Industrial Estates | Meaning, Objectives, Merits, Types, Role

Meaning and Definition of Industrial Estates

Industrial estate is one, which consists of well-constructed factories that are offered to entrepreneur for establishing an enterprise. It is normally established in the industrially backward areas so as to minimize the regional imbalances. It provides all infrastructural facilities such as power, transport, water and lighting at a reasonable cost.

The main objective of establishing Industrial estates is to attract industries to industrially backward areas, which will make the country a regionally well-balanced one.

Industrial Estates - Meaning, Objectives, Merits, Types, Role

Industrial Estates – Meaning, Objectives, Merits, Types, Role

Definition of P.C. Alexander

According to P.C. Alexander,

an industrial estate is a group of factories constructed on an economic scale in suitable sites with facilities of water, transport, electricity, steam, banks, post office, canteen, watch and ward, first aid and provided with special arrangements for technical guidance and common service facilities.

Definition of United Nations:

The United Nations has defined an industrial estate as

a planned cluster of industrial enterprises offering standard factory buildings erected in advance of demand and variety of services and facilities to the occupants.

How are Industrial Estates Set up?

The area normally required for an industrial estate ranges from 15 to 60 acres. Industrial estates are owned, established, controlled and managed by the Government.

The Government itself acquires the land, develops it, constructs roads and buildings of different sizes. It also makes arrangement for the supply of electricity and water and other facilities. The factory sheds are generally allotted to the small entrepreneurs on hire purchase basis.

For items like heat treatment, electric furnaces etc., the common service workshops are set by the Government because small units cannot afford to do these types of services on their own. The industrial enterprises set up in these estates are also entitled to various incentives granted by the Government either directly or through some financial institutions.

To sum, up, all these facilities provide a congenial atmosphere for quick and steady growth of Small Scale Industries.

Objectives of Industrial Estates

The principal objectives as pointed out by Prof P.C. Alexander are:

1. To minimize congestion of industries in the cities.

2. To dispense industries in different regions in order to eliminate regional imbalances.

3. To encourage small entrepreneurs to establish their industries in specified areas by offering various incentives and other facilities.

4. To create a favorable atmosphere for the healthy growth of SSI.

5. To accelerate employment opportunities.

Merits of Industrial Estates

1. Provision of Premises and Amenities at a Reasonable Cost

Industrial estate provides premises i.e. Land and Factory Shed for the establishment of a new industrial undertaking and also other amenities such as power, water, transport etc. at a reasonable, cost. Hence the entrepreneur is able to produce goods at cheaper costs.

2. Availability of Service Centers

As each and every SSI unit established in an industrial estate cannot afford to have their own service centers, the industrial estate itself provides for a repair shop, a testing laboratory etc. for the common benefit of all SSI units situated there.

3. Minimum Initial Capital

Since reasonable sheds are offered to the industrialists either on hire purchase basis or on rental basis, they need not spend a huge amount initially for the construction of the factory building etc. Thus the initial capital investment is less.

4. Avoidance of Unnecessary Delays

While starting an industrial unit an entrepreneur is required to comply with various rules and regulations regarding the location of factory sheds and obtaining infrastructural facilities. But if an entrepreneur obtains a ready-made premises in an industrial estate, he need not worry about all these things as they are constructed by the Government itself by taking into consideration all these formalities well in advance. Hence the unnecessary delay is avoided.

5. Cordial Relationship between the Industrialists

A rapid growth of the industrial units is made possible by fostering complementary relationship among them. For instance, some units may obtain raw materials and semi-finished goods as inputs from other units in the same estate or offer a part of the production to the ancillary units in the same area.

Thus we can conclude that the industrial estates minimize the regional imbalances and reduce the cost of production to the minimum. It enables the small entrepreneurs to compete effectively with larger units, which in turn results in an increase in the standard of living.

Industrial Estates in India

In India, Industrial Estate Programme was started in 1955 as per the recommendations made by the International Planning team. The main objectives of this programme were:

1. To promote a rapid development of SSI, and

2. To promote decentralization and dispersal of industry and to promote industries in semi-urban, backward and rural areas.

The first industrial estate in India was established at Rajkot by the then Sourashtra Government in 1955.

The responsibility of construction and management of the Industrial Estates is in the hands of State Government. But the cost of building is advanced by the Central Government in the form of long-term loans to State Governments.

Sites for the industrial estates may be sold outright or on Hire Purchase basis or offered on a rental basis. Hence the Government takes the initiative in establishing the industrial estates instead of leaving its development to the private enterprise.

The first case of the Government assisted industrial estate in India was the Hadapsur Industrial Estate, which was established by the Pune Municipal Corporation.

Industrial Estates Programme During the Plan Periods in India

The industrial Estates Programme was started at the end of the First Five Year Plan for the purpose of setting up of industrial estates in India. Initially, its main objective was the development of small-scale industry. But during the Third Five Year Plan period, industrial estates were considered as instruments for the promotion of industrial development in under developed areas especially in rural areas.

Consequently, many new industrial estates were set up nearer to small and medium sized towns in India. The same policy was continued during the Fourth and Fifth Five Year Plans also. During the Sixth plan, they have given importance to industrially backward areas and the rural areas.

During the First Plan period, the Government sanctioned a huge amount by way of loan to four State Governments viz., Kerala, Madras, Uttar Pradesh and West Bengal for the purpose of setting up of industrial Estates. NSIC was also asked to set up two industrial estates in Okla and Naini. 10 industrial estates were established and a provision of Rs.58 lakhs was made. In the Second Plan period, 110 estates were established and a provision of Rs.11.2 crores were made. During the Third Plan period, 102 estates were set up.

Types of Industrial Estates

Traditionally, there are 2 types of industrial estates namely,

  1. Functional Estate, and
  2. Ancillary Estate.

Functional estate is one where a particular industrial activity is concentrated. On the other hand, ancillary estates are those, which are engaged in the manufacture of ancillary items required by large industrial units.

But in India, 4 types of industrial estates have been established, the basis of which are:

  1. Type of industrial activity.
  2. Sponsorship.
  3. Location.
  4. Co-operative industrial estates.

On the basis of location, industrial estates can be classified into three categories namely,

  1. Urban Estates,
  2. Semi-Urban Estates, and
  3. Rural industrial Estates.

On the basis of sponsorship, industrial estates can be classified into four types viz.,

  1. Government.
  2. Co-operative.
  3. Municipal.
  4. Private Estates.

Reasons for Poor performance of Industrial Estates in India

1. Absence of Pilot Surveys

No techno-economic surveys were conducted by some State Governments before establishing industrial estates. Hence, most of the industrial estates have less growth potential and have proved to be a waste of time and money spent on them.

2. Lack of Clear Policy

There is no vigorous policy for the dispersal of industries on the part of the State Government in India. There is no clear demarcation of industrially backward region in various States also. All these factors led to poor performance of the industrial estate.

3. Delays in Providing Infrastructure

Improper planning of the estates and poor execution of the plan often leads to considerable delays in providing the infrastructural facilities such as water, electric power, roads, drainage etc.

4. Inefficient Follow Up

There is no effective machinery to follow up and supervise the day-to-day operations of the industrial estates with a view to make it successful.