While small-scale units typically blame inadequate marketing and finance for their decline, a more important reason is location.
For, while an All-India Management Association survey shows a 5.2 per cent fall in sales growth of SSI units in 1998-2002, this was primarily concentrated in north India where sales declined 18.6 per cent. By contrast, SSI sales in south India grew 25.8 per cent.
A parallel survey by the Confederation of Indian Industry, of primarily non-SSI units, shows a fairly dramatic decline in the economy of northern states in the last decade.
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With overall growth falling, it is natural that demand for, and therefore supply of, sales by SSI units would go the same way in north India.
While units in north India, according to the CII survey, are hamstrung by rigid labour laws - 20 per cent Delhi units felt this way, as did 86 per cent in Rajasthan - and corruption - from 20 per cent in Delhi to 100 per cent in Uttar Pradesh - the south has the most export-oriented units -11.07 in each state versus 4.97 for the north - and even the most multinational labs - 24 in all southern states versus five in the north.
The average number of inspection visits by officials was also higher in the north - 9.7 visits in 1999 in Uttar Pradesh compared with 6.1 in Andhra and Tamil Nadu and 6.2 in Maharashtra and Gujarat.
With the atmosphere for growth the most conducive in south India, the AIMA survey shows, SSI units here have been the most pro-active in terms of change as well.
Southern units head the league when it comes to increasing their sales staff or re-training them, and are second - after the west - in making new arrangements for capital; after the east, southern units are also the most aggressive when it comes to looking for new markets or trying out new products.
Southern units used the least number of generators, a big positive for units generally strapped for cash.
According to the survey, 58.6 per cent of southern SSI units were able to avail of market opportunities compared with a mere 40.6 per cent in the north.
While the eastern figure is 60.9, this has to be treated with caution, considering that sales in this region actually fell during the period when the units claimed they were able to exploit new market opportunities.
Southern units also scored the highest, except for the east where the usual caveats apply, in terms of confidence to face the future: 42 per cent of the units felt they would survive for more than five years, against 35 per cent of the northern SSI units.
