India, the “Golden Bird”, was ransacked and looted over decades by multiple rulers and conquerors, foremost among them being the British Colonisers. Stripped of her resourceful, self-fulfilling capacities, the nation was left to fend for herself when Independence came knocking at her door after a long, blood-ridden wait.
Instead of being a harmonious and joy-filled journey of united efforts at restructuring the economy and going back to our glorious days of yore, it was one filled with internal strife, violence and a complete lack of knowledge regarding industrial development.
However, government aid and initiatives gave the required thrust to small-scale, labour-intensive, exportable goods’ manufacturing industries. Indigenous goods began to be encouraged and within the budding nation prospered several small-scale industries that got the complete protection accorded by a closed economy.
However, in the form of a jolt to the industrialists, change-the only constant-revealed itself and the early 90s became a time of drastic change for the Indian economy. Manufacturers and employees were introduced to a new term with economic, social and political connotations- Globalisation.
A huge network of economies and societies developed gradually and today, we are a country of consumers of Chinese phones, American burger joints and British real-time classes available online. The remotest corners of the earth are now our trade partners. The election in a country seven seas away intrigues our political analysts and the aficionados of the land.
“Global Village”- that is what our world is in the present day. Far, near, distant, neighbouring; everyone is close. Can this be a boon?
Understanding Globalisation and its Paradigms in India
Globalisation is a term that is generally associated with the economy. However, it has a broad spectrum. The exchange of goods, services and cultures across oceans and countries is an equally valid definition of the same. The biggest example of such exchange is the growth of outsourcing of jobs, especially in the IT sector by various nations to India.
This became possible only with the advent of modes of communication, transport and exchange of the information that India is the hub of the well-trained and cost-effective labour. This is the exchange of services. This is the global village mentioned above. No place is too far; no service seems too far-fetched.
How did this change come about in India? India, in its infant stage post-independence, struggled to keeps its economy functioning. It had accrued a lot of debt and by 1985, its condition had worsened. To bail India out of this problem, the IMF resolved to lend a substantial amount of money on the condition that India opens its gates to the international market. It had to give up on its protected domestic economy.
The year 1991 is considered the watershed year when the LPG came about- Liberalisation, Privatisation, and Globalisation. Things changed drastically post this. The government had to give more liberty to the individual entrepreneurs and profit-accumulation became the ideal of business. Prices of goods and services were bound to rise and they did. The government no longer exercised sole monopoly on the different industries and sectors.
Along with opening up of individual enterprises came the biggest challenge of foreign competition. The manufacturers and sellers had to compete with the quality and price standards of the foreign goods and quite a few businesses proliferating under the protected regime had to close shop.
The hardest hit among these were the small-scale industries. Before understanding the crushing impact of this competition, it is important to have a clear idea of what comprises a small scale industry.
Small Scale Industries in India
As the name suggests, these industries have a smaller scale and scope of work. They have fewer employees and their quantity of production is also less. There are certain government guidelines which qualify a small-scale industry as one. They are:
- For Manufacturing Units for Goods: Investment in plant and machinery must be between 25 lakhs and five crores.
- For Service Providers: Investment in machinery must be between 10 lakhs and two crores.
Small-scale industries have been the backbone of our economy for long. Almost 45-50% of our exports are provided by the industries producing indigenous goods at a small scale. The biggest social benefit derived from small-scale industries is their ability to generate and provide employment to the force of talented youths dwelling in our country.
These industries have given an impetus to entrepreneurship by encouraging women and middle-class people to take risks and become their own masters. Business acumen has slowly proliferated in this country and small-scale industries get the maximum credit.
Small Scale Industries and Globalisation
While globalisation has definitely brought in competition for the smaller industries, it has also come as a boon to the consumers. They have access to more variety and better quality of goods. The producers, however, have to increase production costs and find means of selling their products in the competitive market.
The entry of Foreign Direct Investment has enabled foreign brands and companies to set up shop in our country which dissuades producers from investing in an unprofitable local business. Most indigenous producers try to export their goods to a favourable market.
The biggest change due to globalisation is that brands selling organic and local produce in attractive packaging are preferred over unglamourous, cheaper substitutes in the local market. Thus, globalisation has made people starry-eyed towards the foreign culture and goods, thus, neglecting cheaper local manufacturers.
Industries being established throughout the country have reduced from a 273.08% growth in 1973-74 to a 4.05% growth in 1989-90 which declines even further post globalisation.
While the government has given immense impetus to foreign invest through Special Economic Zones and subsidies for basic necessities in the backward areas, it also needs to focus on the growth of these dwindling smaller industries.
The trend is not all that bad as well, because initially producers could not cope with the entry of foreign producers into the market, but have found ingenious ways to sell their products in the market.
Apart from that, the markets of other countries have also been a blessing for Indian indigenous goods. This provides them with the necessary means of expanding their base. This has also compelled them to improve the quality of their goods and thus, make a secure consumer base wherever they deliver.
Online shopping has also given a boost to these manufacturers. It is easy for any merchant to go online and upload their goods for the world to admire and order right away. Amazon and Flipkart are good examples of such sites which allow all businessmen to advertise their products and keep a direct contact with their customers. Thus, we see many home-based enterprises slowly growing and being appreciated for their quality products.
Thus, small scale industries are slowly finding their feet in the globalised world.
Globalisation has its blessings as well as evils. Things got a lot harder for our small manufacturers the moment their shield of protection from competition was seized. However, the government can aid these industries even now. Providing some subsidies and incentives on better quality and greater imports will allow the entrepreneurs to work harder and employ capable and trained workers.
Industries and startups are increasing by the day and the present government has also started acknowledging their booming presence in the market. This will have positive impacts on their prosperity when the government understands their problems and alleviates them.
It is indeed a small world where there is a place for everyone, given that they are willing to work hard and perform well. Thus, globalisation has created a positive spirit of competition which can be channelised by the small scale industries with the aid of the government to thrive and make their own identity in the international market.
We have several opportunities in this day and era. Technology lies at our feet and it cannot be undone. So what cannot be changed needs to be accepted wholeheartedly and optimized to bring the best possible results.
Small scale industries and globalisation can co-exist. The only need is to find measures where none feels at a loss. Things will fall into place once all the players of this game realise their part and come to terms with it.
India has the potential to turn into a profitable market both in terms of import and export. It should understand this power and make its way to the top by taking all the components of this exercise together and at the same level.
Small-scale industries have been the backbone of this economy and they shall remain so for a long time to come because people will always need employment. So, for the people to live a happy and successful life, it is imperative to improve their method of sustenance and livelihood. This is the time for action and welfare of the people.
India shall rise and make its name in and among the markets around the world. It is a sincere hope that the “golden bird” shall raise its head again and flap its wings to take off the ground and fly high into the sky taking along with it, the joys, smiles and prosperity of all those living beneath. The past glory shall return to India, very soon someday.
“Any small business that’s predicated on technological innovation and is differentiated and superior can expand globally very effectively using the Internet as a vehicle for promotion. “ -John Quelch