Changing Scenario of Small Scale Units in the Globalization Era

Abstract

Changing on Scenario of Small Scale Units in the Globalization EraRapid economic development has been the primary objective of independent India. It has been pursued through industrialization, especially the development of basic and heavy industries within the ideological framework of a'socialist pattern of society' stressing equitable distribution. In order to ensure equitable distribution, the state, as the principal agency acting on behalf of society as a whole, assumed direct responsibility for the development of industry. The states direct involvement in the development of industry resulted in the formation of a dominant public sector and heavily regulated private sector. To enable the government to control the course of industrial development public utilities and industries that were essential but quality coupled with existing income inequalities segmented the product market into two parts: price-sensitive and quality-insensitive segment and price-insensitive and quality-sensitive segment. Lower-income households and the government constitute the former segment while the higher income households constitute the latter market segment. Small-scale industrial units, mostly being producers of lower quality but cheaper products, cater mainly to the price-sensitive and quality-insensitive market segment/. Product market segmentation exists in India for numerous consumer items such as water heaters, washing machines, pressure cookers, tape recorders, sewing machines, garments and footwear. Underdevelopment of infrastructure like transport created sheltered local markets for small-scale units. The only competition these units have so far faced is competition with each other due to the overcrowding. The business environment has, however, changed drastically since the 1990s due to new economic policies. The radical shift in the Indian economic policies partly occurred due to its own macroeconomic crisis and partly as a consequence of the global fiend.