INTRODUCTION

The characteristics of small enterprises dovetail well with the socio-economic objectives of many of the developing countries. Generally, they are labour intensive, employment generating, capital saving, and capable of operation on a decentralised basis in rural areas. In countries which are concerned with the generation of thousands of new workplaces – especially in the rural areas – and with raising the incomes and quality of life of the poorer sections of the population, small-scale industrialization offers a far more appropriate alternative to industrialization strategies that emphasise large-scale, centralised industries, which until recently were favoured by development planners and practitioners. The issues of whether or not the technologies appropriate to small-scale industrialization exist and whether they are as economically and technically efficient as the large-scale alternatives have already been well researched. Evidence suggests that a wide range of technologies do exist and that, in a majority of cases, the smaller-scale technology is just as efficient as the large-scale'.

A more recent issue is that of how to go about enabling the widespread adoption and use of these technologies. To a certain extent, this is one and the same issue as finding appropriate ways of developing and promoting the small-scale industries which are the social carriers of these technologies. On this issue, very little empirical data are available. Many suggestions have been made as to what may or may not work in respect of supporting small-scale industries. In practice, there are very few examples available of well thought-out models which have been effectively implemented. This report, by describing the nature and impact of the interesting and successful model developed at the Birla Institute of Technology (BIT) in Ranchi, India, aims to add to the very small body of literature available which can show what is involved and what can be achieved in the development and promotion of small industries. It is hoped, this will be of assistance to those wishing to start small industry programmes elsewhere.

BIT's involvement started in the early 1960's when its founder, Mr B.M. Birla, formed a Department of Industrial Research, to develop an awareness of the needs of industry among technical students through work on projects of practical use to neighbouring industries.

Later, with an industrial recession, growing unemployment among engineering graduates and a change in government emphasis towards the development and support of small industries, the Chairman of BIT (Mr G.P. Birla) decided that the Institute's resources should be extended to the development of entrepreneurship among BIT graduates and the promotion of small industries to be run by them. This meant setting up a working group within BIT to man an organization which could provide all the necessary inputs for the development of small-scale engineering units. The inputs were to cover the entire spectrum from laboratory-scale research to the production of commercial prototypes and continuing technical assistance for industrial production. The organization was also to provide assistance for financing arrangements and marketing.

Such an organization (SIRDO) was established in 1972 and started work in a small way with funding from the Birla Institute of Scientific Research (BISR) and staff inputs from BIT. There followed two major inputs which, when integrated with the ideas and technical expertise of the BIT staff and the facilities made available through BIT and BISR, helped the scheme expand and thrive. First, the United Commercial Bank agreed to finance the small units sponsored through the scheme without the usual constraints regarding collateral and financial contribution from the entrepreneur. Second, the Government of Bihar, recognising the relevance of the scheme to its own industrial development objectives, agreed to provide sheds and infrastructure for an industrial estate from which the entrepreneurs could operate until they had confidence and resources enough to move off on their own.

The combined effect was the establishment of several flourishing small-scale industrial units. So impressed was the Government of Bihar with the SIRDO scheme that, in 1977178, when it was looking for ways in which to allocate the funds provided by Central Government under the 'Half a Million Job' Programme, it decided to give increased financial support and also to direct that all technical institutes within the State should start similar programmes. It was thus that an idea conceived in the early 1960's eventually became translated in 1978 into a State Government-sponsored programme known as the Small Industries Research Training and Development Organization (SIRTDO).

A particularly interesting aspect of the scheme is that it has its roots in a technical institute and it shows how a small group of teachers within such an institute can develop and implement a workable model for small industry promotion. Apart from this, there are three features of the scheme which are particularly worthy of attention. These relate to replicability, integration and entrepreneurial development.

First, the model forms the basis for starting similar schemes elsewhere and can provide guidelines to governments when planning small-scale industrialization programmes. Apart from the involvement of the Bihar Government in strengthening the Ranchi scheme and in funding the setting up of five similar centres in the State, the Government in the neighbouring state of Uttar Pradesh has also recognised the effectiveness of the programme and, following a visit to the Ranchi centre, is planning to give financial support to the BISR centre located in Allahabad. Additionally, the United Commercial Bank has found the model works so well that it is now encouraging technical institutes in other states to copy this and is offering to give financial support to small entrepreneurs sponsored through such schemes.

A second point is that the model has been built up largely by planning for the more efficient use of existing resources. Facilities for the development of laboratory and commercial prototypes, testing facilities, favourable banking arrangements, assistance with raw material procurement and marketing,...