assistance to the small-scale industries through its scheme of refinance and, to a limited extent, through its bills rediscounting scheme. As it is not feasible for the IDBI to reach a large number of smallscale industries scattered all over the country, the flow of its assistance to this vast number has, therefore, been indirect in the form of refinancing of loans granted by the banks and the State Financial Corporations (SFCs). Industrial Finance Corporation of India ltd (IFCI) Some sectors that have directly benefited from IFCI’s disbursals include: • Consumer goods industry (textiles, paper, sugar); • Service industries (hotels, hospitals); • Basic industries (iron & steel, fertilizers, basic chemicals, cement); • Capital & intermediate goods industries (electronics, synthetic fibers, synthetic plastics, miscellaneous chemicals); and • Infrastructure (power generation, telecom services). IFCI Venture Capital Funds Ltd. (IVCF) IFCI Venture Capital Funds Ltd. (IVCF) was originally set up by IFCI as a Society by the name of Risk Capital Foundation (RCF) in 1975 to provide institutional support to first generation professionals and technocrats setting up their own ventures in the medium scale sector, under the Risk Capital Scheme. In 1988, RCF was converted into a company, Risk Capital and Technology Finance Corporation Ltd. (RCTC), when it also introduced the Technology Finance and Development Scheme for financing development and commercialization of indigenous technology. To reflect the shift in the company’s activities, the name of RCTC was changed to IFCI Venture Capital Funds Ltd (IVCF) in February 2000. Industrial Credit and Investment Corporation of India Ltd. (ICICI) The ICICI performs the following functions: (i) It provides assistance by way of rupee and foreign currency loans, underwriting and direct subscriptions to shares/debentures and guarantees, (ii) It offers variety of financial services such as deferred credit, leasing credit, installment sale, asset credit and venture capital. (iii) It guarantees loans from other private investment sources. Industrial Reconstruction Bank of India (IRBI) The IRBI had diversified its activities into ancillary lines such as consultancy services, merchant banking and equipment leasing. All these activities are allied to its task of rehabilitation of sick industrial units. Through its consultancy services, IRBI attempts to help banks and financial institutions to assess intrinsic worth of sick units, which are seeking assistance for revival. Through its merchant banking services, IRBI enables units in the process of amalgamation, merger and reconstruction. Equipment leasing was, in fact, an extension of the IRBI hire-purchase scheme Life Insurance Corporation of India (LIC) Today LIC functions with 2048 fully computerized branch offices, 100 divisional offices, 7 zonal offices and the corporate office. LIC’s Wide Area Network covers 100 divisional offices and connects all the branches through a Metro Area Network. LIC has tied up with some Banks and Service providers to offer on-line premium collection facility in selected cities. LIC’s ECS and ATM premium payment facility is an addition to customer convenience. Apart from on-line Kiosks and IVRS, Info Centres have been commissioned at Mumbai, Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, New Delhi, Pune and many other cities. With a vision of providing easy access to its policyholders, LIC has launched its SATELLITE SAMPARK offices. The satellite offices are smaller, leaner and closer to the customer. The digitalized records of the satellite offices will facilitate anywhere servicing and many other conveniences in the future.

The facilities are available in Jammu & Kashmir. Kerala. Air Freight Subsidy State Governments provide Air Freight Subsidy to SSI units on their finished goods for any destination. Andaman & Nicobar Islands. INCENTIVES AND FACILITIES SalesTax concessions StateGovernmentsgiveconcessions in sales tax to new units/sick units on the sale of their finished products at the first point of sale for a period of three to fifteen years. Rajasthan. The facilities are available in Uttar Pradesh. The facilities are available in Uttar Pradesh. Andhra Pradesh and Manipur. The facilities are available in Sikkim. . Kerala and Manipur. Jammu & Kashmir. Over the years. Gujarat. Sikkim. Interest Subsidy State Governments provide interest subsidy to entrepreneurs on term loans which they get from State Financial Institutions/Scheduled Banks. Nagaland. Daman. Himachai Pradesh. The facilities are available in Uttar Pradesh. The facilities are available in Jammu & Kashmir. State Transport Subsidy Some State Governments provide State transport subsidy at notified rates from time to time to industrial units on transportation of raw materials and finished products. Rajasthan. Exemption from stamp duty and local taxes State Governments exempt stamp duty in respect of land allofted by the Government to the new industrial Maharashtra and Manipur. The UTI also provides assistance to the corporate sector by way of term-loans and underwriting/direct subscription to shares/debentures. Karnataka. Himachal Pradesh. Nagaland and Manipur. the UTI has introduced a variety of schemes to meet the need of diverse sections of investors. Punjab.ions. Semi-Government Organisat. etc. while making purchases of their requirements of store items. Nagaland. Rajasthan and Tripura. Andhra Pradesh. Rajasthan. Andhra Pradesh. The facilities are available in Jammu & Kashmir. Rebate in electricity charges and water charges State Governments provide rebate in electricity charges and water charges to the new and existing units in their respective States. Himachal Pradesh. Gujarat. Nagaland. Nagaland. Haryana. Kerala. Haryana and Tripura. Sikkim. raw materials and packing materials of new units are exempted from payment of octroi duty and other local taxes. Grant-in-Aid Institutions. Delhi. established under an Act of Parliament in 1964. State Governments reimburse costs incurred by SSI units for shipment of export samples from the nearest port/container depot to the port of destination. Punjab. The facilities are available in Jammu & Kashmir. Marketing Support The State Government Departments. Kar nataka. Sikkim. Meghalaya. Kerala and Maharashtra. Autonomous Government Organisations. Daman & Diu. Sikkim. Manipur and Tripura. For obtaining such technical know. Gujarat. Meghalaya. Machinery. Himachal Pradesh. The facilities are available in Jammu & Kashmir. Daman. Punjab. Meghalaya. Andaman & Nicobar Islands. mobilize savings of small investors through sale of units and channelize them into corporate investments. Karnataka. Special facilities for export oriented un4ts State Governments provide special package of incentives and better infrastructural facilities for export oriented units. Karnataka. give preference to the products manufactured by the local SSI units. equipments. Subsidy for technical know-how State Governments provide subsidy on the cost of technical know-how obtained by small scale industries from reputed and well established research and development organisations. Rajasthan.Unit Trust of India (UTI) The Unit Trust of India (UTI). Sikkim. Departmental Undertakings. plrior permission from State Governments has to be obtained. Delhi.

National Small Industries Corporation (NSIC) and three training institutesNational Institute of Small Industry Extension Training (NISIET). Himachal Pradesh. 2 Ministry of Small Scale Industries : The process of liberalization and market reforms has created wideranging opportunities of the development of small scale industries. • Maintaining close liaison and vital linkage with the Central Ministries.Incentives to Non-Resident Indians (NRis) State Governments provide special incentives for setting up new industries by NRis in their respective States. FINANCIAL INSTITUTIONS AND SMALL SCALE INDUSTRIES ALL INDIA INSTITUTIONS 1 Small Scale Industries Board: SSI Board is the apex non-statutory advisory body constituted by the Government of India to render advice on all issues pertaining to the SSI sector. State Govts. Planning Commission. Indian Institute for Entrepreneurship (IIE). statutory bodies/other organizations like Khadi and Village Industries Commission (KVIC) & Coir Board. 280 changing world scenario has thrown up new challenges to the very existence of this sector. At the same time. National Institute for Entrepreneurship and Small Business Development (NIESBUD) 3 Small Industry Development Organisation (SIDO): • Advising the Govt. Financial Institutions. It provides a forum to its members for interaction to facilitate co-operation and inter institutional linkages and to render advice to the Government on various policy matters. The facilities are available in Uttar Pradesh. & similar other developmental organizations/agencies related to the promotion and development of SSI Sector. • Providing facilities for technology up-gradation. The implementation of policies and various programmes/schemes for providing infrastructure and support services to small enterprises is undertaken through its attached office. Purjab and Rajasthan. • Providing economic information services. The need of the hour is to suitably strengthen the sector so that it could adapt itself to the changed environment and face the challenges boldly and effectively. namely the Small Industries Development Organization (SIDO). Its term is for two years. for the development of the sector. common facilities and extension services. modernization quality improvement & infrastructure. promotion. The KVIC is supposed to do the planning. organization and implementation of programmes for the development of khadi and other village industries in the rural areas in coordination with other agencies engaged in rural development wherever necessary. • Human resources development through training and skill up-gradation. • Providing techno-economic and managerial consultancy. The broad objectives that the KVIC has set before it are: • The social objective of providing employment • The economic objective of producing saleable articles. The Board was first constituted in 1954. 4 National Small Industries Corporation (NSIC) Limited : Some of the main services provided by NSIC are described below: • Machinery and Equipment (Hire-Purchase Scheme) • Machinery and Equipment (Lease Scheme) • Financial Assistance Scheme • Assistance for Procurement of Raw Material • Marketing Assistance • Government Store Purchase Programme • Technology Transfer Centre 5 The Khadi and Village Industries Commission (KVIC) The Khadi and Village Industries Commission (KVIC) is a statutory body created by an Act of Parliament in April 1957. . The wider objective of creating self-reliance amongst the poor and building up of a strong rural community spirit. Hyderabad. in policy matters concerning small scale sector.

cement). It functions through a network of District Industries offices. research and education. 8 Training Institutes: National Institute of Small Industries Extension Training (NISIET) The NISIET since its inception by the Government of India has taken gigantic strides to become the premier institution for the promotion. the primary responsibility for implementation of policies and programmes of assistance rests with the Directorate of Industries in each State. STATE LEVEL INSTITUTIONS 1 State Industrial Development Corporations (SIDCs): The State Industrial Development Corporations were set up under the Companies Act. paper. heads the governing council of the institute and the Secretary. Chairman. The main functions of Directorate of Industries are as follows: a) Registration of small scale units b) Providing financial assistance c) Distributing scare and indigenous raw materials to industrial units . of India head the Executive Committee. Entrepreneurship Development Institute of India (EDII): EDII has been spearheading an entrepreneurship movement throughout the nation in the belief that entrepreneurs need not necessarily be born. and • Infrastructure (power generation. 7Industrial Finance Corporation of India ltd (IFCI ): Some sectors that have directly benefited from IFCI’s disbursals include: • Consumer goods industry (textiles. • Service industries (hotels. industrial parks and setting up industrial projects either on their own or in the joint sector in collaboration with private entrepreneurs or as wholly owned subsidiaries. fertilizers. 2 State Directorate of Industries (SDIs) Under the constitution of India promotion and development of small scale industries is a State subject. In addition to provision of financial assistance. synthetic plastics. and Govt. they can be developed through well-conceived and well-directed activities. Therefore. the Institute strives to achieve its avowed objectives through a gamut of operations ranging from training. hospitals). basic chemicals. miscellaneous chemicals). • Basic industries (iron & steel. It performs both regulatory and developmental functions. It acts under the overall guidance of SIDO and concerned Central institutions. they are also involved in developing industrial infrastructure like industrial estates. development and modernization of the SME sector. • Capital & intermediate goods industries (electronics. Indian Institute of Entrepreneurship (IIE):The policy direction and guidance is provided to the Institute by its Board of Management whose chairman is the Secretary to the Government of India. NEC. Ministry of Small Scale Industries. Programmes initiated/sponsored by the NIESBUD are constantly evaluated and revised to suit the changing needs in the area of entrepreneurship and small business development. industries offices and extension offices at district subdivision and block level respectively. consultancy. telecom services). to extension and information services. SSI and ARI. 1956.6 Coir Board: Coir Board is a statutory body established by the Government of India under a legislation enacted by the Parliament namely Coir Industry Act 1953 for the promotion and development of Coir Industry in India as a whole. An autonomous arm of the Ministry of Small Scale Industries. as wholly owned state government undertakings for promotion and development of medium and large industries. synthetic fibers. The institute is engaged in creating a climate conducive for entrepreneurship and in developing favourable attitude amongst the general public in support of those who opt for entrepreneurial career. sugar). National Institute for Entrepreneurship & Small Business Development (NIESBUD): NIESBUD’S role is that of a catalyst as it helps in developing the effectiveness of all these organizations.

there should be strong promotional machinery with delegated powers at the district level. installment sale.. 3 District Industries Centres (DICs) Initially institutional infrastructure for small industry development existed at the state level and there was hardly any promotional machinery at the district level except a small office of the district industries. (ICICI): The ICICI performs the following functions: (i) It provides assistance by way of rupee and foreign currency loans. (iii) It guarantees loans from other private investment sources. i) Overall administration of village and small scale industries. As it is not feasible for the IDBI to reach a large number of small-scale industries scattered all over the country. viz.75% to 16. In late 70s. asset credit and venture capital. building and machinery. project counseling. 3 State Financial Corporations (SFCs) SFCs provide term loan to small and medium scale industries for creation of assets. land. b) Industrial Development Bank of India (IDBI) The IDBI provides assistance to the small-scale industries through its scheme of refinance and. leasing and hire purchase are also been undertaken by them. the flow of its assistance to this vast number has. use mainly indigenous technology. equipment finance.5% depending upon the size of the loan and its term. . fiscal and infrastructure measure. through its bills rediscounting scheme. Industrial policies over the year have focused to promote SSIs through various incentives related to financial.d) Granting essentiality certificates for import of raw material e) Establishing industrial estates and industrial co-operatives f) Developing industrial infrastructure g) Undertaking industrial surveys and collecting information h) Arranging concessions and incentives for industries. 240 lakhs. under-writing of public issues. to a limited extent. along with a heavy industrial base. it was felt that if a district has to be a unit of planning. employment intensity and its suitability for rural area with limited techno-economic structure. They are operating a number of financial assistance schemes for the benefit of the entrepreneurs such as assistance for marketing activities. POLICY SUPPORT TO SMALL SCALE INDUSTRIES INTRODUCTION After attaining independence in 1947 India adopted mixed economic planning as a method to achieve economic development. SFCs provide maximum loan upto Rs. single window scheme. been indirect in the form of refinancing of loans granted by the banks and the State Financial Corporations (SFCs). The interest on loan ranges between 13. underwriting and direct subscriptions to shares/debentures and guarantees. leasing credit. bill discounting. which will have necessary expertise to guide an entrepreneur and meet all his requirements FUND-BASED INSTITUTIONS 1 Small Industries Development Bank of India (SIDBI): Small Industries Development Bank of India (SIDBI) was established in April 1990 under an Act of Indian Parliament as the principal financial institution for: • Promotion • Financing • Development of industry in the small-scale sector • Co-ordinating the functions of other institutions engaged in similar activities 2 Commercial Banks: a) Industrial Credit and Investment Corporation of India Ltd. special schemes for assistance to ex-servicemen. etc. therefore. It was therefore. Various non-fund based services like merchant banking. Along with the Large Scale sector the thrust was on Small Scale sector because of it decentralized. (ii) It offers variety of financial services such as deferred credit. They also provide working capital term-loan to the industrial units on competitive terms. felt that an agency should be set up a district level. its small size. j) Maintaining liaison with other agencies for industrial development.

SSI associations were motivated to develop and operate testing laboratories. market survey. were laid down. 2. village and small industries widely dispersed in rural area and small towns. INDUSTRIAL POLICY RESOLUTION 1991 The basic thrust of this resolution was to simplify regulations and procedures by delicensing. Small Industries Development Bank of India was established to ensure adequate flow of credit to SSIs. 4. Equity participation by other industrial undertaking was permitted up to a limit of 24% of shareholding in SSIs. quality control. The scheme of granting Rs 75000 to each small scale enterprise for obtaining ISO 9000 certificate was continued till the end 10 th plan. This thinking specified the following things: 504 items were reserved for exclusive production in the small scale industries. Special marketing arrangement through the provision of services. The concept of District Industrial Centers (DICs) was introduced to that in each district a single agency could meet all the requirement of SSIs under one roof. such as. 5. assistance was granted to woman entrepreneurs for widening the entrepreneurial base. Activities of Khadi and Village Industries Commission and Khadi and Village Industrial Board were to expand. 6. the aim of state policy would be that the development of this sector is integrated with that of large scale industry. deregulation . production standardization. Its salient feature are: SSIs were exempted from licensing for all articles of manufacture. The limit of investment was increased in industry related service and business enterprises from Rs 5 lakhs to Rs 10 lakhs.The various provisions under Industrial Policy Resolutions formulated by the government in assisting the small scale industries (SSI) The various fiscal incentives for SSIs INDUSTRIAL POLICY RESOLUTION AND SSIs INDUSTRIAL POLICY RESOLUTION 1948 1 SSIs are particularly suited for the utilization of local resources and creation of employment opportunities . The investment limit for tiny enterprises was raised to Rs. Also. The coverage of ongoing Integrated Infrastructure Development (IID) was enhanced to cover all area in the country with 50% reservation for rural area and 50%earmarking of plots for tiny sector. COMPREHENSIVE POLICY PACKAGE FOR SSIS AND TINY SECTOR 2000 The exemption for excise duty limit raised from 50 lakhs to Rs One crore to improve the competitiveness. 3. It created central investment subsidy for this sector in rural and backward area. 2 The primary responsibility for developing small industries by creating infrastructure has been provided to state government. Technological up gradation was emphasized in traditional sector . Factoring services were to launch to solve the problem of delayed payment to SSIs. INDUSTRIAL POLICY RESOLUTION 1977 The main thrust of policy was effective promotion of cottage. Special emphasis was laid on training of woman and youth under Entrepreneurial Development Programme. Stress was reiterated to upgrade technology to improve competitiveness. INDUSTRIAL POLICY RESOLUTION 1956 1 It stated that besides continuing the policy support to cottage. Reservation of items to be produced by SSIs was increased to 836. 7. Market promotion of products was emphasized through co-operatives. It raised the investment ceiling in plant and machinery for SSIs. Priority was accorded to small and tiny units in allocation of indigenous and raw materials. public institutions and other marketing agencies and corporations. 3 Central government frame the broad policies and coordinates the efforts of State Government for development of SSIs. 2 The focus was to improve the competitive strength of SSIs. The limit of composite loan was increased from Rs10 lakhs to Rs 25 lakh. INDUSTRIAL POLICY RESOLUTION 1990 Main feature of this resolution are as follows: 1. village and small industries by differential taxation or direct-subsidies.5 lacs irrespective of location. . The family income eligibility limit of Rs 24000 was enhanced to Rs 40000 per annum under the Prime Minister Rozgar Yozna (PMRY).

INDUSTRIAL POLICY ON SSIS 2004-05 Policy initiatives for this year are as follows: The national commission on Enterprises in the Unorganized/Informal Sector was set up in September 2004. besides special tax concessions. 4) There is no distinction between registered and unregistered units for SSI concessions for SSIs has been based on annual turnover rather than SSI registration . The reserve Bank of India raised the composite loan limit from Rs 50 lakhs to Rs One crore.the deduction to be claimed is 25% for first 10 years . 3. The corpus fund set up under the Credit Guarantee Fund Scheme was increased from 125 crore to 200 crore. FISCAL INCENTIVES AND FACILITIES TO SSIs Fiscal incentives are provided through tax concessions granted in the form of exempted of direct or indirect taxes leviable on production or profits.with 80% of the lending for SSI units. 2) SSI units having turnover less than Rs. The following concessions are available to them in this regard: 1) SSI units producing goods up to Rs. or owned or controlled by other industries undertaking . 5)The SSI exemption is available for home consumption . 4. 6) Normally .TAX EXEMPTION CONDITIONS: No small scale or ancillary undertaking shall be subsidiary of.It suggested measures considered necessary for improvement in the productivity of these enterprises. linkage of the sector to institutional framework in area like credit .11lakhs duty annually . 7)With effect from 1-4-1994. Credit Guarantee cover was provided against an aggregate credit of Rs 23 crore till December 2001. These incentives have been provided to promote the SSIs and discussed in following: well as in respect of goods exported to Nepal & Bhutan.excise officers are not expected to visit SSI units paying less than Rs. Promotional Package for small enterprises was initiated.EXCISE CONCESSIONS: Government of India has provided a major relief by grating full exemption from the payment of central excise duty on a specified output and thereafter slab-wise concessions.personal ledger account etc. Duty liability is to be discharged by 15 th of following month.INDUSTRIAL POLICY PACKAGE FOR SSI 2001-02 This policy emphasizes the following: The investment limit was enhanced from Rs 1crore for to Rs 5 crore for units in hosiery and hand tool sub sectors. technology up gradation . The SSI unit should commence business between 1 st April1991 and 31 st March 2002. Small scale industrial undertaking can claim deduction at the following rates: If SSI unit is owned by a company . This tax exemption from total income is allowed from the assessment year in which the unit being to manufacture or produce goods or articles. The Small and Medium Enterprise (SME) fund of Rs 10000 crores was stared by SIDBI since April 2004. the deduction available is 30% for first 10 year . the deduction to be availed is 25% for first 10 years . Gate –Pass System was replaced by manufacturer invoice to cover clearance of goods as the duty-paying document. 2. SSI unit can manufacture any nature/type of goods /article to avail deduction. They should employ at least 10 workers in manufacturing process carried out with aid of power or at least 20 worker in manufacturing process carried out without the aid of power. Market Development Assistant Scheme was launched exclusively for SSI sector. infrastructure. If SSI unit is owned by a co-cooperative society.100 lakhs are exempted from payment of excise duties. their own record are adequate for excise purpose.TAX HOLIDAY With effect from financial year 2005-06. Reservation policy Government’s purchased . raw material account . generation of large scale employment opportunities.The investment limit in plant and machinery was raised from Rs One crore to Rs 5 crore in October 2004. and If any other person owns SSI units .60 lakhs per annum need not have a separate storeroom for storing the finished products.MEASURES FOR PROMOTION AND DEVELOPMENT OF SSIs Central and state Government have formulated several schemes to make the SSIs vital and competitive. The interest rate was 2%below the prevailing Prime Lending Rate (PLR) of the SIDBI. deduction in respect of profit and gains for small scale industrial undertaking is available under Section respect of seven item of sports goods to help to upgrade the technology and enhance competitiveness. 3)SSIs are also not required to maintain any statutory records such as daily stock account of production and clearance .marketing facilities and skill development by training .raw material supply.

TECHNICAL ASSISTANCE Technology audits and benchmarking Technology needs assessment Technology sourcing Application of new acquisition.GOVERNMENT PRICE PREFERENCE POLICY FOR MARKETING SSI PRODUTS These facilities includes the following : Price preference up to 15%in case of selected items. after deleting items having common nomenclature and addition of some new ones. which get them registered with the NSIC: Availability of tender sets free cost. 51 item were dereserved in 2002. A consortium to channelize and identify for the production of SSIs both in India and abroad. The benefit is available to compensate them on a/c of non-availability of economies of scale . Classroom and practical training for skill upgradation .preference policy for SSI products. Price preference up to15% over the lowest quotation of the large scale units.39 items were dereserved in four phases viz.GOVERNMENT’S PURCHASE PREFERENCE POLICY FOR SSI PRODUCTS Under the Store Purchase Policy of the Government 409 items of store were reserved for exclusive purchase from KVIC/Women’s Development Corporation/Small Scale units in 1989. 6. 108 in March 2005 and 180 in May 2006. 7.. In February2004. Exempted from payment of Security Deposit up to the monetary limit for which the unit is registered. 75 item in 2003 and 85 items in 2004. This list also includes 8 handicraft items reserved for purchase from the Handicraft Sector. the Committee (set up to consider the question of inclusion of additional items) revised list and 358 items were approved . Now 298 items stand reserved for this sector. Exempted from payment of Earnest Money Deposit.THE SINGLE POINT REGISTRATION SCHEME OF NSIC the following benefits are given to SSIs units.subsequently. Government’s price preference policy for marketing SSI products. Product design including Computer Aided Designs.RESERVATION POLICY Out of 836 items reserved in 1989. 9. This list reviewed . 14 item on 2001. 8. Common facility support in machining Energy and environment services at selected centers. Technical assistance Raw material assistance Financial assistance New initiatives 5. 15 items in 1997’ 9 items on 1999 1 item on 2001 and. Material testing facilities through accredited laboratories. Technology acquisition .poor resource base. poor access to raw –material as compared to the large scale sector. No registration fee.

Sign up to vote on this title
UsefulNot useful