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Unit 1: Nature of Indian Economy

Ancillary industry is also coming around the Nano Plant to meet the auto component Notes
requirements of the small car. TATA motors has decided to allot land to its 55-odd Nano
parts vendors at Sanand, which will make 350,000 cars annually in a phased expansion.
Among the SMEs that are coming up, is a unit of Durr India Pvt. Ltd. which will paint the
body of the car using Robots, Avtec Ltd., which makes cylinder heads, cylinder blocks,
connecting rods, crank shafts, hubs and synchro sleeves, round gears, shafts, transmission
case and cover for Nano. Other major vendors like Bosch India, Exide, etc. are also coming.
Setting up of ancillary units around the Nano plant is said to have instigated the residents
of seven villages adjoining the Nano project to oppose the State Government’s move to
acquire their land for setting up an industrial estate by the Gujarat Industrial Development
Corporation (GIDC).

The land acquisition process was initiated by the State Govt. following inquiries by some
of major industries like Bharat Forge and the US Based company, Alexandria, to set up
auto component manufacturing units.
It was the setting up of a vendor park which was the centre of the main dispute at Nano’s
original site in West Bengal with Trinamool Congress opposing the move. Tata Motors
had planned to have the vendor park adjacent to the production site to keep logistics
expenses under control.

Questions
1. Discuss the political and social factors because of which TATA has to shift from
Singur to Sanand.

2. Discuss how the decision of a State has changed the fate of a Region (Sanand/
Singur), Company (TATA/Ancillaries), People (Sanand/Singur) and an Industry
(Infrastructure and others).
Source: Business Environment, Dr Vivek Mittal, Excel Books

1.5 Summary

India’s economic freedom score is 55.2, making its economy the 119th freest in the 2013
Index. Its score is 0.6 point higher than last year, with improvements in the management
of public finance and monetary freedom offsetting a continuing decline in freedom from
corruption.

India is ranked 23rd out of 41 countries in the Asia–Pacific region, and its overall score is
below the world average.

India’s institutional shortcomings continue to undermine the foundations for long-term
economic development. In the absence of a well-functioning legal and regulatory
framework, corruption throughout the economy is becoming a more serious drag on the
emergence of a more dynamic private sector.
The state’s presence in the economy remains extensive through state-owned enterprises
and wasteful subsidy programs that result in chronically high budget deficits.
Progress in structural reform has been uneven and often stalled. Plans to open up key
service sectors have been reversed, and no significant reforms have been implemented
effectively in recent years. Efforts continue, however.
Reform measures aiming at reducing government subsidies and encouraging foreign
direct investment were announced in 2012.

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