SMALL ENTERPRISES 45 Nehru. This committee was supposed to work out the detailed implications flowing from the Congress Economic Programmes Committee's Report and the pronoucedly status quoist Industiral Policy Resolution of 1948. 17 The distinction between the processes and their interconnection is analysed in K Marx, Capital, Vol 1, Ch 25. 18 See Government of India, Ministry of Commerce and Industry, Report of the Working Group on Small Scale Industries: Programme of Work for the Third Five Tear Plan, New Delhi, 1960. 19 The clearest expression of this is the ubiquitous infringement of the policy reserving items for exclusive production in the small scale sector by transnational and indigenous big enterprises. See S K Goyal, et al, op cit. 20 A company like Hindustan Lever, for instance, has 4000 retail stockists whose turnover varies from Rs 25,000 to Rs 2 crors per annum. These stockists supply 300,000 retailers. In addition, the company has "satellite or van markets" which service remote markets, whether from "Patiala in the Punjab or Tiruvalla in Kerala". T Thomas, "Distribution of Essential Commodities", Speech at Annual General Meeting of Hindustan Lever Limitrd, 20 June 1975. 21 Thomas offers an ingenious rationale for the marketing practices of large corporations by arguing that without the investment in sales promotion by these corporations, products would lie with retail traders longer. These costs of storage would then be passed onto the customer through higher margins. T Thomas, op cit. As a matter of fact, heavy advertising expenditure and extensive distribution networks serve basically as bairiers to entry to competing products. 22 For exhaustive documentation, see S K Goyal, et al, op cit. 23 See Government of India, Ministry of Industrial Development, Report of the Committee for Drafting Legislation for Small Scale Industries, 1972, (Mimeo). 24 In the official definition it is stated that an ancillary unit should not be "a subsidiary to or controlled by any large units in regard to the negotiations of contracts for supply of its goods to any large unit". Various guidelines to regulate the relationship between ancillary and parent unit have been specified. 25 See, for example. Economic Times (Bombay), 14 January 1984. 26 The case concerned a large scale unit, Vindhya Paper Mills vs Union of India, Indian Security Press and Gandhi Brothers Private Limited. Vindhya Paper Mills had been given a license to produce "speciality papers". Gandhi Brothers, who were supplying low grade stamp paper to the Security Press represented to the Ministry of Industries that the license could not be used by Vindhya Paper Mills to produce high grade stamp paper, as this was a reserved item. Justice Bharucha held that Section 29 B (1) of the IDRA could not be used to reserve items and that all orders reserving items for exclusive production would have to be withdrawn. See, Financial Express (Madras), 10 February 1983- 27 The cases of Balsara vs Colgate - Palmolive, and many others, are well known as cases where small enterprises face extreme competition in products which are supposedly reserved for the small scale sector. However, the crux of the problem in this case, as in many others, while never possible to document, is well known even to senior officials of the Goverment of India. For instance, a member of the staff of Hindustan Lever told the Chief of the Small Enterprises Division in the Planning Commission that his company welcomed the efforts of the Division to set up small soap manufacturing units. For once these units had become established and "created a market" for soap, Hindustan Lever would move in, and by underselling the small entreprenuer for some time, take over the cost free "market" for soap. 28 Even brief discussions with small entrepreneurs will produce reactions such as the following by a machine tool manufacturer in Madras: "All this talk about growth is bunkum! As soon as you try to grow they (the banks and other official agencies operating as Organisations) try everything possible to pull you down!"