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Vagrecha -Darshna Chande -Mrinal Kaul -Samir Daddikar -Subrato Das
DEFINITION OF SSI
using power with less than 50 employees
not using power with the employee strength being more than 50 but less than 100
1960 1966 1975 1980 1985 1991 1997 1999
INVESTMENT LIMITS Upto Rs 5 lacs in Plant & Machinery Upto Rs 7.5 lacs in Plant & Machinery Upto Rs 10 lacs in Plant & Machinery Upto Rs 20 lacs in Plant & Machinery Upto Rs 35 lacs in Plant & Machinery Upto Rs 60 lacs in Plant & Machinery Upto Rs 100 lacs in Plant & Machinery Upto Rs 100 lacs in Plant & Machinery
CLASSIFICATION OF SSIs
TRADITIONAL •KHADI •HANDLOOM •VILLAGE INDUSTRIES •HANDICRAFTS •SERICULTURE
•TV sets •ELECTRONICS •CONTROL SYSTEMS •ANCILLARY INDUSTRIES
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.
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?
had no legal backing
◦ except 2 sections of I (D&R) Act, 1951
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 valueadded 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
Export From SSI’s
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
Technical assistance and selling their products in the country by KVIC. 60,000 skilled workers employed in around 5000 mostly cottage (home) based small scale units, They produce about 90 million pairs of shoes and 110 million pairs of sandals and chappals annually SISI institute Agra- Helps in promotional activity of SSI, technical assistance, training of unskilled workers
Cane & Bamboo industry
Problems:◦ ◦ ◦ ◦ Shortage of skilled labour Migration to big cities. Getting support from Govt is very difficult, Youth getting influenced by extremist.
It started as a cottage industry in Tamil Nadu. Source of employment to unskilled women Significant foreign exchange earner after liberalisation. Total exports have increased by 266% to Rs 4 billion (approx. US$ ll2 million)
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
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