Managerial economics final_copy

MANAGERIAL ECONOMICS

Transport Cost Market Energy Labour Climate Power subsidy Government strategies Area External economies

Electricity duty exemption

Concession to new industry

Concessional tariffs Power intensive

Industry Incentives for project

report Land Water supply & Power

Factors Affecting Location Of The Firm

Raw material oriented Industries will be closed to sources of supplyFor e.g. Tata Steel

Depends upon type of raw material◦Perishable For e.g. Fruit Canning industries

◦Non perishable For e.g. Pharmaceutical Industries

Transport Cost

Market

Industries tends to be near their market

Industries of perishable products

Size of market is measured by its potential sales

Energy

Source of energy

a) Coal Fields

b) Rivers

Advancement in technology

Labour Most important factor of production which influence the location of an industry

Capital-intensive industries and Labour-intensive Industries

Three types of labour – Skilled, Semi-skilled and Unskilled

Plays very important role.

Some industries require dry, some require humid.

Cotton requires humid conditions.

Textile industries require moist climate.

Climate

Granted to small scale units on power consumption

The quantum admissible is difference between the actual rate per unit and

1. 3 paise/unit to max. 12 paise/unit if population is upto 20,000

2. 6 paise/unit to max. 9 paise/unit if population is 20,000 to 1,00,000

3. 9 paise/unit to max. 16 paise/unit if population is above 1,00,000

Power Subsidy

Government Strategy

Earlier conditions: Industries were set up as per the wish of entrepreneurs

Results: congestion of industries, migration of labor, Problems of housing ,soaring prices , awkward growth and regional imbalance etc

Steps taken State Industrial Development corporation

Identify backward industrial areas

Offer a package of incentives

Give notifications bout such incentives

Government Strategy

Areas Divided area into –

a) Well Developedb) Nearly developingc) Developing d) Underdeveloped e) Undeveloped

General type of incentives to industries

Especial incentives or concession given in addition

Special incentives :a) Cash subsidiesb) Sales taxes exemptionsc) Interest-free sales tax loans d) Power tariff concession etc

Cash subsidies will be equivalent to fixed capital investment in addition to 15% cash subsidiary from central government

Areas

Sales tax exemption is given to small scale industries

Sales tax exemption on purchase of machineries, raw materials, process materials etc.

For example Gujarat government has set up following criteria-

a) Start the production on or after 11th November, 1977

b) Expansion , diversification or modernization of any industry

Sales Tax Exemption

14 industries are exempted like flour mill, rice mill, laundry, tailoring, photographing studio, preparing farsan, khakra, papad etc.

Units run by government are exempted from the subsidies

Sales Tax Exemption

External Economics External economics are those which accrue to firms

as a result of the expansion and concentration

Availability of RM, tools, machi. & Transportation cost

Other Factors Natural factors

Infrastructures

Historical accidents

Electricity Duty Exemption

On power purchased for 5 year

Concession for small scale Industries

Substantial expansion are also exempted

Concessional tariff of 90% for 1st 5 year

Not applicable for expansion or extension

Commence taking the supply on or after 1stNov. 1978.

Concession To New Industries

Register a contract demand of 2500 KVA or more

Annual operational load factor should be 80% or above

Examine request by the Gujarat Electricity Board

The cost of electricity should be 25% or more of the cost of the manufacture of the particular product

Power Intensive Industry

If capital exceeds Rs 50 lakhs then subsidy offered is 50% on project report or feasibility study otherwise 80%

Infra Structural Facilities State Government provides land and other basic

facilities through Industrial Development Corporations this helps prospective entrepreneurs

Financial Incentives

Most Basic requirement for any Industries

Estates industrial sheds

Entrepreneur to construct building takes lot of time

Implementation of project get delayed

Industrial Estate with readymade design

It offered at very moderate rate of interest or easy hire-purchase scheme

Land

Water Suppy And Power Prominent factors in establishing any industrial unit

Industrial development corporation supported by state government and central government assist for availability of these factors

Sources of water supply and power

Water supply and power are challenges before industries. Checking water pollution and encouraging use of renewable energy are possible solutions

Thank You

Presented By

Chaitali Patil

M Farhan Chaudhary

Hrishikesh Chumble

Milind Naik

Rohit Wadge

Mrudula Gawde

Kunal Ghosh

Ramprakash Gupta

Bowsmika Vadlakonda

Ram Panchal

Abhinav Dubey