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SSI in New Millennium

22nd February, 2009



SSI in New Millennium

22nd February, 2009


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SSI in New Millennium

22nd February, 2009

We are very much glad to Prof. V.S.GOPAL for giving us such a knowledgeable project. It was an immense pleasure to work on this project. In this project we got to know about the “SMALL SCALE INDUSTRIES IN NEW MILLENNIUM.” We are also hoping for such good and knowledgeable projects in future also.

Thanking you…


Bibliography 1. SSI  In Past  In Present  In Future. Classification Of SSI 3. Programmes And Schemes 8. Conclusion 13. 2009 INDEX Introduction 2. Infrastructure For Modernization And Growth Of SSIs 7. SSIs In India (Statistics) 6. Objectives of SSI 4. Incentives For Obtaining Quality System Certificate By SSI 9. 5. Measures For Promotion And Development Of SSIs 11.BMS@VES SSI in New Millennium 22nd February. 4 . Fiscal Incentives To SSIs 10. Traditional And Modern Small Scale Industries. 12.

5Cr. An industrial unit can be categorized as a small.1. Cottage industries. The Village and Small Industries Sector comprises of five Sub-Sectors viz. As per the latest definition which is effective since February 28. for any industrial unit to be regarded as Small Scale Industrial unit the following condition is to be satisfied: i) ii) iii) iv) v) Investment in fixed assets like plants and equipments should not be more than Rs. An initial Investment of capital directly / indirectly. 2007. With 40% in total industrial output and 35% share in exports. Women enterprise is also given importance.BMS@VES SSI in New Millennium 22nd February. 2) Handlooms and Textiles 3) Khadi and Village Industries Handicrafts Development 5 . the small-scale sector in India has been a major contributor to country’s Gross Domestic Product (GDP).investment upto 10 lakhs. are identified. Export Oriented Units (EOU). The definition for small-scale industrial undertakings has changed over time. Village. 1) Small Scale Industries (under the control of the Director of Industries and Commerce). Initially they were classified into two categories:   Those using power with less than 50 employees Those not using power with the employee strength being more than 50 but less than 100.scale unit if it fulfills the capital investment limit fixed by the Government of India for the small-scale sector. This traditional sector in India is considered to have huge growth prospect with its wide range of products.. Artisians. However the capital resources invested on plant and machinery buildings have been the primary criteria to differentiate the small-scale industries from the large and medium scale industries. The trade is classified Domestic. the small-scale industrial sector in India is acting as Engine of Growth in the new millennium. 2009 INTRODUCTION Since the time of independence.

Handloom. medicine. The items manufactured in modern Small-scale service & Business enterprises in India now include:         Rubber Products Plastic Products Chemical Products Glass And Ceramics Mechanical Engineering Items Hardware Electrical Items Transport Equipment        Electronic Components And Equipments Automobile Parts Bicycle Parts Instruments Sports Goods Stationery Items Clocks And Watches. ancillary Units. But in today's scenario. 6 . Cottage industry. maintenance OBJECTIVES OF SSI:      Create and generate employment. warehouse. Trading:  Wholesale. cold storage. The modern small scale industries are that of garments. Handicrafts.g. coir. 2009 CLASSIFICATION OF SSI Manufacturing:  Village.  Commercial service-e. The traditional units are highly labor consuming with their age-old machineries and conventional techniques of production resulting in poor productivity rate whereas the modern small-scale units are much more productive with less manpower and more sophisticated equipments. village industries etc.BMS@VES SSI in New Millennium 22nd February.g. Commission agents Service:  Professional services-e.  Fashion-dry cleaning. Traditional and Modern Small Scale Industries and Their Products: The traditional small-scale industries clearly differ from their modern counterparts in many respects. repairing. most of the small scale industries in India are modern small scale industries. Retail. Distribute economic advantage Raise Standard of living Increase Production Promotes development of backward areas. leather products etc. law etc. accounting. Some of the traditional small scale industries are that of Khadi and Handloom.

To prevent unequal distribution of income. 2009 Distinction Between Traditional And Modern Small Industries Traditional small industries Include khadi. SSIs IN INDIA Estimated No. the government is trying to develop this industry keeping in mind the following aims:    To increase employment. village industries. sericulture.  To mobilize capital investment and entrepreneurship skills Need to Boost Small Scale Industries: Realizing the importance of small scale industries in Indian economy.57 Million (45-50%) Over 9. Use highly sophisticated equipment and machinery. To develop capital investment. Highly labor-intensive Modern small industries Variety of goods including simple and sophisticated goods such as TV sets.000 298 7 .96 Million 40% 3. engineering products and electronic control systems. coir etc. handloom. handicrafts.BMS@VES SSI in New Millennium 22nd February.57 Million 19. of Units Employment Share in Industrial Value Added Share in Total Exports Total Number of Items Produced Number of Reserved Items 3. Since independence the Government of India has nurtured this sector with special care with the following aims:  To develop this sector as a major source of employment  To encourage decentralized industrial expansion  To ensure equitable distribution of income.

Has marketing boards to promote marketing. Direct assistance and indirect assistance schemes (e. provide info on technologies. particularly with respect to latest developments in field of technology. 2009 Infrastructure For Modernization And Growth Of SSIs: Institution Small Industries Development Organization (SIDO) Centers Established in 1954. Implementation of SSI promotional schemes Provide and arrange a package of assistance for credit guidance. Established under special act of Parliament in 1990.identify items for manufacturing. 33 offices (5 regional and 28 branch offices) Under system called National Information System for Science and Technology (NISSAT) Information Banks 8 . training. Industrial development in states. Provide assistance in all phases of manufacturing . research and consultancy in SSI related fields of development.g. energy conservation. extension and information for development. pollution control. Testing centers also provide advanced technical training. Have well-equipped workshops and labs offering testing services to SSIs. Branches spread all over country As of 1991. District Industries Centers (DIC) National Small Industries Corporation (NSIC) NISIET (extension training institute) SIDBI (Bank) Established in 1962 by Government of India. seminars. ISO 9000 etc. organize workshops. 422 DICs operating in 431 districts (counties) Has 3 prototype development and testing centers in country. refinancing) Provides information.BMS@VES SSI in New Millennium 22nd February. 26 SISIs Functions Technology development. Provide equipment on hirepurchase basis. Small Industries Services Institutes (SISIs) Directorate of Industries 6 regional and 30 district level establishments Began in 1979. plant visits. Training. marketing. To ensure increased flow of financial assistance to SSIs. training.

 Negative impacts of reservation policy  Reservation in areas of mechanical engineering. about 233 thousand small-scale units were sick. expert personnel and testing facilities.  The recent policies and programs providing management training by the SIDBI is hopefully a step towards solving this problem.  The Equity policy  Non-classification of a separate medium enterprise under the Indian industrial sector. regional imbalances in the concentration of small scale industries  Survey data shows that government institutions are the ``least important sources of technological information. 2009 Other organizations involved are:     Trade Development Authority of India Regional Testing Centers Indian Institutes of Technology (IITs) Universities. polytechnics and colleges.  Problem of large firms entering in reserved areas and no penalty.''  Lack of coordination between the various support organizations set up by the government. there are specific programs including technology transfer. Major issues that these policies did not address are as follows:  Problems in obtaining credit  Sickness in the SSIs  As of September 1992. technology upgradation in indentified industry clusters And management development  Technology Development Board under the Department of Science and Technology.  These provide equipment. Each institution has a consulting division to help SSIs. Poor management has also be identified as a major cause of sickness. 9 .  Establishment of Technology Development and Modernization Fund under the scheme of direct Assistance of the SIDBI. Many of the sick units ultimately close down due to finance and marketing problems. chemical products and autoancillary industry group.  Enterprise Strengthening service under SIDBI : Under this service.  Hence the reservation policy tends to become large redundant .BMS@VES SSI in New Millennium 22nd February.  SIDO and SISIs have introduced a program for promoting technological modernization of the SSIs Most of the policies before the 1990s were aimed at protecting the small sector rather than making it competitive.

raw material and marketing aspects of industrial units or group of industries.BMS@VES SSI in New Millennium 22nd February. Under The Scheme “Surveys. 2009 PROGRAMMES AND SCHEMES Guidelines For Assigning Studies. Village Industries. ii) iii) iv) v) vi) vii) viii) ix) 10 . Industrial potential surveys consisting of the various sub-sectors in the VSI sector. Khadi and Coir Sectors. Research. Such data collection. In order to formulate sustainable policy frameworks operational strategies and action plans there is a need for getting relevant data as also surveys. studies investigations etc. sickness. Handicrafts etc. Studies And Policy Research” In the context of the liberalisation and globalisation of the economy the competitive strength of the small scale industries will need to be enhanced through suitable policy measures by which the units can be made operational and more efficient. Coir. Area specific studies at Block Level. market surveys and studies. Etc. in order to improve the viability of these industrial units to enable them to withstand competition. Sector-specific Studies and Surveys such as a Modern Small Scale Industries. KVI and Coir sectors. feasibility studies. particularly in respect of employment generation. State Level and National Level. studies and investigations including producer’s as well as customer’s feedback on the problem areas of units in the Small Scale. Studies relating to technological problems faced by Small Scale. Handloom. income creation and creation/generation of new manufacturing techniques. demand estimates. Sub-contracting and ancillarisation studies for the benefit of modern small scale industries. District Level. Industry related studies to find out the problems of a specific industry and suggesting appropriate measures. surveys. would be undertaken under the above scheme and will include the following: i) Action oriented research studies relating to problems and prospects of industrial units in the small scale. Village. khadi village and coir sectors. pricing of products etc. Problem oriented studies highlighting finance. Khadi. Village and Cottage Industries and measures for upgradation of technology of these industries. Policy oriented research studies to assess the impact of existing policies and suggesting remedial measures for improvement of policies and programmes appropriate for the development of the SSI.

The study/surveys may be entrusted to research. Unit wise information on any survey that may be conducted and the final report should be made available on a floppy disc to the Department of SSI&ARI. At least 50 hard copies of the final report of the survey/study should be made available to the Department of SSI&ARI. Other Terms And Conditions: The other general terms and conditions would be: i) ii) iii) iv) The Government shall not pay any extra amount for any cost escalation of the study project beyond the time period stipulated in the agreement. khadi.40% of the fees shall be released on the signing of the agreement with regard to the terms and conditions of the study between the Department and the concerned Institution. Payment Schedule: The payment for the study will be as under: First Installment . Identification Of The Subject Of Study And Selection Of Institutions: The Department of SSI & ARI will first identify the specific area/areas in which studies/surveys are proposed to be carried out with the approval of Secretary SSI&ARI. Village Industries. Any other study or survey which the Department considers necessary for taking policy decisions. modify the terms and conditions if the study during the currency of the study in order to strengthen/deepen the scope/coverage of the study. if need be. 11 . registered societies and reputed individuals with proven competence to undertake such assignments. Government of India may. coir and similar sectors.25% of the fees shall be released on the submission of the final report and its acceptance by the Government. Studies on micro-enterprises and micro-financing institutions.35% of the fees shall be released after submission of the draft report with the stipulated time frame.BMS@VES SSI in New Millennium 22nd February. 2009 x) xi) xii) Evaluation of the existing policy measures in the Small Scale Industries. Third and final Installment . Second Installment . The Committee will also examine the details of the proposals submitted by the short listed organizations including the cost aspect and will make recommendation to an Apex Level Committee. academic and training institutions.

To focus on existing entrepreneurs in micro. schemes for promotion of entrepreneurship for encouraging self-employment in small scale industries and small business. vi) Guidelines For National Entrepreneurship Development Board (NEDB): The National Entrepreneurship Development Board (NEDB) is the apex body for entrepreneurship development in the country. To facilitate the consolidation. The Board also recommends suitable facilities and incentives for entrepreneurship training. To identify & remove entry barriers for potential entrepreneurs (first generation and new entrepreneurs). small and medium scale entrepreneurs to lead a national drive by the concerned governmental agencies both Central and State Government. to meet the below mentioned objectives. 2009 v) The study reports and the contents thereof would be the property of Government of India and would not be published by the individual or agency who carried out the said study without the prior approval of Government of India. The Board may appoint committees for specific purposes and also invite persons to the meeting of the Board. studies etc. tiny. To sensitise to support agencies in the area of entrepreneurship about the current requirement of growth. To act as catalyst to institutionalise entrepreneurship development by supporting and strengthening state level institutions for entrepreneurship development as most 12 ii) iii) iv) v) vi) vii) viii) . small and medium enterprises. Under NEDB. growth and continuously improve performance. R&D institutions. as and when necessary. tiny and small sector and identify and remove constraints to survivals. It devises and recommends to the Government. funds are provided for entrepreneurship development. growth and diversification of existing entrepreneurial venture in all possible ways. To support skill upgradation and renewal of learning processes among practising entrepreneurs and managers of micro. tiny. required by micro. The findings/raw data/processed data should not be disclosed to any agency/institution without the prior approval of the Department of SSI&ARI. NEDB was set up by the Government with the following objectives: i) To seek to evolve a ten years perspective plan of resource development and support services. entrepreneurship promoting institutions and all others interested in supporting the cause of entrepreneurship and entrepreneurial ventures. training.BMS@VES SSI in New Millennium 22nd February. To articulate priorities and design and monitor the implementation of Action Plans thereby helping the area to cope with the business environment of 21 st Century.

Egypt. For this purpose. Seminars and enterprise to enterprise interaction could be built around important International Fairs. Govt. Indonesia. will bear common expenditure on hiring the space etc. South Korea. and organizations / associations will be fully borne by Government. China. Sixteen countries viz. While common expenses for holding the seminars etc. Studies could be undertaken through SIDO. consultants could be appointed in India and abroad. Technology upgradation and modernisation of SSI sector and promotion of exports from small sector are inter-linked issues which are important objectives behind promoting international cooperation. 2009 entrepreneurship related activities take place at the grass root level and removing various constraints to their effective functioning. To hold seminars and promote enterprise to enterprise interaction through selected agencies both in India and abroad. These activities would be entirely funded by Government under this Scheme. Singapore. Malaysia. NSIC and reputed industry association etc.BMS@VES SSI in New Millennium 22nd February. ii) iii) iv) 13 . Germany. Thailand and South Africa have been identified as thrust countries for promoting enterprise to enterprise cooperation between the Indian SSIs and SMEs in these selected countries with a view to upgrade the capabilities of Indian SSI sector to make it competitive in the global market. Japan. To depute and receive Government officials and representatives of associations and SMEs for preliminary discussion for making necessary arrangements for seminars and enterprise to enterprise cooperation. and the expenditure of travel of the officials from Govt. The activities undertaken under this scheme are: i) To conduct surveys and studies in order to identify the potential units in India and abroad for transfer of technology and promotion of joint ventures. UK. grants. USA. Israel. International Cooperation The small enterprises has emerged as a focus area for forging and promoting trade investment ties with other countries. This could be done in close interaction with the Commerce Ministry and the Export Promotion Councils in identified areas where SSIs have strength. In such cases. This would improve quality of participation of individual meetings. Australia. Italy. The economic reform programmes envisage the emergence of the Indian industry as a global competitor with substantial presence in the international markets. and units selected could also participate in such fairs. individual units selected for participation in the seminar and enterprise to enterprise interactions would generally meet their own expenses. this will be fully funded out of Govt. Taiwan. Exhibitions etc.

20 % of the balance 50 % investment subsidy and maximum of Rs.2005 In order to improve the qualities of raw materials and also finished products. such equipment will be exempt from commercial taxes.-INDUSTRIAL POLICY 2000 . Quality Certification. 14 . P. 2. GOVERNMENT OF KERALA-INDUSTRIAL POLICY 2001 Technology Upgradation.P-INDUSTRIAL POLICY AND ACTION PLAN 1994 In order to increase export. The R&D institutions in the State will be enabled to take up technology development in specific industrial sectors in the state. In this context the State Government will provide assistance by reimbursing upto 50% of fees paid to a recognized certification institution.I.00 lakhs will be provided on production of respective bills from Registered/Reputed Testing Laboratories / B.S GOVERNMENT OF M. Obtaining an ISO 9000 is an important step in this direction. Encouragement will be given for getting accreditation with international quality testing agencies. 2 lakhs per unit. Grants will be provided to industrial units for quality certification by approved institutions/research laboratories at the rate of 50% of the expenditure subject to a maximum of Rs.BMS@VES SSI in New Millennium 22nd February. 2009 INCENTIVES FOR OBTAINING QUALITY SYSTEM CERTIFICATE BY SMALL SCALE INDUSTRIES Different State Government's Scheme For Providing Incentives To SSI Units GOVERNMENT OF A. Assured quality is the key to competitiveness. Intellectual Property Upgradation of and transfer of technology to industry will be priority strategy for the industrial development of Kerala. The State Government is keenly aware of the need for environmental protection along with rapid industrial development in order to encourage installation of environmental protection equipment. products manufactured in the State need to be made more competitive. the unit holder will be allowed for testing facilities for their products / raw materials and also to obtain the BIS Certificate etc.

25 000/(Rupees Twenty Five Thousand). to the units which obtain ISI Certification for their products. 5 000/. 4. 4. The scheme shall be applicable only to the SSI units registered and established in the State of Karnataka. The unit shall be eligible to get the subsidy only once under the scheme. The unit shall be eligible to get the subsidy only once in each of the above cases. whichever is less.BMS@VES SSI in New Millennium 22nd February. The operational details of the scheme would be as prescribed by the Directorate of Industries and Commerce from time to time. (cost includes application fee. The grant of subsidy shall be subject to the following conditions: 1. 15 . The subsidy shall be available to 10 (ten) units each year on first-come-first-serve basis. In addition. The subsidy shall be available to 50 units each year on first-cum-first serve basis. This benefit shall not be available to the units which have availed the benefit under the GOI scheme. The grant of subsidy shall be subject to the following conditions. whichever is less. The scheme shall be applicable only to the SSIs units registered and established in the State of Karnataka. the Government would also provide subsidy to an extent of 25% of the expenses of Rs. 50 000/. 2. 2009 GOVERNMENT OF KARNATAKA Scheme For Providing Incentive For Units Obtaining ISI Certification For Their Products: The State Government would provide a Subsidy of 50% of the fees and other charges payable to the Bureau of Indian Standards (BIS) or Rs. Subsidy would be released based on estimated value of equipments indicated by BIS. Scheme For Providing Incentive To Units Obtaining ISO 9000 Series Certification Or Its Equivalent Indian Standard (IS 14000): The State Government would provide a subsidy to an extent of 50% of the cost for obtaining the ISO 9000 Series Certification. Subsidy for investment on testing equipments shall be available only after due certification from the BIS that these equipments were necessary for getting the ISI mark.(Rs Fifty Thousand) only whichever is less) to the units which obtain the ISO 9000 series Certification or its equivalent Indian Standard (IS 14000 Series). 3. 1. 3. Applicants must have applied and received ISI Certification or Certification of BIS regarding testing equipments on or after the Date of the Order to be eligible for Subsidy under the scheme and a copy of the grant of such certification must be submitted along with the application prescribed 7. assessment fee and the annual licence fee for the first year or Rs. The subsidy would be released after the unit gets ISI Certification 5.(Rupees Five Thousand). 6. towards setting up of testing facilities for getting the prescribed ISI Certification. 2.

Government of India/SIDBI/FIS schemes on Technology Upgradation will be actively pursued and promoted. 2009 5. Any local small scale industrial unit having ISO or ISI Certification for its products will get an additional price preference of 3 % or 2 % respectively. The State Government Departments and Agencies will have to purchase their requirements of these items only from local industries with ISO/ISI/EPM certification for the items.BMS@VES SSI in New Millennium 22nd February. Encouragement will be given to get accreditation with International Quality. at the rate of 50% of the expenditure up to a maximum of Rs. Testing Agencies so as to make them internationally competitive. Efforts will be made to distribute the purchase order quitably among the participating industries. prepared to accept the lowest negotiated rate keeping in view their production capacity. Venture capital fund of SIDBI/OSFC/IPICOL will be available for promotion of I. The Technology Cell (TBIIP) set up in OSFC with the help or UNIDO will be strengthened. GOVERNMENT OF GUJARAT-INDUSTRIAL POLICY 2000 Assistance For Quality Certification: The State Government accords high priority for quality improvement. The operational details of the scheme would be as prescribed by the Directorate of Industries and Commerce. 16 . units. Applicants must have applied and received the ISO Certification (or its Indian Equivalent) on or after the date of the order to be eligible for claiming subsidy under the scheme and a copy of the grant of such certification must be submitted along with the application prescribed. 2 lakhs GOVERNMENT OF ORISSA-INDUSTRIAL POLICY 2001 Technology Upgradation: The State Government accords priority on upgradation of technology by industrial units. 6. Assistance will be provided to industrial units obtaining quality Certification from approved institutions/research laboratories.T. by inviting competitive quotations from such industries.

GOVERNMENT OF PUNJAB-INDUSTRIAL POLICY AND INCENTIVES CODE-1996 Modernization And Technology Upgradation Incentive The Modernization and Technology Upgradation Incentives shall be granted to the existing small scale Industrial Units for obtaining ISO standards and purchase of testing equipment on obtaining ISO standard with financial assistance from SIDBI. Preference will be given to ISI/ISO marked products in procurement by the State Government and its Public Sector Enterprises. SMERFH shall give Rs. The State Government shall facilitate for reimbursement of charges for acquiring ISO 9000 ( or its equivalent) certification to the extent of 75% of the cost subject to a maximum of Rs. 2009 GOVERNMENT OF RAJASTHAN-INDUSTRIAL POLICY 1998 Technology Upgradation And Quality Improvement: The State Government will institute Quality Awards to accord recognition to entrepreneurs achieving excellence in the field of given as subsidy to the SSI unit who is awarded ISO 9000 certification.or 50 % of the expenditure. The Govt. To supplement Govt. of India has formulated a policy of giving away incentives to industrial units acquiring ISO 9000 certification. 75000/.in each case from the Central Government. whichever is 17 . Purchase of ISO/ISI certified products will be given preference. GOVERNMENT OF JHARKHAND-JHARKHAND INDUSTRIAL POLICY 2001 Incentives For Quality Certification: Small Scale / Ancillary Industries would be encouraged to seek ISI / ISO certification. GOVERNMENT OF HARYANA-INDUSTRIAL POLICY 1999 Reimbursement Of ISO 9000 Certification Expenses: With the objective of promoting Quality Management Systems in the small and medium industrial sector and for strengthening their products marketing and exports. of India policy.BMS@VES SSI in New Millennium 22nd February. 50 000/. PFC or commercial Banks through their specialized branches or any other branch of a scheduled bank. A sum of Rs. NSIC. the Society shall give away incentives to SMEs for acquiring ISO 9000. 75 000/.

counsel and purchase of machinery 4. 18 . 2. 2009 less. The application should reach the Department for examining the case within 9 months from the date of issue of ISO 9000 or equivalent certification by the certification agency. ELIGIBILITY 1. 500 lacs shall be eligible for grant of incentives. Submission of copy of ISO 9000 or equivalent certification to the SME industrial unit 3. 5. of India GOVERNMENT OF WEST BENGAL-INDUSTRIAL POLICY 2000 Subsidy For Quality Improvement In The Small Scale Sector: An eligible Industrial unit in the Small Scale Sector shall be reimbursed 50% of the expenditure upto a maximum of Rs.BMS@VES SSI in New Millennium 22nd February. incurred in acquiring ISO 9000/equivalent certification if the unit has not availed the incentives of Government of India. Small and Medium industrial units with fixed capital investment upto Rs. of India then no subsidy will be reimbursed to the unit by SMERFH. If the unit has availed the incentives granted by Govt. An affidavit from the unit that they have not received any subsidy from Govt. 5 lakhs for installing pollution control devices and obtaining ISI Certification / ISO 9000 from approved Institutions/Research Laboratories. Documents showing payment of charges (invoices & receipts) made to the certification agency.

2009 FISCAL INCENTIVES TO SSIs Fiscal incentives are provided through tax concessions granted in the form of exemptions of direct or indirect taxes leviable on production or profits.60 lakhs per annum need not have a separate storeroom for storing the finished products. b) If SSI unit is owned by a co-operative society. b) SSI units having turnover less than Rs. excise officers are not expected to visit SSI units paying less than Rs. c) They should employ at least 10 workers in a manufacturing process carried out with the aid of power or at least 20 workers in a manufacturing process carried out without the aid of power. the deduction available is 30% for first 10 years.11 lakhs duty annually. besides special tax concessions. e) Normally. b) SSI unit can manufacture any nature/type of goods/article to avail deduction. 19 .BMS@VES SSI in New Millennium 22nd February. d) There is no distinction between registered and unregistered units for SSI concessions. EXCISE CONCESSIONS Government of India has provided a major relief by granting full exemption from the payment of central excise duty on a specified output and thereafter slab-wise concessions. and c) If any other person owns SSI unit. The following concessions are available to them in this regard: a) SS units producing goods up to Rs. c) SSIs are also not required to maintain any statutory records. TAX HOLIDAY With effect from financial year 2005-06. d) This tax exemption from total income is allowed from the assessment year in which the unit begins to manufacture or produce goods or articles. Small scale industrial undertaking can claim deduction at the following rates: a) If SSI unit is owned by a company. The small scale units can avail this tax exemption facility only after fulfilling the following conditions: a) No small scale or ancillary undertaking shall be subsidiary of. the deduction to be claimed is 25% for first 10 years. Duty liability is to be discharged by 15th of the following month. the deduction to be availed is 25% for first 10 years. deduction in respect of profits and gains for small scale industrial undertakings is available under Section 80IB. These incentives have been provided to promote the SSIs. or owned or controlled by other industrial undertaking. 100 lakhs are exempted from payment of excise duties.

Subsequently. most of reserved items were importable with the removal of quantitative restrictions. Now 298 items stand reserved for this sector. However with the opening up of Indian trade in 1991. and every year some items were dropped from the reserved list. GOVERNMENT'S PURCHASE PREFERENCE POLICY FOR SSI PRODUCTS Realizing that small scale units face the problem of marketing their products at remunerative prices. 1 item on 2001 and 14 items on 2001. 75 items in 2003 and 85 items in 2004. 9 items on 1999. This shift over will certainly create new employment opportunities at rapid rate.BMS@VES SSI in New Millennium 22nd February. 39 items were dereserved in four phases viz. Defence and Communication ministries and companies are invited to participate in buyer-seller meets to enrich SSI unit’s knowledge regarding terms and conditions. 108 in March 2005. Out of 836 items reserved in 1989. This paved the way to phase out reservation in due course. quality standards. and 180 in May 2006. RESERVATION POLICY Reservation of items for exclusive manufacture in SSI sector has been one of the important policy measures for promoting and protecting this sector against competition from medium/large/ multinational companies The policy received statutory backing in 1984 under Industries (Development & Regulation) Act. Under the Stores Purchase Policy of the Government 409 items of stores were reserved for exclusive purchase from KVIC/Women's Development Corporations/Small Scale units. Bulk and departmental buyers such as the Railways. It is believed that dereservations will enable medium/large/ multinational companies to move out of capital intensive manufacturing to enter labour-intensive production. 1951.. This list also includes 8 handicraft items reserved for purchase from the Handicraft Sector. 51 items were dereserved in 2002. 2009 MEASURES FOR PROMOTION AND DEVELOPMENT OF SSIs Central and State Governments have formulated several schemes to make the SSIs vital and competitive. 15 items in 1997. Government stores purchase programme was initiated to assist smallscale industries in obtaining a fair share of the total purchases made by the Government and its departments. 20 . etc required by the buyer.

Following facilities are available at NSIC Software Technology Park: a) Built-up Space: This enables the software industries to commence their operations with minimum gestation period. Extension Centres. Technology acquisition. The member units can avail 64 kbps to 2Mbps dedicated leased channels. c) High Speed Data Link: High-speed data communication facility through satellite connection is available. National small Industries Corporation Ltd (NSIC) offers SSI units the following support and services through its Technical Services Centre. etc. and adopt the one that helps integrate their operations with their environment. b) Instant Power Connection: Instant power connections and Generator facility is also available on site. Software Technology Parks and Technology Transfer Centre: a) b) c) d) e) f) g) h) i) j) Technology audits and benchmarking. 21 . Technology sourcing. which will allow software units to work without any interruptions.BMS@VES SSI in New Millennium 22nd February. 2009 TECHNICAL ASSISTANCE Technology is the key to enhance an organisation's competitive advantage in today's dynamic information age. Energy and environment services at selected centers. Photocopier. Fax. Application of new techniques. d) Business Centre: A business centre comprising of Conference Hall. These STPs extend support in terms of the requisite infrastructure to the SSI units to start business operations with a minimum lead-time. is available inside the STP complex for the member units. Material testing facilities through accredited laboratories. marketing and operational strategies. e) Telephones: Each member units will be provided with one telephone line for business promotion on occupation. Product design including Computer Aided Designs Common facility support in machining. Classroom and practical training for skill upgradation Software Technology Parks (STPs) facilitate small industries in setting up 100% exportoriented units for software export. Training aids. SSIs need to develop and implement a technology strategy in addition to financial. customers and suppliers. They also act as major point to activate software exports directly through NSIC. Technology needs assessment.

a senior professional. thus allowing them to focus on manufacturing quality products. An advisor. State Directorate of Industries distributes scarce raw materials to small units. d) Market oriented interest rates and service charges with liberal terms of margin. e) Arrangement with commercial banks for sanction of loan proposals received from small enterprises. The main features of the financial services offered by institutions are as follow: a) Financial assistance for the equipment and marketing activities under one roof with speed and efficiency. 22 . 2009 RAW MATERIAL ASSISTANCE NSIC aims to help SSI units by financing purchase of raw material (both indigenous and imported). The Central Government has introduced a buffer stock scheme to ensure availability of scarce raw materials to this sector. c) Assistance in preparing the proposals and completion of document formalities. will volunteer his services to individual or a group of units . Incubation centre enable technical entrepreneurs to conduct their Research and Development programmes in a professional. State Small Industries Development Corporations have set up depots for distribution of raw materials to SSIs. NEW INITIATIVES 1 Advisory and Mentoring Services: Inadequate management skills are often the cause of non-performance of small enterprises. a person with wide experience is running his own business.BMS@VES SSI in New Millennium 22nd February. Mentors and advisor will provide the necessary professional and moral support in the early lifecycle of an enterprise or to existing units facing critical operational problems. friendly and supportive environment. level of assistance and repayment schedules. without making any further investment. FINANCIAL ASSISTANCE Central and State Governments have introduced several schemes to ensure adequate and timely availability of credit to SSIs through various institutions. It offers Mentor-pupil relationship services in which the Mentor. generally retired and a specialist in a specific area will assist in the process.the pupil. NSIC's advisory and mentoring services are aimed at effectively addressing this impediment to growth. 2 Technology Business Incubators: Innovative entrepreneurial ideas have to be fostered and developed in a supportive environment before they become attractive for Venture Capital Institutions. b) Prompt clearance of the proposals with minimum processing time and without cumbersome paper work.

Bio-Technology. Information Technology. a necessity for buyer comfort. NSIC provide accreditation to SSI units by developing an effective accreditation system process through collaboration with Indian and International Accreditation agencies. ii. NSIC has setup the following Technology Business Incubators. Recognizing this need. Energy and Environment.for all Government purchases and for private national and international buyers.BMS@VES SSI in New Millennium 22nd February. v. Electronics and Communications 3. speaks of the enterprise's ability to supply reliably and effectively a product. in accordance with the customer’s changing needs. i. Accreditation is provided at two levels . 2009 Technology Business incubators are an important tool for entrepreneurial development. Suppliers Rating Accreditation Services: Accreditation. Product Design. iii. 23 . iv.

this sector has been able to withstand competition from the power loom and mill sectors. they have proved themselves to be extremely adopt at beating large industrial houses which were enable to respond promptly to changing market needs or innovate in time. 2009 SSI in Past While the first two decades after Independence focused on institutional support. It plays a very important role in the economy. This sector contributes substantially to the export income of the country. Liberalisation of the domestic economy made it easy for fresh capacity came up in the form of large units across Industry segments. the third decade saw the use of reservation of products for exclusive manufacturers in small sector as the preferred policy intervention. specially the public sector units (PSUS). The powerloom industry produces a variety of cloth both grey as well as processed bearing intricate designs. These were only Five pillars of SSI in India: Handlooms: Handlooms form a part of heritage of India and richness and diversity of our country and artistry of the weavers. 24 . Garments: Garments occupy a predominant position in World trade as it is the second fastest growing product category next only to office and telecom equipment.BMS@VES SSI in New Millennium 22nd February. Handloom is the largest economic activity after agriculture. In the fourth decade. Despite substantial increase in the number of players in each industry segment. the endeavor was to promote linkages of SMEs with large units. This sector is estimated to provide direct and indirect employment Due to effective State intervention through financial assistance and implementation of various developmental and welfare schemes. In certain cases. Powerlooms: The decentralised powerloom sector plays an important role in meeting the clothing needs of the country. Textiles: The Textile Industry of the State is the forerunner in Industrial development and is providing massive employment. the Small Scale sector has managed to hold on its own and withstand the onslaught of competition. It is predominantly spinning oriented.

Sickness in the SSI Sector As on March 31.BMS@VES SSI in New Millennium 22nd February. An amount of Rs.49. 25 . Further. 2001. Of these only 13. additional credit for modernisation and technology upgradation and provision for fresh working capital.943 crore as unviable. 3.630 sick SSI units which had obtained loans from banks.076 units were considered potentially viable by the banks with outstanding credit of Rs. 4. there were 2.25.488 units with outstanding bank credit amounting to Rs. Presently. the State Level InterInstitutional Committee (SLIIC) of banks and financial institutions is the only forum looking into rehabilitation of potentially viable sick SSI units. banks had identified 2.506 crore of bank credit was blocked in these units. Rehabilitation of sick units is a costly proposition as it involves rescheduling of past over dues with concessions on interest amount due. 399 crore. 2009 Handicraft: The Handicrafts sector is of special significance in the country's economy due to its contribution to employment generation and foreign exchange earning through exports as well as retaining heritage and tradition.

Production: The small scale industries sector plays a vital role for the growth of the country. This takes place through merchant exporters. It contributes 40% of the gross manufacture to the Indian economy.BMS@VES SSI in New Millennium 22nd February. 2009 SSI in Present The process of liberalisation. the SSI sector has generally performed better than the manufacturing and the overall industry sector. Employment Generation: SSI Sector in India creates largest employment opportunities for the Indian populace. Direct exports from the SSI Sector account for nearly 35% of total exports. while providing tremendous opportunities. next only to Agriculture. The growth rates during the various plan periods have been very impressive. 45%-50% of the Indian Exports is being contributed by SSI Sector. Like production. The number of small scale units that undertake direct exports would be more than 5000. has thrown up new challenges for the Indian small-scale industries sector. In the view of the changes in EXIM policies and the Government stance. barring a few years. trading houses and export houses. It has been estimated that a Crore rupees of investment in fixed assets in the small scale sector generates employment for persons. Besides direct exports. They may also be in the form of export orders from large units or the production of parts and components for use for finished exportable goods. Export contribution: SSI Sector plays a major role in India's present export performance. export from SSI sector have increased. The small scale sector has grown rapidly over the years. Due to the unique characteristic of resilience and flexibility. It has been estimated that a Crore rupees of investment in fixed assets in the small scale sector produces lakhs of goods or services with an approximate value addition of ten percentage points. it is estimated that small scale industrial units contribute around 15% to exports indirectly. export from the SSI sector also have generally shown better growth trends as compared to overall exports of the country. 26 .

2009 It would surprise many to know that non-traditional products account for more than 95% of the SSI exports. In terms of value added this sector accounts for about 40% of the value added in the manufacturing sector.BMS@VES SSI in New Millennium 22nd February.    Today. leather and gems and jewellery units from this sector. The sector's contribution to employment is next only to agriculture in India. The export from SSI sector has been clocking excellent growth rates in this decade. The development of this sector came about primarily due to the vision of our late Prime Minister Jawaharlal Nehru who sought to develop core industry and have a supporting sector in the form of small scale enterprises. It is therefore an excellent sector of economy for investment. Small Scale Sector has emerged as a dynamic and vibrant sector of the economy. % Of SSI In Total Exports Product Sports goods Readymade garments Woolen garments. It has been mostly fuelled by the performance of garment. basic chemicals & pharmaceutical products Engineering goods % of SSI in total exports 100 90 35 65 29 80 45 55 30 27 . knitwear Processed foods Marine products Leather products Plastic products Cosmetic. Economic Indicators: The Small Scale Industry today constitutes a very important segment of the Indian economy. it accounts for nearly 35% of the gross value of output in the manufacturing sector and over 40% of the total exports from the country.

The capacity building for SSI sector in terms of infrastructural facilities. provision of suitable fiscal incentive could be considered. Opportunities: Small industry sector has performed exceedingly well and enabled our country to achieve a wide measure of industrial growth and diversification. SSI sector has made significant contributions to employment generation and also to rural industrialisation. development of human skills. availability of raw material. R&D. By its less capital intensive and high labour absorbtion nature. 28 . by infusion of technologies. It has been suggested that a “Renewal / Upgradation of Technology fund for SSI Units” be created and the contribution made out of their profit be exempted from income tax. dissemination of information and formation of industry cluster need to be developed to take advantage of new opportunities The opportunities in the small scale sector are enormous due to the following factors:               Less Capital Intensive Extensive Promotion & Support by the Government Reservation for Exclusive Manufacture by small scale sector Project Profiles Funding Finance & Subsidies Machinery Procurement Raw Material Procurement Manpower Training Technical & Managerial skills Tools & Tools utilisation support Reservation for Exclusive Purchase by Government Export Promotion Growth in demand in the domestic market size due to overall economic growth Increasing Export Potential for Indian products. 2009 SSI in Future To encourage R&D in the SSI sector. capital and innovative marketing practices. This sector is ideally suited to build on the strengths of our traditional skills and knowledge.BMS@VES SSI in New Millennium 22nd February.

indeed promising. To Open Up Small Scale Industry. It may be said that the outlook is positive. In the end. FDI would be allowed. This is important because we have got to modernise our SSIs. So if a large industry is allowed 51 per cent in that sector. the Government is all set to remove a restrictive clause in a 1951 law that prevented non-SSI players from setting up small units. SSIs would only be defined on the basis of one definition — capital investments of up to Rs 5 crore in plant and machinery. have ensured the presence of this sector in an astonishing range of products. So this is the opportune time to set up projects in the small scale sector. It is not that some reservations that are there would go away. attract the infusion of just these things in the sector. The big challenge is no more generating or earning foreign exchange which was the case 15 years ago. They can own an SSI. Govt Set To Remove Restrictive Law: Moving to liberalise small-scale industries (SSIs). This expectation is based on an essential feature of the Indian industry and the demand structures. given some safeguards. The idea is that our SSIs must have access to technology and capital. any investment that generates additional economic activity is great. However. In my view. but generation of employment. Now there is no limit. 2009  Growth in Requirements for ancillary units due to the increase in number of greenfield units coming up in the large scale sector. but it will be governed by the investment policy. particularly in consumer goods. the question (about policies) is if they would multiply employment generation.BMS@VES SSI in New Millennium 22nd February. The number of items reserved for small-scale industries will remain the same at 114 but the restrictive clause will go. The promotional and protective policies of the Govt. then they will also be allowed 51 per cent in SSIs as well. they cannot fund it because it is not allowed. Once the notification clears Parliament. technology and marketing. The SSI sector needs foreign equity. Excise and other benefits will remain. the bug bear of the sector has been the inadequacies in capital. The process of liberalisation will therefore. If today someone wants to set up an SSI unit and ancillary units. 29 .

to ensure that their operations did not militate against the interests of the small and village enterprises. d) Measures have also been taken to improve infrastructure facilities and promote marketing of products. regulations and procedures were reviewed and modified. Further efforts would be made to deregulate and debureaucratise the sector with a view to remove all fetters on its growth potential. These consist of the following: a) Tax concessions have been provided to SSIs to promote investment in this sector and also to grant relief to small entrepreneurs. Suppliers Rating Accreditation Services have been taken up. The sector has been substantially delicensed. employment and exports. Through 95 per cent of industrial units in the country. c) In order to facilitate adequate flow of credit efforts have been done. The primary objective of the Small Scale Industrial Policy during the nineties was to impart more vitality and growth-impetus to the sector to enable it to contribute its mite fully to the economy. 30 . Government is aware of the challenges faced by SSIs and has been trying to improve their competitiveness through various measures. wherever necessary. f) Other initiatives. Advisory and Mentoring Services. automation of the Ministry of SSI Office of DC (SSI). All statutes. Technology business Incubators. 2009 CONCLISION Small Scale Industry sector has emerged as India’s engine of growth in the New Millennium. The Government has recognized its importance for the economy and its intention towards promotion of SSIs is reflected in various Industrial policy Resolutions right from the year 1948.BMS@VES SSI in New Millennium 22nd February. reposing greater faith in small and young entrepreneurs. Directorate of Industries and District Industries Centres have been set up. b) Technological facilities have been increased. the sector provides employment to about 20 Million persons. particularly in terms of growth of output. e) To improve access to latest information. The SSI sector accounts for nearly 40 per cent of value added in the manufacturing sector and 34 per cent of total exports from the country. such as. BOOKS REFERRED:  Management of Small-Scale Industries -J.BMS@VES SSI in New Millennium 22nd www.wikipedia.Mascarenhas 31 .Romeo S. 2009 BIBLIOGRAPHY SEARCH ENGINES:    Saboo  Management of Small-Scale Industries .