Escolar Documentos
Profissional Documentos
Cultura Documentos
BANGALORE'S INDUSTRIALISATION:
industrial development of the city to enable us to locate them in both their his-
torical and spatial setting. The documentation of the city's industrialisation ex-
perience could by itself be valuable since no such account, to our knowledge, is
of time and has only a cursory note on its growth and determinants. Based almost
study has focused mostly on the social and demographic profile of the population
other than caputring a few dimensions of the economy like income, expenditure, saving
behaviour. The study, therefore, does not record and/or explain Bangalore's in-
dustrial development.
Vyasulu C1984J has attempted to construct a statistical account of the city's
manufacturing sector for the year 1975 using official data sources. 2 The study,
unfortunately, is misleading. The official source that he has used pertains only to
the registered small scale sector and in no way represents the manufacturing in-
3. The publication does not mention that the data pertain only to the registered
small scale sector. We discovered it in the course of our discussions with the offi-
cials and by cross checking the figures from other sources.
detected in Vyasulu's exercise, the study depicts a very erroneous profile of the
city's industrial sector. 4
dustrial growth is made here. The bulk of the statistical evidence is for the period
since 1960, mostly based on the decennial censuses and other official sources. Our
tried to offer a broad <qualitative) explanation in the last section of the chapter,
Section I
Industrial development up to 1950:~
Ban~alore, as it is known now, was built by Kempa Gowda in the sixteenth century.
La ter the city was developed by Hyder Ali and Tipu Sultan. During the latter's
textile manufacturing - centre. Sandalwood and ivory trade were state monopolies
during Tipu's rule. Silk and superior quality cotton textiles were widely exported
from the city. He is known to have taken several measures to encourage commerce and
for breeding silkworm eggs from South China. However, with the fall of Tipu in 1799
4. For a detailed comment on the shortcomings of Vyasulu's paper, see Nagaraj [1985-
a.J
6. The main sources information for this section are: Hayavadana Rao <1930), Sub-
ramanyam <1987) and PaniC1987).
73
The subsequent rulers of Mysore, the Wodayars, though not fully independent of
the British, nevertheless made some conscious efforts to initiate modern factory
based industry in their province, most of which was concentrated in Bangalore. During
the last decades of the nineteenth century the state provided subsidies, risk capital
and infrastructure facilities for industrial promotion. The first modern spinning
mill in the state - which later came to be known as Mysore Spinning and Manufactur-
ing Company Limited was set up in Bangalore in 1884. After three years, the
Bangalore Woollen, Cotton and Silk Mill Ltd., was set up by indigenous capital, 7
However, as the firm went into financial difficulties it subsequently taken over by a
British managing agency. Further, development of the city was restricted by the
great plague of 1888-1900 which resulted in large scale death and exodus of the
population. •
In 1902-1903 the Siva Samudram Hydro Electric Power ProJect was commissioned
to supply power for the Kolar Gold Fields in which the British had considerable
interest. However, Bangalore benefited from this project as it became the first
city in the country to have electricity. Availability of cheap motive power seems
to haVe facilitated the growth of a number of medium and small modern manufacturing
enterprises ....
pointed the chief engineer in 1909 and later became Diwan of Mysore, is supposed to
leadership the Hysore Economic Conference was organised in 1911 on whose recommenda-
7. We have made this observation based on Hysore Gazetteer (1929). But according to
;ltlr.ith~r ;;u-.:r.:mJ.nt. tha BanrJalore lioollen Factory was set up by a Brit isher natle(l Mr. Lee
[Subramanyam, 1987].
8. It has been historically true that spread of electric power made possible decentr-
alisation of manufacturing. Prais [1976J quoting Siemans said "As Siemans had
foreseen, in a remarkable passage written a hundred years ago, the development of
electric power would 'in the course of time produce a revolution in our conditions of
work in favour of small-scale industry"' CPrais,.1976, PP 53J.
74
the state. Alfred Chaterson, 9 the then head of Industries Department in Madras
Presidency, was invited to organise the industrial development effort in Mysore
state. The Industries Department made a systematic survey of the resources of the
state and recommended setting up a wide range of resource based modern manufacturing
industries. The Bank of Mysore which was instrumental in financing modern in-
dustries was set up in 1912 and four years later Mysore Chamber of Commerce was
the import of capital goods was banned by the British Indian government.
75
Table 3.1 provides data on the number of modern industrial establishments and
their employment in 1921. It shows the existence of a wide range of manufactures in
Bangalore. Though there were ten textile and related industries out of the total of
121 establishments, they accounted for nearly half of the total employment. Appendix
3.1 provides a complete list of all industrial establishments in 1930 employing more
than 20 workers. It shows that there were 46 'large establishments' together emplo-
ying about 8300 persons, 45 of them using power. Out of these 11 establishments were
government owned employing about 1000 persons.
The decade of the thirties appears to have been probably a period of rapid
industrialisation in Bangalore. After taking the lead in hydroelectric generation
the Hysore government initiated the development of electric machinery manufacturing
under aegis of the state sector. In 1932 a porcelain factory was set up to make
electric insulators and in 1934, an electric factory was promoted to manufacture
motors, transformers, pumps and transmission towers. The World War-II, contrary to
the earlier War, provided a major impetus for industrialisation. Around this time
first time in the country. Apparently the British automobile manufacturers succeeded
76
ing establishments employing about 22.5 thousand persons and about 17,000 non-tex-
tile establishments employing about 44.6 thousand persons. It is interesting to
discover that the share of small textile related establishments in the total textile
10. We have not made any strict comparison for all categories of industries since the
coverage of the two sources appear to be not identical.
77
Within the small textile establishments 44 per cent of the total workers are employed
in silk textiles and 38 per cent in cotton textile industry CTable 3.5J. In the
non-textile small establishment nearly a third of workers are engaged in silk worm
rearing [Table 3.6J. It is very evident that engineering industries were not promin-
ent.
The analysis of the 1951 data clearly shows that despite the coming up of modern
78
Table 3.5 : Important textile related industries in
small establishments in Bangalore district
;================================================================
Industry Number of Total number Percentage
establish- of workers to the
ments total
79
Table 3.6: Important non-textile industries in small
establishments in Bangalore district in 1951
=================================================================
Industry Number of Total Percentage
establish- employ- of total
ments ment employment
------------------------------------------------------------------
14375
1. Silk worm rearing 4353 36.1
2. Stone quarrying 340 850 2.1
3. Hillers of cereals and 409 858 2.1
pulses
4. Veg. oil pressing and 417 1091 2.7
refining
5. Bidi 176 825 2.1
6. Tailors 2400 4535 11.4
7. Cobblers 425 993 2.5
8. Blacksmiths 1259 2659 6.7
9. Tinkers 179 580 1.5
10. Repair of motor vehicles 736 1615 4 .1
and bicycles
11. Non. elec. mfg. including 130 540 1.4
workshops
12. Perfumes and cosmetics 345 957 2.4
13. Goldsmiths 1724 3132 7.9
14 Toy makers 177 475 1.2
15. Bricks and tiles 106 523 1.3
16. Potters 1134 3202 8.1
17. Basket makers 645 1905 4.8
18. Printers 159 655 1.6
Sect ion II
As the 1951 Census data on workforce is not comparable with the subsequent
censuses we will postpone the discussion of the developments in the 1950s to the
next section and will concentrate, in this section, on the post 1960 period. As can
be seen from Table 3.7 population of Bangalore district 11 nearly doubled between
1961 and 1981 recording annual compound growth rate of about 3.5 per cent per annum.
i 1. In this chapter we have used data for Banqalore district and not Bangalore city
since its boundaries have been expanded over the years. Since bulk of urban Ban-
galore consists of the city the former can be taken as a proxy for Banaalore citv.
While the increase in urban population was 135 per cent during this period, the
tut~l p~pulati~n increased by only 53 per cent. In 1981 the share of urban popula-
tion was nearly two-thirds of the population of the district. Interestingly, while
Bangalore district accounts for 13 per cent of Karnataka's population, urban Ban-
galore constitutes nearly 30 per cent of urban population in the state.
Total 2504462 4947610 97.5 1306230 2582539 97.7 1198232 2365071 97.4
Rural 1147018 1754394 53.0 583712 900579 54.3 563306 853815 51.6
(45.8) (35.5) (44.7) (34.9) (47.0) (36 .1)
Urban 1357444 3193216 135.2 722518 1681960 132.8 63492 1511256 138.0
(54.2) (64.5) (55.3) (65 .1) (53.0) (63.9)
====================================================================================
Source: 1.Census of India 1961fHysoreJ, General Population Tables
2. Census of India 1981 rKarnatakaJ, General Population Tables
Note: For 1981 total workers is equal to main plus marginal workers.
Urban 32.6
.
. 30.4 52.5 49.6 9.9 9.1
================================================================================
Source: 1. Census of India 1961 fHysoreJ, General Population Tables
2. Census of India 1981fKarnatakaJ, General Population Tables
Note: For 1981 total workers is equal to main plus marginal workers.
Table 3.8 provides data on workforce in the district. The share of workers in
total population of Bangalore district has declined from about 40 per cent in 1961
to 34 per cent in 1981, the fall being sharper in rural areas than in urban and more
among women than among men. However, there is practically very little change in the
81
Table 3.9: Industrial classification of total workers by
division in Bangalore district, 1961 and 1981
======================================================================
1961 1981
Division
Total Urban Total Urban
Agriculture
related 32442 9257 33119 8702
activities (6.6) (2.3) (3.0) (0.9)
Mining 517 183 2343 1107
(0 .1) (-) (0.2) (0 .1)
Manufacturing 168779 148661 428832 369965
(34.3) (36.7) (39.2) (39.4)
Electricity, 25767 23078 11596 10652
gas and water (5.2) (5.7) ( 1.1) ( 1 .1)
Construction 3875 3577 65656 56253
(0.8) (0.9) (6.0) (6.0)
Trade,restaurents 64501 56095 161136 143432
and hotels (13.1) (13.8) (14.7) <15.3)
Transport,storage 21996 20695 95861 87456
and communication (4. 5) (5 .1) (8.8) (9.3)
Finance and 170405 140128 36042 34884
real estate (34.6) (34.6) (3.3) (3. 7)
Community, social 3527 3470 257568 227617
and personal services (0. 7) (0. 9) (23.8) (24.2)
---------------------------------------------------------------------
Total 491809 405144 1092153 940068
======================================================================
Source: 1. Censvs of .India 1961 /HysoreJ, General Population Tables
2. Censvs of .India 1981 /KarnatakaJ, General Population Tables
Note: 1.For 1981 total workers is equal to main plus marginal
workers.
2.Figures in brackets refer to percentage of the total.
the share of manufacturing employment has gone up from 34 per cent of total workers
to 39 per cent between 1961 and 1981. 19 <Table 3.9l. However, the share of household
workers in manufacturing has declined from about 30 per cent to 11 per cent [Table
3.10J, which conforms to the all India pattern observed by Vaidyanathan and Eapen
£19B4i. However, unlike the all India trend, the fall in household manufacturing
12. To make 1981 data comparable with 1961 figures we have combined figures on main
workers and marginal workers for 1981. For justification see Vaidyanathan and Eapen
<1984).
13. In Rao and Tiwari (1979) study also 38 per cent of the sample respondents were
in manufacturing sector.
82
Table 3.10 : Percentaqe of employment 1n household industry to
total manufacturing employment
===================================================================
Persons Hale Female
turing workforce in urban area has remained more or less the same.
83
Table 3.11 (iil: In4Y&tryawi&e distribution of total
manufacturing employment in Banqalore
district~ 1981
=================================================================
NIC Industry group Total number Percent of
code of persons the total
employed
groups- CSIC/NIC-2 digitJ - shows some interesting changes. [Table 3.11 Ci) &
(ii)J.14 In 1961 nearly 36 per cent of the workforce was engaged in textile related
industries - namely spinning and weaving of cotton and silk and textile products
tJt~vio!Js ~dir.m, is the continuation of the historical pattern observed since ttte
beginning of this century. However, during the two decades since 1961 their share in
manufacturing workforce came down to 29 per cent CNIC 23 to 26J. Almost an obverse
of the above trend is noticeable in the case of metal and machinery manufacturing in-
14. We have not attempted a detailed industrial group wise comparison a.s it involves
considerable statistical adjustments. Since our purpose is to mainly record the broad
pattern of changes we did not consider it necessary to go into further details.
84
dustries. Their share in total manufacturing workforce went up from 26 per cent in
1961 [SIC 36 to 38J to 41 per cent in 1981 CNIC 33 to 37 and 39J. 1
~ The growing
ASI data for Bangalore for 1980-81, value added per worker in metal manufacturing is
about 2.2 times than that in textile industries. In other words, the relative
decline of textile industries in the city's manufacturing output is much more acute
than what is ref1ected in changes in the proportion of the workforce.
Table 3.12(il and (iil provide data for 1961 and 1981 respectively for minor in-
dustry groups CSIC/NIC 3 digit] which individually account for at least one per cent
of the total manufacturing workforce.'• The share of engineering industries which
individually account for at least one per cent of manufacturing workforce has gone up
Table 3.13 gives a list of minor industry groups CNIC - 3 digit] in which each
industry account for at least one per cent of the net manufacturing value added in
•
ASI census sector - that is all factories employing 50 workers with power or 100
metal and machinery manufacturing account for 45 per cent of total value added in the
It is evident from the data that within the textile industries, garment making
has gained prominence at the expense of textile spinning and weaving. More important
metal manufacturing has over the last two decades grown considerably. Its sig-
nificance is more when seen in terms of value added than in share in workforce.
15. Decimals are avoided and as far as possible. Quantitative information is ex-
pressed in round figures and proportions to improve the readability of the text.
16. This has been used as a measure for shortlisting the relatively more important
industries.
85
Table 3.12(i) :Htnor industry qroups which account
for at least one per cent of total manufactur-
ing employment in Bangalore district, 1961
======================================================================
ISIC Description No. of workers Per cent
220 Mfg. of bidi 3420 2.0
231 Cotton spinning (other than
mi 11> 2202 1.3
232 Cotton spinning and weaving in 15993 9.5
mi 11
Cotton weaving in powerloom 4436 2.6
235 Cotton weaving in handloom 8338 4.9
260 Spinning and weaving of silk
textile in mill 4227 2.5
262 Spinning of silk other than
in mills 3092 1.8
263 Weaving of silk textile by
power looms 3028 1.8
264 Weaving of silk textile by
hand loom 3493 2.1
273 Textile garments 10982 6.5
288 Materials from cork, bamboo,
cane, etc. 2478 1.5
289 Other wood and allied products 4670 2.8
302 Printing 1778 4.9
311 Mfg. of shoes and other leather 1620 1.1
footwear
335 Medicines, pharmaceutical
preparations 4621 2.7
340 Structural clay products like
bricks 3736 2.2
343 Stone goods, stone dressing 6108 3.6
350 Earthenware, earthen pot 2513 1.5
369 Mfg.of sundry hardware 3397 2.0
372 Machine tools 3979 2.4
374 Heavy electrical machinery 1920 1.1
378 Electronic equipment 3973 2.4
379 Misc. electrical machinery 4328 2.6
384 Servicing of motor vehicles 6517 3.9
387 Mfg.and repair of transport
equipment 11331 6.7
388 Repair of bicycles and tricycles 1948 1.2
393 Jewellery, silverware 3974 2.4
399 Miscellaneous 6570 3.9
86
Table 3.12Cii): Minor industry groups which
account for at least one percent of total
manufacturing employment in Bangalore
district, 1981.
===========================================================~==========
NIC Minor Industry Group Main workers Percentage
CNIC-3 digitJ total of the
main workers
231 Cotton spinning and weaving 27064 7
235 Handloom weaving 4919 1
245 Spinning and weaving of silk
textiles 35227 9
264 Textile garments 23734 6
276 Woolen furniture and fixtures 5541 1
279 Miscellaneous wool products 5272 1
285 Printing and publishing 4695 1
314 Perfumes and cosmetics 4644 1
320 Structural clay products like
bricks 4831 1.3
326 Structural store goods 7095 1.9
330 Iron and steel industries 4376 1.2
349 Misc. metal products 3673 1.0
357 Machine tools 13413 3.6
360 Electrical industrial machinery 13808 3.7
363 Electrical apparatus 4240 1.2
364 Radio and television 28532 7.7
367 Electronic components 3710 1.0
374 Motor vehicles and parts 9069 2.5
377 Aircraft and its products 20249 5.5
383 Jewellery and related products 4478 1.2
389 Misc. manufacture · 3747 1.0
392 Repair of motor vehicles and 13948 3.8
motor cycles
394 Repair of bicycles and cycle 4500 1.2
rickshaw
399 Misc. repair 7662 2 .1
factories shows that the census sector of AS! employed about 1.4 lakh persons in
1980-81 accounting for about a third of the total manufacturing employment in 1981.
Household industries account for 11.3 per cent of total manufacturing employment.
ttutt rlr:tspit.r:t t.hr:t hir~h visibility of larr~e firJW in BarlfJalore, over one half of total
17. Ideally one would like to get industry-wise, size wise distribution of establish-
ments to bring out the fact of growing importance of smaller sized units. However,
available data does not permit us to verify this.
87
We have, however no comparable data for other cities to make a comparative statement
88
Table 3.15: Distribution of factories under ASI census sector
by type of ownership, 1980-81
======================================================================
Type of ownership Number of All All Net value
factories workers employees added CRs.OOOl
1. Wholly central
government 7 8441 (8. 1 ) 12469 358578 ( 12.3)
2. Wholly state/local
government 19 27418(26.3) 42368 719432 (24.7)
3. Wholly private 317 49651(47.7) 63997 1326151 (45 .5)
4. Central and state/
local government 16 115 79 (11 • 1) 15750 273560 (9. 4)
5. Joint sector private 4 434 <0.4) 541 26205 co. 9)
6. Joint sector public 8 6534 (6.3) 8651 208489 (7.2)
Table 3.14 shows that within the AS! census sector four factories employing over
5000 workers account for over two-fifths of employment in 1980-81 and for one third
of net value added. If factories employing 1000 or more workers are considered large
factories then their dominance in the ASI census sector is very evident. 18
Table 3.15 gives data on AS! census sector factories classified according to
type of ownership. It shows that in terms of employment of workers and value added
private and public sectors [various categories put together] have more or less equal
contribution.
Official statistics used widely for administrative purposes divide the manufac-
turing sector into Cal "large and medium scale" sector and Cbl the "small scale"
sector. According to the Directorate of Industries and Commerce, in 1986, Bangalore
had 163 medium and large scale firms Cor plants). The data- confirming the earlier
Table 3.16J account for 58 per cent of the number of medium and large scale units,
Table 3.17 which provides industry group-wise age distribution of medium and
large firms in Bangalore shows a clear accelerating trend during the 1960s and
18. It is however not possible to get any idea of value added in manufacturing sector
as a whole in/ Bangalore since no estimates are available for the ASI Sample Sector,
household industries and nonhousehold and factory segments.
89
gradual fall - from 49 and 48 in the sixties and seventies to 22 in the eighties - in
the inception of newer firms during the last three decades. The above otJservation is
also valid for industry group machinery and transport equipment which accounts for
nearly one half of the medium and large scale units in Bangalore district.
Table 3.18 provides time series data for 1969-70 to 1985-86 on the number of regis-
tered small scale industrial units in Bangalore district, their investment and
workforce, separately for rural and urban areas. This data, as discussed in the
previous chapter, refer only to those units registered with the official agency and,
being a cumulative figure, ignore the mortality of small units. Subject to these
90
limitations the data suggest that the number of small enterprises and their employ-
ment Cas reported by the entrepreneur at the time of registration> have increased at
annual average rates of about 14 per cent and 10 per cent respectively, over the
period of 1969-70 to 1985-86. Interestingly the growth rates in rural areas have been
higher than those in urban areas. An industrial classification of the registered
small scale units in Bangalore district (Table 3.19> for 1986 shows that nearly
two-fifths of them are in metal and machinery manufacturing Citems 11 to 14J. Thus
we find that the dominance of engineering industries in Banga1ore is not only in
the large and medium scale segment of manufacturing sector but in the registered
sector of Karnataka. Table 3.20 shows that in 1981 Bangalore accounts tor fifty per
cent of the factories, 34 per cent of investment and nearly 60 per cent of employ-
ment in Karnataka's ASI census sector, pointing to a rather high degree of regional
concentration within the state. Although there are wide yearly fluctuations, the data
clearly brings out the continued dominance of Bangalore in the manufacturing sector
of the state since 1969-70.CTable 3.21) For instance, in 1979-80 Bangalore ac-
counted for 38 per cent of factories, 46 per cent of employment of workers and 73
per cent of value added in the ASI census sector of Karnataka. Despite conscious
91
policy of industrial dispersal since 1974 there appears to be no evidence of its
impact on Karnataka at least until 1980-81.
The statistical evidence adduced in this section shows the growth of manufactur-
ing sector in Bangalore. The relative decline of textile industries, excepting
textile products, since 1960 is very evident. The available data in terms of employ-
ment, value added and share of different segments of the manufacturing sector
clearly demonstrate the growth and dominance of engineering industries. But the data
cannot explain the factors responsible for the observed industrial change in the
city. An attempt at a plausible explanation is made in the ensuing section.
1969-70 1100 1140.70 19500 307 387 .so 6400 1407 1528.20 25900
197Q-71 1921 2663.70 51047 407 511.05 9642 2332 3174.75 60889
1971-72 2446 3507.70 54404 554 767.31 15900 3004 3775.01 70304
1972-73 2777 3311.70 57553 688 1067.31 21760 3669 4379.01 79313
1973-74 3400 3710.70 60597 H53 1300.31 25122 4857 5011.01 86319
1974-75 3717 4412.51 63014 1725 1407.31 30220 5446 5819.82 93234
1975-76 3943 4774.13 64305 2026 1738.31 32167 5973 6512.44 96472
1976-77 4191 4908.79 67308 2238 2133.24 34612 6433 7042.03 101920
1977-78 4300 4994.44 69509 2509 2397.74 36392 6879 7392.18 105401
1978-79 4696 5150.09 71220 2861 2653.26 39714 7561 7603.35 110234
1979-80 5204 5693.99 52085 3378 3324.67 46660 8586 9018.66 128745
1980-81 5690 6154.37 86773 3843 3951.06 50862 9537 10105.43 137635
1981-82 6102 6832.88 90608 4296 5317.03 57405 10402 12149.91 148013
1982-83 6535 7475.70 94505 4827 6907.67 62183 11366 14383.37 156688
1983-84 1 7443 8199.93 100073 5404 7369.35 66439 11357 14041.08 140612
1964-65 12951 15248.40 149436
1985-86 15078 16942.11 158560
92
•uv•~ ~·!~• ~ltt~~lr1cat10n ot registered SSI units in Bangalore
district according to broad industry groups, 1986
==============================================================
Sl. Industry group No. of Percentage
No. units to total
1. Food products 955 3.4
2. Beverages 69 0.3
3. Misc. textiles & garments 1118 4.0
4. Wood & wood products 1145 4 .1
5. Printing & paper products 2664 9.6
6. Leather & leather products 437 1.6
7. Rubber & plastic products 2551 9.2
a. Chemical & chemical products 3641 13.1
9, Glass & ceramic products 1380 5.0
10. Basic metal products 1313 4.7
11. Metal products 4971 17.9.
12. Machinery & parts 3394 12.2
13. Electrical ~ electronic
products and parts 2197 7.9
14. Transport equipment and parts 514 1.8
15. Miscellaneous products 703 2.5
16. Repair & servicing 672 2.4
17. Services 156 0.6
93
Table 3.21: Share of Bangalore district in the number of
factories, employment and value added in ASI
census sector in Karnataka
================================================~================
Year No. of factories Net value added
Cin ASI Census No. of (in Rs.OOOl
sector] workers <current prices)
-----------------------------------------------------------------
1970 (31.7) (45.2)
186 68739 (65.4) 1101551
1971 275 (32.2) 78741 (45.5) 1370413 (70 .5)
1973-74 334 (38.8) 83461 (45 .1) 1425518 (66.5)
1974-75 379 ( 40. 1) 81255 (45.2) 1495343 (59 ,1)
1975-76 307 (38.7) 80635 (42.2) 1838446 (61.9)
1976-77 395 (42.3) 84430 (41.6) 2112642 (64.7)
1977-78 297 (34.2) 95296 (43.3) 2211536 (60.0)
1978-79 360 (36.4) 101404(45.3) 4030880 (70 .3)
1979-80 344 (38 .6) 101430(46.3) 3590596 (72.9)
1980-81 371 (37.9) 104057(42.7) 2912415 (57.5)
=================================================================
Source: Directorate of Economics and Statistics,
Government of Karnataka.
Sect ion I II
Factors influencing the industrial growth of Bangalore:
As noted earlier in this chapter, the foundation of modern industrialisation in
Bangalore were laid quite long back and that textile manufacturing and trade have
historically been very significant. Another noteworthy feature is that the city was
one of the largest cantonments of British India since early nineteenth century
which could have contributed towards infrastructure and in providing modern institu-
tions for economic development. These two factors together seem to have provided a
firm basis for industrial development. 19
Industrialisation since 1950:
projects in the fifties, all of which in totally new lines of manufacture for the
first time in the country. One can only speculate on the probable reasons for the
19. Salubrious climate of Bangalore could also have had positive influence on the
growth of the city, especially in attracting outsiders. This however should not be
seen in isolation. Given the developed and economic infrastructure, the climate
could have added to the attractiveness.
94
concentration of so many public investment projects in a single location. At the
level of policy one could consider that it was perhaps a conscious decision to reori-
ent the nascent economy away from the colonial pattern of Cport based) industrial
public sector projects are defense related, locational choice may have also been
decision. It may not be fortuitous that K.C. Reddy, the then Union Cabinet Mini-
ster, was a former Chief Minister of Karnataka and that among others, he held the
Movers Ltd. CBEMLl came into being and the Karnataka government promoted NGEF Ltd.,
machinery. All these public sector enterprises CPSEsl expanded rapidly in the fifties
and the sixties and came to have a large workforce ranging from about 6000 persons in
NGEF to about 24,000 in HAL.e 1 Thus, Bangalore acquired the distinction of attract-
ing the largest central. public sector investment in any single location in India.
However, for quite some years these giant enterprises appear to have remained as
"islands" of relatively sophisticated and largely "self sufficient" manufacture,
physically isolated in the outskirts of the city, with limited industrial linkages
with their surroundings since Bangalore had practically no base of metal working
industries.ee This probably was the principal reason for these PSEs to come to ac-
20. That K.C. Reddy promoted the interest of Bangalore is a widely accepted view. He
held portfolios of Cal production, Cbl works, housing and supply and Ccl commerce
and industry between 1952 and 1963,
21. As seen in the previous section the share of factories employing so or more
workers in the total manufacturing employment in 1980-81 is around two-fifths.
However within the ASI Census Sector nearly three-fifths work in factories employing
1000 or more workers.
22. As can be seen from the data for 1981, metal manufacturing- excluding transport
equipment which was mainly made by HAL - accounted for about 7 per cent of the total
manufacturing workforce [Table 3.5J. In the non-textile small establishment segment
metal based industries accounted for only about ten per cent of the employment.
95
quire fairly vertically integrated plants,ea resulting in a large agglomeration of
w9rkforce.
A second 'wave' of industrial investment appears to have commenced after the mid
sixties when the State found itself having power surplus with the commissioning of
Sharavathy Hydro-Electric Project. As the State government had apparently not made a
corresponding investment in transmission lines the surplus power could not be used
for electrification of rural areas. To overcome the short term imbalance, efforts
were made to attract investment in manufacturing sector especially in relativ~l.y
Larsen and Toubro etc. A probable reason for the growth of machinery manufacture
24. Indian Aluminium Co. Ltd. [lndiaJ also set up a plant at Belgaum around this time
attracted by the abundance of power supply in Karnataka
25. In the Trade circles one often hear about the Aggarwals of Calcutta - a well
established name in steel trade, transport and textiles - who were the first to come
to Bangalore to set up a fairly sophisticated rerolling mill - Bhoruka Steel Ltd.
96
been the easier availability of steel with the coming up of a number of mini steel
plants. 26
The 1970s witnessed concomitantly a boom in the small scale sector which was
clearly a 'secondary effect' of the massive investment made in the previous two
decades. A large proportion of it, as we noted in the previous section, was in the
metal working industries supplying mostly intermediate products to the large manufa-
cturers. Thus Bangalore came to have a large manufacturing sector with firms of wide
The rapid growth appears to have been accompanied by a fairly high degree of
division of labour and specialisation which is characteristic of metal working in-
dustries. Wage differentials between large and small firms appear to have been so
wide that farming out of production by large firms was an easy and effective way to
rapid growth of the small scale sector. Though it is difficult to find firm eviden-
ce, it has been widely suggested that the rapid growth of relatively high technology
26. Though at a main level steel was in excess supply, there was a persistent mis-
match between the types of steel in demand and those supplied by the steel mills,
especially the public sector firms.
28. Economists in the classical tradition like Arthur Lewis have always strongly
emphasised the significance of skills for spread of industrial development. See
Lewis (1955).
29. It is widely known in the industry circles that Bangalore has some of the best
tool makers in the country. It is said that large firms like TELCO get their tools
made from Bangalore. The reason for this is said to be the availability of highly
skilled workers, drawn mainly from the public sector undertakings.
Table 3.22Ci>: List of 'large' factories which have increased
maximum number of workers to be employed between
1963 and 1982
================================================================
1. Mysore Spinning and Manufacturing Co. Ltd.
2. Kissan Products Ltd.
3. NGEF Ltd.
4. Widia Cindia> Ltd.
s. Escorts Ltd.
6. Goetze Cindia> Ltd.
================================================================
Table 3.22 Cii>: List of 'large' factories which have increased
maximum amount of power proposed to be used between
1970 and 1982
=======================================================================
1. Radio and Electrical Manufacturing company Ltd.
2. ITC Ltd.
3. Mysore Spinning and Manufacturing Co. Ltd.
4. Kissan Products Ltd.
s. Army Base Workshop
6. Hafatlal Plywood Industries
7. Kirloskar electric Co. Ltd.
8. Hysore Tobacco
9. Motor Industries Company Ltd.
lO.Hindusthan Aeronautics Ltd.
11.Bharat Electronics Ltd.
12.NGEF Ltd.
13.Widia Cindia> Ltd.
14.HHT Ltd. Watch Factory
15.Internationa1 Instruments Ltd.
16.Bharat Earth Hovers Ltd.
=======================================================================
Source: Office of the Chief Inspectorate of Factories and Boilers, Ban-
galore.
~~p~~i~lly in th~ public SP-ctor, rP-sorted to repeated and prolonged strikes mainly
in support of wage demands.so Management - both in public and private sectors - for
the first time realised the potential threat posed by large sized factories. As a
response conscious attempts were increasingly made to minimise, if not freeze, fresh
recruitment of workers. However, the growth of output was maintained by systematic
efforts at rationalisation, increasing mechanisation and farming out of production
to small scale units. This strategy of large firms, in turn, provided further
impetus for growth of the small scale sector in Bangalore. Data on large factories
30. we do not have data to support this. But it would be reflected in the data prese-
nted in Chapter 5.
98
suggest some interesting trends [Table 3.22 Ci) and Cii)J. It shows that between
1963 and 1982 only six out of 22 factories have increased the average number of
workers employed and out of these, four were set up during the late sixties. But
during the same period 16 factories have increased the "maximum amount of power
proposed to be used", which is a clear indication of increasing mechanisation. 81
These figures do seem to be consistent with our view that large firms increasingly
emphasised mechanisation of work on the one hand and freeze of fresh employment of
of the rerJistered small units are in metal work.infJ which does seem to suqqest in-
followed by private investment in large and medium scale sector •. These, in turn,
have given rise to growth of the small sector resulting in a close interdependence
among them.
31. Industrial economists like Florence have widely used this as a measure of mechan-
isation and automation. See Florence (1949}.
99
It would be interesting to note that Bangalore has little natural resources for
industrialisation. Agriculturally it is located in a rain fed crop region which can
provide little surplus for the growth of non-agricultural sector. Though Bangalore
has been an important trading centre for a very long time, the city surprisingly
does not have any significant indigenous entrepreneurial class. Almost the entire
private investment in Bangalore has come from Marwaris, Gujarati and Punjabis with
their traditional bases in Calcutta, Bombay and Delhi. Till recently the majority of
Conclusion
textile manufacturing and trading centre. Moreover, the erstwhile princely state of
decades of this century public investments were made in a variety of modern manufac-
a major thrust for industrial development. This was followed, with a lag, by priv-
ate sector investment in the post mid-sixties and the seventies, resulting in the
creation of a large agglomeration of engineering industries in the ci.ty. There has
been a relative decline in traditional industries like the textiles, spinning and
weaving. Due to a number of factors there seems to have developed close linkages
between different segments of the manufacturing sector leading to an internal dynam-
ics of its own. An important element of this growth process appears to have been
sub-contracting relationship between large and small firms. This aspect is explored
in detail through case studies in the following three chapters.
Appendix 3.1
Banqalore City
101
{1) (2) (3) (4) (5) (6)
102
( 1) (2) (3) (4) (5) ( 6)
103