Energy Efficiency in Small Scale Industries - An Indian Perspective

The small-scale sector occupies a position of prominence in the Indian economy, contributing to more than 50% of the industrial production in value addition terms. The sector accounts for one third of the export revenue and employs the largest manpower next to agriculture. In India's present liberalized economy, the survival and growth of small-scale industry (SSI) largely depends on its ability to innovate, improve operational efficiency and increase productivity. It has been observed that the factories in the small-scale sector in India are generally less efficient in process and utility energy use compared to larger enterprises, as well as to enterprises of equivalent capacity in other countries. There is also a general disregard in small-scale units towards environmental management. The poor energy and environmental performance is directly related to the lack of technical capacity in these enterprises to identify, access, adapt and adopt better technologies and operating practices. Though case studies suggest that enhanced energy management leads to increased productivity as well for these enterprises, yet such win–win potential is actualized in very few instances.

 

In order to enable small scale enterprises adopt more efficient energy use patterns, it is essential to demonstrate positive impacts of reduced energy use to the entrepreneurs in terms of increased productivity and higher profitability. Thus an effective strategy to promote energy efficiency in small scale industry is to use a cluster based approach wherein energy efficient technologies and practices can be demonstrated to a group of companies located in close geographic proximity. In India, a large portion of the SSI activity is geographically clustered. Within a cluster, there exists a great deal of similarity in the level of technology, the operating practices and even the trade practices among the individual units which means that the potential to develop and implement standard solutions for improving energy efficiency is large.

 

The paper highlights the importance of the small-scale sector in the Indian economy and the need to improve the energy and environment performance of units operating in the sector. It draws upon the results of a major program that TERI (Tata Energy Research Institute) initiated in 1995 in the small-scale sector with the support of SDC (Swiss Agency for Development and Cooperation). The program aims at finding solutions to the energy problems of the SSI through technology upgradation and human and institutional development in some small scale energy intensive sectors. Three small-scale sectors are presently being covered -foundry, glass and brick manufacture. In each of the three smallscale sectors, demonstration plants have been/are being built to widely disseminate/popularize energy efficient technological options to the cluster. In addition to highlighting the work done in individual cluster/industry, the paper gives details of the benefits that can accrue to the individual units in terms of improving their energy efficiency and improving productivity, if the demonstrated technologies are implemented.

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