Book: J. R. D. Tata Keynote

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Industries The Large and the Small
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Big Can Also Be Beautiful

 

Indian Junior Chamber, Ahmedabad, December 24, 1970.

 

igness in a capital intensive industry is essential to its competitive efficiency. Bigness is a desirable objective for many other reasons. Only big companies with large resources can afford the heavy expenditure on research and development, essential to product development and improvement or the elaborate organisation required to take advantage of advanced technology and modern management and marketing techniques. Only big companies can provide the markets for small-scale industries, which supply them with ancillary components and materials.

Bigness is bad only when such economic power as it generates is used 'to the common detriment.' In fact, this principle is explicitly stated in the Constitution and included in Section 28 of the Monopolies and Restrictive Trade Practices legislation. Bigness is an inherent and inevitable consequence of the manner in which the modern world, and life in that world, has developed. But bigness in business and industry is more than matched by bigness in the government, in trade unions, in consumer power.

We are today, and increasingly, moving deeper into the age of bigness. As John Galbraith has reminded us, the bigness of one sector is confronted and constrained by the bigness of other sectors. Instead of ensuring, by a system of countervailing forces, that the benefits of bigness are obtained without its evils, the opponents of bigness in our country want to put all the country's eggs into the basket of big government.

 

Collaboration

 

The Tata Oil Mills Co. Ltd., Chairman's Statement, July 10, mo.

 

India's industrial licensing policy is based on the erroneous view that there is an inevitable conflict between the large-scale sector and the small-scale sector. Experience in other countries has shown that the development of large-scale industry does not stand in the way of the rapid growth of small-scale units. Indeed, the opposite has often been the case and the creation of large-scale industries has stimulated and helped the growth of small-scale industries. Where necessary, monetary and fiscal incentives can be extended to increase the competitive power of the small-scale sector.

It is often possible, with some ingenuity and innovation, to formulate schemes in which the large and small-scale sectors can actively collaborate to their mutual advantage. The small units can be helped with technical know-how; they can be provided facilities of various types. More particularly, a nation-wide marketing organisation built up by a large-scale enterprise can be extremely useful to small units, which cannot afford large marketing and market research departments of their own.

 

Consumer Products

 

The Tata Oil Mills Co. Ltd., Chairman's Statement, June 24, 1969.

 

The draft plan states that if growth with stability is to be the objective of the Fourth Plan, the supply of consumer goods should increase commensurate with the expansion of the demand for these goods.

If the Planning Commission has its way, the consumers' interests will be adversely affected by its recommendation that the additional capacity for consumer goods 'should not be permitted to be set up by the big industrial houses, which would have ample scope for taking new ventures in technologically challenging fields.' This pronouncement displays surprising ignorance of the technological aspects and content of consumer industries.

The belief that little or no modern technology is involved in the production of consumer goods is patently contrary to fact. Throughout the world, consumer industries, whether they be in food, in soaps or detergents, in textiles or radio sets, are increasingly dependent on bigness and advancing technology. This apart, while new entrants into the field of consumer industries should by all means be encouraged by suitable incentives, can it be claimed to be in the true interests of the vast and growing number of Indian consumers to freeze out the very producers who have the ability to supply high quality goods at a low cost because of their bigness. This surely is not the way to achieve either growth or stability in the Indian economy, or to serve the interests of the consumers.

Instead of threatening to deprive large-scale consumer industries of the opportunity to expand in order to meet the vastly increased demand for consumer goods which may be expected in the coming years, there is a strong case for extending industrial de-licensing to them while, as stated earlier, giving new entrants and the small and medium-scale sector such initial incentives and assistance as may be appropriate. Furthermore, apart from their important role in combating inflation through increased sales and profits, large units, with their financial resources and highly developed marketing and sales organisations, are in the best position to promote the export of consumer goods.

In their obsession with a largely mythical growth of economic power in private hands, some people in our country have strange ideas of bigness in 'big business'. In other and more enlightened countries, a company like ours (Tata Oil Mills), with its turnover of a mere £17 million or $40 million a year, would be considered a small enterprise and given every encouragement to grow to a size which would enable it to compete on equal terms with leaders in the world market.

Our Planners, instead, while exhorting Indian manufacturers to capture a large share of export markets from giant competitors abroad, seek to ensure that no Indian manufacturer is allowed to grow to a size which would enable him to compete with them on equal terms. This makes no economic sense.

 

Strengthen the Weak, Not Weaken the Strong

 

The Tata Oil Mills Co. Ltd., Chairman's Statement, July 8, 1971.

 

If, notwithstanding the findings of the Dutt Committee that with two or three exceptions the larger houses were not guilty of using their economic power to the common detriment, the Government still feels that some companies have abused the opportunities given to them under the industrial licensing system, or committed malpractices, let them blacklist such guilty parties, but there is no justification for penalising the innocent ones only on the grounds of size.

The needs of the country are such that there is room, and indeed there is a need, for industries of all sizes. In fact, many large industries are essential to the quicker growth of small industries. They assist them in developing ancillary industries and opening new markets provided by the growth of demand created by the expansion of large industries like our own.

If necessary let the Government, when permitting large enterprises to expand, do so on terms that will encourage them to support small-scale enterprises and also to establish themselves in backward areas, which they alone can afford to do. Industrial policy should be directed at strengthening the weak rather than weakening the strong.

 

Creating Rural Employment

 

The Tata Oil Mills Co. Ltd., Chairman's Statement, July 6, 1978.

 

The processes and speed of rural industrialisation, whatever technology is adopted – primitive or intermediate – must also take count of the readiness and willingness of the people themselves, which vary widely in our country. The fact is incontestable that the majority of our rural people today are unskilled in any activity other than tilling the soil or similar simple activities.

The urgent objective of a rapid development of employment in the rural areas as the first step towards prosperity, can best be achieved by undertaking in rural areas in the initial period massive programmes of medium and small public works in road building, afforestation, irrigation, water and soil conservation, and the like. It is not by coincidence that the most prosperous States in the country are Punjab and Haryana, which have the most developed road and irrigation systems, the greatest concentration of small-scale industries, and the highest employment rate and prosperity.

So far as existing organised industries making consumer products are concerned, I suggest that the right policy on the part of the Government would be, to encourage and help them to turn to more technologically advanced production and, at the same time, to harness wherever possible their resources and expertise to the task of assisting small industries and other employment-oriented activities in the rural areas.

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