GROWTH
OF ENTREPRENEURSHIP AND THE MARCH OF TECHNOLOGY - IN INDIA
Y. V. S. S. Murty
At the time
of Independence, industry in general and chemical industry in particular was
not significant in the country with few units dotting the country here and
there. There was a fairly large textile and jute processing industry apart from
primary agro industries like rice milling, cotton ginning, flour mills and cane
sugar factories. Most of the industries were based on imported plant and
machinery and even whatever little technology was involved in these industries
was imported.
The education
system in the country was oriented to supply personnel for service mostly in
the Government and a small percentage to the industry. Innovation and
entrepreneurship were practically non existent.
The country
faced severe problems of poverty, extreme food shortage, famines, poor
agriculture output and uninhibited population growth. Big business houses like
Tatas, Birlas, Dalmias dominated the steel, cement & paper industry. They
had nurtured competent engineers and managers to run their industries, but the
entrepreneurship did not spread beyond their families.
Immediately
after independence the Government embarked on major irrigation projects and
agricultural research stations to increase the food production and productivity
which made the nation self sufficient in food requirements even after meeting
the needs of the exploding population.
The next
objective of the Government was to hone the scientific and technological talent
towards entrepreneurship by providing the necessary financial inputs and the
infrastructure facilities.
A number of
schemes came on the anvil such as 50:50 equity participation in the project
cost, seed capital, risk capital assistance and soft loans to the promoters. A
number of industrial areas and industrial estates were built by the Government
with power & water supply, roads and buildings. Financial incentives were
also provided and every effort was made to attract the technical people to set
up industries particularly in the small and the medium scale sector. A massive
drive was organized in all the States by setting up Industrial Development,
Financial and Infrastructure Corporations which were autonomous bodies
empowered to decide and finance the projects.
I was one of
the earliest beneficiaries of such liberal financial packages in 1968 namely a
50:50 joint venture with APIDC which promoted a Sodium Metal manufacturing
unit, the first of its kind in the country and one of the five such units then
in the world. The project was based on a claim by me that I would translate
text book information into a commercial plant inspite of the well known fact
that the process for the electrolytic production of Sodium Metal is
a well guarded technology confined to the former war time powers. Such was the
fervour with which technocrats were supported by the Government that my
proposal was at once sanctioned as a joint venture.
In 1968, 5
joint ventures were launched, of which only the joint venture with me is
surviving and the rest perished long long ago. I justified the trust the
Corporation had in me. This in fact lead to many more J.Vs and much more
liberalized sanctions. Inspite of many such concessions it had taken quite a
few years for the technical personnel to risk, if it can be called a risk, to
opt to be an entrepreneur from secure “no risk” jobs. There were also some
schemes in which the scientists were given a lean on their job for a period of
3 years along with a lump sum grant of Rs.25 Lakhs to set up an industry and
make a success of it. If it failed, they could come back to their parent job.
The various
schemes mentioned gained momentum between 1968 and 1975 and a number of small
and medium scale industries came into existence. Quite a few of them perished,
either because of inadequate technical skills, managerial skills or inability
to compete in the market, quality problems and also to some extent the greed of
the entrepreneur. None-the-less the success rate of the industries that came
into existence was almost 20% which is a very decent achievement, considering
that at start the entrepreneur man power resource was almost zero.
Between 1975
and 1985 there was a big spurt in the establishment of many industries
particularly the chemical industries like pharmaceuticals, pharma
intermediates, dyestuffs and textile auxiliaries which flourished due to
protection from foreign competition by the imposition of heavy import duty,
market assistance from the Government and easy access to project funds through
public issues for which there was great response from the public. Public sector
undertakings which were set up by the Government in 1950’s and 1960’s like the
giant steel factories, HEC, IDPL, HOC., Fertiliser factories, Petroleum
Industry etc., were the breeding grounds for entrepreneurs. They also ensured
availability of basic raw material for the growth of the industry and avoided
excessive dependence on imported materials.
Thus, by
early 1990’s in A.P. alone 120 chemical and allied units, 30 drugs and
pharmaceutical industries, 30 paper and pulp units, about 40 cement units, 140
food and agriculture industries and 30 mineral based industries were in
operation. This is a growth achieved in 30 years between 1960-1990. Paper mills
have increased their capacities from 5 M.T. per day to 200 Te per day. Cement
industry was able to set up one million / 3 million tons per year plants.
Fertilizer industry grew from 1 M.T. Ammonia per day to 1350 M.T. per day with
28 such factories in India. From a small 100,000 tons petroleum refinery in
Assam to 5 to 8 million tons refinery in Koyali, Trombay, Vizag etc., and now
27 million tons refinery at Jamnagar. Power generation which was hardly 100 MW in
early 1950’s has gone up to 4000 MW in mid 1990’s and presently 8000 MW in A.P.
alone. Installed power generation capacity in India in 1947 was 1400 M.W. today
it is 110,000 M.W. Coal output has risen from 40 million tons to 340 million
tons. Post offices and railways are the largest net works in the world.
Satellite
communication and information and satellites launching has also come into
being. Space launch vehicles and space exploration units are now made in the
country with indigenous technology. Ship building has grown to great heights,
air craft carriers and frigates are now being built in the country. Rolling
stock and engines required for railways are all now made in the country and are
even being exported. Electronic industry has developed phenomenally though
still far behind countries like China, Taiwan, Korea etc.
The effort of
the Government in encouraging the growth of entrepreneurship has been a success
story. By the beginning of the 21st century the Government has
considerably cut down on the many sops to the entrepreneurs, like assistance in
equity participation, seed capital and risk capital assistance etc., and
rightly so.
The right
man and the right project only gets support. Supporting each and every project, some with even
doubtful viabilities, is no longer the order of the day. Promoting projects at
any cost and thus bringing about industrialization and entrepreneurship had a
long innings of 40 years and has now almost come to an end. Financial
institutions are now tightening the screws. It is now a case of survival of the
fittest, the best quality, lowest cost. High standards of operation,
maintenance and control of environmental and safety issues are the order of the
day.
During this
period also many industries perished due to reasons earlier stated and also
because of the advent of many who sought short cuts to success. However, most
of the industries particularly pharma & pharma intermediate chemical
industry embarked on vertical integration and capacity increase to cut cost of production
and survive in the intense domestic competitive environment. Problems of
quality, safety and environment also started growing in proportion to the
growth in capacities.
My group
companies manufacturing several hazardous organic and inorganic chemicals,
natural extract concentrates and a large no. of fine chemicals are well
recognized in India and abroad in countries like Japan, Germany & USA as a
dependable high quality producer. Excellence, excellence all the way, no
compromise. We are a recognized in-house R&D by the Ministry of Science
and Technology. We hold certificates under ISO 9001, 14000, 18000, HACCP &
cGMP. We are also an Export House. Entrepreneurship and technology are on the
march and become the engine of growth and major source for employment in the
country. Dependence of employment in the Government and public sector is on the
decline.
While all
this is a matter of great satisfaction and pride, it is necessary to note that
the country has still a long way to go to become a developed nation and get
back to the glory of the country that 400 years ago was the beacon light of the
world. In the last 50 years atleast 3 out of every 1000 technicians, engineers
and scientists in the country came into business, industrial and service provider
sector. Currently it is around 10 in thousand.
The country
would reach great eminence if even 5% of the brilliant and bright students
coming out of the colleges and universities become entrepreneurs, service
providers and employers.
It is
necessary here to point out that the biggest area for growth and opportunities
is (1) the specialty chemicals and pharmaceutical intermediates (2) automobile
ancillary (3) I.T. sector and (4) the farm sector which holds the greatest
challenge. The production of bulk drugs and pharmaceuticals is slowly going out
of reach of the average entrepreneur by the sheer scale of operation and market
intensive nature of the industry. However, the pharmaceutical ingredients and
specialty chemicals are still a vast virgin field in which innovation, quality
and cost saving offer great opportunities to entrepreneurs. This is an area in
which my group companies are now thriving.
Automobile
manufacture and marketing is beyond the average entrepreneur. It is and will
continue to be in the hands of giant corporate. However, the thousands of parts
required for the automobiles have to be produced in the ancillary where
precision, quality, reproducibility are hallmark for success, the talent for
which is abundant in the country. Today about 20% of the automobile ancillary
industry is said to be now in the hands of Indian entrepreneurs.
I.T.: This has seen tremendous growth in
the last two decades but it is saddening to mention that inspite of the
talent and large number of I.T.
personnel working in India and abroad most of them appear to be data
processors. Programmers are very few and software developers are still far
less. These are the areas in which the I.T. engineers have to make greater
impact. The hardware industry is also lagging far behind the other countries.
The growth of
the entrepreneurship and the march of technology in the last 50 years are
indeed very heartening. Thousands, nay, lakhs of engineers in various
disciplines are pouring out of colleges and universities on which talent pool
the country will have to march further on.
Farm
sector: Much has
been done in the farm sector. Much more has yet to be done. Bio-tech, genetic
manipulation organic farming, increasing farm productivity, water conservation
are challenges which the engineering and scientific community has to address.
Water: The future holds wars for water and
not for land. We already have mini battles in the country for this precious
commodity. Water conservation, recycling, prevention of pollution are the great
challenges facing man kind.
Energy
sector: The energy
crisis is bound to deepen more and more unless solutions are found. Our hopes
are now on harnessing solar energy and hopefully we will succeed.
A word of
caution is now needed. There is great need to recognize that we as individuals
and our country are entering into the international arena as a developing /
developed country, so are many other countries hitherto considered backward.
Every country
wants to use its resources as well as it can, and nurture its human talent as
best as it can. Examples are Gulf countries, former Soviet countries, Malaysia,
Singapore, Korea, Taiwan, India and China.
Our mind-set
has to change. It is not technological obsolescence, it is commercial
obsolescence. With plenty of cheap energy and hydrocarbons as source, competing
with gulf countries is not easy in hydrocarbon industry or even in Caustic soda
chlorine industry. With vast sources of Iron ore and cheap energy available,
former Soviet countries can produce steel at far lower cost than any other
country. The shift is from massive low value, high volume products to high
value low volume products. Change from steel to special steel and armaments.
Change from chlorine production to chlorine based products. Shift from electro
chemical and electro metallurgical primary products to down stream higher value
products. It is economic sense to shed the ancestral house and convert it into
an apartment complex.
I followed
this principle 15 years ago when I had given up voluntarily the manufacture of
Sodium Metal, which I ran for nearly 20 years, a much acclaimed pioneering
effort, as the shortage and cost of power made the production uneconomic. I now
import Sodium Metal from abroad (I am
the largest importer and consumer of Sodium Metal) and produce several
commercial products with higher value addition, such as Sodium Amide, Sodium
Azide, Sodium Hydride, Sodium Alkoxides, HMDS Sodium, Amino pyridines,
Tetrazoles etc., all based on Sodium Metal. I now have a basket of high value
commercially viable products which are being exported to Japan, Germany, USA.
We are continuously and constantly developing new products, and new markets,
some of them brought into commercial production.
Our recent
entry into Natural extract concentrates, such as Capsaicin pure, Curcumin pure,
Solanesol 90% are some examples. We are not averse to get out of
production of any product when we face commercial obsolescence. Our policy is
to explore technology, move with the tide and times. There are today many such
entrepreneurs like me, who are making success a habit. In India, we have the
competence, we have the knowledge, what we lacked was dedication and enterprise
which today is coming into its own.
I hope and pray that the youth will bring to the country
greater glory and achievement.
Prof.
C. Chiranjivi Endowment lecture at Andhra University, Waltair on 10th Sept. 2004