BUSINESS ENVIRONMENT

SSI
• The President under Notification dated 9th May 2007 has
amended the Government of India (Allocation of
Business) Rules, 1961. Pursuant to this amendment,
Ministry of Agro and Rural Industries (Krishi Evam Gramin
Udyog Mantralaya) and Ministry of Small Scale Industries
(Laghu Udyog Mantralaya) have been merged into  a
single Ministry, namely, “MINISTRY OF MICRO, SMALL
AND MEDIUM ENTERPRISES (SUKSHMA LAGHU AUR
MADHYAM UDYAM MANTRALAYA)” 
Ministry of Micro, Small and Medium Enterprises, Udyog
Bhavan, New Delhi - 110011 Name

Sh Dinsha J Patel
Minister of State (Independent Charge) Micro, Small and Medium
Enterprises.
Scheme of Surveys, Studies and Policy Research Objectives
The objective of the “Scheme of Surveys, Studies and Policy
Research”:
To regularly/periodically collect, from primary, secondary and
other sources, relevant and reliable data on various aspects and
features of micro, small and medium enterprises (MSME)
engaged in manufacturing and services (whether in the
category of tiny/small scale industries, khadi, village industries
or coir) as a composite group or specific segments thereof.
“SCHEME FOR ASSISTANCE TO TRAINING INSTITUTIONS”

In order to ensure that young entrepreneurs are encouraged and

suitably equipped to go into new ventures, the Government
has been providing assistance for establishment of Training
Institutions/ Entrepreneurship Development Institutes (EDIs)
for imparting entrepreneurship and skill development training.
Government makes consistent efforts to accelerate and
promote entrepreneurship by providing support for
strengthening of training infrastructure as well as programme
support.
MoMSME has set up three National level Entrepreneurship
Development Institutes namely National Institute for Micro,
Small and Medium Enterprises (NIMSME), Hyderabad;
National Institute for Entrepreneurship and Small Business
Development (NIESBUD), Noida and Indian Institute of
Entrepreneurship (IIE), Guwahati to undertake the task of
entrepreneurship and skill development on a regular basis.

MoMSME has also been supporting the efforts of State

Governments/ Union Territories, Industry Associations,
Financial Institutions, Technical/ Management Institutions,
other Non-Governmental Organisations (NGOs), etc. for
establishment of new training institutions as well as
strengthening of the infrastructure of existing training
institutions.
The Scheme envisages financial assistance for establishment of
new institutions (EDIs), strengthening the infrastructure of the
existing EDIs and for supporting entrepreneurship and skill
development activities. The main objectives of the scheme are:
a. development of new micro and small enterprises,
b. enlarging the entrepreneurial base and encouraging self-
employment in rural as well as urban areas, by providing
training to first generation entrepreneurs and
c. assisting them in setting up of enterprises.
The assistance shall be provided to these training institutions in
the form of capital grant for creation/strengthening of
infrastructure and programme support for conducting
entrepreneurship development and skill development
programmes.
Scheme of Fund for Regeneration of Traditional Industries
(SFURTI)
Definition of Traditional Industry and Traditional Industry
Clusters
(i) Broadly, traditional industry means “an activity which
produces marketable products, using locally available raw
material and skills and indigenous technology”.
(ii) Traditional industry cluster, in the context of this Scheme,
refers to a geographical concentration of around 500
beneficiary families of artisans/micro enterprises, suppliers
of raw materials, traders, service providers, etc., located
within one or two revenue sub-divisions in one or more
contiguous District(s).
 Objectives of the Scheme
The objectives of the Scheme are:
(i) to develop clusters of traditional industries in various parts of the
country over a period of five years commencing 2005-06;
(ii) to make traditional industries more competitive with more
market-driven, productive, profitable and sustained employment
for traditional industry artisans and rural entrepreneurs;
(iii) to strengthen the local governance systems of industry clusters,
with the active participation of the local stakeholders, so that they
are enabled to undertake development initiatives by themselves;
and
(iv) to build up innovated and traditional skills, improved
technologies, advanced processes, market intelligence and new
models of public-private partnerships, so as to gradually replicate
similar models of cluster-based regenerated traditional industries.
 Target Sectors and Potential Beneficiaries
The target sectors and potential beneficiaries will include:
(i) Artisans, workers, machinery makers, raw material
providers, entrepreneurs, institutional and private business
development service (BDS) providers engaged in 2
traditional industries and working in selected clusters of khadi,
coir and village industries, including leather and pottery.
(ii) Artisan guilds, cooperatives, consortiums, networks of
enterprises, self-help groups (SHGs), enterprise associations,
etc.
(iii) Implementing agencies, field functionaries of Government
institutions/organisations and policy makers, directly
engaged in traditional industries.
Criteria for Selection of Clusters
The selection of clusters will be based on their geographical
concentration which should be around 500 beneficiary
families of artisans/micro enterprises, suppliers of raw
materials, traders, service providers, etc., located within one
or two revenue sub-divisions in a District (or in contiguous
Districts).
The clusters would be from khadi, coir and village industries,
including leather and pottery. The potential for growth in
production and generation of employment opportunities will
also be considered in selecting clusters under SFURTI. The
geographical distribution of the clusters throughout the
country, with at least 10 per cent located in the North
Eastern region, will also be kept in view while selecting
clusters.
Intervention/Support Measures
These would consist of the following:
(i) Replacement of charkhas and looms in khadi sector.
(ii) Setting up of Common Facility Centres (CFCs).
(iii) Development of new products, new designs for various khadi
and village industry products, new/improved packaging, etc.
(iv) Market promotion activities.
(v) Capacity building activities, such as exposure visits to other
clusters and institutions, need-based training, support for
establishment of cluster level networks (industry associations)
and other need based support.
(vi) Other activities identified by the Implementing Agency (IA) as
necessary for the development of the cluster as part
Rajiv Gandhi Udyami Mitra Yojana (RGUMY)
to provide handholding support and assistance to the potential first
generation entrepreneurs, who have already successfully
completed EDP/SDP/ESDP or vocational training from ITIs,
through the selected lead agencies i.e. 'Udyami Mitras', in the
establishment and management of the new enterprise, in dealing
with various procedural and legal hurdles and in completion of
various formalities required for setting up and running of the
enterprise.
Under RGUMY, financial assistance would be provided to the selected lead
agencies i.e. Udyami Mitras for rendering assistance and handholding
support to the potential first generation entrepreneurs. Following
agencies/ organizations can be appointed as the lead agency i.e. Udyami
Mitra:
i. Existing national level Entrepreneurship Development Institutions (EDIs)
ii. Micro, Small and Medium Enterprises Development Institutes (MSMEDIs)/
Branch MSMEDIs.
iii. Central/ State Government public sector enterprises (PSEs) involved in
promotion and development of MSEs e.g. National Small Industries
Corporation (NSIC) and State Industrial Development Corporations etc.
iv. Selected State level EDIs and Entrepreneurship Development Centers
(EDCs) in public or private sectors;
v. Khadi and Village Industries Commission (KVIC)
vi. Special Purpose Vehicles (SPVs) and Non-Government Organisations
(NGOs) set up for cluster development and involved in entrepreneurship
development; vii. Capable associations of MSEs/SSIs;
Role and Responsibilities of Udyami Mitras
(i) Networking, coordinating and follow up with various
Government departments/ agencies/ organizations and
regulatory agencies on the one hand and with support agencies
like Banks/financial institutions, District Industries Centers (DICs),
technology providers, infrastructure providers on the other hand,
to help the first generation entrepreneurs in setting up their
enterprise. Udyami Mitras are expected to help the first
generation entrepreneurs in:
a) Identification of suitable project/product/enterprise and
preparation of bankable project report for the same;
b) Creation of the proprietorship firm/ partnership firm/
Company/ Society/ Self Help Group (SHG) etc;
c) Filing of Memorandum (as prescribed under MSMED Act
2006);
Role and Responsibilities of Udyami Mitras cont…..
d) Accessing bank loans, admissible capital subsidy/ assistance
under various schemes of the Central /State Government and
other agencies/organizations/financial institutions/ Banks etc. by
networking with respective agencies
e) Assistance and support in establishment of work shed/office;
f) Sanction of Power load/connection;
g) Selection of appropriate technology and installation of plant
and machinery/office equipment etc;
h) obtaining various registrations/ licenses/ clearances / No
Objection Certificates (NOCs) etc. from the concerned regulatory
agencies/ Government departments/ local bodies/ Municipal
authorities etc.;
Role and Responsibilities of Udyami Mitras cont…..
i) Allotment of Income Tax Permanent Account Number (PAN)
and Service Tax/ Sales Tax/ VAT registration etc;
j) Sanction of working capital loan from the banks;
k) Arranging tie up with raw material suppliers;
l) Preparation and implementation of marketing strategy for the
product/ service and market development; and
m) Establishing linkage with a mentor for providing guidance in
future
n) Creation of web page and email identity;
Empanelment of Udyami Mitras
i) The organizations of Ministry of MSME engaged in the task of
entrepreneurship development i.e. the three national-level EDIs,
(i.e. NIESBUD Noida, IIE Guwahati and NIMSME Hyderabad)
MSMEDIs/ Branch MSMEDIs, KVIC and NSIC (hereinafter referred
as Category-I Udyami Mitras) are deemed to have been
empanelled as Udyami Mitras under the scheme.
ii) For empanelment as Udyami Mitra, the Central/State
Government public sector enterprises (PSEs) involved in
promotion and development of MSEs as well as state level EDIs
(hereinafter referred as Category-II Udyami Mitras),
Universities/Institutes etc. are required to submit application in
prescribed format to the Ministry of MSME through the
Director/ Commissioner of Industries of the State/UT
concerned. http://msme.gov.in/RGUMY_Background_English.pdf
MARKETING SUPPORT TO MSMEs
Under the Scheme, it is proposed to provide marketing
support to Micro, Small & Medium Enterprises through
National Small Industries Corporation (NSIC) and
enhance competitiveness and marketability of their
products, through following activities:
i) Organizing International Technology Exhibitions in Foreign
Countries by NSIC and participation in International
Exhibitions/Trade Fairs. Built up space would be provided by the
implementing agency i.e. NSIC, to MSMEs in various domestic
exhibitions at subsidised rates to enable them to exhibit their
products and services.
Organizing Domestic Exhibitions and Participation in
Exhibitions/ Trade Fairs in India
– Built up space would be provided by the implementing agency
i.e. NSIC, to MSMEs in various domestic exhibitions at
subsidised rates to enable them to exhibit their products and
services. The rates of subsidy available on space charges
would be as under:
Scale of assistance
General Category
Micro Enterprises : 75%
Small Enterprises : 60%
Medium Enterprises: 25%
Enterprises belonging to NE Region/ Women / SC/ST category
Micro Enterprises : 95%
Small Enterprises : 85%
Medium Enterprises: 50%
Organizing Domestic Exhibitions and Participation in
Exhibitions/ Trade Fairs in India
"Techmart" exhibition by NSIC
NSIC has been organising "Techmart" exhibition every year during India
International Trade Fair (IITF) in the month of November. This is an
international exhibition showcasing the best MSME products,
technologies and services of India. No subsidy would be available to
General Category entrepreneurs participating in this exhibition. Upto
30% of the total area may be allocated for the entrepreneurs
belonging to the Special Category i.e. Entrepreneurs belonging to NE
Region/ Women / SC/ST category, keeping in mind the instructions
and guidelines issued in this regard from time to time. The rates of
subsidy available on space charges for the Special category would be
as under:-
Micro Enterprises : 95% Small Enterprises : 85% Medium Enterprises:
50%
MARKETING SUPPORT TO MSMEs cont….
• Support for Co-sponsoring of Exhibitions organized by other
organisations/ industry associations/agencies
• Participation in International Exhibitions/Trade Fairs held in
Foreign Countries
• Buyer-Seller Meets
CREDIT RATING SCHEME for SSIs
Need of a Performance and Credit Rating Mechanism for SSIs was highlighted
in Union Budget’04-05. A scheme for SSIs has been formulated in
consultation with Indian Banks’ Association(IBA) and Rating Agencies. NSIC
has been appointed the nodal agency for implementation of this scheme
through empanelled agencies..
Benefits of Performance and Credit Rating
• An independent, trusted third party opinion on capabilities and credit-
worthiness of SSIs
• Availability of credit at attractive interest
• Recognition in global trade
• Prompt sanctions of Credit from Banks and Financial Institutions
• Subsidized rating fee structure for SSIs
• Facilitate vendors/buyers in capability and capacity assessment of SSIs
• Enable SSIs to ascertain the strengths and weaknesses of their existing
operations and take corrective measures.
CREDIT RATING SCHEME for SSIs
Benifits to Banks and Financial Institutions
• Availability of an independent evaluation of the strength and
weaknesses of an SSI unit seeking credit and thereby enabling
banks and financial institutions manage their credit risk
Salient Features
• A combination of credit and performance factors including
operations, finance, business and management risk
• Uniform Rating Scale for all empanelled rating agencies.
• SSIs have the liberty to choose among the empanelled Rating
Agencies.
• Turn-Over based Fee structure
• Partial Reimbursement of Rating Fee through NSIC
CREDIT RATING SCHEME for SSIs
Benifits to Banks and Financial Institutions
• Availability of an independent evaluation of the strength and
weaknesses of an SSI unit seeking credit and thereby enabling
banks and financial institutions manage their credit risk
Salient Features
• A combination of credit and performance factors including
operations, finance, business and management risk
• Uniform Rating Scale for all empanelled rating agencies.
• SSIs have the liberty to choose among the empanelled Rating
Agencies.
• Turn-Over based Fee structure
• Partial Reimbursement of Rating Fee through NSIC
PRIME MINISTER’S EMPLOYMENT GENERATION PROGRAMME (PMEGP)
Objectives
(i) To generate employment opportunities in rural as well as urban
areas of the country through setting up of new self-employment
ventures/projects/micro enterprises.
(ii) To bring together widely dispersed traditional artisans/ rural
and urban unemployed youth and give them self-employment
opportunities to the extent possible, at their place.
(iii) To provide continuous and sustainable employment to a large
segment of traditional and prospective artisans and rural and
urban unemployed youth in the country, so as to help arrest
migration of rural youth to urban areas.
(iv) To increase the wage earning capacity of artisans and contribute
to increase in the growth rate of rural and urban employment. This scheme is
operated by the Khadi and Village Industries Commission (KVIC)
PRIME MINISTER’S EMPLOYMENT GENERATION PROGRAMME (PMEGP)
The Khadi and Village Industries Commission (KVIC) is a statutory body
established by an Act of Parliament (No. 61 of 1956, as amended by act no.
12 of 1987 and Act No.10 of 2006. In April 1957, it took over the work of
former All India Khadi and Village Industries Board.

OBJECTIVES: 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 wider objective of creating self-reliance amongst the poor and building
up of a strong rural community spirit.
Scheme of  Khadi Karigar Janashree Bima Yojana for Khadi Artisans (JBY)
  (Implemented through KVIC)
• A Group Insurance Scheme for khadi workers, namely, “Khadi Karigar
Janashree Bima Yojana” was launched during 10 Five Year Plan through
KVIC on 15th August 2003 By the Government of India (in the erstwhile
Ministry of Small Scale Industries and Agro & Rural Industries), with LIC of
India as insurers. The Scheme covers spinners, weavers, pre-spinning
artisans and post-weaving artisans engaged in the khadi sector. This
scheme, like other Group Insurance Schemes, does not have any terminal
benefit for the beneficiaries as this is not a Life Insurance Scheme. The
scheme provides only risk cover for death/disability and the worker is not
entitled to get any returns on the premium paid by him or paid on his
behalf by KVIC/khadi institutions, if he survives the entire period of
insurance.
Scheme of Interest Subsidy Eligibility Certification (ISEC)
(Implemented through KVIC)
• The Interest Subsidy Eligibility Certificate (ISEC) Scheme is the major source
of funding for the khadi programme. It was introduced in May 1977 to
mobilise funds from banking institutions to fill the gap in the actual fund
requirement and its availability from budgetary sources. Under the ISEC
Scheme, credit at the concessional rate of interest of 4 per cent per annum
for capital expenditure as well as working capital is given as per the
requirement of the institutions. The difference between the actual lending
rate and 4 per cent is paid by the Central Government through KVIC to the
lending bank and funds for this purpose are provided under the khadi grant
head to KVIC.