Davanagere University

Department of Commerce, Shivagangotri, Davangere.

EL 3.4- Promotion and Management of Small Business Enterprises.

Present by: Mr. A.P. SUBRAMANYAN
M.A.F., (M Phil).,

Faculty Member and Research Scholar, Department of commerce, Davanagere University.
2/14/2013 Mr. SUBRAMANYA A.P. 1

2 . 4.3 Incentives under the licensing regulations. 2/14/2013 Mr.4 Incentives for development of backward areas. SUBRAMANYA A.P.Module 4: Incentives and Subsidies 4. 4.2 Schemes of incentives in operation.1 Policies initiatives for entrepreneurial growth. 4.

4. 2. Promoting coordinated development of large and small industries by2/14/2013 Mr. Changes in the attitudes of both Central and State Governments towards private enterprises in general and promotion of small scale industries in particular. SUBRAMANYA A.P. 3. 1. 3 . Liberalization of Industrial Licensing Policy and announcement of special incentives for NRI investments and exporting industrial units. 4.1 Policies initiatives for entrepreneurial growth. Identification of backward areas and announcement of a number of concessions and incentives for the entrepreneurs to start their ventures in such areas.

Continues….  Reserving further expansion either exclusively or partly for the small sector in certain industries.P.  Encouraging the participation of small industries in the export drive. 4 .  Developing small industries more vigorously as ancillaries to large industries. 2/14/2013 Mr. SUBRAMANYA A.

.P. 5 lakhs from Rs. 60 lakhs to SSI units. SUBRAMANYA A.Small Scale Industrial Policy  Separate small scale industries policy in August 1991.Irrespective of their location would be recognized as small scale industries. . 2 lakhs. 75 lakhs for both ancillary and export oriented units and Rs. 5 .The Small Industries Development Organization (SIDO) has been recognized as the nodal agency to support the small scale industries export promotion 2/14/2013 Mr. .For small scale industries the investment limit (investment in plant and machinery) is raised to Rs.The investment limit for the tiny sector was raised to Rs. .

2/14/2013 Mr.An export development centre would be set up in SIDO to serve the small scale units through its network of field officers to further augment export activities of the sector.The National Small Industries Corporation (NSIC) would concentrated on marketing of mass consumption items under common brand name and organization links between NSIC and SSIDCs would be established.Continues….A technology development cell will be set up in SIDO which could provide technology inputs to improve quality and competitiveness of production of small scale sector. .P. . SUBRAMANYA A. . 6 .

. .Continues…. 20 lakhs with working capital margin up to Rs.The single window loan scheme has also been enlarged to cover projects up to Rs. . 10 lakhs. SUBRAMANYA A.The scope of the national equity fund scheme will be widened to cover projects up to Rs. 10 lakhs for Equity Support (up to 15%). 2/14/2013 Mr. 7 . public undertakings and NRIs or foreign investment.Small Scale Units can have equity support to the extent of 24% of the total investment from the medium and large scale industries.P.

P.Meaning of Incentives and Subsidies “incentive” means concessions. subsidies and bounties. SUBRAMANYA A. “subsidies” denotes a single lump sum which is given by a government to an industry. 8 . 2/14/2013 Mr.

• By providing subsidies and incentives the Government can Bring industries development uniformly in all regions 2/14/2013 Mr. • They encourage the entrepreneurs to start industries in backward areas. SUBRAMANYA A.Advantages and Disadvantages Advantages: • They act as a motivational force which makes the prospective entrepreneurs to enter into manufacturing line.P. 9 .

10 .P.The antagonists argue that the incentive schemes may deteriorate into useless tax-give away schemes if they are not implemented properly. Disadvantages: 1. 2/14/2013 Mr.Continues….  Develop more new entrepreneurs which leads to entrepreneurial development  Increase the ability of entrepreneurs to face competition successfully  Reduce the overall problems of small scale entrepreneurs. SUBRAMANYA A.

2/14/2013 Mr. Some of the units are located in backward areas with a view to mainly avail the subsidies and concessions. 2.Continues…. 3.P. Empirical studies reveals that the incentive schemes are being highly misused rather than properly used. 11 . SUBRAMANYA A. The real objective of providing incentives is hardly achieved. Favoritism and corruption have crept into the administrative machinery which has caused much financial strain on the exchequer.

2 Schemes of incentives in operation.  Export/Import subsidies and bounties  Interest free loans  Subsidy for R&D works  Capital investment subsidy  Transport subsidy  Interest subsidy  Subsidy for power generation  Exemption from property tax  Subsidies to artisans and traditional industries including handlooms 2/14/2013 Mr. SUBRAMANYA A. 12 .P.4.

Continues…. 13 .  Incentives to non-resident Indians  Special incentives to women entrepreneurs  Exemption from income tax  Interest free sales tax loans  Sales tax exemptions  Subsidy for buying test equipment  Subsidy for industrial housing  Land and building at concessional rates  Price preference to SSI units  Subsidy/assistance for technical consultancy  Exemption from stamp duty 2/14/2013 Mr. SUBRAMANYA A.P.

SUBRAMANYA A. Concessional water Provisions for seed capital Allotment of developed/constructed sheds Allotment of controlled or subsidized raw material Subsidizing the cost of market studies/feasibility studies or reports 2/14/2013 Mr.Continues….P. 14 .

Concessional finance 2. Central investment subsidy 3.P. SUBRAMANYA A. Tax holiday to new industrial undertakings set up in backward states and union territory Tax holiday for the power sector 2/14/2013 Mr.4 Incentives for development of backward areas. 15 .4. 1.

16 . SUBRAMANYA A.P.Thank you 2/14/2013 Mr.

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