Approved by the Government of India in 2009, a project to develop a foundry and machine tool cluster at Batala in Punjab is yet to receive assistance from the Centre. As a result, the cluster is yet to see the light of day and the existing units are struggling.
The cost of the cluster development project was estimated at Rs 80 crore. Of this, Rs 50 crore was to be disbursed by the Centre in terms of assistance and the remainder was to be contributed by local industrialists.
Batala was once famous for foundry and machine tool manufacturing, with a majority of the units being SMEs. In the 1980s, the town was one of India’s biggest centres for cast iron and machine tool manufacturing. At its peak, Batala housed about 800 cast iron and 1,500 machine tool manufacturing units.
Only 20 per cent of them are operational today. Among the well-known units that have closed down are Agriculture Industries, Khalsa Engineering, Royal, Micro and Janaki Steel Rolling Mills.
Industry executives say the apathy of the state and Central governments and militancy were the main reasons behind the decline of the industry. During the militancy period, the area was almost inaccessible to traders and customers from others parts of India. Industrialists began investing their money in other parts of the country, with the result that Ludhiana, Faridabad, Agra and Secunderabad flourished at the cost of Batala.
Both foundries and machine tool manufacturing are yet to see signs of revival. Local industralists said that the cluster project was a ray of hope for them.
A local entrepreneur, Bharat Bhushan Aggrawal, said, “We were pinning our hopes on the Government of India’s cluster scheme which was approved in 2009, but it is yet to be implemented. Two years have passed but nothing has been done. The cluster scheme is the only way to help sustain existing units and attract new ones or revive old industries.”
Already, 75 per cent of the units have closed down and the rest are on the verge of closure. In order to boost the industry, the president of the Association of Batala Small Industries, Rakesh Goel, said, “The government should abolish entry tax on raw material like iron, steel and coal, as our working capital is blocked. Besides, it leads to increase in input costs. Banks should also reduce interest rates for MSMEs — they should not exceed seven per cent a year.”
The local entrepreneurs also expect the government to reintroduce the freight equalisation policy, arguing that abolition of the policy put industrialists of this region at a financial loss vis-à-vis their counterparts in other parts of the country. Goel added that the dying units are looking to the state government for grant of a special package so that their locational disadvantages can be neutralised and they can compete with their counterparts in other parts of the country.
The cluster project was to have aimed at enhancing the productivity and competitiveness as well as capacity building of micro and small enterprises (MSEs). Creation of clusters also yields economies of scale.