Financial Daily from THE HINDU group of publications
Friday, May 17, 2002
Industry & Economy
Guindy estate: Mirroring the decline of SSIs
BUMPY RIDE: A stretch of damaged road near the Metrowater filling station inside the Guindy Industrial Estate in Chennai.
CHENNAI, May 16
ITS claim to fame is that it is the oldest industrial estate in the country the forerunner of more such industrial estates that will be the beehive of industrial activity, especially among the small and tiny sectors.
However, the Guindy industrial estate in Chennai also called the Thiru Vi. Ka. Industrial Estate now reflects the troubled times that the small-scale sector in the country is facing.
As Mr K.V. Kanakambaram, President, the Industrial Estate Manufacturers' Association, points out, a number of units have closed down, some have let out their premises, and some others sold out their sheds to salvage whatever they can. All types of activities not essentially industrial by the strict definition of the word have come up in the estate, he says.
For instance, a number of automobile dealerships have their service facilities inside the estate, courier companies have set up base, even shops dealing in metal scrap have sprung up. Besides, scores of trucks are almost always parked inside the estate. The roads are in a bad shape, particularly the stretch near the Metrowater's filling station.
An industrial directory brought out last year by the Industrial Estate Manufacturers' Association (IEMA), the representative body of units in the Guindy industrial estate, proudly says: "Blessed with diagonal and circular transport system and completely linked by roads, the estate's infrastructure consists of a host of institutions like the SISI, RTC, Advanced Training Institute, CIPET, NISC - Prototype Testing Centres."
It further says the products that come out of the estate range from pencils to highly sophisticated electronic components. "There has been tremendous progress on the industrial front particularly in the small-scale sector, with little cause for worry in Guindy estate on labour issue."
The Guindy industrial estate itself was the brainchild of the former President of India, Mr R. Venkataraman, who as Minister for Industry in the then Madras Government, initiated the move in 1956. The first phase of the estate was inaugurated by the then Prime Minister, Jawaharlal Nehru, in 1958.
According to Mr Kanakambaram as also some entrepreneurs who have units in the estate, the engineering industry is facing troubled times and this is reflected in the prosperity or the lack of it of the units in the estate. "There is no point in merely saying that this is the oldest industrial estate in the country. The Government has failed to protect the small-scale units and maintain the estate in keeping with its pioneering status," says Mr Kanakambaram.
For instance, he says, the Tamil Nadu Small Industries Development Corporation Ltd (SIDCO), which administers the estate, has failed to maintain the estate despite collecting maintenance fees. The SIDCO levies a maintenance charge of Rs 10,000 per acre, according to him.
Official sources admit that the general upkeep of the estate has suffered over the years. This is because the money collected by SIDCO as maintenance charge is just about enough to carry out day-to-day maintenance like clearing garbage and removing clogs in the drains. Money is simply not available for undertaking major capital works, they say.
Mr Kanakambaram points out that the Chennai Corporation collects money from units in the estate through property tax, licence fee and professional tax. "The Corporation gets almost Rs 3 crore a year from these levies and not even 10 paise is spent back on the estate," he says. If a portion of this is given to SIDCO, the estate's maintenance can be improved, he adds.
It is for this reason that, after repeated representations from the IEMA, the State Government is examining the possibility of creating an industrial township authority for industrial estates. This means that the township authority will collect all the taxes and levies from the units in the estate, pay a portion of it to the civic body and plough back the balance to improve the condition of the estate.
Official sources say other options are being considered hand over the maintenance to the local body concerned, permit the manufacturers association to undertake maintenance, or SIDCO itself will maintain provided a portion of the taxes collected by the Chennai Corporation is given to it for this purpose.
According to Mr Kanakambaram, Tamil Nadu can adopt the Andhra Pradesh model. That is, of all the income from the estate as much as 65 per cent should be used to maintain the estate, and the balance given to the local body concerned.
He says barely a fourth of the nearly 700 units in the estate, spread over 405 acres, are functional. The Government should appoint a committee to identify the problems faced by individual units and take steps to nurse them back to health. Apart from the general decline in the engineering industry, a Government Order issued in February 1997, which removed purchase and price preference for the small-scale industries, contributed to the decline of the units, he said. (The present AIADMK Government has now withdrawn that order.)
Mr Kanakambaram hopes that withdrawal of the order and continued monitoring of the problems would help in the revival of the small-scale sector in the State. "This is where the employment generation can come from," he said, pointing out that there were nearly 60,000 working in the estate four-five years back, and there were only 15,000-20,000 employed in the various units now.
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