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84. Large-scale developments are envisaged in the field of organic chemicals almost for the first time. These may be said to have followed the build-up in the demand for many items as a result of the development of allied chemical industries over the last decade e.g. plastics, dye-stuffs, drugs. New industries visualised in the Third Plan like nylon and terytene and further expansion in the existing lines over the next five years have been taken into account in fixing the levels of development appropriate in this field. The undermentioned targets for the three major items have to be regarded as provisional since it is not yet clear at what pace the industries which would be important customers for the products and are to be established in the country for the first time, are likely to develop.
Manufacture of plastic monomers, vinyl chloride and styrene, butadiene, carbon black and rubber chemicals, butyl alcohol and its esters, citric acid and oxalic acid, which are proposed to be undertaken for the first time in the private sector, deserves mention in this connection.
85. Major developments are also envisaged in the public sector through the Basic Chemicals and Intermediates (BCI) plant near Panvel in the Maharashtra State, the B.C.I, project as the supplier of intermediate chemicals, is firmly linked with the synthetic drugs project proposed for establishment at Sanatnagar near Hyderabad. As a result of these two projects, valuable technical know-how in a virgin field is expected to become available during the Third Plan period. The programme under the BCI project covers the manufacture of 40 organic intermediates with an aggregate output of 25,160 tons. Provision is also being made for further expansion in due course by about 15,000 tons. Several basic inorganic chemicals are consumed in the manufacturing operations which include inter alia chlorination,. sulphonation, alkaline fusion, nitration, reduction and oxidation. The manufacture of some of these inorganic chemicals is also envisaged in captive plants within the project.
86. A project report is to be obtained with a view to establishing in the public sector a plant for the manufacture of high viscosity index lubricating oil products. Government is also considering a proposal for establishing a plant for this purpose in association with private enterprise. Apart from this, developments in the field of refined, petroleum products are visualised entirely in the public sector. The programme includes the completion of the refineries under construdtion at Nunmati (Gauhati) and Barauni and the establishment of a third public sector refinery with an annual capacity of about two million tons of crude throughput in Gujarat. External credit and technical assistance have been assured for this third refinery and the site for it is being selected, 'inc product pattern of this refinery will have to be designed, as in the case of the Nunmati and Barauni refineries, to cover as far as possible the deficits in kerosene and diesel oil. Every effort is being made for the construction of the refinery by the middle of 1964, and on present indications it is likely to be in -a position to ;undertake a throughput of approximately 3.5 .million tons of crude oil during the Third Plan period. The estimated requirements of end-produdts by 1965 -and the expected output of the refineries in operation and under construction are presented in the following Table :
12 Estimated requirements of petroleum products
87. The requirements of furnace oil might prove to be higher if fiscal incentives are given to encourage industries in areas far removed from the coal fields to change over from coal to fuel oil. This matter is under examination.
88. In common with several other countries, India will face the problem of imbalance between the output of motor spirit (gasoline) and the demand for it. While exports have so far provided an outlet for surplus motor spirit, the disposal of it, in this manner, is expected to become more and more difficult with the all-round expansion of refining capacity in neighbouring countries. The solution to the imbalance problem will have to be found by the adoption of the following methods :
89. The public' sector programmes in this field also visualise a project for the fractiona-tion of the Nahorkatiya natural gas to isolate the ethylene, butane and other aliphatic hydrocarbons and make them available to petrochemical industries. The residual gases are proposed to be fed to the Nahorkatiya fertiliser project and the power plant planned for establishment close to the petro-chemical! plants.
PHARMACEUTICALS AND DRUGS
90. A beginning has been made in the later years of the Second Plan in the diversification of the production of essential drugs in both the public and private sectors. This is illustrated by the arrangemeats for gtrcptomyam maaufac-turc by Hindustan Antibiotic's Ltd., and the synthesis of vitamin A from lemongrass oil by two leading pharmaceutical establishments in Bombay. New developments in this field arc projected by Government as well as private enterprise which are expected to ensure the availability of essential drugs at reasonable prices and based on indigenous raw materials.
The public sector projects in this field which arc estimated to involve a combined outlay of Rs. 27.3 crores arc :
In connection with the manufacture of phyto-chemicals the establishment of modern drug farms has assumed crucial importance. Provision has been made in the Five Year Plan of some of the States for these related developments.
91. Within the overall target of 85,000 tons set for plastic materials as a whole, pride o1 place has been assigned to polyolefines (polyethylene, etc.) their proposed share being 27,000 tons. Next in importance from the point of view of the rate of growth envisaged are polystyrene and polyvinyl chloride for each of which appropriate targets are being fixed. Polyethylene has a high priority as a lining material for bagging fertilisers on account of its high resistance to moisture. Ethylene of petro-chcmical origin is expected to come into use as the raw material for its production on account of its price advantage as compared to alcohol. This is a field in which revision of the target might merit favourable consideration from the export angle as well as the potential of some of the plastics to provide substitutes for scarce materials like rubber and leather.
92. The manufacture of soft eekc frera lignite at Neiveli at the rate of 380,000 tons per year is a major spillover scheme from the Second Plan. Development of further capacity is prima facie desirable in the context of the heavy denudation of forests that has been taking place from charcoal production. The public sector programme includes a proposal for the establishment of low temperature carbonisation plants for the production of soft coke. The approach to developments in this field is, however, flexible.
93. The capacity target for cement fixed at 15 million tons by 1965-66 represents about 50 per cent increase over the level expected to be reached by the end of the Second Plan. Recent trends in the demand for cement indicate that the estimated requirements for 1960-61 which were taken as the basis for the projections of growth, may have been somewhat on the low side. This matter is expected to be reviewed in another year. The possibility of having to revise the cement target upwards, if restraint on construction activities is not considered necessary or desirable, cannot be ruled out.
In view of difficulties in expanding the output of limestone in step with the full requirements of the cement industry, greater attention should be devoted to the use of granulated slag from the steel works. Not much progress was made on the use of blast furnace slag in cement manufacture during the Second Plan.
GLASS AND GLASSWARE
94. Important developments in this industry will be the manufacture of optical and ophthalmic glass. The former is of basic importance to the instruments industry and its manufacture is to be started during the Third Plan on the basis of the know-how and experience built up by the Central Glass and Ceramic Research Institute of the Council of Scientific and Industrial Research. Manufacture of ophthalmic glass is to be undertaken at Dureapur with aid from U.S.S.R
95. The plant for the manufacture of raw films, X-ray films and sensitised papers proposed to be set up near Ootacamund in Madras State with the technical collaboration of M/s. Bauchct ct Cic of France is a major public sector project falling in this field. The capital investment on the scheme and its turnover arc estimated at Rs. 8 crores and Rs. 5 crores respectively. On reaching full production under its current phase of development, availability of these products is estimated at 4.8 million sq. meters of films and 1.5 million sq. meters of photographic paper.
CONSUMER GOODS INDUSTRIES
96. Programmes for the manufacture of consumer goods in the public sector occupy a relatively miner position in terms of direct investment in organised industries, the only exception being the manufacture of essential drugs discussed in para 90 above. Watches and cameras are two items of durable consumer goods projected for manufacture in the public sector with technical collaboration from Japan. The production of the latter will be developed by the National Instruments Factory, Calcutta. The interest of the public sector in the field of consumer goods will also be manifested through assistance afforded for the establishment and expansion of cooperative enterprises. Sugar and cotton spinning mills will continue to be the main beneficiaries of such assistance. The programmes and targets proposed for the major consumer goods industries under the Third Plan are briefly outlined below.
97. Cotton textiles.The requirements of cotton textiles at the end of the Third Plan have been calculated on the assumption that 8450 million yards of cloth will be needed for domestic consumption and 850 million yards for export. The figure for domestic consumption provides for an increase of about 20 per cent over the estimated level of demand in 1960-61 ; in other words it allows for an annual increase of 2 per dent in population and 2 per cent in per capita consumption. For the purpose of this calculation, the demand in 1960-61 has been assumed to be about 7000 million yards. The actual availability of cotton cloth for domestic consumption that year was of the order of 6750 million yards, but this relatively low figure is believed to have been mainly due to a shortage of raw cotton consequent on a poor cotton crop in 1959-60 and cannot be taken to reflect the actual level of demand in 1960-61. This view is also supported by the high prices ruling for cotton cloth which have had a restrictive effect on the offtake. The figure taken for exports is not much higher than the average level prevailing during recent years, as for some time past exports have been stagnant and have not shown any decidedly upward trend.
98. Out of the total target for cotton cloth of 9300 million yards, 3500 million yards have been allocated as the share of the decentralised sector (handloom, powerloom and khadi). The production target allocated to the mill sector is 5800 million yards as against the current level of output and estimated effective capacity of about 5000 million yards. To achieve the additional production of 800 million yards in the mill sector, it is envisaged that about 25,000 automatic looms will have to be installed during the Third Plan.
99. On the basis of a cloth production target of 9300 million yards, and taking into account also the yarn required for purposes other than cloth weaving, e.g. hosiery and newar, the yam production target has been fixed at 2250 million Ib. To reach this target of 2250 million Ib of yarn it will be necessary to increase the active spindleage of the mills to about 16.5 millions as compared to 12.7 millions at the end of the Second Plan. The addition that may be secured through the activisation of idle spindles as a result of modernisation programmes will ultimately determine the number of spindles required to be installed through new units and expansions. The implications of the general observations made in para 21 regarding investment on replacements have to be further examined and the contributions towards additional effective spindleage which may be obtained through modernisation programmes and through the establishment of new mills assessed on realistic basis. The estimated gross investment will, however, remain substantially the same whether the bulk of the additions to spindleage comes from modernisation or from new units. Out of the additional capacity for spindles and looms envisaged for installation during the Third Plan, it is proposed that a substantial proportion of the additional loomage shall be export oriented.
100. Rayon and staple fibre.The programme for the rayon and staple fibre industry in the Third Plan period envisages expansion of capacity from about 100 million Ib (52.3 million Ib of rayon filament and 48 million Ib of staple fibre) at the end of the Second Plan to 215 million Ib (140 million Ib of rayon filament and 75 million Ib of staple fibre). This expansion programme provides inter alia for an increase in the per capita consumption of rayon fabrics from 1.3 yards in 1960-61 to 1.8 yards in 1965-66. The overall target for rayon filament comprises 20 million Ib of tyre cord yarn required for the automobile tyre industry, 76 million Ib of viscose filament, 24 m'liion Ib of acetate yam, 10 million Ib of cuprammonium and 10 million Ib of synthetics
101. Considerable importance, has been attached to the phasing of investments in this industry so as to reduce the burden on foreign exchange on current account. Thus it is proposed that expansion of capacity for the manufacture of rayon grade pulp should be given preference over further expansion of output of rayon filament and staple fibre The position will have to be periodically reviewed so as to ensure that additional capacity in this field is created in step with the progress in the manufacture of the raw materials. The future planning of this industry, particularly staple fibre, will also be influenced by the extent to which it proves possible to increase ths production of long staple cotton, since staple fibre can be regarded as a substitute for it.
102. Paper and newsprint.The expansion programme of the paper and paperboard industry broadly conforms to the aim of achieving self-sufficiency in respect of this essential item. To meet the estimated demand of 700,000 tons by 1965-66, il is proposed to increase the capacity of the industry from the present level of 410,000 tons to 82Q..OOO tons by the end of the Third Plan period. A sizeable proportion of the additional capacity to be established dining the Third Plan period will take the form of small paper plants using local raw materials.
103. The Security Paper Mill to be established at Hoshangabad with an annual capacity of 1500 tons envisages the production of specialised paper on the import of which a considerable amount of foreign exchange is nt present expended.
104. In the case of newsprint, a five-fold expansion from 30,000 tons to 150,000 tons has been proposed in :tep with the anticipated growth of demand during the Third Plan period. Additional capacity is expected to be achieved through the doubling of the Nepa mills and through the establishment of new newsprint factories based on baggasse and on the soft woods available in tb? Himalayan region.
For the achievement of these targets, the paper and newsprint industries
will have to depend upon new raw materials ir. place of bamboo which has
so far been their mainstay. New industrial uses of bamboo, e.g. for rayo.i
grade pulp will also rccentuate the shortage of bamboo for f-bc paper
industry. While ;)ew plantation and replantation programmes can, to some
extent, provide a long term solution, in the Third Plan the paper and
newsprint expansion will have to depend heavily on the use of bagasse
which is currently being use'.' as fuel by the sugar mills. The diversion
of bagasse to the the paper industry will have to be based on providing
the sugar mills with an
106. Sugar.In the case of the Sugar industry, the stage of self-siist.i.'ned growth has been reached by the beginning of Ihe Third Plan as a result of the progress made in the manufacture of mill machinery in the country. A second major factor which would influence the pace of growth of this industry is the expected availability of sugarcane. The Third Plan has envisaged expansion of sugarcane output to 100 million tons mainly through improvements in yield per acre. After allowing for diversion of sugarcane for jaggery manufacture and other miscellaneous uses, about 35 million tons of sugarcane are expected to be available for sugar production. To cope with the crushing of these supplies in this seasonal industry, expansion of capacity to 3.5 million tons per year (in terms of gur) has been projected under the Third Plan. Cooperative industry during the Third Plan and it is estimated that their share of the enterprises are expected to make further progress under this overall mill capacity will rise to about 25 per cent. A provision of about Rs. 6 crores has been envisaged in the Plan for contribution by State Governments to the share capital of cooperative sugar factories, Throughout the Third Plan period, the production of sugar in the country is expected to meet the demand in full and the surplus will be exported.
107. Vegetable oils.In the case of vegetable - oils, further expansion of production is largely dependent on the programmes for cultivation of the five major oilseeds, viz., groundnut, sesamum, rape and mustard, linseed and castor. The production of these oilseeds is planned to be raised from an estimated 7.1 million tons in 1960-61 to 9.8 million tons by 1965-66. From the trends of consumption and the rate of population growth, it is felt that the availabilities of edible oil will not be adequate to provide for sizeable exports after meeting the internal needs in full. In order to augment the supply of vegetable oils, various proposals; form a part of the overall programme, one of which is the expansion of the production of cotton seed oil to one lakh tons per year. The realisation of this target will depend on the success achieved in promoting the use of dotton seed cake as an animal feed instead of the whole seed and in ensuring the offtake of the cotton linters as an industrial raw material. The additional production of cotton seed oil is largely to be used in the manufacture of vanas-pati thereby relieving the pressure of demand on groundnut oil. Another important programme calculated to augment the vegetable oil resources which has been envisaged in the Plan, is to increase solvent extraction of oil cakes to 160,000 tons of oil per year from its current level of about 40,000 tons. Oil thus produced would be used chiefly for industrial purposes. Other subsidiary sources of supply of oil, though relatively of minor importance from the point of view of tonnage output, have also been borne in mind, e.g. rice bran oil. The overall production of vegetable oils inclusive of coconut oil is expected to amount to about 2.9 million tons by 1965-66.
PROBLEMS OF DEVELOPMENT AND GENERAL RECOMMENDATIONS
108. The nature and levels of industrial development proposed under the Third Plan present a major challenge to both the public and private sectors in view of the manifold problems to be attended to in a limited period of time. Resources and foreign exchange, though important, are not the only problems which have to be tackled. Those involved in maintaining rising levels of production and at (he same tune carrying out the expansion of steel plants have been found by the two private sector companies to be quite complex and the fullest use must be made of their experience in overcoming the difficulties that may arise in expanding the public sector plants while at the same time bringing them to full production.
109. For machine building activities, which figure prominently in the public sector programmes, as well as for machinery manufacture in the private sector, designs development and project engineering are of paramount importance. In regard to the latter, which has been briefly referred to in paragraph 6, the N.I.D.C. is arranging to assume responsibilities with reference to its own public sector projects as well as those of the Commerce and Industry Ministry, and a Technological Consultancy Bureau was established by it in 1960-61. The functions of the Bureau will include preparation of preliminary studies, investigation and selection of sites, preparation of detailed project reports and the designing of structures. As regards designs development, though to begin with the fabrication of plant and equipment will necessarily be based predominantly on 'bought out' designs, the object should be to manufacture in the not distant future industrial machinery on the basis of indigenous designs. In the public sector, it is intended that the nucleus organisations functioning under Hindustan Steel Ltd. and Sindri Fertilisers and Chemicals should be rapidly expanded and similar agencies brought into being in an appropriate manner under other machinery projects. A central designs institute for machine tools is projected at Bangalore. Similar programmes should be accorded high priority in the private sector also and appropriate steps taken to push forward these programmes vigorously. Since performance guarantees are customary in this field, establishment of the necessary testing facilities will also become essential. A high voltage laboratory is being set up for the testing and design development of switchgear at Bhopal. This problem will have to be attended to by the private sector also wherever necessary.
110. Since the industrial sector has also to play its part in the export drive, thought and attention must be given not only to securing expansion of output but also to all factors that contribute to enhanced productivity and reduction of costs. As regards production costs, the high levels are partly attributable to factors capable of remedy, if the sizes of plants proposed for establishment are of optimum size and economic outlets for by-products and/or co-products as in the case of electrojycic caustic soda plants, are also developed. A high level of utilisation of capacity will be conducive to economies on overheads. These are aspects that should be continuously studied by Development Councils at the expert level.
111. Many of the heavy industries envisaged for development, e.g. steel plants, petroleum refineries, fertiliser factories require very large quantities of water for process use. Machine building projects, which give rise to concentration of industrial labour at the selected location, similarly demand largescale water supply facilities for potable and other township requirements, though the direct consumption in the processes is not considerable. In the studies undertaken by special committees entrusted with the task of recommending suitable sites for some of the major industrial projects included in the Third Plan, the availability of water has figured as a very material factor influencing the ultimate choice. It has been noted that several areas which are otherwise well suited for the location of heavy industries have had to be ruled out owing to lack of water on the scale demanded. Without long-term planning of water supplies, the opportunities for industrialisation in such areas will be thwarted. No less important is the problem of effluent disposal, particularly in the case of chemical and allied industries. Without proper arrangements for treatment and disposal of effluents, the pollution of the rivers in proximity to chemical factoriesmany chemical plants are getting established in the upper reaches of the Ganges and other riverswill present a serious public health problem. These twin problems should receive attention commensurate with their growing importance in detailed studies relating to factors ancillary to industrial expansion.
OUTLOOK FOR THE INDUSTRIAL SECTOR IN 1965-66
112. The gains from the industrial development, as formulated for the Third Plan, will be many sided. The rapid growth of public sector investment and output will considerably further the objective of a socialist pattern of society. The dependence of some of the vital sectors of the economy like agriculture, electric power, railways, motor transport on imports of equipment and material from abroad will be substantially reduced. Within the industrial sector itself, the development of heavy engineering and machine-building will enable a large amount of capital equipment required for industries, which is at present imported, to be manufactured here. The imports required for the maintenance of a number of important industries will also be reduced through the production of the basic raw materials within the country itself, e.g. rayon grade pulp, organic chemicals, synthetic rubber, intermediates for dyestuffs and the drug industries. Thus, with the completion of the industrial programme drawn up for the Third Plan, the essential foundations for self-sustaining growth will have been laid. In 1965-66 the general index of industrial production, which is one of the conventional indicators of progress, is expected to reach the level of 329 (1950-51=100) as against 194 provisionally estimated for 1960-61 and 139 for the last year of the First Plan.
ANNEXURE I Third Five Year Plan 1. Industrial Projects of Central Government
@According to the latest estimates these projects will cost Rs. 10.1 crores and will need foreign exchinae expenditure of Rs. 6.4 crores.
ANNEXURE I Contd..2, Mineral projects of the Central Government
*In addition some further amount may be needed for deep and gassy mines.
3. assistance to institutional agencies and other miscellacoui requirementsCentral
ANNEXURE II 1. Industrial projects of State Governments
llcontd. 2. mineral projects of the State Governments
outlay requirements of States for participation in private industries
(a) Figures of
total cost and foreign exchange are the amounts expected to spill-over
into the Third Plan.
ANNEXURE III Expansion of selected major industries and mineralsprogress and targets
for engineering industries is estimated on the basis of double shift operation.
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