Medium and large-scale industries

Medium and large-scale industries

            Those industries which need more capital, labour, machinery, equipments and high technology are called medium and large-scale industries. According to industrial policy 1992, the industries having fixed investment of 10 million to 50 million are called medium industries. Similarly, the industries having fixed investment above 50 million are called large scale industries.

Importance of Medium and large scale industries:

            The medium and large-scale industries can play an important role in the process of economic development. The importance of medium and large-scale industries are as follows:

I.                   Increase in employment opportunities:

The development of medium and large-scale industries helps to generate employment opportunities. Thus, it helps to reduce the problem of unemployment and disguised (unseen) unemployment in the country.

II.                Modernization of agriculture sector:

We need modern tools, fertilizers, technology, etc. to modernize agriculture sector. Thus, the establishment of agro-based medium and large-scale industries helps in the production of these things within the country which helps to develop agriculture sector.

III.             Utilization of Natural resources:

Medium and large-scale industries are necessary for the scientific utilization of available natural resources. For Eg: Forest resource, water resource, mineral resource and human resource. This will help to increase Gross Domestic Product.

IV.             Source of government revenue:

The government can receive revenue in the form of sales tx, exercise duty, export duty, income tax, VAT, etc. with the establishment and development of medium and large-scale industries. Thus, government revenue increases with the growth of these industries.

V.                Development of basic infrastructures:

Basic infrastructures like transport, communication, electricity, etc. are the pre-requisites for the development of large scale industries. The investment in these basic infrastructures increases the development of industries.

VI.             Capital formation:

Medium and large scale industries help to accelerate the process of capital formation within the country. Establishment of these industries expand capital market by providing investment opportunities to the people which is the basis of economic development.

VII.          National Independence and security:

Development of medium and large scale industries means large scale production of consumer goods and capital goods. It makes people self-dependent. Further more, development of these industries help national security by providing different materials and weapons necessary for the countries security.

Problems of Medium and large-scale industries in Nepal

            There are various problems for the development of Medium and large-scale industries which are as follows:

I.                   Lack of Capital:

Development of medium and large-scale industry needs large amount of capital investment. But there is lack of capital in Nepal because Nepal is a poor country. The per capita income of Nepalese people is very low.

II.                Lack of infrastructures:

Infrastructures like transport, communication and electricity are the most important factor of the development of large scale industries but there is lack of such infrastructures in Nepal.

III.             Scarcity of raw materials:

Nepal has to depend on foreign capital, imported raw materials, chemicals and intermediate products for most of the industries. Thus, there is shortage of raw materials for the development of large-scale industries.

IV.             Limited Market:

The domestic market for Nepalese industrial product is limited due to low purchasing power of people. The nearest potential market for Nepalese product is India but Indian attitude towards is not favorable.

V.                Land-locked position:

Nepal is a land-locked country. The land-locked position of the country is also hindering industrial development. Nepal has to cross 2000 KM Indian land to get entry into International market.

VI.             Defective government policy:

A sound government policy is pre-condition for creating sound industrial environment but the government policy of Nepal is neither sound nor consistent. There are repeated changes and revision in Industrial policies in Nepal.

VII.          Lack of entrepreneurship and managerial skills:

There is lack of entrepreneurship and managerial skills for the development of medium and large-scale industries in Nepal.