Mohali Industrial Area
A dream gone sour?
By Nonika Singh

— Panic grips the employees of JCT Electronics Ltd, a pioneer in the field of colour picture tube manufacturing in India, Mohali, as the company resorts to extreme measures like retrenchment to counter the spiralling graph of overhead costs.

— Punjab Wireless Systems (PUNWIRE), a company which has over the last two decades witnessed a meteoric transformation from being a small company to a Rs 175- crore giant, decides to shift gears from manufacturing to servicing.

—PCL(Punjab Communications Ltd), Mohali, despite a phenomenal growth of 30-40 per cent, stands a mute witness to its dwindling profit share.

— Fujitsu, a multinational situated in Mohali, falls back upon its parent company to offload the gnawing gap between demand and supply.

This is but a sample of the dismal scenario prevaling in the electronic "industrial belt" of Mohali, the industrial growth of which can be traced back to 1970-71 when 1189 acres of land were acquired by the government. Touted as the Silicon Valley of Punjab, it was expected to emulate the success story of Bangalore. Today, it remains a poor cousin of the original model, a dream turned sour. A director of a medium- scale electronics company frets, "For a idea to translate into reality, the dream has to come from the people themselves and can’t be realised by government’s empty promises. Silicon Valley couldn’t have possibly erupted out of thin air".

But the moot question is whether the ensuing crisis is symptomatic of the overall not too healthy economic atmosphere prevailing in the country. Or, is Mohali, a conglomerate of 35 medium and large units and 1087 small ones, facing problems of its own making?

Keshav Sachdev, Vice-President (works), JCTEL, says that the Punjab Government can’t be faulted for the ills afflicting the units. Nor can the blame be laid at the door of industrial recession for that matter. He reveals that though at present industrial growth is pegged at a rather low 4-5 per cent, the television industry is growing by leaps and bounds -- 35 to 40 per cent per annum. But the flip side of the increase in volumes has been that profits have taken a sever beating. Since the combined production (6 million) of all major players in CPT industry outstrips the demand ( 4.5 million), manufactures have been forced to slash prices by Rs 300/400 per tube. Besides, the entry of China and Far Eastern countries into the international circuit has closed down the export market. Still Sachdev is adamant that government intervention cannot resolve matters.

An executive of the makers of long digital switching systems too feels that promoters can’t be absolved and they alone are responsible for landing themselves in a financial soup. For one, most managements failed to either upgrade technology or to indigenise the production process. Losing out the competitive cost edge, they have failed to capture markets. Plus DoT’s (Department of Telecommunications) haphazard policy (where policy makers and those who implement it are different people) has only worsened matters. While in countries like China the order is placed for three years, in India the companies are expected to meet the order requirements in a brief span of three months. Moreover, with DoT’s ambiguous stance on the entry of private operators in the telecommunication sector, the demand continues to be sluggish.

PCL sources (the company makes transmission and switching products, and is a major supplier to DoT) shift the onus to government’s selective policy of liberalisation. Though PCL’s target production for the ensuing year is a staggering Rs 100 crore, an employee of PCL claims that if the present situation continues, Indian industry will die an unnatural death.

On paper, most of these electronics units are still making profits (JCTEL’s profit figure for 1997-98 is Rs 12.6 crore.) The reality, however, is markedly different from cold statistics, giving credence to the quote that statistics are lies, lies and damned lies.

With lead players in a fix, ancillary units too are feeling the bite. S.S. Sabharwal of Fit-O-Fit seals (a small-scale unit) says, "Our profit margins are constantly being squeezed. Plus deferred payments have become the order of the day. While banks pressurise us to pay up in time, our own money is held up for at least six months". Mercifully, since units like Punjab Tractors Ltd are doing extremely well, 40 per cent of the small-scale units have not been affected by the financial crunch. Interestingly, the heavy machine industry and health care units like Ranbaxy are in a comfortable position.

Avinder Singh Sahi of Punwire fumes, "You are missing the point. These industries are on the negative list of imports. You can’t possibly import a tractor, but you can always walk through the airport (by paying a minimal duty) with a mobile in your hand". As a matter of fact 95 per cent of SMD -- small mount devices -- used in telecommunication equipment are imported. What to talk of promoting indigenisation — for that alone can ensure transfer of technology — today, with anomalies in the duty structure, it makes great economic sense to import the finished product and market it, rather than produce or assemble it here. But in an intrinsically middle man’s economy, where Rs 8000 crore change hands in the onion crisis without any monetary benefit passing on to the producer (farmer in this case), what else can one expect?

The battlelines are drawn over liberalisation, with each side having its loyal supporters. R.S. Sachdeva, president, Mohali Industries Association, remarks, "Liberalisation is a Central government matter and affects the entire nation. But the attitude of the respective state government too is very crucial. Alas, in Punjab the government mindset is inimical to entrepreneurial spirit. For instance, in Mohali the land allocation policy is absurd. Plots are auctioned at one go and are invariably allocated to the near and dear ones of the powers that be". So today, 40 per cent of industrial plots are lying vacant and 20 per cent are being used for purposes other than the avowed intent. The government has no policy on confiscating the plots which are not being used for industrial activity. In fact, buying and selling of industrial plots in Mohali has become a business in itself. Sahi adds, "More often than not the cost of plot is higher than that of the entire project".

Hence, while the same size plot in Derra Bassi is available for say Rs 10 lakh, the asking rate could be five times higher in Mohali. Repeated pleas of MIA — availability of plots the whole year around, single window clearance — have fallen on deaf ears. So, investment is drying up. In the recent past, only 20 new units have come up, while nearly 50, including Crompton & Greaves, have been declared sick. Says Sahi, "With 13 engineering colleges in the state, there is no dearth of technical manpower. But to lure first generation enterprenurs, the government too has to stick its neck out". Sachdeva claims that in Punjab the credit- deposit ratio in banks is not favourable to Punjabi enterprise.

Out of Rs 27000 crore, only Rs 10,000 crore is invested in Punjab. About Rs 17000 crore go out of the state.

To be fair to the government, it has set up a technology park with a earth station at Mohali. At the recent CII Agro fair, Chief Minister Prakash Singh Badal made grandiose announcements, which included an express way connecting Mohali and Ludhiana.

But Sabharwal, who was the president of MIA for two years, rues that when it comes to the crunch, the government backtracks. The association’s suggestion that 5 marla plots be allocated for allied activities like welding, fabrication, forging etc have gone unregistered. Plus, the absence of a five star hotel, an airport, dry port etc may sound minor irritants but can snowball into a monumental obstacle in the path of attracting investments from outside. As a senior executive of an electronics unit puts it, "At best, Mohali appears like a small town which can hardly enthuse investors from outside the state".

However, many feel that the Punjab government has failed to attract fresh investment as it has been unable to sell the industrial town which has many plus points on its balance sheet. Unlike other industrial cities like Ludhiana, Amritsar etc, which are bursting at the seams, Mohali is well-planned. Though many blame the dark chapter of terrorism for sounding a blow to Mohali’s nascent industry, as of now the atmosphere is congenial. Keshav adds, "There is no law and order problem, no threats of extortion". Besides, Mohali’s proximity to City Beautiful makes it an idyllic locale. Add to it the indefatigable Punjabi spirit, and an economic miracle, a prelude to societal development, is not an impossible task. Provided, of course, the government approaches the problem with an open mind.