A study on export oriented units and their performance in Karnataka

Abstract

The government has been alive to the importance of export in the overall development of the country and has been taking various measures to promote export over the years. The EOU scheme was introduced in 1980. The scheme provides a host of tariff and non-tariff concessions. This paper quantitatively examines the performance of the units working under the scheme in Karnataka in terms of objectives of the scheme namely exports, employment generation and investment. The other objectives of the scheme were studied qualitatively. Most of the analyses have been done based on the Annual Performance Reports of the units. It is found that, garments and mines and minerals and electronics sector units combinedly accounted for more than 50 pct. of the export value between 98-99 and 2000-03. The fisheries sector has been a failure in the state. In the case of floriculture, only a handful of units managed to survive. When the NFE for the entire state since inception of the scheme was considered, it was found to be positive except in 1983-84. Further, the study found that the NFE of a unit generally had a positive correlation with the use of indigenous raw material. In terms of employment generation, garments and textile units put together accounted for around 70 pct. of the total employment generated. In terms of female and male ratio also, the garment sector tops with over 55 pct. share of female employees. The FDI/NRI participation has been hovering around 7 to 11 pct. The study, in its conclusion, advocates that the performance of a unit working under this scheme should not be measured only in terms of their export tum over and quantum of foreign exchange earned, but it should be done by taking into account other economic benefits occurred from a unit. Though the study outlined and illustrated few intangible benefits like indirect employment and backward linkage, it could not go in to other intangible benefits for want of data. The study also found certain issues concerning the exporters as well as affecting the implementing agencies, including glaring infirmities in the data capturing mechanism. It is felt that liberalization in certain procedures should be brought in along with improvement in the reporting and monitoring mechanism. It concludes that, in future, the government should focus its attention towards improving the infrastructure needs to boost exports.