CHAPTER 3

BANGALORE'S INDUSTRIALISATION:

A BACKGROUND FOR THE CASE $TUDIES

Before reporting the findings of the case studies on sub-contracting in Ban-

galore we deem it appropriate to provide a brief - mainly statistical - outline of

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

readily available. This lacuna is particularly striking as Bangalore, by many

popular writings, 1 is accorded to be one of the fast growing - mainly industrial -
metropolises in the country in the recent decades.
Rao and Tiwari's Cl979J study is a geographical account of the city at a point

of time and has only a cursory note on its growth and determinants. Based almost

entirely on a stratified sample survey (conducted in 1975l of 1745 households the

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-

dustries as a whole. 3 Moreover, as some serious computational errors have been

1. See, India Today, March-April, 1983.

2. Industrial Directory of Karnataka, 1975, Directorate of Industries and Commerce,

Government of Karnataka, 1982.

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

As a background to our case studies, discussed in the subsequent three chapters,

a modest effort at putting together the available information on Bangalore's in-

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

historical account contained in section I rests on a slender source material and is

necessarily sketchy.~ As the statistical details of industrial growth discussed
below does not 1 explain' the factors responsible for the observed changes, we have

tried to offer a broad <qualitative) explanation in the last section of the chapter,

based on extensive discussions with a wide cross-section of knowledgeable persons

associated with industry, business executives, officials of chambers of commerce,

trade union leaders, management experts, etc.

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

reign Bangalore came to be known as a maJor commercial and industrial - mainly

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

industry. For instance, to promote silk industry he apparently imported technology

for breeding silkworm eggs from South China. However, with the fall of Tipu in 1799

the economy of Bangalore is said to have stagnated.

4. For a detailed comment on the shortcomings of Vyasulu's paper, see Nagaraj [1985-
a.J

s. A detailed historical study of the evolution of Bangalore's industrialisation is

outside the scope of the present exercise.

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 ....

The erstwhile rulers of Mysore made it a state policy to promote economic

development. Sir M. Vishveswarayya, the well known engineer-statesman, who was ap-

pointed the chief engineer in 1909 and later became Diwan of Mysore, is supposed to

have been instrumental in promoting various institutions of economic development.

More important, he provided a vision of a modern industrialised society. Under his

leadership the Hysore Economic Conference was organised in 1911 on whose recommenda-

tion Industries Department was set up to plan and encourage industrialisation of

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

instituted with the conscious encouragement of Vishweswarayya. The nascent process

of modern industrialisation was, however, adversely affected by the World War I as

the import of capital goods was banned by the British Indian government.

Table 3.1: Distribution of industries in

Banqalore district, 1921
=================================================================
Description of establishment Number of Number of
establish- persons
ments employed

I • Textile and connected industries

[Total]
1. Cotton spinning and weaving 1 1252
2. Cotton and silk weaving 1 195
3. Cotton and wool weaving 2 3130
4. Woollen weaving 1 19
5. Dyeing works 3 54
6. Fabric factories 1 33
7• silk t w1st i ng 1 13
II. Leather, etc
1• Tanneries 13 710
2. Carpentry works 2 87.
III Metal industries 14 1828
1. Glass and earthenware industries 10 652
2. Chemical products 15 558
3. Food industries 17 182
4. Furniture 5 130
5. Industries of dress 7 35
6. Industries connected with building 1 1635
7. Transport and communication 7 115
8. Electric power 3
9. Industries of luxury 17

Total 121 10,628

=================================================================
Source: Census of India, 1921. Vol.XXII, Mysore, Part-II, Tables
Note: Industries located in Bangalore city and civil and Military
station, Bangalore are included in the table.

0, It w•~ •t thQ auggestion of Chaterson that the Indian Institute of Science,

Bangalore developed an indigenous method of extracting sandalwood oil. To commer-
cialise the technology Government Soap Factory was set up in 1916.

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

Seth Walchand Hirachand proposed manufacture of automobiles in Bangalore for the

first time in the country. Apparently the British automobile manufacturers succeeded

installing the project by exerting pressure on the British-Indian,Government. The

colonial government, however, persuaded Seth Walchand to set up instead an aircraft

repair and assembly unit as their locations in Britain were affected by the War.
After the take over by the qovernment of India this unit came to be known as Hindus-
than Aircraft Ltd. A list of some of the prominent industrial units promoted during

the 1930s are given in Table 3.2

A profile of Bangalore's industrial structure as of 1941 can be seen from Table
3.3. It shows that despite considerable diversification of the manufacturing base,

nearly one-half of the total manufacturing workforce continued to be engaged in

textile industry. Transport equipment emerged as the second largest employer ac-
counting for 12 per cent of the industrial workfor~e •. No significant change in the
distribution of manufacturing employment is discernible between 1941 and 1951. [Table
3.4J. The Census of 1951 provides data on small establishments employing less
than 20 workers disaggregated for industries and districts. According to this data
Bangalore district [including the cityJ had nearly 6000 textiles related manufactur-

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

industry [sum of items 2.6 to 2.8 in Table 3.4J is 57 per cent. 10

Table 3.2: List of prominent industrial units set up during 1930s

=================================================================
Sl. No, Name of the unit Year of
establishment
1• Government Porcelein Factory 1932
2. Government Electric Factory 1934
3. Mysore Tobacco Curing Company 1937
4. Mysore Vegetable Oil Products Ltd 1938
5. Hindusthan Aircraft Limited 1940
6. Radio Electric Manufacturing Company N.A
7. Kirloskar Electric Company Limited N.A
-----------------------------------------------------------------
Source: Census of India, 1941. Mysore.

Table 3.3 : Classification of industrial establishments

and the number of persons employed in Bangalore
district, 1941
=================================================================
Industry Number of Number of persons
'Establishments employed
-----------------------------------------------------------------
1• Mining and quarries 7 33 ( 0 .1)
2. Textiles 216 14602 (46.5)
3. Hides and skins 62 1865 ( 5.9)
4. Wood 49 388 ( 1.2)
5. Metals 97 1317 ( 4.2)
6. Ceramics 34 1644 ( 5.2)
7. Chemical products 48 1290 ( 4 .1)
8. Food 146 975 ( 3 .1)
9. Narcotics 21 1825 ( 5.8)
10. Dress and toilet 89 408 ( 1.3)
11. Building 13 81 ( 0.3)
12. Transport equipment 100 3867 (12.3)
13. Energy 3 266 ( 0.8)
14. Electrical 4 634 ( 2.0)
15. Stationery 3 10 ( -- )
16. Miscellaneous 116 1794 ( 5.7)
17. Transport operation 29 400 ( 1.3)
------------------------------------------------------------
Total 1037 31399 (100.0)
=================================================================
Source: Census of India, 1941, Mysore
Note: !.Industries located in Bangalore city and civil and Military
station, Bangalore ar~ included in the table.
2.Figures in brackets are percentage to the total employment.

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

manufacturing industries the dominance of cotton and textile industries continued

mainly in the 'small scale' sector.

Table 3.4 : Total Number of workers by industry in

Banqalore district
=================================================================
Division Industry Number of Percentage
Code workers to the
employed total

2.0 Food incl. otherwise unclassified 1519 ( 1. 7)

2.1 Grams and pulses 489 (0 .5)
2.2 Vegetable, oil dairy products 925 ( 1 • 0)
2.3 Sugar 15 ( - )
2.4 Beverages 1095 ( 1 • 2)
2.5 Tobacco 4155 (4.7)
2.6 Cot ton textiles 20930 (23.5)
2.7 Wearing apparels except footwear 8302 (9.3)
2.8 Textiles otherwise unclassified 10505 (11 .8)
2.9 Leather, leather products and footwear 2650 (3.0)
3.0 Metal products otherwise unclassified 3236 (3.6)
3.1 Iron and steel 121 (0 ,1}
3.2 Non-ferrous metals 6 ( - )
3.3 Transport equipment 11026 (12.4)
3.4 Electrical machinery 2664 (3.0)
3.5 Non-elec. machinery including workshops 4364 (4.9)
3.6 Chemicals and fertilisers 252 (0 .3)
3.7 Medical and pharmaceutical preparations 40 ( - )
3.8 Chemical otherwise unclassified 1971 (2.2)
4.0 Hfg. industries otherwise unclassified 3902 (4.4)
4 .1 Petroleum and coal ( - )
4.2 Bricks, tiles and structural clay 1100 ( 1 • 2)
products
4.3 Cement, cement pipes 21 ( - )
4.4 Non metallic mineral products 2273 (2.6)
4.5 Rubber products 22 ( - )
4.6 Wood and wood products 5300 ( 6 .0)
4.7 Furniture and fixtures 53 (0 .1)
4.8 Paper and paper products 17 ( - )
4.9 Printing and allied industries 2078 {2.3)

Total 89032 {1 00 .0)

==========================================================:::::======
Source: Census of India, Hysore, 1951.
Note : Figures in brackets refer to percentage of the total
workers employed.

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

1. Cotton sizing, spinning 1923 7501 33.9

weaving
2. Woollen spinning and 811 2813 12.7
weaving
3. Silk reeling, spinning 2360 9854 44.5
twisting and weaving
4. Hfg, of soap, twine, 810 1985 9.0
string etc.
-----------------------------------------------------------------
Total 5904 22153 (100 .0)
=================================================================
Source: Census of India, 1951, Hysore. Vol. 1
Notes: 1. Only those industries are included here which employ at least
one per cent of the total employment in textile industry
2."Total Number of workers" includes full-time as well as
part-time workers
3. Full time workers are those who are employed for at least nine
months in a year in an industry. Part-time workers are those
who work for less than nine months in a year in an industry.

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

Total of non-textile 15114 39770 100.0

industries
=================================================================
Source: Census of India/ 1951, Hysore. Vol. 1
Notes: l.Only those industries are included here which employ at least
one per cent of the total employment in textile industry
2."Total Number of workers" includes full-time as well as
part-time workers
3. Full time workers are those who are employed for at least nine
months in a year in an industry. Part-time workers are those
who work for less than nine months in a year in an industry.

Sect ion II

Industrialisation since 1950:

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.

Table 3.7 :Growth of population in Bangalore district, 1961-1981

====================================================================================
Persons Male Female

1961 1981 % 1961 1981 1961 1981 %

increase increase increase

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.

Table 3.8: P~rcentaqe of workers in Banqalore district, 1961-81

<1n per cent>
================================================================================
Persons Male Female

1961 1981 1961 1981 1961 1981

Total 39.7 33.8 56.7 52.1 21.0 13.9

Rural 48.0 40.0 62.0 56.7 33.6 22.5

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

partifipation rate for women in the urban areas.

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.

Industrial classification of non-agricultural workers 1 e by divisions shows that

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

employment in Bangalore is discernible both in urban and rural areas as well as

between both the sexes.

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

1961 1981 1961 1981 1961 1981

Total 30.2 11.2 23.4 9.6 64.7 22.6
Rural 79.3 30.0 73.9 21.1 90.1 32.6
Urban 18.4 9.4 14.2 8.0 48.2 20.5
===================================================================
Source: 1. Census o.f India 1961 rHysoreJ, General Population Tables
2. Census o.f India 1981 rKarnatakaJ, General Population Tables
Note: For 1981 total workers is equal to main plus marginal workers.
Table 3.11 (i) :Industry-wise distribution of total
manufacturing employment 1n Banqalore
district 1961,
=================================================================
SIC Industry group Total number Per cent
code of workers of the
employees total
-----------------------------------------------------------------
20 Foodstuffs 5237 3 .1
21 Beverages 919 0.5
22 Tobacco products 5299 3 .1
23 Cotton textile 32519 19.3
24. Jute textile 382 0.2
25. Woollen textiles 714 0.4
26. Silk textiles 14551 8.6
27. Miscellaneous textiles 13283 7.9
28. Wood and wood products 10632 6.3
29. Paper and paper products 185 0. 1
30. Printing and publishing 3663 2.2
31. Leather and leather products 2747 1.6
32. Rubber, petroleum and coal products 295 0.2
33. Chemical and chemical products 6198 3.7
34+35 Non-metallic min products excld. 16651 9.9
petroleum and coal
36. Basic metal 6031 3.6
37. Machinery and electrical equipment 16225 9.6
38. Transport equipment 22071 13.0
39. Misc. mfg. industries 11177 6.6

Total 168779 100.0

=================================================================
Source: Census o.f India, 1961. Vol.XI
part Il-B(i) General Economic Tables
Notes: Total number of workers is an aqgregat ion of rural and .urban
and also male and female.

In Bangalore district over four-fifths of the manufacturing workforce force

reside in urban areas. Although the share of urban population in the district in-
creased from 54 per cent to 64 per cent between 1961 and 1981 the share of manufac-

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

20-21 Food products 16757 3.9

22. Beverages, tobacco and tobacco 14031 3.3
products
23. Cotton textiles 44137 10.3
24. Wool, silk and synthetic fibre 43957 10.3
textiles
25. Jute, hemp and mesta textiles 381 0.1
26. Textile products 34911 8.1
27. Wood and wood products 20598 4.8
28. Paper and paper products 12833 3.0
printing, publishing etc.
29. Leather and leather products 2817 0.7
30. Rubber, plastic, petroleum 6405 1.5
and coal products
31. Chemical and chemical products 19463 4.5
32. Non-metallic mineral products 25144 5.7
33. Base metal and alloy industry 7891 1.8
34. Metal products and parts 14233 3.3
35. Non-electrical machinery and parts.23731 5.5
36. Electric machinery 61623 14.4
37. Transport equipment 34129 8.0
38. Misc. mfg. industries 13514 3.2
39. Repair services 32238 7.5
Total manufacturing 428793 100.0
=================================================================
Source: Census of India, 1981. Karnataka, General Economic Tables
Notes !.Total number of persons employed includes urban and rural
and also male and female
2.Total workers is main plus marginal workers.
A comparison of the distribution of manufacturing workforce by major industry

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

CSIC 23 to 27J. The dominance of textiles industries in Bangalore, as seen in the

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

importance of metal manufa~turing in Bangalore would be more sharply reflected in

terms of value than as a proportion of workforce. On the basis of an unpublished

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

from 22 per cent of the total in 1961 to 35 per cent in 1981.

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

workers without power- in Bangalore district in 1980-81. According to this, elect-

rical machinery manufacturing CNIC-360J alone accounts for about 11 per cent and

metal and machinery manufacturing account for 45 per cent of total value added in the

AS! census segment of manufacturing sector in the district.

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

Total 134672 80.1

======================================================================
Source: Census of .India, 1961 Hysore, General Economic 7'a1Jles.

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

Total 258427 70.9

=====================================================================
Source: Census of India, Karnataka 1981, General Economic f'a.bles.
An analysis of manufacturing workforce in Bangalore district according to size of

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.

Hence, the share of registered and unregistered factories employing up to 50 workers

(with power) works out to be about 55 per cent. It is thus interesting to discover

ttutt rlr:tspit.r:t t.hr:t hir~h visibility of larr~e firJW in BarlfJalore, over one half of total

manufacturing workforce is employed in non-household small factories and workshops. 1 '

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

about the relative importance of the small scale sector.

Table 3.13: List of manufacturing industries CNIC 3 digitJ

accounting for one per cent or more of net value added
in AS! census sector for 1980-81
======================================================================
Number of All All Net
NIC Description factories Workers emplo- value
yees added
CRs'OOOl

200 Distilling spirit 5 2188 2451 75363(2.6)

222 Halt liquor and malt 3 420 656 36131 ( 1 .2)
231 Cotton spinning and
weaving 14 12613 14367 159803(5.5)
264 Textile garments 34 4424 4880 31298(1.1)
314 Perfumes and cosmetics 7 709 915 68804<2.4)
329 Other non-metallic
mineral products 3 556 813 54972(1.9)
330 Iron and steel industries 13 2664 3425 84835(2.9)
331 Castings and forgings 22 1933 2463 40407(1.4)
343 Hand tools 5 813 1104 54040(1.9)
357 Machine tools 10 3330 5764 137533<4.4)
360 Electrical industrial
machinery 15 8226 11809 312983(10.8)
362 Dry and wet batteries 2 898 1371 5873 (8 .8)
366 Computer and control
instruments 5 1986 2299 77960 (2,7)
374 Motorcycles and parts 10 5166 6987 256852 (8.8)
382 Watches and clocks 5 1774 2406 81469 (2. 8)
973 Servicing motor vehicles 16 1950 2463 38363 ( 1. 3)
Miscellaneous mfg.
industries 57 29889 45928 730605(25.1)
======================================================================
Source: Directorate of Economics and Statistics, Government of
Karnataka.

Table 3.14.: Size distribution of factories in Bangal~re district coming

under census sector of ASI, 1980-81
======================================================================
Size class
of factories Number Net
in terms of of All All value
number of factories Workers employees added
workers [Rs.'OOOJ

0-4 11 (-) 1 (-) -641 (-0 .02)

5-9 1 7 (-) 9 (-) 179 (-)
10-19 19 202 co .19) 267 co .20) 3362 (0.12)
20-49 75 2032 ( 1 • 95) 2550 (1. 77) 24132 (0.83)
50-99 71 4193 (4.03) 5066 (3.52) 57916 (2.00)
100-199 76 8598 (8 .~6) 11090 (7. 71) 2176024 (7.47)
200-499 65 15703 (15.09) 20769 (14.45) 496578 (17. 05)
500-999 20 9617 (9.24) 12899 (8.97) 3238858 ( 11 .12)
1000-1999 8 8233 (7.91) 10600 (7 .37) 235678 (8.09)
2000-4999 6 1263 4 ( 12 • 14 ) 18398 ( 12.80) 505261 (17.35)
above & 5000 4 42838 (41 .17) 62127 (43.21) 1048438 (36.00)

Total 356 1,04,057C100.00) 143776 (100.00) 2912413 C100.00)

=======================================================================
Source: Directorate of Economics and Statistics, Government of Karnataka.

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)

Total 371 104057 143776 2912415

======================================================================
Source: Directorate of Economics and Statistics, Government of
Karnataka.

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

evidence -show that in 1986 the engineering industries in Bangalore [Item 1 to 11 in

Table 3.16J account for 58 per cent of the number of medium and large scale units,

73 per cent of the workforce and 67 per cent of turnover.

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

1970's. Although it may be premature to infer, there appears to be a perceptible

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 3.16: Total investment, turnover and employment in medium

and large scale industries units in Bangalore d1str1ct,1986
===============================================================~===================
Sl. No.of Investment Turnover CEmploymentJ
No. Category of Industries Inds. <Rs. in lakhsl <Rs.in lakhsl <nos.>
studied
-----------------------------------------------------------------------------------
6823 (17) 15451 ( 16) 3873 (17)
1. Metallurgical industries 17
2. Prime movers other than
electrical generators 1 137 ( 1) 426 ( 1) 347 ( 1)
3. Electrical equipments 31 25618 C29l 56008 (29) 38853 (31)
4. Telecommunications 3 6633 {2) 13592 (2) 16528 ( 2)
5. Transportation 8 4532 {5) 8587 (5) 8243 (5)
6. Industrial machinery 12 3698 (12) 4220 ( 11) 2486 ( 11)
7. Machine tools 10 7478 (9) 9737 (10) 9999 (10)
8. Agricultural machinery 3 376 (3) 792 ( 3) 1001 (3)
9. Earth moving machinery 1 1763 ( 1) 3328 ( 1) 652 (1)
10. Misc. mech. & engg. inds. 6 2161 (5) 3133 (6) 1734 (6)
11. Industrial instruments 3 993 (3) 1879 (3) 1804 (3)
12. Photographic raw film&paper 1 53 ( 1) 110 (1) 97 (1)
13. Chemicals <other than
fertilisers> 7 960 (7) 645 (5) 530 (7)
14. Drugs & pharmaceutical 4 762 (3) 4759 (4) 1827 (4)
15. Textiles <including those
dyed, printed or otherwise
processed> 18 6093 (17) 12115 C18l J8543 ( 18)
16. Fermentation industries 5 1673 (5) 2344 ( 1) 1131 (5)
17. Food processing industries 18 1883 (18) 7752 (18) 2918 ( 18)
18. Vegetable oils & vanaspati 1 37 ( 1) 130 ( 1) 53 (1)
19. Soaps,cosmetics and
toilet preparations 1 2954 (1) 2414 (1) 1093 ( 1)
20. Rubber goods 1 105 ( 1) 244 ( 1) 202 (1)
21""'.~eather, leather goods &
pickers 1 84 ( 1) 98 ( 1) 181 (1)
22. Ceramics 4 936 (3) 1355 (3) 2015 (3)
23. Timber products 1 252 ( 1) 346 ( 1) 569 (1)
24. Miscellaneous industries
<Not-categorised> 6 3679 (6) 26770 (5) 3006 ( 6)

Total 163 79682 (152)176233 (151) 117685 (157)

=====================================================================================
Source: Directorate of Industries and Commerce, Government of Karnataka.
Note : Figures in brackets indicate number of units for which figures are available.

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

small scale segment as well.

Finally, we present the relative share of Bangalore district in manufacturing

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.

Table 3.18: Growth of registered SJall scale enterprises

in Bangalore district, 1969-70 to 1964-85
============= - -----======================================~-=====--=======--===========----------=====--------=====--==
Urban Rural Total
Year -------------------------------- --------------------------------- --------------------------------------~
No. of 1nvest- Persons No. of Investtent persons No. of I nve.st~ent Persons
enterpr1- ~ent e1ployed enterpr!- !in Rs. eJployed enterpri- !In e1p1oyed
ses lin R.s. ses laibsl ses Rs.lathsl
laibsl

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

Growth rateE 11.3 7.62 21.6 15.2 14.3 9.8

================================================================================================================
source: Directorate of Industries and commerce, Government of Karnataka
1: Provisional
2: Annual average compound growth rate in per cent

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

Total 27880 100.0

===============================================================
Source: Directorate of Industries and Commerce, Government of
Karnataka.

Table 3.20 : District-wise distribution of the number of

large and medium enterprises in Karnataka, 1981
=======================================================================
S .No. District Number of Investment Persons
units registered < i n Rs • 1ak h > employed
1• Bang a lore 167 (50.8) 23660 (34.0) 178268 (59.3)
2. Bidar 1 (0.3) 232 co ,3) 750 (0,2)
3. Bijapur 4 ( 1 • 2) 634 co ,9) 7688 (2.6)
4. Bel guam 16 (4.9) 6583 (9.5) 9430 (3 .1}
5. Bellary 11 (3.3) 2784 (4,0) 5687 ( 1 • 9)
6. Chickmagalore 2 ( 0. 6) 59 (0 ,1) 275 (0 ,1)
7. Chitradurga 21 (6,4) 2432 (3,5) 12626 (4,2)
a. Dharwad 16 (4.9) 3275 (4.7) 6599 (2.2)
9. D.Kannada 12 (3.6) 6544 (9.• 4) 3400 (1 • 1)
10. Gulbarga 5 ( 1 .5) 2470 (3.6) 4677 ( 1 • 6)
11 • Hassan 2 (0,6) 75 (0 ,1) 400 (0 ,1)
12. Kodagu 1 (0.3) 31 (-) 240 co ,l)
13. Kolar 3 co ,9) 2852 (4 .1) 23450 (7.8)
14. Handy a 11 (3.3) 1673 (2.4) 5211 ( 1 • 7)
15. My sore 37 (11.2) 3411 (4. 9) 11544 (3.8)
16. U.Kannada 4 ( 1.2) 3569 (5 .1) 4825 ( 1 • 6)
17. Raichur 11 (3.3) 1607 (2.3) 8498 (2.8)
18. Shimoga 6 ( 1 • 8) 5825 (8,4) 15528 (5. 2)
19. Tumkur 2 (0,6) 1366 (2.0) 1385 (0,5)

Total 329 (1 00 ,0) 69080 300481 (100 ,0)

=======================================================================
Source : Directorate of Industries and Commerce, Bangalore

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:

In th~ first d~cade of the planned economic development in India. Bangalore

attracted a substantial share of public sector investment. ITI commenced production
in 1952, HMT was set up in 1953 and BEL in 1948. HAL was taken over and vastly
expanded around the same time. Thus the city acquired four large public sector

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

development to domestic oriented infernal economy. Moreover, as two of the four

public sector projects are defense related, locational choice may have also been

guided by the.national security consideration. Within these broad policy parameters,

it is not inconceivable that the ultimate choice of Bangalore was a political

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

industries portfolio, for a number of years.eo

After the lapse of a decade or so, the rail coach division of Bharat Earth

Movers Ltd. CBEMLl came into being and the Karnataka government promoted NGEF Ltd.,

in collaboration with AEG Telefunken of West Germany to manufacture electrical

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

short gestation electricity intensive industries like secondary steel processing, 24

The power surplus situation in Karnataka appears to have coincided with growing
power shortage in West Bengal, which was till then the most industrialised state in
the country. Moreover, during the late sixties West Bengal also witnessed widespread
industrial unrest which as part of the political uncertainty and radicalisation of
politics. It is a widely believed view in Bangalore that many Marwari entrepre-
neurs, especially from Calcutta, were attracted to Bangalore for its "peaceful"
industrial relations atmosphere and abundance of electric power.e 5
Although the growth of industrial investment was sluggish in the country Jn
general in the 70s, Bangalore emerged as one of the newer manufacturing centres
attracting considerable private investments by relatively high technology machinery
manufacturing firms like Widia Cindia) Ltd., Ingersoll-Rand, Escorts, Goetze,

Larsen and Toubro etc. A probable reason for the growth of machinery manufacture

in Bangalore - in addition to sound infrastructure and electric power -could have

23. This is consistent with Ishikawa's observation that underdeveloped economies

attempting rapid import substituting industrialisation, especially under the aegis of
public sector, tend to have highly vertically integrated plant structures.
[Ishikawa ,1982J.

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

ranging sizes having a dense network of inter-firm transactions resulting in growth

momentum of its own.

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

reduce manufacturing expenses. 27

The easy availability of skilled labouree seems to be another reason for the

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

manufacturing in Bangalore since the fifties yielded a large reservoir of skilled

workforce. This later became the source of entrepreneurship and of skilled labour in

the small scale sector. 29

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.

27. Evidence for this will be found in our case studies.

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.

Effects of rapid industrialisation began to tell on the climate of industrial

relations especially since the second half of the seventies. Organised workers

~~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

employing over 1000 workers, as recorded at the Chief Inspectorate of 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

workers on the other.

We do not have any aggregate evidence to support the proposition on growth in

sub-contracting. However, as we have seen earlier in Table 3.19 nearly two-fifths

of the rerJistered small units are in metal work.infJ which does seem to suqqest in-

cidence of sub-contracting relationship.

Table 3.23: Performance of the Sub-contracting Exchange, Bangalore

=================================================================
Year Total number of small Number of enquiries
entrepreneurs regi- received in each year
stered with the
Exchange
1979 548 542
1980 638 648
1981 797 782
1982 992 930
1983 1093 1010
1984 1188 1070
=================================================================
Source :Small Industries Service.Institute, Bangalore.
The last piece of information we have is on the performance of the Sub-contract-

i ng Exchange. Set up in 1978 it was conceived, as mentioned in the previous chap-

ter, an institutional mechanism to promote sub-contracting [Table 3.23]. Though
going by the accounts of officials and users the role of the Exchange appears to
have been marginal. The growth in the number of firms registered with it does not
really reflect the increasing trend towards sub-contracting.
Thus, we find that the initial thrust given by investment in public sector was

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

workers were also from Tamil Nadu and Andhra Pradesh.

Conclusion

In order to provide ~background for the case studies on sub-contracting repor-

ted in the following three chapters, we have attempted to trace, though not very
exhaustive, industrialisation of Bangalore, especially in the post independence
period. This backdrop suggests that the city has had a much longer tradition of
manufacturing than is usually appreciated. It has, for very long time, been a major

textile manufacturing and trading centre. Moreover, the erstwhile princely state of

Hysore consciously promoted industrialisation nearly a century ago. In the early

decades of this century public investments were made in a variety of modern manufac-

turing industries to utilise the natural resources. Bangalore also happened to be a

major cantonment of the British-Indian government which perhaps contributed to
creation of sound infrastructure and many modern institution of economic development.
After the independence public sector investment in four large projects provided

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

List of Large Establishments in Bangalore City, 1930

==================================~=========================================
Aver- Whether
Sl. age worked Remarks
No. Name of Establishment Class of descrip- No.of by me-
tion of Industry persons chanical
employed power or
daily hand power
-----------------------------------------------------------------------------
(2) (3) (4) (5) (6)

Banqalore City

1. Government Printing Press Printing 403 Mechanical Owned by

power government
2. Hysore Arts and Wood Works Wood carving,
working in
ivory 125 -do- -do-
3. Government Art Workshop Wood carving,
working in
ivory 89 -do- -do-
4. Standard Foundry and Engg.
Co. Casting of all
kinds 40 -do-
5. Mysore Metal Industries Ltd. Manufacture of
sofas etc. 38 -do-
6. Madras and Southern Maharash- Engines and
tra Rly. Locomotive Shed boiler repairing 183 -do-
7. Madras & Southern Haharash-
tra Railway Workshop -do- 295 -do-
e. HIS Petrie Hay & Co. Brass and iron
foundry 63 -do-
9. Aryan Hosiery Factory Manufacturing of
hosiery 67 -do-
lO.Govt. Sandlewood Oil
Factory Manufacturing of
sandlewood oil 100 -do-
ll.City Standard Tobacco Co. Manufacture of
Cigarettes 33 -do- -do-
12.The Bangalore Woollen,
Cotton & Silk Hills Ltd. Manufacturing of 2684 -do-
cotton goods, blan-
kets and rugs
13.B.K. Subbyiah & Sons Manufacture of 245 -do-
blankets, carpets
etc.
14.Kaisser-i-Hind Woollen
Cotton & Silk Mills Ltd. Mfg. of blankets,
rugs, tweeds, etc. 568 -do-
15.Mahalakshmi Woollen & Silk
Mills Co. Ltd -do- 80 -do-
16.Hysore Spinning and Hfg Mfg. of cotton
Co. Ltd. goods 1540 -do-

101
{1) (2) (3) (4) (5) (6)

17.Govt. Central Distillery Mfg. of liquors 101 -do- -do-

18.Sri Rama Weaving Shed Silk weaving 50 Mechani- Owned by

cal power Govt.
19.Govt. Weaving Factory Weaving 63 -do- -do-

20.Govt. Soap Factory Mfg. of soaps 52 -do- -do-

21.Central Industrial Workshop Mfg.of rice
mills, sugar
cane mi 11,
presses 137 -do- -do-
22.Sri Rama Krishna Oil Mills Oil pressing 23 -do- -do-

23.Mysore Tannery Ltd. Tannery hides 160 -do-

24.The Railway and General Mfg. of rein-

Engg. co. forced concrete
articles 60 -do-

25.The Pressure Metal Factory Ltd. Mfg. of seamless

measures 100 -do-
26.Bangalore Whitelead Syndi- Mfg. of white-
cate Ltd. 1ead powder and
paint 30 -do-
27.The City Brick and Tile Works Mfg.of bricks
and tiles 195 -do-
28.The Mysore Clay Works Ltd. Mfg. of tiles 30 -do-

29.Mr. Khoday Eswara's Silk

Twisting Factory Silk twisting 75 -do-

30.Bangalore Silk Filament Silk reeling 23 -do-

31.Mr.R.C •. Muniappa's Oil Oil extraction

and Flour Mills and flour milling 23 -do-
32.Mr. Naganna's Oil Mill Oil extraction 21 -do-

33.Bangalore Printing and

Publishing Co. Printing 100 -do-
34.Shivaji Soapnut works and
Oil Mills Oil extraction 31 -do-

35.Swadeshi Perfumery Works Mfg. of perfumes 20 -do-

36.Sumvasa Flour Mills Flour mi 11 37 -do-

37.Radhakrishna Rice and Rice milling etc 21 -do-

Flour Mi 11

38.Sri Krishna Flour Mill Flour mi 11 35 -do-

39.Sri Krishna Gold Lace

Thread Factory Gold lace making 23 -do-

102
( 1) (2) (3) (4) (5) ( 6)

40.Bangalore Fire Bricks

and Tiles Co. Mfg. of bricks
and tiles 73 -do-
41.M/S Moduri Mudaliar & Sons Engg. workshop 42 -do-

42.Tala Silk Farm Silk rearing and

reeling 95 -do-
43.Mr. Sivappa Revappa Rice milling and
Rice Mill soapnut powdering 20 -do-

Banqalore Taluk, Yelahanka

44.Standard Tile Factory

Whitefield Brick making 53 -do-

4S.Permanent Brick and

Tile Works Ltd. Mfg. of bricks and
tiles 29 Hand power
Channapatna

46.Mr. Ramasanjiva Chetty's Mfg. of lacquerware

Toy Works toys 23 -do-

Source: Hayavadana Rao (1930)

103