Entrepreneurship Development

Unit – 5 (A)

SUPPORT ORGANIZATIONS FOR AN ENTREPRENEUR AND THEIR ROLES

Institutional support system is necessary at three stages enterprise development:

 Inception or Promotion  Day-to-day management  Expansion and Diversification

Three dimensions of institutional support system are:  Central Government  State

Government  Non-government Support System

CENTRAL GOVERNMENT INSTITUTES

1.SMALL SCALE INDUSTRIES BOARD

Established in 1954 to provide effective coordination and inter-institutional linkages for
the benefit of small-scale sector. It consists of the following members:  Union Industry
Minister  State Industry Minister  Selected members of Parliament  Secretaries of
department concerned  Financial Institutions  Eminent experts in the field

2.NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT (NABARD)

Services offered by NABARD:  Attracting youth to rural non-farm sector.  District
Industries Rural Project (DRIP).  Rural Entrepreneurship Development Programme
(REDP).

3.SMALL INDUSTRIES DEVELOPMENT ORGANISATION (SIDO) Constituted in 1954

to develop support services for promotion of SSS. Main objectives of SIDO are:  To
formulate policy for promotion of SSI  Provide coordination of policies of state
government  To collect and disseminate information  To offer consultancy services 
Provision of testing services

4.NATIONAL SMALL INDUSTRIES CORPORATION (NSIC) Set up by government of

India in 1955. Main functions are:  Supply of machinery and equipment.  Provision of
financial assistance.  Assistance for arrangement of raw materials.  Establishment of
technology transfer centres.  Arrangement of marketing assistance.  Priority in
government purchase programme
5.SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA (SIDBI) Subsidiary of IDBI,
setup as an act of parliament. Provides assistance for:  Setting up of new SSI units,
small hotels, hospitals and so on  Technological upgradation and modernization,
expansion and diversification.  Quality upgradation.  Discounting of bills of
manufacturer-seller in

STATE GOVERNMENT INSTITUTES

1.STATE FINANCIAL CORPORATIONS (SFC) Objectives:  Provide term loans for the
acquisition of land, building, plant and machinery.  Promotion of self-employment. 
Encourage women entrepreneurs.  Expansion of industry.  Provide seed capital
assistance.

2.STATE SMALL INDUSTRIES DEVELOPMENT CORPORATION (SSIDC) Important

functions performed are:  Procurement and distribution of raw materials.  Supply of
machine on hire-purchase basis.  Construction of industrial estates.  Providing
assistance for marketing of products of SSI.  Eg:- KARNATAKA STATE SMALL
INDUSTRIES DEVELOPMENT CORPORATION LTD.

3.TECHNICAL CONSULTANCY ORGANISATON Services of TCOs include: 

Preparation of project profiles.  Undertaking industrial potential surveys.  Identification
of potential entrepreneurs.  Undertaking market research.  Project supervision and
rendering technical and administrative assistance.  Conducting EDPs.

4.KHADI AND VILLAGE INDUSTRIES COMMISION (KVIC) It is engaged in the

development of khadi and village industries in rural areas. Main objectives of KVIC are: 
Providing employment in rural areas.  Skill improvement.  Rural industrialization. 
Transfer of technology.

NON-GOVERNMENT INSTITUTES

1.INDIAN COUNCIL OF SMALL INDUSTRIES (ICSI) It was established in 1979. Main

functions are:  Information dissemination.  Entrepreneurship development. 
Consultancy and managerial support.  Training and research.

2.LAGHU UDYOG BHARTI (LUB) It was founded in 1995. It is responsible to undertake:

 Entrepreneurial training.  Technology upgradation.  Marketing services.
NEED AND IMPORTANCE OF SUPPORT SYSTEM:

Many entrepreneurs and especially those in small-scale sectors have technology related
knowledge to take care of production and quality aspects. They require lot of guidance
and support in the beginning stage and production stage of the industry in various project
and business-related activities. The important areas they need guidance are project
report preparation, location and layout of plant, selection of men and machinery,
competition level, various marketing aspects, various types of finance facilities and
Government assistance and subsidies. The support functions will extend necessary
guidance and provide inputs and help industries in moulding during initial stages of an
enterprise. Any industry will have teething problems and uncertain situations in the initial
phases of the organization. With the backing of the support function organization can
decide to get over difficult situations. The most important aspects for a new businessman
are finance and marketing related subjects. An entrepreneur should be able to consider
the advantages of various Government subsidies and assistance given for backward
areas and the disadvantages of marketing activities and transport cost and problems of
raw-materials and other facilities availability. Many industries started in backward areas
are suffering for various reasons and therefore it is essential to give a serious thinking
about location of an industry. It is always advisable to start as industry in a location where
adequate infrastructure facilities, availability of raw-material, market and skilled labour
are available. In such semi- developed or developed industrial areas other supports of
banks and civic amenities will be available. In this chapter various organizations which
are started specifically to play a supportive role to small industries are covered in belief
the support function required for small industries is in finance areas. For this SIDBI which
was started mainly for financial assistance to SSI is very important. Other organizations
like SIDO, SSIB, SISI and SSIDC involve themselves in other types of assistance
required for SSI units. There are specialized institutions like Tool Room Training Centres,
Entrepreneurship Development Centres and Technical Consultancy Organizations which
help SSI in various activities related to their development Central and State Governments
have reviewed the support system to small enterprises from time to time and provided
infrastructure to this sector. The commercial banks have extended good help in
developing SSI sector in the country. The Banking Commission in its report considered
existences of institutions who offered services like promotion of industrial and service
projects, investment management and financial advisory services within the country and
for exports. The commission pointed out that there is necessity of institutions that offer
services to small entrepreneurs in project formulation, preparation of project reports,
techno- economic studies and giving advice on technology, management, quality and
finance issues. In last two decades the commercial banks on their own or with the help of
other agencies have taken up the job of advising small, prospective entrepreneurs about
project report preparation, evaluation, planning and executing of projects. Most of public
sector and private sector banks have opened merchant banking divisions for this
purpose. Few of the banks term the department as entrepreneurial clinic cum guidance
centres. Central and State Government institutions help in development and initial hand
holding functions for the SSI entrepreneurs. Up-gradation and use of these specialized
institutions to changing needs is equally important.