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however, it is the secondary that is likely to play a major role in economic
relations with Germany and other industrialized countries.
3.3 Characteristic features of the producing sector
This sector includes the processing industry, energy-producing
industry, mining and construction industry. The following arguments
address mainly the processing industry, i.e. the industrial sector. The
producing sector has two key structural features:
- Going by comparisons on a global scale we find a conspicuous
deep structure as the distinguishing feature of the Indian industry.
The dominance of the strategy of self-reliance, in other words,
domestic market orientation and the ensuing import substitution
policy resulted in turning the Indian industry into one of the most
diversified in the world. All the important categories of industrial
goods were manufactured in India. A high degree of self-reliance
based on the supply of Indian products, ie., extreme diversifica
tion, also has a downside, for it implies a low degree of specialisation
of the enterprises. This is an important reason for the lack of
international competitiveness of Indian industrial products.
The pronounced heterogeneity of the manufacturing sector is
another chief characteristic feature. What is so characteristic about
the Indian industry is that it has a very broad-based and extensive
profile combining in it cottage, small scale and medium scale
industry, on the one hand, and the big industry, on the other.
Altogether there are but a few big enterprises with several thou
sand employees as opposed to a large number of small and
marginal units with less than 10 persons on the payroll. Besides,
the Indian industrial sector has a high degree of concentration. At
the end of the 1980s, in more than 50% of the industrial product
lines, four big industrial houses dominated in each case with an 80–
100% share in the market. Approx. 90% of the value-added net
industrial output is generated by the enterprises with more than
1000 employees, whereas the units with less than 50 employees
can take credit for barely 7.7% of value-added net industrial
output.
Till the mid-eighties, the "Sick Industries Act” was an important
feature of the Indian industrial policy. It was meant to identify units which
had consistently been making losses and to support them by way of
adequate subsidies (eg. easy credits, tax relaxations). The aim was to
prevent loss of workplaces as well as production capacity. Thus, a series
