Industries in Odisha

1.Industrialization in the state of Odisha

The manufacturing and mining sectors emerged to contribute 18.27 % & 7.36 % share to GSDP of Odisha respectively in 2016-17 from a meagre 1 % share each in 1950s. The shift was required for effective mobilization of natural and human resources, larger employment generation, augmentation of domestic supply and sustainable export promotion for Odisha.

State policies, reforms, investment decisions, resource stock, demand-supply characteristics, institutional mechanisms etc. showed the way to ‘advantage industry’ in Odisha over the decades. Series of revised and new orientation IPRs (Industrial Policy Resolutions) between 1980 & 2015, economic reforms in 1990s, rise in domestic driven demand for industrial products, rich stock of minerals, water and energy resources and State’s policy decisions etc. steered the industrialization process in Odisha.

The State Government makes viable strategies to make industry sector efficient & competitive with the accelerated support of technological, infrastructural, institutional & entrepreneurial skill development. This would enable Odisha State to compete with national domestic as well as capture international markets on its industrial products. Industrialization is crucial not only for income redistribution but also for people’s attitude towards self-reliance etc.

The new regime of national level industrial reform measures such as liberalized mechanisms for Ease of doing business, Make in India programme, E-Biz project by launching of Government to Business (G2B) portal, new Ministry of Skill Development & Entrepreneurship, Streamlining of environment & forest clearances and labour sector reform through new “ShramSuvidha” portal etc. are expected to instill confidence among business community & boost up industrial growth in the State. Industrial development is one of the major components of economic development of the State.

The broad industry sector consists of Manufacturing, Mining and Quarrying, Electricity-Gas-Water Supply & other utility services and Construction sub-sectors. The sector contributed about 36.56% to Odisha’s GSDP in 2016-17 at 2011-12 prices.

2. Status of Credit Flow to Micro, Small and Medium Enterprises (MSMEs)

“Micro, Small and Medium Enterprises (MSME)” is a growing sector in the State. During 2015-16, the maximum numbers of MSMEs were set up in Sundargarh district followed by Cuttack, Sambalpur, Ganjam & Khurda districts. Among manufacturing units, the largest number of MSME units belong to the Repairing & Services sectors followed by Textile sector. The handicraft and cottage industry in Odisha exhibits a declining trend in terms of number of units as well as employment generation. Industrial sickness continues to be a problem area for the MSMEs.

The Directorate of Industries, Odisha is functioning under the administrative control of MSME Department. It is looking after promotion of MSMEs including Khadi and Village Industries, Coir Industries and Salt Industries in the State. Besides, PMEGP (Prime Minister’s Employment Generation Programme) is also implemented. Growth of MSME sector is being emphasized not only because of its potential for generation of employment opportunities but also for its contribution to the output of the State. Government of Odisha aims to create adequate space for MSME development in the State over the years through various fiscal and non-fiscal incentives under IPRs.

MSME sector shows increasing trend over years both in number of units, investment and employment generation. During 2016-17 financial year, the MSME sector in Odisha has achieved a record growth with 57,783 units gone into production with an investment of Rs. 3034.64 crore and employment generation of 1.75 lakh persons. By the end of 2016-17, 2.72 lakh MSME units were operating in Odisha with an investment of Rs.13726.40 crore and employment generation of 11.87 lakh persons.

MSME industries in Odisha

Year MSME Units (at year end) MSME Units Setup (during the Year) Investments Made( in crore) Employment Generated(person)
2014-15 160167 29866 2267.24 107011
2015-16 214087 53920 2679.64 166731
2016-17 271870 57783 3034.64 175221

Sector-wise MSME Units in Odisha by the end of FY 2016-17

Category No. of units setup Investment (in crore) Employment (persons)
Food & Allied 35246 2018.45 179115
Chemical & Allied 3854 317 26980
Electrical & Electronics 1945 109.94 9917
Engineering & Metal Based 16603 1219.68 111972
Forest & Wood based 13124 200.48 61748
Glass & Ceramics 10326 752.48 148312
Livestock & Leather 619 14.58 3060
Paper & Paper Products 3940 177.18 19962
Rubber & Plastics 2066 285.99 12558
Textiles 15109 351.84 73247
Misc. Manufacturing 16450 753.87 69544
Repairing & Services 152588 7524.91 471026
Total 271870 13726.40 1187441

Credit Flow to MSME Sector

(Amount in Crore)

Sector Balance outstanding Balance outstanding Y-o-Y
as on 31.03.2017 as on 31.03.2018 Y-o-Y
Accounts Amount Accounts Amount Accounts Amount
Micro Enterprises 882385 15370.17 977875 18040.57 10.82 17.37
Small Enterprises 133915 9221.80 152517 11665.37 13.89 26.50
Total MSE 1016300 24592.97 1130392 29705.94 11.22 20.79
Medium Enterprises 14407 3389.24 51715 5607.16 258.95 65.44
Total MSME 1030707 27982.21 1182107 35313.40 14.68 26.19

3. NPAs in MSME sector

  • Gross NPAs in the State (for all sectors) decreased from 11.50% as on March 31, 2017 to 10.66% as on March 31, 2018. The gross NPAs in the MSME Sector also declined from 12.28% as on March 31, 2017 to 11.91 % as on March 31, 2018.
  • The gross NPAs in PMEGP loans increased from 18.84% as on March 31, 2017 to 19.06% as on March 31, 2018.

4. Reasons of Sickness in MSMEs:

Broad reasons of sickness in MSMEs are as follows:

  • General slowdown in the economy / consumption and recycling of money, decline in sales and creation of idle inventories / capacity. Delay in Govt. decision over Mining Sector adversely affected the small steel & its associated units, transport sector engaged in this business as well as all ancillary SME units set up in those areas.
  • Lack of backward / forward linkage to the existing units affects the small industries.
  • Recovery climate in the State is not conducive. Implementation of Odisha Public Demands Recovery Act is absolutely ineffective. Required action is not taken against wilful defaulters.
  • Delay in providing assistance to banks (secured creditors) under Section 14 of SARFAESI Act, 2002 by District Magistrate. Delay in receipts of dues from Govt. Departments / and other receivables meant that the borrowers are not able to repay bank dues within 90 days period.
  • Delay in release of subsidy by designated agencies. Subsidies provided under Government schemes are mostly back-ended and released after inspection by Govt. Agencies / Officials. Due to delay in release of subsidy, the borrowers are not able to continue operations for a long period as the subsidy forms major part of their working capital.
  • Under Govt. sponsored schemes, beneficiaries are not selected on the basis of viability of the project. Beneficiaries are interested in availing subsidy only. After availing subsidy and creation of assets, the units are closed in most of the cases.
  • Handholding is a major constraint for start-up entrepreneur. Inadequate capacity building and skill development is also an issue.
  • Diversion of funds from the core business activity to other new activities before the core business activity becomes stable. Diversion of funds from short term use to long term use i.e. creation of fixed assets from working capital leading to choking of working capital.
  • Delay in sanction and disbursement of loans; Underfinancing in some cases.
  • Wilful default — Feelings that bank should not recover as borrowers have less stake and bank should recover from Insurance / CGTMSE etc. ; Opening of new business without proper knowledge on the demand supply scenario and the major risks in the business.

5. MSME Clusters

There are two MSME clusters in Odisha namely in Puri and Cuttack district.

  1. In Puri a Cashew cluster is there in Food processing sector of MSME clusters. The product is cashew nut in this cluster.
  2. In Cuttack a Spices Cluster is situated in Food processing sector. The products are spices in this sector.