation can lead to significant economic growth. In the framework of the new Economic Policy, Public Sector industry has an important role as an autonomous, competitive and efficient sector, to provide essential infrastructure goods and services, development of natural resources and areas of strategic concern. A positive and productive future awaits public sector industry. To reach that goal, considerable restructuring is involved. The Eighth Plan recognises this and proposes a major public sector reform initiative. This initiative will consist of the following integrated strategies:
5.4.2 The above call for a positive public sector reforms, by designed, selective and tar-getted interventions. The reform initiative needs to include: creating a knowledge base for reform, generating an institutional capability and developing a consensus among the stakeholders about policy goals and implementation strategies.
5.4.3 A network of institutions (academic, government, industry, consulting firms, financial institutions and international organisations) needs to be organised to design and implement the reforms. A coordinated strategy through a high powered task force is needed to mobilize the resources for achieving the objectives * reforms in the Eighth Plan period.
Targets for the Eighth Plan
5.5.1 The capacity and production targets for selected industries for the Eighth Plan are contained in Statement 5.5. Brief highlights of industrial programmes and stratgies for major sectors are given in the subsequent paragraphs.
Metallrrgical and Mineral Industries
5.6.1 The metallurgical and mineral industries constitu*-; the bed-rock of industrial sector as they provide basic raw materials for most of the industries. Their easy availability is an essential pre-requisite for growth of most of the other sectors.
5.6.2 India continues to be a net importer of minerals and metals. The gap between the projected demand and supply of most of the minerals is likely to increase in the coming years.
5.6.3 Considering the time lag between discovery and eventual production of minerals, a greater thrushon mineral exploration activities needs to be riven during the Eighth Plan particularly towards exploration by adoption of improved technology, including remote sensing and geophyiscal techniques. The exploration strategy has to be reoriented and emphasis should be on those minerals in which the resources are poor e.g. gold, base metals, platinum group of metals, diamond, nickel, tungsten and rock phosphate, etc.
5.6.4 The State sector's contribution in mining of industrial/non-metallic minerals is quite significant. Reorganisation and strengthening of the concerned departments of the State Governments will be accorded priority in the Eighth Plan. Most of the non-metallic minerals are produced through small scale mining which will continue to co-exist with large scale mining.
5.7.1 Iron ore constitutes one of the major exports of the country with foreign exchange earnings of about Rs. 1200-1300 crores in 1991-92. The major exporters are National Mineral Development Corporation (NMDC), Kudre-mukh Iron Ore Co. Ltd. (KIOCL) and private parties, particularly the Goan mine owners. The ore fr n Bailadilla mines of NMDC is by far the ricnest in the country. Until recently,-the entire Baiiadiila output was being exported, with the indigenous industry using inferior grades. It is imperative to reduce the level of exports of very high grade iron ore (+65% Fe) and utilise it increasingly in indigenous steel plants, particularly tor direct reduction.
5.7.2 As a significant proportion of iron ore reserves is in the form of fines and blue dust, greater efforts will have to be made for their utilisation for which necessary R and D work will be taken up. In this context, the NMDC will undertake a project in collaboration with the Department of Electronics(DOE) on development of process technology for manufacture of various types of ferrite powders using indigenous raw materials/blue dust and their pilot plant production.
Iron and Steel
5.8.1 During the Seventh Plan and 1990-92, the expansions of Bokaro and Bhilai steel plants to four million tonnes each, the second phase modernisation/expansion of Tata Iron and Steel Company and the first phase facilities of Visak-hapatnam Steel Plant (except light and medium merchant mill) were c^.pleted. In addition, there has been impressive growth of production capacity in mini steel plants and induction furnace units in the secondary sector. The second phase of Visakhapatnam Steel Plant is expected to be completeu 111 .*')gust, 1992.
5.8.2 Indian steel industry has been suffering from a number of disabilities. Obsolescence of plant, machinery, and technology has been important factor for low capacity utilisation, low productivity, high energy consumption and high production cost. It is interesting to note that in the sixties, the Indian Steel Industry was internationally competitive, but it is no longer so. The programme of development of steel industry in the Eighth Plan is aimed at improving the technological health of the existing integrated steel plants and modernisation and upgradation of technology so as to achieve international competitiveness in respect of both cost and quality. Modernisation of existing integrated steel plants at Durgapur and Rourkela in public sector and Tata Iron and Steel Co. in the private sector is expected to be completed in the Eighth Plan. Upgradation of steel making in the secondary sector has been taken up/being contemplated in the Eighth Plan. All these measures intiated in the Seventh Plan will bring the Indian steel industry at par with global standards. The modernisation and rebuilding of the IISCO plant at Burnpur is also expected to he taken up in the Eighth Plan.
5.8.3 Under the recent policy changes, no licence is required to set up iron and steel units. These policy changes are expected to give impetus to Indian steel industry to grow freely and also attract private investment. The initial response of the private sector to these changes appears to be encouraging.
5.9.1 During the Seventh Plan period, the non-ferrous metals sector made impressive progress with completion of the prestigious, integrated, multi-locational Aluminium complex of National Aluminium Company Ltd.(NALCO), setting up of a captive power plant for Bharat Aluminium Company Ltd.(BALCO), modernisation and debottlenecking of copper smelters and refineries of Hindustan Copper Ltd.and expansion of Vizag Zinc smelters of Hindustan Zinc Ltd. as well as Binani Zinc Plant in private sector, thereby raising capacities for aluminium, copper and zinc as targetted for the Plan. From a position of dependence on imports, India has emerged as a net exporter of aluminium. As far as other major non-ferrous metals are concerned, the share of imports in the consumption of lead and zinc registered some decline, whereas in case of copper, despite expansion of the existing capacity, dependence on imports increased.
5.10.1 With the commissioning of Orissa Aluminium Complex of NALCO, the country has emerged as a net exporter of aluminium. However, this situation is expected to last only for a couple of years more and by 1994-95, the country may once again turn a net importer of aluminium.
5.10.2 Considering the advantageous position in the resource endowment and in view of the production being competitive, it would he desirable to maintain an exportable surplus. In this context, the proposed expansion of Hindustan Aluminium Company Ltd.(HINDALCO) by 1.5 lakh tonnes would merit a high priority. NALCO's expansion by 1.15 lakh tonnes would also need to be considered as soon as they stabilise their production from the present capacity. BALCO would need to concentrate on energy conservation and setting up of downstream capacity. A number of 100% EOU proposals for manufacture of alumina in the private sector have been made but these have been pending for quite some time now for want of final isation of bauxite linkages. This needs to be expedited. Such plants could serve as the first step for setting up of aluminium smelters at a later date or joint ventures abroad for aluminium smelting.
5.11.1 During the Seventh Plan, a marginal increase in the capacity was achieved by debot-tienecking and modernisation of the existing smelters of Hindustan Copper Limited (HCL) with small investments. Production of copper is not internationally competitive because of the low grade of copper deposits and small scale of operations in comparison to world standards. Malanjkhand copper deposit appears promising. After an evaluation of the results of the exploration and feasibility study currently under way, a view will be taken on augmenting copper production. Since the deposits in India are very low in copper content, possibilities of bio-acid leaching need to be examined.
Lead and Zinc
5.12.1 With the commissioning ofRampura-Agucha-Chanderiya integrated project of Hindustan Zinc Ltd. (HZL) in 1991-92, the country has achieved near self-sufficiency in zinc. The integrated project will need to stabilise its operations before embarking on any large scale expansion in the Eighth Plan. No major new projects are envisaged in the Eighth Plan except for a repaclement mine to feed Rajpura Dariba concentrator.
5.13.1 The entire requirement of nickel in the country is imported. Considerable efforts made in the past for commercial production from large low grade nickel resources of °ukinda (Orissa) based on indigenous technology have not been successful. It will, therefore, be necessary to carefully examine the plans for indigenous production. It would be desirable to look for imported technology for upgradation of ores before taking any investment decision on production of nickel.
5.14.1 The gold deposits have been steadily getting poorer and deeper with production costs becoming increasingly uneconomic. The future of gold mining in India will depend on the low grade small scale deposits in which mill recovery is a sensitive factor. Mining of scattered shallow gold deposits will have to be considered. A new approach to gold exploration and recovery of gold from low grade ore deposits and tailings deserves consideration.
5.14.2 With the liberalisation of gold import and consequential decrease in the gold prices, the operations of Bharat Gold Mines Ltd. have become still more un-economic. The cost of production is two to three times the selling price of gold and the company is heavily dependent upon budgetary support even for its current operations. A hard look at the future of the company is overdue. The possibility of induction of private partners and ' state-of-the-art" technology and closure of some un-economic mines with re-settlement of surplus manpower in new ventures will need to be explored.
A National Materials Initiative
5.15.1 There are significant and rapid changes taking place in the world of materials. The emerging unity of many disciplines and areas in materials science and technology; the growing integration of activities in the materials cycle ranging from design to disposal; the intensive engineering efforts for superior performance; the targetted, high priority and integrated efforts on materials in many countries and the large potential for materials technology-based industrial development in India, call for a coordinated Indian strategy in technology development and innovation, industrial structure, human resources development, infrastructure development and international linkages. Indian capability in Materials Scinence and Technology is large and diversified but is fragmented and has a poor impact on the production system. The Natinal Materials Policoy Project, under the auspices of the Technology Information, Pore-casting and Assessment Council, Department of Science and Technology, has concluded that there is a priority need to promote a National Materials Initiative (NMI) to reach these objectives and has recommended the formation ofa Materials Council with adequate resources to implement the strategy with and through other institutions, to make india a competitive world player in select materials. This will involve doubling our current national investment in materials technology development from about Rs. 125 crores per annum to Rs. 250 crores per annum by 1995.
5.15.2 Material Science and Technology will be the central instruments to achieve the goals of the National Mateiral Initiative. Research and Technology Developent in the fliowing areas need to be promoted in collaboration with industry, R and D laboratories and Academmic Institutions:
Material Technological Innovation in Industry can be promoted by a competitive environment as envisaged in the New Economic Policy. A "Materials Council", when formed can, by strengthening the infrastructure and appropriate joint funding arrangements, stimulate this process. One of the Council's tasks is to identify specific areas of priority and promote alliances and partnerships of various institutions for materials technology development and use. The Council will seek to coordinate the diverse ongoing efforts for synergy among them.
5.15.3 The Material Council, when established could be an autonomous .body, and a collaborative venture of Industry, Government, S and T organisations and Financial Institutions. It could be set up through the initiative of the Department of Science and Technology and managed by an independent hoard. Initial funding by Government could be minimal in the Eighth Plan and larger resources can be raised with the help of financial institutions, international organisations, industry etc. A Materials Development Fund can be formed for this prupose. The main tasks of the Materials Council would be :
The Council's role will be to orchestrate, facilitate and catalyse various programmes rather than direct intervention. It will not seek to duplicate any efforts, but build on them. The experience of Japan, South Korea, European Community and United States of America suggest such an approach. The Council's performance in the long run is to be measured by the extent it has been able to promote a competitive and materials-technology-based industrial development.
5.16.1 The engineering industry provides the key to economic growth with its diversified forward and backward linkages with almost every sector of the national economy. The share of engineering in the total organised industrial activity is about 31.0% of the value of output, 33.2% of value added, 29.7% of employment and 28.4% of invested capital. During thi^ Seventh Plan, output of the manufacturing sector as a whole grew at 8.8%, while the engineering industry grew at 10.5% per annum. This sector is mainly based on domestic resources and has good employment potential. The cour.try has comparative advantage in this sector. However, the engineering industry has a number of weaknesses, the prominent being:
Overmanning, which has often prevented modernisation and also increased overheads;
5.16.2 The stress in the Eighth Plan will be on qualitative upgradation and elimination of the. weaknesses mentioned above. Greater stress would need to be laid on impoit of drawings and designs, than on import of equipment. Establishment of closer linkages between academic institutions, manufacturers of equipment, users of equipment, national laboratories and the Government is also necessary.
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