Unorganized Manufacturing Sector Research Articles

Urban Unorganized Sector of North-East India: Dimensions and Growth

The unorganized manufacturing sector has been considered as the main engine of growth for manufacturing in India. Given the paucity of studies concerning the urban unorganized manufacturing sector (UUMS) in the North-East India, this paper aims to examine its growth performance along with an overview of composition of its workforce. The data has been obtained from three rounds of NSSO data viz., 62nd, 67th and 73rd round . The UUMS holds a significant position across the North-East, given the substantial no. of enterprises and workforce engaged in the sector. While the growth of enterprises has been led by OAMEs, the establishments have pushed the employment growth. Although, employment of females has seen a less significant position in UUMS, contractual employment has been largely driven by female part time workers. Given its dynamic nature, the UUMS has a greater scope in making valuable contributions for the development of North-East’s economy.

Subcontracting: A Stepping Stone for Modernisation or a Survival Strategy for Unorganised Manufacturing Sector in India?

Subcontracting: A Stepping Stone for Modernisation or a Survival Strategy for Unorganised Manufacturing Sector in India?

Characteristics of Enterprises More Likely to Face Constraints in the Unorganised Manufacturing Sector in India

The unorganised manufacturing sector has been facing numerous challenges in spite of its capacity to generate employment. This study analyses the enterprises in the unorganised manufacturing sector in India most likely to face challenges based on different characteristics. The data for the study is extracted from the 73rd Round of National Sample Survey Organisation (NSSO) for the period 2015–2016. The aim is to identify the characteristics of unorganised manufacturing enterprises more likely to encounter problems. Logistic regression techniques have been employed for this purpose. The results show that the larger enterprises, the establishments, are more likely to face problems than the small own-account units. With odds ratios greater than one, rural sector enterprises, registered enterprises, male-owned enterprises, contracting enterprises, enterprises with accounts maintained and enterprises with government assistance have higher risks of problems. Registration status does not reduce the chances of such enterprises encountering problems. Older enterprises are less likely to face problems. Suitable policy measures designed for enterprises with specific characteristics are needed to address the problems of the unorganised manufacturing sector.

COVID-19 and Manufacturing Industries in India and Role of Human Resources Management

COVID-19 had put a halt to many manufacturing industries across the world, including India, and that led to one of the worst job crises. Manufacturing industry is one of the most important sectors in India that drives the economy. India’s manufacturing workforce in majority belongs to the unorganized sector which has progressed the economy in pre-COVID-19 times. The employees in the unorganized sectors have suffered immensely during the COVID-19 crisis. The Human Resources Management (HRM) experienced unprecedented challenges in understanding the crisis, employee challenges, and coming up with timely solutions to address these issues. The focus of the paper is to review the opportunities and challenges in the HRM policies and practices in the manufacturing industries during COVID-19 and provide recommendations to apply these findings and to develop a future HRM strategy in unorganized manufacturing sectors in India. To our knowledge this is the first review that addresses the potential role and challenges of HRM in the unorganized manufacturing sector in India during COVID-19 pandemic.

Economic viability and underemployment in India’s unorganized manufacturing firms: evidence from nationally representative surveys

Importance of the manufacturing sector in bringing about structural transformation in the economy is well appreciated in literature. In India, with more than 70% of manufacturing employment originating in the unorganised segment, it becomes imperative to explore the dynamics of employment and growth of firms in the unorganised manufacturing sector. Additionally, interest in the sector arises since it is one of the prime avenues of employment generation. In particular, this paper examines the economic viability of unorganised manufacturing firms and underemployment therein. Results on underemployment help us to conclude on the prospect of full-time employment opportunities in the sector, whereas an assessment of economic viability brings out the major obstacles to growth plaguing unorganised manufacturing firms. This article identifies the prime areas requiring policy intervention and emphasises the need of implementing existing policies on ground.

Informality and structural change: evidences from microenterprises in India's unorganised manufacturing sector

PurposeThis article analyses the structural change in microenterprises located at India's unorganised manufacturing sector in terms of output mix, choice of technique and productivity during the last few decades.Design/methodology/approachBased on data collected from a quinquennial survey of unorganised firms, this study attempts productivity analysis by using the growth accounting technique.FindingsThe paper finds that there is a significant structural change which has occurred in the small firm sector in Indian manufacturing. The share of capital-intensive industries has increased substantially in recent years. Further, though small firms are more labour intensive, the labour productivity and total productivity of these firms are very low. The falling labour productivity and rising capital intensity indicates replacement of labour with capital in Indian small firm sector.Practical implicationsLow productivity of the sector is a cause for concern and this needs to be addressed by making the sector more competitive in the world market. To achieve this, policies should be designed so that small firms reach the efficient scale of production.Originality/valueThis is the first paper which examines structural changes in the Indian MSME sector. The findings have strong implications for creation of a viable ecosystem of entrepreneurship in the country.

Growth of Unorganised Agro-based Industries in Punjab

To relieve the employment pressure from agriculture, the growth of the industrial sector is required and the unorganised sector plays an important role in this context as jobs in the organized sector are shrinking. Within the unorganised sector, it is the manufacturing sector which provides employment opportunities to a large less-skilled section of the labour force and requires less capital and within the manufacturing sector, agro-based industries are major employment providers. Therefore it is important to study the growth of such industries in a state like Punjab where agriculture continues to be a major contributor to the economy. An attempt was made to study the growth pattern of agro-based industries in the unorganised sector of Punjab because agro-based industries accelerate agricultural development by creating backward and forward linkages. For the purpose of study unit level data from various rounds of NSSO was used. It was observed that four agro-based industries namely manufacture of food and beverages, manufacture of textile, manufacture of wearing apparel, manufacture of wood and products of wood were dominating the unorganised manufacturing sector of Punjab economy both in terms of the number of industries and employment. Manufacture of wearing apparel has emerged as a major industry and replaced textile industry in terms of both numbers of units and employment. It was also observed that share of agro-based industries in unorganised manufacturing sector of Punjab was declining and the declining number of agro-based enterprises and employment is a major cause of concern particularly in state like Punjab which is trying to find new employment and income generation opportunities outside agriculture after the growth of agriculture in the states nearly stagnated.

Spatial Industrial Diversification in India: An Analysis of Unorganised Manufacturing Enterprises

Industrial diversification continues to be an important policy goal in regional planning, because of its direct positive effect on economic growth and stability. A large number of studies in India, carried out at different geographical scales namely, national level, states, and districts show that the industrial structure of India and its regions and states is characterised by high degree of specialisation rather than diversification. However, these studies are related to the organised (or registered) manufacturing sector only. Despite the fact that the unorganised manufacturing sector, also known as the informal manufacturing sector, is vast and diverse, and occupies an important role in India’s industrial sector, very few studies have attempted any systematic analysis of the structure of the unorganised enterprises, both at the national and regional levels. Therefore this paper aims to examine the industrial structure and the extent of diversification of unorganised manufacturing enterprises across the Indian states. Using data from the 51st (1994–95), 62nd (2005–06), and 67th (2010–11) “quinquennial” rounds the National Sample Survey on unorganised manufacturing enterprises, we have analysed the industrial structure of the states at two-digit industry level by employing location quotient technique, whereas the diversification coefficient has been employed to examine the degree of diversification of unorganised manufacturing enterprises in different states. We have also examined the relationship between diversification of unorganised manufacturing enterprises and level of industrial development across the states.

TECHNICAL EFFICIENCY IN INDIA’S UNORGANISED MANUFACTURING SECTOR: A NON-PARAMETRIC ANALYSIS

Unorganized manufacturing sector accommodates a large portion of workforce who are poor and economically excluded in the developing economies. Indian economy witnessed a rapid economic growth after the adoption of globalization policies in the year 1991. Contribution of unorganized manufacturing sector to the gross domestic product has increased. This sector is generally characterized by low productivity and low efficiency. However increasing importance of this sector makes the efficiency analysis more crucial recently. An attempt has been made in this paper to examine the technical efficiency of India?s unorganized manufacturing sector across states. Efficiency levels across different industries/ industry groups are also examined. Data Envelopment Analysis, a non-parametric approach of measuring technical efficiency is used. National Sample Survey Organization (NSSO) data for 1994-95 and 2005-06 have been considered.

Efficiency Improvement Opportunities of Unorganized Manufacturing Sector Using 5S Methodology

Efficiency Improvement Opportunities of Unorganized Manufacturing Sector Using 5S Methodology

Inter-firm Linkage in Unorganised Manufacturing Sector in India

Inter-firm Linkage in Unorganised Manufacturing Sector in India

Women Entrepreneurship and Employment in Micro and Small Manufacturing Enterprises

Based on three rounds (51st, 56th & 62nd) of NSS surveys on unorganised manufacturing sector, the present paper attempts to analyse the changing trend, pattern of female entrepreneurship and employment in the unorganised manufacturing sector. Although there has been an increase in both female entrepreneurship and employment during the study period, i.e., 1994-95 to 2005-06, it has largely been concentrated in low-productive and labour intensive industry groups; female-owned enterprises are operating at low levels of productivity as compared to their male counterparts; further, a large part of female employment is part-time and contractual in nature and a preponderant majority of female are engaged in the tiniest enterprises, i.e., OAMEs. The present paper makes an attempt to understand the role of women in the unorganised manufacturing sector and calls for suitable policy interventions to improve their levels of earning and conditions of work.

Role of Unorganized Manufacturing in Expanding Employment Opportunities in Assam

The unorganized sector plays important role in creating gainful employment opportunities, especially in developing countries, which are, in general, labour abundant. The Eleventh Five Year Plan has emphasized that the unorganized manufacturing sector holds the promise of vast employment creation, and thus, could be a panacea to the burgeoning labour force in India. In this light the present paper analyzes the structure and growth of employment in the unorganized manufacturing sector in Assam. Our main concern is to address the employment potentiality of the sector in the State. We have discussed the issue in the light of different technology parameters such as capital intensity and factor productivity, etc. The analysis has been carried out separately for different enterprise types to get a clear picture about the specific sectors and sub-sectors. The findings suggest that the unorganized manufacturing sector of Assam has witnessed sharp decline during 1994-95 to 2000-01, especially in terms of number of units and employment, but the sector has experienced significant rise in recent years (during 2000-01 to 2005-06). However, this improvement is at the cost of quality of employment, since the number of full-time workers has sharply declined and there has been increase in part-time workers only.

Micro and Small Enterprises in Assam

This paper examines the structure and growth of micro and small enterprises (MSE) sector in Assam. We analyse the growth of the sector by different enterprise types in terms of different indicators such as number of units, employment, value added and fixed capital. The analysis, based on National Sample Survey data on unorganised manufacturing sector, carried out for the period 1994-95 to 2005-06 reveals that Assam’s MSE sector has witnessed drastic decline during the period 1994-95 to 2000-01, while significant growth has been experienced during 2000-01 to 2005-06. However, growth rates are varied across different enterprises. The findings are important in formulating policy for entrepreneurship development and development of the MSE sector in the state.

Distinction between Informal and Unorganized Sector: A Study of Total Factor Productivity Growth for Manufacturing Sector in India

Since its very onset, the concept and definition of the informal sector has been a subject of debate both at the national and international levels. Existing literature uses the terms ‘informal sector’ and ‘unorganized sector’ interchangeably. However, in India, the characteristics of enterprises in the informal and non-informal unorganized manufacturing sectors are different and, thus, it is not justifiable to consider the informal and unorganized sector interchangeably for the manufacturing sector. Thus, the objective of this paper is to test the hypothesis on whether or not the total factor productivity growth (TFPG) of the informal manufacturing sector is different from the non-informal unorganized manufacturing sector. TFPG is decomposed into technical efficiency change and technological change. Later, technical efficiency change is further decomposed by pure efficiency change and scale efficiency change. Results show that the average TFPG of the non-informal sector is higher than the informal sector. The informal sector heavily concentrates in own account small enterprises, whereas the non-informal unorganized sector concentrates only in directory manufacturing enterprises (DME). Due to large in size, DME avails the advantages of economies of scale, which, in turn, helps the units for more growth in terms of total factor productivity growth. The main reason for productivity decrease of the enterprises, besides technology regress and the lack of adequate investments, is the limitation of activities and scale along with the optimal allocation of resources. This study provides a basis on how policies can be designed for enhancing the total factor productivity growth of the informal sector.

Entrepreneurship and Micro and Small Enterprises Growth in Assam

In this paper we examine the structure and growth of micro and small enterprises (MSE) sector in Assam. We analyze the growth of the sector by different enterprise types in terms of different indicators such as number of units, employment, value added and fixed capital. The analysis, based on National Sample Survey data on unorganized manufacturing sector, carried out for the period 1994-95 to 2005-06 reveals that Assam’s MSE sector has witnessed drastic decline during the period 1994-95 to 2000-01, while significant growth has been experienced during 2000-01 to 2005-06. However, growth rates are varied across different enterprises. The findings are important in formulating policy for entrepreneurship development and development of the MSE sector in the State.

Unorganised manufacturing industries in India: A regional perspective

Notwithstanding various policies to address regional disparities in industrial development, the issue of balanced regional industrial development still remains in India. Studies dealing with the issue mainly focused on the organised industries. In spite of the fact that the unorganised manufacturing sector occupies a dominant position compared to the organised sector and recognized as the most potential sector for rapid employment creation; no attempt has been made so far to examine the regional pattern of the sector. The major objective of the paper is to analyze the regional pattern of unorganized manufacturing in India before and after reforms. We found that while unorganised manufacturing continued to concentrate in few advanced states, there is barely any improvement in the performance of the backward states even after reforms. Spatial concentration is high for the high-technology industries and low for resource-based low-technology industries. Spatial concentration is found to be declined for all and most of the two-digit industries after reforms. Key words: Industrial location, regional development, unorganised manufacturing.

STRUCTURE, EMPLOYMENT AND PRODUCTIVITY GROWTH IN THE INDIAN UNORGANIZED MANUFACTURING SECTOR: AN INDUSTRY LEVEL ANALYSIS

The paper analyzes the size, growth and productivity performance of the unorganized manufacturing sector in India during the 1978–1979 to 2000–2001 period. The study shows evidence of an increase in the size of the sector with a slowdown in the reforms period. Evidence indicates that the rate of growth varies widely across the two-digit industries but the variation in growth rate is smaller during the 1990s. Textiles and machinery goods were the fastest growing segments of India's unorganized manufacturing sector in the reforms period. The partial factor productivity approach shows that labor productivity has improved in 2000–2001 over 1978–1979 while capital productivity reported a decline in the same period. The sector, on the other hand, registered a fall in total factor productivity (TFP) during the reforms period. It is found that technological progress has been the main contributor to the growth in TFP in the prereforms period while technical regress contributed to the decline in TFP in the reforms period. A completely different picture is noticed since the mid-1990s when the sector made significant progress in TFP primarily attributed to technological progress which outweighed the decline in technical efficiency. It is also found that capital intensity is an essential factor augmenting labor productivity levels in the sector, which is important for improving the wages paid to the workers in the sector.

Subcontracting in India’s Unorganised Manufacturing Sector

The article provides empirical evidence on the pattern and magnitude of subcontracting in micro and small manufacturing enterprises sector and across its different industry groups and analyses whether there are any sector-specific features in functions and linkages. It illustrates types, nature and extent of linkages and their implications for the micro and small enterprises. In terms of select performance indicators, a comparative analysis of enterprises that are engaged in subcontracts and those that are not has been attempted to identify factors that work for or against long term relationships between the large and micro and small firms. Subcontracting as an instrument for technological upgradation and employment expansion in micro and small manufacturing enterprises has also been discussed. The article shows that the subcontracting intensities were pronounced in very few product lines. Although the subcontracting enterprises were reported of receiving assistances in terms of marketing, technology and finance, these enterprises were operating at a lower productivity level as compared to non-subcontracting enterprises. Further comparison of employment generation capacity between subcontracting and non-subcontracting enterprises does not reveal any pattern. The article concludes with a summary of the article and suggests policies that can potentially impinge on subcontracting linkages for optimal outcomes.

Organized Versus Unorganized Manufacturing Performance in India in the Post-Reform Period

This paper analyses the productivity performance of the Indian manufacturing sector using unit level data, which is aggregated at four-digit industry level for the period 1994-95 to 2004-05 for 15 major states. The study focuses on both the organized and unorganized segments of the manufacturing sector. Both partial and total factor productivity (TFP) measures have been employed to trace the productivity performance of formal and informal manufacturing sector. TFP is estimated using Cobb-Douglas production functions at the four-digit industry level. The estimation is carried out by employing the Levinsohn-Petrin method, which uses intermediate inputs as the proxy to address the potential simultaneity bias in production function estimations. Our analysis reveals that labour productivity has increased for the organized sector over time whereas both labour productivity and capital intensity growth have slowed down in the unorganized sector during the 2000-01 to 2004-05 period. The production function analysis shows that capital has played a more significant role in the production process in both the sectors. TFP growth accelerated in the organized manufacturing sector during 2001-05 over 1995-2001 while the TFP decline that started in the first period (1995-2001) continued unabated even in the second period (2001-2005) in the unorganized manufacturing sector. We also find that output growth in both the sectors is productivity driven and not input driven. The improvement in TFPG of organized manufacturing in the post-2000 period as compared to the second half the 1990s across most states in India and that output growth was mostly productivity driven are important positive features of manufacturing performance in the post-reform period. However, the declining total factor productivity on one hand and increasing capital intensity of the unorganized sector is a cause of worry and raises several important questions.