Industry faces tough choice — migrate or perish

 No big unit set foot in Ludhiana in 10 years

Manav Mander

Tribune News Service

Ludhiana, August 30

The growth of industry in Ludhiana has become stagnant and no big firm has come up in the city in the past 10 years. 

Ludhiana, known for its hosiery, knitwear and industry, is witnessing the closure and shifting of units due to heavy taxation and unfavourable conditions for their survival in the state.

Ludhiana has nearly 33 per cent of Punjab's industry and 95 per cent of the industry belongs to the Micro, Small and Medium Enterprises (MSME) sector.

Although the local Industries Department claims that that no industrial unit has surrendered its entrepreneur memorandum number in the past year, but the reality is strikingly different. 

Five years ago, a survey of the Micro, Small and Medium Enterprises (MSME) Ministry in the city revealed that nearly 7,000-8,000 units have shut down in Ludhiana. 

Earlier, units use to have small-scale industries (SSI) number which was then converted to entrepreneur memorandum (EM) number. As many units did not apply for their EM number, it implied that nearly 7,000-8,000 units had shut down in the city.

Mahesh Khanna, general manager, District Industries Centre, said that according to the official data available, no unit has surrendered its EM number in the past year. 

"But a survey was done by the local department a few years ago according to which 2,819 units were found to be closed," said Khanna.

Knitwear firms in knots

Ludhiana is known for its hosiery and knitwear industry, but most are witnessing closure and many units are shifting from the state.

Presently, there are about 12,000 knitwear units operating in the city, giving employment to nearly 4-5 lakh people directly and indirectly. Three years ago, the number of units was 13,000.

Earlier, VAT imposed on yarn and finished garments was at 4 per cent while at present, it is 6.05 per cent. "The knitwear industry is declining rapidly due to high rate of taxation. Inflation and taxes are the major reason for the decline of this industry in Punjab," said Vinod Thapar, chairman of Knitwear Club.

The other major reason behind the decline in the knitwear industry is mixed-land-use areas. Some areas like Gurpalnagar, Shimlapuri, New Janta Nagar, Ishar Nagar, New Shimla Puri and Bajwa Nagar, where hosiery units are housed have not been included under mixed-land-use areas.

These areas have leading knitwear and textile units which have been in operation for more than 30 years. It was a great setback for these units when these areas were not included in the industrial mixed-land-use areas.

The major problem faced by these areas is in getting power connections. PSPCL demands change of land use (CLU) certificate for getting new connections and uploading the load.  The industries, which had been operating from these areas for the past many years, had never procured such a certificate.

The industry is now making its way towards the hill state of Himachal Pradesh for setting up firms as the Himachal Government is offering subsidies, electricity at Rs 4.05/unit round the clock and 1 per cent relief on central sales tax.

"The other problem is that we are unable to get power. In the absence of power, we are forced to work on gensets," said Badish Jindal, national president of the Federation of Association of Small Industries of India.

Dragon applies cycle brakes

Besides knitwear, Ludhiana is equally known for its cycle industry around the globe but the Chinese dragon has gulped down the industry. The most worrying fact is that Ludhiana receives at least 100 containers of Chinese cycle parts each month at its Dhandari dry port.

The overall export of the same has fallen to Rs 500 crore from Rs 950 crore while the imports have increased to 1,000 crore from just Rs 100 crore in the past three years.

The cycle industry is shifting to Bihar and Orissa and the major cycle manufacturing units of Ludhiana have been approached by the Bihar Government for establishing plants and ancillary units in Hazipur and Muzafarpur. City-based small units are shifting out of Ludhiana while big units are making their expansion plans.