District Level Mapping Of Micro, Small and Medium Enterprises Pilot Project … · 2017. 1. 13. · Tiruvannamalai and Ariyalur were responsive and supportive of our efforts and we

AKARA RESEARCH & TECHNOLOGIES

District Level Mapping

Of

Micro, Small and Medium

Enterprises

Pilot Project

Mapping of MSME Activity: Final Report

2

Akara Research & Technologies Pvt Ltd consists of a unique team of economic researchers

and information and communication technology professionals. Our Mission is to build

systems that enable smart governance. We leverage emerging innovations in the spheres of

Information and Communications Technologies (ICT), electronics and Geographic

Information Systems (GIS) Technologies to build platforms that harness the power of data

for informed decisions-making. We engage with stakeholders at various levels of governance

to help them reach the public services to the last mile of citizens.

Reach us at www.akara.co.in to view some of our other innovative products and services, in

the areas of town assets and property management, economic activities map, and online

tools for financial literacy.

Contact: [email protected]

http://www.akara.co.in/


3

-

Acknowledgements

Akara Research & Technologies is grateful to the Tamil Nadu State Planning Commission (TNSPC) for

the confidence reposed on us. We thank the Vice Chairperson, Tmt. SanthaSheela Nair, IAS (Retd)

for setting the initial framework and guidance at subsequent presentations of our study.

We thank the Member Secretary, Dr. Sugato Dutt IFS, for his support and guidance.

We thank Mr. K. Ramakrishnan, Head of Division - Industries, Power and Transport, TNSPC for his

comments and suggestions on the study.

The officials of the Block Administrative Office and the District Industries Centre at Theni,

Tiruvannamalai and Ariyalur were responsive and supportive of our efforts and we thank them for

the same.


4

Contents

Chapter Page Number

1. Introduction 5

2. Industrial Clusters and Economic Geography 8

3. Study Methodology 12

4. Pilot Districts – Current Economic Status 14

5. Pilot Districts – Micro, Small and Medium Industry Profile 18

6. Findings from Economic Mapping 21

7. Economic Mapping: Learning from Pilot Study in Three Districts 26

8. Economic Empowerment of Women 29

9. Opportunities for Value Addition and Linkages 30

10. Scope for Other Larger Studies 31

11. Annexure 1: Map of Textile and Handloom in Theni 32

12. Annexure 2: Map of Food Processing Clusters in Theni 33

13. Annexure 3: Map of Handloom Clusters in Ariyalur 35

14. Annexure 4: Map of MSME Activity in Tiruvannamalai 36

15. Annexure 5: Tamil Nadu Regional Economic Linkages – Current Status

36


5

Introduction

The pilot project on Economic Mapping of micro, small and medium enterprises (MSME) at the

district level was awarded by the Tamil Nadu State Planning Commission, under its Industry, Power

and Transport Division, to Akara Research & Technologies. The objectives of the project were to

create a system based approach to map the economic activities of the districts in the MSME sector,

in order to create a framework of intervention based on real-time data transfer. Three districts were

chosen by the Tamil Nadu State Planning Commission for the pilot project, namely, Tiruvannamalai,

Theni and Ariyalur.

Economic maps have found increasing applications in the areas of economic research, economic

planning and promoting welfare. Moreover, this has important benefits for a State in promoting

clusters. There are three main arguments that are advanced to justify the focus on cluster-based

approach to development:

1. Collective efficiency gains

2. Spatial proximity effects and

3. Pro-poor potential

The inherent characteristic of the spatial proximity in a cluster-approach influences both the other

two gains mentioned above. As such, it is imperative that planners and researchers have a

systematic geographic approach to understand the clusters and cluster formation. This is generally

termed as “analysis of spatial distribution of economic activity”.

Analysis of spatial distribution of economic activity has a number of implications in areas like urban

planning, infrastructure planning and delivery, supporting policies for enterprises and land use, and

is therefore, receiving an increasing attention by researchers. Conventionally, scholars have

approached this issue using the extant of administrative units (such as counties, regions,) and then

analysing how economic activities were spatially distributed. Unfortunately, such analyses suffer

from some shortcomings, as administrative boundaries are not always equivalent with real economic

areas and are sometimes arbitrary. Moreover, such an approach becomes redundant in the context

of a large country as India, where the real issue is inclusive growth and geographical inclusion is a

key parameter in this context. Also, there is need to understand the issue of lack of value adding

activities given a large geography with uniform economic policy.

In order to face such constraints, recent developments have shifted to micro-geographic data, trying

to overcome previous shortcomings. Concretely, smaller spatial units are being used, while such


6

units need not match exactly with any extant administrative unit. In other words, they could be

developed across any adjacent administrative units, to understand the cluster formation in full.

The subsequent issue in promoting clusters is then, the planned interventions by the State to

promote the clusters. Here the first step is to identify the spatial distribution of the industries, and

the extent of co-location (intensity within a given geography). As such, mapping of spatial

distribution of economic activity becomes important. There are quite a few researches that have

shown that co-location and cluster formations are important characteristic of successful industrial

geographies1. Scholars explain the geographical concentration of production in terms of the

existence of some increasing returns2 (Krugman, 1991) or because there are some kind of external

scale economies at the industry level. In the words of Karlsson et al3 (2005), “when external

economies of scale of this type are present in a functional region, the unit costs of each firm in the

industry decreases as the number of firms in the industry in the region increases. With decreasing

costs, co-located firms can increase their productivity and their factor rewards. Hence wages and

profits can rise”.

Another important research finding from the Indian context, based on district level study4 is that

entrepreneurship across successive periods or new businesses in specific locations (clusters) were

closely linked to the type of incumbent entrepreneurship. In other words, in regions with higher

intensity of female entrepreneurs were highly likely to have successive periods of entrepreneurship

from women. This also suggests that it could be a policy decision to formulate intervention

strategies to promote entrepreneurship amongst women for gender equality through a cluster

based approach.

Given the above context, this project looks to execute a pilot study of mapping of micro, small and

medium enterprises (MSME) in three non-industrialised districts, namely Ariyalur, Theni and

Tiruvannamalai. The structure of the report is as follows:

1. Theoretical framework of economic geography

1 Duranton, G. and Overman, H.G. (2005): “Testing for Localization Using Microgeographic Data”, Review of

Economic Studies 72: 1077-1106 2 Krugman, P. (1991): Geography and Trade, MIT Press: Cambridge, MA

3 Karlsson, C.; Johansson, B. and Stough, R.R. (2005): “Industrial Clusters and Inter-Firm Networks: An

Introduction”. In: Karlsson, C.; Johansson, B. and Stough, R.R. (Eds.), Industrial Clusters and Inter-Firm Networks, Edward Elgar: Cheltenham. 4 Ejaz Ghani, William R. Kerr, and Stephen D. O’Connell, Local industrial structures and female

Entrepreneurship in India, Journal of Economic Geography (Nov 2013)


7

2. Need for the study in the context of the current economic situation in Tamil Nadu, and

particular the three chosen districts

3. Methodology of the study

4. An analysis of available data, secondary and primary, for the three districts

5. An analysis of the maps generated from the study of the three districts

6. Summary of findings

7. Scope for further studies


8

Industry Clusters and Economic Geography

One of the significant aspects of the last two decades of the economic growth in India, during the

post-liberalisation period, has been the debate on inclusive growth, or the lack of it. The lack of

development as revealed by human development indicators in many regions in India has been well

documented. For instance, the works of Datt and Ravallion (2002) which tries to examine if or not

India’s economic growth is generated only by a few regions within India while others are left way

behind in the development path5 These studies have resulted in policy responses at both the Central

and State government level on implementing schemes that are specifically oriented for and targeted

at the economically and socially weaker sections of the society, whether in rural or urban areas. The

Mahatma Gandhi National Rural Employment Scheme (NREGS) and the Urban Livelihoods Mission

are such schemes.

However the issue of addressing growth and strengthening of economic activities at a granular level

of geography has still not found a policy response. Cluster development programmes traditionally

have taken more time lags till a threshold level of number of units is created. Such a systemised

knowledge of clusters, based on seamless flow of information on the type of units getting formed in

a geographic region is an important parameter that could determine the type of interventions, that

are more geographically targeted and sector-specific. The attempt of this study is to develop a map

of three districts based on emerging data on economic activities. This chapter looks at the

theoretical framework of economic geography and extending some of the learnings to the

regional/district level.

Economic Geography and Value Generation for Local Economic Development

Economic geography refers to the spatial distribution of resources and the effect of these resources

on the economic activities of a region. Researchers have always been interested in studying the

effect of resource endowments on the economic activities in a region. Colocation of specific type of

economic activities is termed as industrial cluster. A variety of causes have been analysed for

formation of cluster including historical reasons, for example, the Cumulative Causation Model of

Myrdal (1960) and Kaldor (1960).

Economic geography has also been explained in the context of increasing returns to the firm

externally and internally. Henderson, Shalizi and Venables [2001] have identified information

5 Datt, Gaurav and Ravallion, Martin (2002), “Is India’s Economic Growth Leaving the Poor Behind?”, The

Journal of Economic Perspectives, Vl. 16, No. 3 (Summer, 2002)


9

spillovers as a major source of increasing returns to the firms. Information about the processes used,

technological progress, sellers and buyers is readily available in a cluster. This provides external

benefits to the firms and is an important factor in explaining agglomeration. The internal benefits

manifest themselves via easy access to markets, lower input prices and the increased demand for

intermediate goods. The firms producing intermediate goods have an incentive to locate in areas

with large demand for intermediate goods to minimize their transport costs and to better service the

demand. This process reinforces the tendency of other firms to cluster in that particular location

thus leading to the “positive feedback” effect discussed in Arthur [1990]. Henderson, Shalizi and

Venables [2001] also point out that the formation of new cluster is dependent on exogenous factors

like improvement in technology and the growth of population among other things.

India too had followed a policy framework that targeted historically backward regions; for instance

the industrial policy favoured a “tax-holiday” for setting up of industries in backward districts. As a

result of such policies, industries, and many of these were public sector undertakings, were set up in

a variety of regions identified as backward. The objective was that due to the investments a

multiplier effect would reinforce the region with other economic benefits and propel the district

towards growth path. As such, in India, while a great number of clusters did develop based on

inherent strengths, the Government did play an active role in shaping of the economic geography of

a region.

These influences manifest themselves in the setting up of port cities, investment in infrastructure

and setting ground rules for firms operating in a certain area. The role of Government in shaping the

economic geography of a region has undergone a sea change over the years. Many of the states

have witnessed some sort of structural changes over the years, i.e. they have undertaken reforms.

Post the reforms, the role of the Government has changed from being the initiator of change to the

enabler of change in the sense that the state has given a more prominent role for the private sector

and encouraged foreign investments. The change in role of the private sector is often accompanied

with a change in economic geography of a nation that has undergone structural changes.

However, the ideas on economic geography have changed considerably post the globalisation drive

across various countries. With the advent of developments in information and communication

technologies, the scope and size of what could form as business entities has undergone phenomenal

change. Firms do not specialise just in a final product, but increasingly on specific activity within a

long value chain of production. For instance, we have cluster of automobile designers in Ireland, a


10

cluster of specific spare-parts in East Asian and Indian cities, and assembling at the respective

market countries.

Secondly, in the Indian context, where the MSME sector contributes to significant part of

employment and demand for finished products, it is important to note that the investment decision

and choice of location are not flexible. These decisions are made within the region that the investor

resides. The nature and scope of home-grown businesses therefore depend on the given economic

geography of the region. Implementation of targeted programmes that can augment the value

addition within the region could bring about a change in the business ecosystem of a region.

Therefore, policy driven by modern economic geography needs to be backed by an understanding of

the value chain in respective industries. Such policy could help in targeting incentives including skill

development and financial inclusion. A system of information flow on the economic activities as they

emerge is indispensable to drive such policies. The pilot project of mapping the economic activities

through an online system is a response to this need.

Value chains

According to International Labour Organisation definition, a Value Chain “describes the full range of

activities that are required to bring a product or service from conception, through the intermediary

phases of production (...), delivery to final consumers, and final disposal after use6.” This includes

activities such as design, production, marketing, distribution, and support services up to the final

consumer (and often beyond, when recycling processes are taken into account).

Why value chain led interventions?

In India, as in many parts of the world, successful clusters have been naturally grown clusters.

According to a study by the United Nations Industrial Development Organsiation (UNIDO), almost

91% of the clusters in India have developed naturally and only 9% of the clusters are government

induced7. Secondly, in many sectors, even in well-performing clusters, there are problems related to

technology obsolescence, poor product quality, inadequate management systems and information

deficiencies.

6 Kaplinsky, R. 2004. Spreading the gains from globalisation: what can be learnt from value-chain analysis,

Problems of economic transition, vol. 47, no. 2, 7 UNIDO 2005. “Building Successful Export Clusters: What Are The Essentials? The Experience Of UNIDO Cluster

Development Programme In India.


11

Under such circumstances, targeting value chains for intervention programmes could provide the

following benefits:

1. This could be targeted at naturally evolving clusters

2. Different clusters may need different type of interventions; a combination of interventions

such as skill development, technology upgradation, market linkages and financial inclusion

3. Provide the Government with a detailed resource/product/process map of the State at the

MSME level. This would be of great use to market the State for larger investments based on

inherent strengths

4. Estimate the “population at risk” and “value at risk” for the State’s MSME sector, for any

negative shocks such as exchange rate fluctuations, price fluctuations and plan for

interventions to help out the specific MSME entities through appropriate channels

5. Provide a base for better marketing reach of the products (both inputs and output); in

general such information dissemination could help entrepreneurs in decision-making.

6. It would also help understand the emerging environmental risks in different regions and

address them before they precipitate

7. This will also give the opportunities arising on the “value from waste” models

This project envisages the creation of the base for such a value-chain based policy making for the

MSME sector.


12

Study Methodology

In our system, there are two levels of data collection. First is the secondary data, for which we first

look at the entrepreneurs memorandum II (EM II) filed at the District Industries Centre, which

pertains to micro, small and medium industries. The memorandums filed on the prospective

expansion contains details of location, type of industry, product/service of the entity, capacity of the

expansion, proposed employment in numbers, and the value of investment planned. We shall create

a management information system (MIS) of the available data.

We propose to create the system to organise these information in the form of a location-specific

database, at the level of the district. We propose to obtain time-series data for the past 2 to 3 years.

Moreover, the system will be developed with on-line, map-based analytics for better understanding

of growth and direction of demand. We shall also create a tool to update data regularly, so that the

data is dynamic. Such a system would have the following benefits:

Cluster Identification: This system can help in identifying the emerging clusters in a location. A

prototype has been created by Akara Technologies for the same. A screen-shot of the data collection

system is given in Figure 1

Industry sector management: Since essentially the proposed system is a tool for monitoring the

industry growth, the State government could use this to monitor and manage the industry sector

more effectively. As the data is being continuously mapped, this could pave way for the creation

“economic activity atlas” on a real-time basis for the state, a unique initiative in the country.

The second part of data collection is through field visits. Here we identify the economic activities

pertinent in the three districts by visiting the locations. This is because often, the registration

process is missed by the MSME entrepreneurs. As a result, there is little or no knowledge on the

status of economic activities or the value addition taking place in a given geography.

The successive chapters give the output from the collection of data from both primary and

secondary data collection.


13

Figure 1: Screen shot of Data Collection for Cluster Identification


14

Pilot Districts: Theni, Tiruvannamalai and Ariyalur

Current Economic Status

District Economic Profile: Income

The three chosen districts are among the less industrialised districts of Tamil Nadu. According to

official statistics published by Government of Tamil Nadu, the three districts together contributed to

about 4 percent of the state’s Net District Domestic Product (NDDP), in the year 2010-11 (Table 1).

Table 1: Net District Domestic Product At Current Prices

District (Rs. In Lakhs) District Share in State NDP

2010-2011 (%)

Thiurvannamalai 1195759 2.27%

Theni 625123 1.18%

Ariyalur 201614 0.38%

State Total 52791219 Share of 3 districts

3.83%

Source: Handbook of Statistics of Tamil Nadu, 2013-14

However, in terms of growth rate, Tiruvannamalai comparatively grew at a higher rate in tune with

the growth rate of Tamil Nadu state average, compared to the other two districts (Table 2). Chart 1

shows the annual NDDP of the three districts during the period 2004-05 to 2010-11.

Table 2. Growth rate of Net District Domestic Product

District Compounded Annual Growth Rate

(CAGR) 2004-05 to 2010-11

Thirvannamalai 18.03%

Theni 15.50%

Ariyalur 14.19%

State Total 18.19%

Source: Computed based on data from Table 1.


15

Chart 1: Annual NDDP for Three Pilot Districts: 2004-05 to 2010-11

Per capita income is the real indicator of economic wealth of a region. Using the Census 2011 data

for the State and districts of Tamil Nadu and the NDDP data provided by the Handbook of Economics

and Statistics, Government of Tamil Nadu, we arrive at the per capita NDDP, which indicated the per

capita income of the three districts, in comparison with the State average, and is presented in Chart

2. As can be seen from Chart 2, Ariyalur is way behind in per capita income and is just about the

poverty line of India, at Rs. 26,708 per annum.

Chart 2. Per capita Income - 2011 (Rupees per annum)

All the three districts fare well below the average per capita income of Tamil Nadu state;

Tiruvannamalai and Theni are however, much better comparatively, over Ariyalur, at about Rs.

50,000 per annum.

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16

Economic Profile: Economic Activities

Data from banking sector is a major indicator of underlying economic profile of the districts.

Agriculture, expectedly is the most important activity of all the three districts. The number of credit

accounts and the amount outstanding for the different sectors is dominated by agriculture in all the

districts (Chart 3). It can be seen that Theni has a higher access to bank funds, even though it has a

lower NDDP. Thus, it is also reflected in the per capita incomes, as seen earlier. Though Ariyalur finds

second position in terms of credit to industry, this is on account of a few large cement industries.

This is reflected in Chart 4, which gives the number of accounts for each occupation class in the

three districts. The number of accounts in the industry category is very meagre and a few accounts

contribute to a larger credit outflow from the region. Tiruvannamalai has the highest number of

accounts in agriculture category. Chart 5 gives the per-account credit outstanding. It is interesting to

note that the per-account credit is lowest in Agriculture sector, reflecting also the land-holding size

pattern. Industry sector has the highest per-account credit, but there is a huge difference for

Tiruvannamalai, compared to the other two districts.

Chart 3. Total Loan Outstanding By Occupation (Rs. Lakhs)

05000000

100000001500000020000000250000003000000035000000

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Theni

Tiruvannamalai


17

Chart 4. Number of accounts according to occupation

Chart 5. Per-account outstanding credit (Rupees)

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18

Pilot Districts - Micro, Small and Medium Enterprises Profile

The focus of this project is the MSME sector. Akara Research has sourced the data from the District

Industries Centre for the three years. This was compared with the published data on by the

Commissioner of MSME, Government of India for verification. The charts below represent the data

for period 2007-08 to 2013-14, the latest available period.

Chart 6-A. Number of Micro Enterprises: 2007-08 to 2013-14

Ariyalur had zero number of new units during the period 2007-08 to 2011-12. This was confirmed in

the database accessed at the District Industries Centre at Ariyalur by the research team from Akara.

2012-13 and 2013-14 showed marginal improvement in the situation for Ariyalur in the MSME

sector. This was a result of the New Enterprises and Entrepreneurs Development Scheme (NEEDS),

with the financial support from Tamil Nadu Industrial Investment Corporation (TIIC).

Chart 6-B: Number of Small Enterprises: 2007-08 to 2013-14

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It is important to note however that the existing cement industries have not had much of multiplier

effect in spread of economic activities in the district. We present this as a separate comparative note

of type of economic activities prevalent in the three districts.

As can be seen from Chart 6-C, Theni has the higher number of medium enterprises among the three

districts.

Chart 6-C: Number of Medium Enterprises: 2007-08 to 2013-14

One of the important interventions since 2012-13 is the NEEDS programmes, as mentioned above.

Table 3 below provides the data on sanctions from Tamil Nadu Industrial Investment Corporation

(TIIC) for these three districts.

Table 3. District-Wise Proposals & Amount Sanctioned By Tamil Nadu Industrial Investment Corporation Ltd

Name Of The District 2011-12 2012-13

No. Of Proposals Amount No.Of Proposals Amount

Tiruvannamalai 54 5.25 37 7.12

Theni 17 8.43 14 3.45

Ariyalur 17 4.29 10 1.53

State Total 2610 800.97 2139 972.53

Source: Handbook of Economics and Statistics, 2013-14

However, one may note that the data from TIIC, is not reflected in the data at DIC. There is a need

for convergence at the data level.

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One can summarise the following on observing the data from the MSME (EM II) Filings:

- All the three districts have a low investment base

- Ariyalur is particularly affected as no units are getting registered, except for the recent years

- The existing large industries (Rice mills in Tiruvannamalai and cement industry in Ariyalur)

have had limited impact in terms of multiplier effect in these districts.

- The impact of cotton textile in Theni and surrounding districts of Theni is better compared to

other two districts, given the existing cotton ginning and handloom/power-loom cluster.

- In all these three districts, handloom is an important industry at the household level. The

official statistics is however more reflecting this only in Theni and Tiruvannamalai districts,

while the units in Ariyalur are largely unregistered.

- Theni and Tiruvannamalai are important tourist destinations. While the Tiruvannamalai

town with its famous temple has leveraged the tourist potential, it can be said that the

potential at Theni is yet to be fully leveraged. It is also noted that there are other important

pilgrim centres in Tiruvannamalai that can be tapped to promote tourism.


21

Findings from Economic Mapping

The project entails, as mentioned above, creating the economic maps of three districts at the level of

MSME to understand the spatial dispersion of MSME activity in the districts. Akara Research has

executed the mapping at the three districts based on an extensive field survey. The maps are given

in the subsequent Annexure section.

Economic Activity Maps

The Annexures give the atlas of economic activities in the three districts. Our field survey covered

the length and breadth of the three districts to identify the economic activities spread across the

districts. In our discussions with the District Industries Centre and the staff of Lead Banks, we

identified the nature and scope of businesses. Individual meetings with some of the registered

businesses were held. During the interactions we identified various important economic activities

beyond the scope of what is getting registered in the DIC. The following tables give a summary of the

economic activities across the districts and the number of units involved in the respective towns. The

number of units was estimated based on our discussions in each location with the people involved in

the business.

Dominant Industry Segments: It can be observed that there are two major types of industry clusters

in the selected districts, namely, food products and textiles, including handloom and silk yarn, in the

manufacturing sector. Table 4 gives the clusters of food products. Table 5 gives the clusters of coir

and textiles including handloom and silk yarn.

Table 4. Cluster Food Products and Beverages

S.No Products Units District Major Town

1 Mango pulp extract 156 Theni Periyakulam

2 Onion processing 1 Theni Andipatti

3 Banana powder 107 Theni Jakkampatty

4 Cocount - coir and oil 23 Theni Chinnammanur

5 Corn products 15 Theni Tevaram

6 Banana powder 21 Theni Chinnammanur

7 Vegetables processing 11 Theni Chinnammanur

8 Banana powder 78 Theni Chinnammanur

9 Banana powder 20 Theni Silpalakottai

10 Banana powder 20 Tiruvannamalai Chengam

11 Banana powder 15 Tiruvannamalai Polur

12 Banana powder 15 Tiruvannamalai Arni


22

Table 4. Cluster Food Products and Beverages

S.No Products Units District Major Town

10 Grapes – vine 5 Theni Silpalakottai

11 Milk products 15 Theni Mayiladumparai

12 Flowers, flower extract 7 Theni Mayiladumparai

13 Flowers, flower extract 25 Tiruvannamalai Chengam

15 Flowers, flower extract 15 Tiruvannamalai Keelpennathur

14 Grapes – vine 5 Theni Surulipatti

15 Sugar Factory 10 Theni Kizmangalam

16 Rice mills and Rice bran oil 2 Theni Uttamapalayam

17 Rice mills 55 Tiruvannamalai Tiruvannamalai

18 Rice mills 45 Tiruvannamalai Chengam

19 Rice mills 40 Tiruvannamalai Cheyyar

20 Rice mills 35 Tiruvannamalai Arni

21 Cardamom 116 Theni Theni

22 Silk yarn 25 Tiruvannamalai Arni

23 Silk yarn 30 Tiruvannamalai Anakkavur

24 Milk chilling and processing 35 Tiruvannamalai K. Pakkam

25 Milk chilling and processing 40 Tiruvannamalai Polur

26 Milk chilling and processing 31 Tiruvannamalai Keelpennathur

27 Milk chilling and processing 33 Tiruvannamalai Cheyyar

28 Milk chilling and processing 41 Tiruvannamalai Arani

29 Milk chilling and processing 15 Theni Andipatti

30 Milk chilling and processing 10 Theni Gudalur

31 Milk chilling and processing 10 Theni Periyakulam

Table 5. Textiles, Handloom and Coir

S.No Products Units District Town

1 Textile (ginning) 35 Theni Andipatti

2 Textile (ginning) 15 Theni Kodangipatty

3 Textile (ginning) 23 Theni Chinanaumanur

4 Handloom 15 Theni Jakkampatty

5 Coir 35 Theni Kambam

6 Coir 24 Theni Uttamapalayam

7 Coir 40 Theni Mayiladumparai

8 Coir 42 Theni Devathapatti


23

Table 5. Textiles, Handloom and Coir


8 Handloom 26 Theni Godalur

9 Handloom 25 Ariyalur Kallakurichi

10 Handloom 50 Ariyalur Nallampalayam

11 Handloom 50 Ariyalur Variyankaval

12 Handloom 50 Ariyalur Sirukalathur

13 Handloom 200 Ariyalur Ponparappi

14 Handloom 25 Ariyalur Ulkottai (South)

15 Handloom 150 Ariyalur Sendurai

16 Handloom 150 Ariyalur Angarayanallur (East)

17 Handloom 25 Ariyalur Alathiyur

18 Handloom 200 Ariyalur Ponparappi

19 Handloom 100 Ariyalur Thennur

20 Handloom 650 Ariyalur Jayamkondam

21 Handloom 100 Ariyalur Reddiyur

22 Handloom 200 Ariyalur Udaiyarpalaiyam

23 Handloom 200 Ariyalur Kanjankollai

24 Handloom 150 Ariyalur Nallampalayam

25 Handloom 300 Ariyalur Udaiyarpalaiyam

26 Handloom 150 Ariyalur Andimadam

27 Handloom 55 Ariyalur Pazhuvur

28 Silk yarn 40 Tiruvannamalai Cheyyar

29 Silk yarn 35 Tiruvannamalai Vandavasi

30 Silk yarn 30 Tiruvannamalai Polur

31 Silk yarn 30 Tiruvannamalai Arni

32 Silk yarn 25 Tiruvannamalai Thellar

Table 6 gives the other activities in the districts, which are non-agriculture based produce in the

manufacturing sector.

Table 6. Other Manufacturing


1 Bricks (fire clay) 5 Theni Vadugapatti

2 Bricks (fire clay) 10 Theni Bodi

3 Bricks (fire clay) 10 Theni T. Kallippatti

4 Bricks (fire clay) 5 Theni Kanniappapillai Patti

5 Bricks (fire clay) 5 Theni Andipatti

6 Inner box for safety matches 20 Theni Andipatti

7 Wax candles 5 Theni Thevaram

8 Wax candles 10 Theni Aranmanaipudur

9 Wood engraving 5 Theni Bodinayakkanur


24

Table 6. Other Manufacturing


10 Wood engraving 10 Theni Chinnammanur

11 Hollow block bricks 10 Tiruvannamalai Aarani

12 Iron & Steel filling 5 Tiruvannamalai Cheyyar

Forward and Backward Linkages

In terms of forward and backward linkages, the profile of the districts based on existing industries

reveals three distinct scenarios for each of the district.

Theni: The traditional industry in Theni was textiles, with some large mills operating in the district.

There was considerable demand for cotton ginning in the region; cotton was also locally grown in

the region. As a result the region had a number of cotton ginning units. However, with falling cotton

output in the district, the ginning units have dwindled; now except for a few of the long standing

ginning units, many have closed down. One feature noted was that the existing ginning units are

serving markets as far as Andhra Pradesh and Karnataka.

In the textiles sector, there is noticeable forward linkage, with new units in the sector of garments,

undertaking mainly job works for retail selling in nearby towns of Madurai and Dindigul.

Similarly the food processing sector which is growing as a cluster in Theni district is based on the

higher potential of vegetables and fruits grown in the region. The Self Help Group movement has

also leveraged the raw material abundance to involve in this business.

Food Processing in Theni

Theni already has a fledgling food processing industry sector, with about 350 units in fruit juice,

pickles and about 160 units processing flour and oil extraction. With the considerably large

production of horticulture produce in the district, Theni could become a focal point of food

processing of home-grown produce of different nature. What is needed is a larger scale investment

(already the district has a fledgling micro and small industries) that can migrate the small industries

to the medium and larger category, with training and skill development in the areas of storage with

certifications such as Codex Alimentarius and certification of organic produce.

Currently there are exports in both processed food sector and also in the garments sector.


25

Ariyalur: The cement industries of Ariyalur have not had much impact on growth of smaller

industries in the district, given the nature of the industry. However, the notable cluster in Ariyalur is

the handloom sector and the potential cluster is that based on cashew and corn crops.

Handlooms of Ariyalur

Ariyalur has a rich handloom cluster, which has considerable potential that needs to be achieved.

The Handloom Cluster Map of Ariyalur is presented in the map section. The market for the

handloom produced in Ariyalur district is mainly in the neighbouring town of Kumbakonam,

particularly at the Thirubuvanam temple town. A large part of the produce sold at Thirubuvanam is

originated at Ariyalur. The artisans of Ariyalur practising the handloom have to depend on this

market; however almost all these households are involved in taking job-work from the traders at

Thirubuvanam.

Cashew Nuts: SHG Activity in Ariyalur

Ariyalur has a higher production of cashew nuts. Currently, self help groups (SHGs) are focusing on

the cashew nuts sector. But the members are involved only in shelling the cashews and packing it, to

be sold on the National Highway. It could be a simple extension to create value added products out

of cashews, particularly with the increasing milk production in Ariyalur and also in the neighbouring

Perambalur district. Here too, interventions required are in the areas of sector specific financial

inclusion and skill development.

Tiruvannamalai: The most prominent industry in Tiruvannamalai are the rice mills. Many of them

are modern rice mills. There is considerable potential for setting up rice-bran oil extraction units,

given this base.

Flowers of Tiruvannamlai

The district of Tiruvannamalai is one of the larger producers of flowers (jasmine) in Tamil Nadu, with

about 1600 hectares of area under cultivation in the areas of T.Puram, Chengam, Keelpennathur and

the Javvadu hills. While there are a few cottage industries involved in extracting flower concentrates

(scents), a huge volume of the flower grown are exported to Bangalore through a few traders. An

intervention with training and financial inclusion, possibly through the SHG movement could

augment value addition taking place within the district and increase the incomes.


26

Economic Mapping: Learning from Pilot Study in Three Districts

There is some learning from the field survey which was undertaking to complete the mapping:

- One common feature that was noticed in the exercise is that there are quite a few

discrepancies in terms of the registration of units. In Tiruvannamalai, while the official

statistics showed locations of rice mills in the MSME category, they were non-operational

and the spaces were utilised by service sector such as tailoring and computer centres.

- In Theni as well as in Ariyalur, the case was more of non-registration of MSME sector,

though the awareness is higher in Theni district.

- At this level, an immediate policy level focus that is suggestive is creation of awareness

drive for bringing the units under registration so that the real potential of cluster

formation could be enhanced.

- It can also be seen that while Theni and Tiruvannamalai have different categories of MSME

activity, the district of Ariyalur has only one major activity type which is handlooms.

- For instance, Devathapatti in Theni is notified officially as a Coir Cluster. However, there are

other centres already functioning virtually as clusters, both in coir and other segments.

These segments are noted as “potential” while the businesses are already underway.

The need for convergence of data and a drive to bring more units under the registered

businesses domain is more accentuated by our field interactions. Table 6 below gives the

broad list of towns in the three pilot districts, each with its principal set of products,

including the export commodities. In our study, we saw that hardly 50 percent of these

were registered businesses. Some of them are involved in “job work” – implying that they

have to invest upfront for both the machinery as well as working capital, but cannot even

get a proper advance for executing an order. The case of Ariyalur district’s handloom

weavers has been explained earlier. The same prevails in other sectors too in many smaller

towns.

Table 6. Importance Products in Smaller Towns of Pilot District

District TOWN_NAME Products of Importance Export oriented products


27



Theni BOOTHIPURAM

Textile, Sugar, Wheat flour, Vegetables, Cocunut, Sugarcane

Masala Powder, Cotton Thread

Theni B.MEENAKSHIPURAM Wheat flour, Sugar, Milk Products Brick, Mice

Agri.insmt, Wooden things

Theni BODINAYAKKANUR Wheat flour, , Sugar, Cardamom, Mangoes, Tea Pickles, Silk Cotton

Theni MELACHOCKANATHAPURAM Tea, Sugar, Oil, Milk Products Bricks, Textile Bricks, Milk Products

Theni DEVADANAPATTI Cement pipe, , Fibre Sugarcane, Coconut Bricks, CoirProducts

Theni GANGUVARPATTI

Sugar, Fertilizer, Coir Products, CoconutPaddy, Vegetables Jaggery

Theni THAMARAIKULAM

Textile, Cons.mat, Fertilizers, Wood articles Betel leaves, Bricks

Wooden things, Silkcotton

Theni PERIYAKULAM Wheat flour, Sugar, MangoSugar, Coconut Pickles, Silkcotton

Theni THENKARAI

Textile, Wooden things, Fertilizers, PaddyBrick, Wooden things Woodenthings, Pottery

Theni VADUGAPATTI

Sugar, Fertilizers, Wheat flour, Garlic Coconut, Bet.leaves Textile, Wooden things

Theni THENI ALLINAGARAM Cotton, Tamarind, Dhall, Mango, Oilseeds, Textiles Oilseeds, Textile

Theni PALANI CHETTYPATTY Thread, Oilseeds, Groundnut, TextileOilseeds, Cocunut oil, Textile

Theni VEERAPANDI

Coffee, NeemSeed, PVCPipes, Textile, PVCPipes, MasalaPowder PVCpipes, Textile

Theni DEVARAM oil, Sugar, Textile, CardomomCocunut, Bricks Soaps, Soda

Theni KUCHANUR , Sugar, Wheat flour, CocunutBanana, Paddy

Wooden things, CoirProducts

Theni MARAKAYANKOTTAI , Sugar, Fertilizers, VegetablesCocunut, Banana , Woodenthings

Theni PANNAIPURAM

, Vegetables, Fertilizers, Cardomom Cotton, GroundNut LimestonePowder, Bricks


28



Theni KOMBAI

Electrical Goods, Electronic Goods, Fertilizers, Cocunut Coir Products, Grapes

MilkProducts, CoirProducts

Theni CHINNAMANUR

Textile, Hardwares, Electronic Goods, Banana Cocunut, Vegetables Buiscuits, CoirProducts

Theni ODAIPATTI

Fertilizers, Clothes, PVC Pipes, Grapes Banana, Cocunut Soda, Bricks

Theni UTHAMAPALAYAM oil, Sugar, Textile, CocunutRice, Brick Soda, Coir Products

Theni ANUMANTHAPATTY , PVCPipes, Fertilizers, GrapesBanana, Cocunut Soda, Coir Products

Theni PUDUPATTI

ElectricalGoods, Electronic Goods, Fertilizers, Cocunut Grapes, Coir Products

Milk Products, Coir Products

Theni KAMBAM Wheat flour, Sugar, oil, CocunutGroundNut, Rice Piclkes, Coir Products

Theni KAMAYAGOUNDAN PATTY , Sugar, Wheat flour, CocunutGrapes, Cotton

LimestonePowder, Mango juice

Theni GUDALUR

Fertilizers, Cement, Textile, Grapes, GroundNut, Sugarcane

Rubber Products, Coir Products

Theni ANDIPATTI Tea, Sugar, Thread, TextileThreads, Biscuits Textile, Buiscuits

Tiruvannamalai ARANI Yarn, Textile Textile

Tiruvannamalai DUSI Cotton, Yarn,

Tiruvannamalai TIRUVATHIPURAM Yarn, Textile, Electric motor and Pump, Oil Oil, Textile

Tiruvannamalai VANDAVASI Coir, Mat Products, Textile Utensils, Mat Products

Tiruvannamalai KALAMBUR Yarn, Textile, Textile

Tiruvannamalai POLUR Edible oil, Edible oil

Tiruvannamalai TIRUVANNAMALAI

Motor Parts, Yarn, , PVC pipe Electricmotor and Pump, Textile Textile

Ariyalur JAYANKONDAM Textile, Textiles, Cashew, Textiles, Cashew

Ariyalur UDAYARPALAYAM Cocount, Coconut

Ariyalur ARIYALUR Cements, Cements, Vegetables, Cements, Chilles


29

Economic Empowerment of Women

In Tiruvannamalai and in Ariyalur, empowerment of women is being carried out through the SHG

movement, under the Tamil Nadu Corporation for Development of Women. The following table

provides an overview of the number of groups in each district.

Table 4. Women Self Help Groups in Pilot Districts (2012-13)

Rural Urban Total

District No. of Groups

No. of Members

No. of Groups

No. of Members

No. of Groups

No. of Members

Ariyalur 7,465 1,15,296 1,003 15,429 8,468 1,30,725

Tiruvannamalai 18,124 2,06,673 3,901 1,19,176 22,025 3,25,849

Theni 8,024 1,23,459 6,082 93,841 14,106 2,17,300

State 3,72,092 57,37,023 1,84,219 28,32,654 5,56,311 85,69,676

Source: Tamil Nadu Corporation for Development of Women

In Tiruvannamalai and Ariyalur, the number of new firms operated by women is very less, compared

to Theni.

In Theni, about 20 percent of the firms created during the last 3 years for which we accessed the

data, are owned by women. In Theni, women ownership of business, the majority categories are:

Beauty parlours

Wax candles

Job work for tailors

Desktop publishing

Milk processing

Readymade garments and trainings

The SHG movement is also quite active in Theni, due a better local market situation. One of the

notable cases highlighted as the success story is the Iyarkai SHG, operating at Rajagopalanpatti of

Andippatti Block. The highlight is that the group has leveraged the market for ready-made food,

preparing nutrition mix.


30

Opportunities For Value Addition and Linkages

As discussed in the earlier section of this report, creating scope for higher value addition within the

local market helps increase the per capita income in the district. However, only in certain cases this

integral market grows naturally over time through forward and backward linkages. A number of

factors are responsible for the growth of clusters that have a highly advanced level of internal trade

across the value chain of an industry. Some of these are entrepreneurship growth, financial

inclusion, skill development through education and a generally conducive business environment

helped by the local government.

Another factor is that clusters that are naturally formed are more likely to succeed rather than those

created through external influence. Therefore the interventions that are planned for economic

development through the strengthening of industry value chain. The economic mapping exercise

through a system-linked approach helps in identifying the right type of interventions in the different

regions. For this systems-based approach, there needs to be a convergence across departments on

creating a common platform for the data and information flow on resources, financial flow and

markets for products and services. The following table provides a summary of the value adding

opportunities and the requisite interventions for the same; though there are a number of options in

each district, we present three of the most immediate options where existing clusters are possible to

be nurtured:

Table 5: Value Chain Linkages: Opportunities and Requirements

District Existing resource Linkages Requirement

Theni Horticulture production, agro-processing

Food value chain including exports Organic food products

Storage infrastructure with certification (Codex Alimentarius), training/capacity development on international food storage standards

Tiruvannamalai Flowers, fragrance extraction

Larger scale fragrance and perfume extraction, branding and retailing

Technical training, machinery, marketing

Ariyalur (Immediate) Handlooms Direct whole-sale and retailing

Raw-material supply, financial inclusion, market support

Ariyalur (Long term) Cashew, Maize Packed food: corn based with cashew

Technical training, machinery, marketing, financial inclusion


31

Scope for Larger Studies

Tamil Nadu has been an outlier among Indian states in terms of economic and social achievement

during the last two decades. However there are intra-state differences in achievement and a few

districts are yet to benefit from the economic policies and programmes of the Centre and State

governments. The Government of Tamil Nadu has realised this and has started implementing unique

schemes and programmes directly targeting the backward regions of the state, at the Block level.

This project suggests some larger programmes that can be implemented for the overall balanced

growth of Tamil Nadu.

1. Convergence of Knowledge of Local Economy: A platform for convergence of information

from all programmes and departments governing the economic and livelihood aspects could

be created. A district level pilot could be completed in 4 months to 5 months and replicated

across the state. Such a system could be built in the lines of a management information

system (MIS) with periodic data flow from all the departments including the lead banks.

Such a system is required at the district level too, as many of the officers are transferred

once in a while, and this system could be a base for developing a knowledge management

system for governing the economy of the district. This could be a unique project in the

country. Such a system could also help in identifying clusters as they emerge. A separate

module on the impact on the economically and socially weaker sections of the society, as

well as the impact on environment can be added into the platform, from each

programme/department.

2. Value Chain Based Economic Linkages: A set of opportunities for each district in

strengthening the value chain has been presented in the earlier chapter. One of these can be

taken up as a project with support from the respective departments for the districts, for a

period of 12 months. The necessary funds are already allocated under the NEEDS

programme and the State Balanced Growth Fund (SBGF).

3. State Level Study on Value Chains: Annexure 5 gives a detailed outline of district level

economic linkage and their impact at the current level. A larger study on existing industries

in the MSME sector, their source of demand, their inputs, and the by-products including

waste, their energy requirements etc, could pave way for many targeted interventions and

growth of supporting industries. This could broaden the economic base of the State.


32

Annexure 1: District level MSME Textiles and Handlooms – Theni

Source: Field level GIS Survey by Akara Research & Technologies Pvt Ltd.


33

Annexure 2: District level Clusters: Food Processing – Theni District



34

Annexure 3: District level MSME Activity – Ariyalur District



35

Annexure 4: District level MSME Activity – Thiruvannamalai



36

Annexure 5: Tamil Nadu: Regional Economic Linkages – Current Status

Region Districts Stage of industrial

development

Economic linkages and impact

Western

Region

Coimbatore Advanced industry

across variety of sectors

Highly interlinked with national and

international markets;

High level of positive inter-linkage with

local economy

Western

Region

Tiruppur, Erode Advanced industry in

specific sectors




local economy

Western

Region

Nilgiris Tourism and cash crop

economy


local economy

Central –

West

Salem, Namakkal,

Karur

Advanced industry in

specific sectors




local economy

Central – East Perambalur,

Ariyalur,

Pudukkottai,

Basic industry in specific

sectors, largely

backward

Very little linkage with national and

international markets,

High level of inter-linkage with local

economy, but lower value-addition,

resulting in lower per-capita income


37


development


Central – East Tiruchirappalli Developed industry in

specific sectors, large

agriculture economy

Higher linkage with national and

international markets, Low level of inter-

linkage with local economy, higher

negative externalities

Central – East Cuddalore Developed industry in

specific sectors; certain

regions still backward





Eastern

Region

Thanjavur,

Thiruvarur,

Nagapattinam

Agriculture based

economy,




South-Eastern

region

Ramanathapuram,

Sivagangai,

Agriculture based

economy; largely

backward region




South-Eastern

region

Thoothukudi Developed industry in

specific sectors





Central –

West

Salem, Namakkal,

Karur


specific sectors




local economy

Central – East Perambalur,

Ariyalur,

Pudukkottai,

Basic industry in specific

sectors, largely

backward

Very little linkage with national and






38


development


Central – East Tiruchirappalli Developed industry in

specific sectors, large

agriculture economy





Central – East Cuddalore Developed industry in

specific sectors; certain

regions still backward





Eastern

Region

Thanjavur,

Thiruvarur,

Nagapattinam

Agriculture based

economy,




South-Eastern

region

Ramanathapuram,

Sivagangai,

Agriculture based

economy; largely

backward region




South-Eastern

region

Thoothukudi Developed industry in

specific sectors





South -

Western

Region

Dindigul, Theni Agriculture based

economy, fledgling

agro-processing

industry, Trade based

economy

Higher linkage with regional and State

level market, high impact on local

economy

Southern

Region

Madurai,

Virudhunagar,

Tirunelveli


specific sectors, Trade

based economy




local economy

Southern

Region

Kanyakumari Agriculture and tourism

based industry, higher

intensity of cash crops





39


development


local economy

Northern

region

Chennai,

Kancheepuram,

Thiruvallur,

Advanced industry

across variety of

sectors;




local economy

Northern

Region

Vellore,

Krishnagiri


specific sectors



Local economy inter-linkage still evolving

Visible negative externalities, posing

sustainability challenges

Northern

region

Tiruvannamalai,

Villuppuram

Dharmapuri

Basic industry, in

specific sectors,

Agriculture based

economy;

Regions in Dharmapuri

still backward

Little linkage with national and





Documents

District Level Mapping Of Micro, Small and Medium Enterprises Pilot Project … · 2017. 1. 13. · Tiruvannamalai and Ariyalur were responsive and supportive of our efforts and we