Small Scale Industries

-Bhumika Vagrecha
-Darshna Chande
-Mrinal Kaul
-Samir Daddikar
-Subrato Das
 DEFINITION OF SSI

SSIs
1950

not using power

with the
using power with employee strength
less than being
50 employees more than 50 but
less than 100
YEAR INVESTMENT LIMITS
1960 Upto Rs 5 lacs in Plant & Machinery

1966 Upto Rs 7.5 lacs in Plant & Machinery

1975 Upto Rs 10 lacs in Plant & Machinery

1980 Upto Rs 20 lacs in Plant & Machinery

1985 Upto Rs 35 lacs in Plant & Machinery

1991 Upto Rs 60 lacs in Plant & Machinery

1997 Upto Rs 100 lacs in Plant & Machinery

1999 Upto Rs 100 lacs in Plant & Machinery

 CLASSIFICATION OF SSIs

TRADITIONAL MODERN

•KHADI •TV sets

•HANDLOOM •ELECTRONICS
•VILLAGE INDUSTRIES •CONTROL SYSTEMS
•HANDICRAFTS •ANCILLARY INDUSTRIES
•SERICULTURE
Government Bodies & SSI
 DIC / SIDCO/ SSIDC

 SISI (Small Industries Service Institute)/ITI


 SFC /NABARD/SIDBI

Objectives of Industrial
Policies
üAchieving industrial growth.
üAchieving economic growth.
üDeveloping heavy and capital goods industry.
üProviding opportunities for gainful employment .
üAlleviating poverty.
üAchieving a self-sustained economy .
üProtecting and developing a healthy small-scale
sector.
üUpdating technology and modernization.
üLiberalization and globalization of economy.
Industrial Policies
 Industrial Policy Resolution of 1948
 Industrial Policy Resolution of 1956
 Industrial Policy Resolution of 1973
 Industrial Policy Resolution of 1977
 Industrial Policy Resolution of 1980
 The New Industrial Policy of 1991

Industrial Policy of 1956
 Definition of SSI ( Investment & Employees)

 Introduced reservations through IRD (Indian
Regulation & Development Act)

 Reserved 48 items.

 The GoI stressed the role of cottage and
village and small scale industries in the
development of the national economy


Industrial Policy of 1973
 An exhaustive analysis of industrial products was
made to identify products which are capable of
being produced in the small scale sector.

 The list of industries exclusively reserved for the
small scale sector was expanded from 180 items
to more than 500 items.
 Within the small scale sector, a tiny sector was
also defined with investment in machinery and
equipment upto Rs.1 lakh.


 Special legislation to protect cottage and

household industries was also proposed to be
introduced.
Industrial Policy of 1977
 Major focus was on effective promotion of the
cottage and small industries in rural areas and
small towns.

 The focus point of development of small scale
industries were taken away from the big cities to
districts.

 The concept of District Industries Centers was
introduced for the first time.

 The investment limit in the case of tiny units was
enhanced to Rs.2 lakh, of a small scale units to
Rs.20 lakh and of ancillaries to Rs.25 lakh.

Industrial Policy of 1980
 It highlighted on producing inputs needed by
a large number of smaller units and
making adequate marketing arrangement
so as to boost the development of small
scale industries.

 It liberalized licensing for large and big
business but by blurring the distinction
between small scale and large scale
industries


Why a new Act?
 SSIs had no legal backing
◦ except 2 sections of I (D&R) Act, 1951
 SSIs were dealt with under multiple
Laws
 No Statutory Consultative body
existed
 Most important policies were without
any statutory basis
 Many Committees & Associations
demanded
Micro, Small and Medium
Enterprises
Development (MSMED) Act, 2006
Salient Features of MSMED
Act
Impact of MSMED Act on
SSIs
 Inclusion of Services based industries
 Provided a legal backing for delayed or non
payment of credit.
 Increase in the investment ceiling ->
additional benefits issued.
 Computerized databases containing regional
information, data and value-added
knowledge.


Types of SSI
 Small Scale Industrial Undertaking
 Ancillary Industrial Undertakings
 Tiny Enterprise
 Enterprise by Women Entrepreneurs
 Cluster development
 EOU
Role SSI in Indian Economy
Incentives for SSI
 Tax benefits
 Excise Duty
 R&D
 EOU
 Government Tenders
 Foreign Tie-Ups
 Easy Access to Loans
 Plant and Machinery
Growth of SSI
SSI Creator of Jobs
Export From SSI’s
Export From SSI’s
Micro Finance
Developing Micro Finance for
SSI
 Enhances Prosperity of KVIC
 Resolves Working Capital Problems
 Less to Almost No paper work
 Easy Terms
 PMRY (Prime Ministers Rozgar Yojna)
 Credit Guaranty Schemes

Micro Finance Model
Credit Guaranty Schemes
 Credit linked Capital Subsidy Scheme for Technology
Upgradation - Capital subsidy @ 12% upto Rs. 4.8 lakh
on loans taken for technology upgradation - for individual
SSIs.
 Credit Guarantee Scheme - Collateral free composite
loans upto a limit of Rs 25 lakh - for individual SSIs.
 ISO-9000 Certification Reimbursement Scheme -
Costs of obtaining ISO-9000 Certification are reimbursed
to the extent of 75% or Rs 75,000/- , whichever is lower -
for individual SSIs.
 Participation in International Fairs - Full subsidy on
space rent and shipment of exhibits of SSI units - for
individual SSIs.
 Purchase and Price Preference Policy - This is
administered through the Single Point Scheme of NSIC.
Under this, 358 items are reserved for exclusive
purchase from SSI by Central Government.
 Other facilities include tender documents free of cost,
exemption from earnest money and security deposit and
15% price preference in Central Government purchases -
for individual SSIs.
Problems Faced by SSI
 Lack of labor due to NREGA
 Increase in Excise Duty
 High Red Tapeism
 Implementation of DTC
 Chinese Goods
 Difficulty in Marketing
 Low-Level Technology
 Raw Material

Sickness Of SSI
 Capita Constraints
 Inadequate demand & other marketing
problems.
 Erratic power supply.
 Labour problems.
 Infrastructural constraints.
 Poor Management.
 Inadequate attention to Research &
Development.
 Inability of the units to face growing
competition

Mechanism to deal with
potentially viable sick SSI
units
 State Level Inter-Institutional Committees
(SLIICs) have been set up in all the States
under the Chairmanship of Secretary,
Industries Department of the concerned State
to deal with the problems of co-ordination for
rehabilitation o sick SSI units.
 A Sub-Committee of SLIIC has also been set up
wherein borrowers and concerned bankers are
invited to discuss the issue.
 Elaborate guidelines issued by the Reserve Bank
of India for extending rehabilitation assistance
to eligible units.
Global Economic Crises
More Sickness.

 Maximum damage to EOU.
 Not much big impact on SSI based on Local
demand.
 Government Measures to Help SSI

 Central government value-added tax was

reduced by 4% on all goods (except oil or
where the tax is already below 4%; the cut
affects enterprises of all sizes)
 Reduced Excise Duty

Recommendations
 Provide Protection against Foreign
Competition.
 Better Implementation of MFI Policies.
 Better Policies to Provide working capital.
 Instead of Providing Subsidies make them
better equipped to face the international
competition.
 Tight regulation on Mal-Practices
 Revamp Khadi and Village Industry
 Better Training and Business development
program for young aspirants.
 Strengthening small business associations

Thank You