-
8/9/2019 Chapter 6_Small Scale Industrial Undertakings
1/31
Management & Entrepreneurship
Small Scale Industrial Undertakings
Defination
The following requirements are to be complied with by an industrial undertaking to be
graded as Small Scale Industrial undertaking w.e.f. 21.12.1999
An industrial undertaking in which the investment in fixed assets in plant and machinery
whether held on ownership terms on lease or on hire purchase does not exceed Rs 10
million.
(Subject to the condition that the unit is not owned, controlled or subsidiary of any other
industrial undertaking)
Explanation: For the purpose of this note: -
"Owned" shall have the meaning as derived from the definition of the expression "owner"specified in clause (1) of section 3 of the said Act;
"Subsidiary" shall have the same meaning as in clause (47) of section 2, read with section
4, of the Companies Act, 1956 (1 of 1956);
The expression "controlled by any other industrial undertaking" means as under: -
i. Where two or more industrial undertakings are set up by the same person as a proprietor,
each of such industrial undertakings shall be considered to be controlled by the otherindustrial undertaking or undertakings,
ii. Where two or more industrial undertakings are set up as partnership firms under the
Indian Partnership Act, 1932 (1 of 1932) and one or more partners are common partner or
partners in such firms, each such undertaking shall be considered to be controlled byother undertaking or undertakings,
iii. Where industrial undertakings are set up by companies under the Companies Act, 1956 (1of 1956), an industrial undertaking shall be considered to be controlled by other industrial
undertaking if: -
a. The equity holding by other industrial undertaking in it exceeds twenty four percent of its
total equity; or
b. The management control of an undertaking is passed on to the other industrialundertaking by way of the Managing Director of the first mentioned undertaking being
also the Managing Director or Director in the other industrial undertaking or the majority
of Directors on the Board of the first mentioned undertaking being the equity holders inthe other industrial undertaking in terms of the provisions of the following items (a) and
(b) of sub-clause (iv);
R.V.College of Engineering, Bangalore 1
-
8/9/2019 Chapter 6_Small Scale Industrial Undertakings
2/31
Management & Entrepreneurship
iv The extent of equity participation by other industrial undertaking or undertakings in the
undertaking as per sub-clause (iii) above shall be worked out as follows: -
a. The equity participation by other industrial undertaking shall include both foreign anddomestic equity;
b. Equity participation by other industrial undertaking shall mean total equity held in anindustrial undertaking by other industrial undertaking or undertakings, whether small
scale or otherwise, put together as well as the equity held by persons who are Directors in
any other industrial undertaking or undertakings even if the person concerned is aDirector in other Industrial Undertaking or Undertakings;
c. Equity held by a person, having special technical qualification and experience, appointedas a Director in a small scale industrial undertaking, to the extent of qualification shares,
if so provided in the Articles of Association, shall not be counted in computing the equity
held by other industrial undertaking or undertakings even if the person concerned is aDirector in other industrial undertakings or undertakings;
V Where an industrial undertaking is a subsidiary of, or is owned or controlled by, any other
industrial undertaking or undertakings in terms of sub-clauses (i); (ii); or (iii) and if the total
investment in fixed assets in plant and machinery of the first mentioned industrial undertakingand the other industrial undertaking or undertakings clubbed together exceeds the limit of
investment specified in paragraphs (1) or (2) of this notification as the case may be, none of
these industrial undertakings shall be considered to be a small scale or ancillary industrialundertaking.
Note 2-
(a) In calculating the value of plant and machinery for the purposes of paragraphs (1) and (2)of this notification, the original price thereof, irrespective of whether the plant and machinery
are new or second hand, shall be taken into account.
(b) In calculating the value of plant and machinery, the following shall be excluded, namely: -
i. The cost of equipments such as tools, jigs, dies, moulds and spare parts for maintenanceand the cost of consumable stores;
ii. The cost of installation of plant and machinery;
iii. The cost of research and development equipment and pollution control equipment;
iv. The cost of generation sets and extra transformer installed by the undertaking as per the
regulations of the State Electricity Board;
R.V.College of Engineering, Bangalore 2
-
8/9/2019 Chapter 6_Small Scale Industrial Undertakings
3/31
Management & Entrepreneurship
v. The bank charges and service charges paid to the National Small Industries Corporation
or the State Small Industries Corporation;
vi. The cost involved in procurement or installation of cables, wiring, bus bars, electrical
control panels (not those mounted on individual machines), oil circuit breakers or
miniature circuit breakers which are necessarily to be used for providing electrical powerto the plant and machinery or for safety measures;
vii. The cost of gas producer plants;
viii. Transportation charges (excluding of sales tax and excise) for indigenous machinery from
the place of manufacturing to the site of the factory;
ix. Charges paid for technical know how for erection of plant and machinery;
x. Cost of such storage tanks which store raw materials, finished products only and are not
linked with the manufacturing process; and
xi. Cost of fire fighting equipments.
(c) In the case of imported machinery, the following shall be included in calculating the value,
namely: -
i. Import duty (excluding miscellaneous expenses as transportation from the port to the siteof the factory, demurrage paid at the port);
ii. The shipping charges;
iii. Customs clearance charges; and
iv. Sales tax.
Every industrial undertaking which has been issued a certificate of registration under section 10of the said Act or a license under sections 11, 11A and 13 of the said Act by the Central
Government and are covered by the provisions of paragraphs (1) and (2) above relating to the
ancillary or small scale industrial undertaking, may be registered, at the discretion of the owner,as such, within a period of one hundred and eighty days from the date of publication of this
notification in the Official Gazette.
R.V.College of Engineering, Bangalore 3
-
8/9/2019 Chapter 6_Small Scale Industrial Undertakings
4/31
Management & Entrepreneurship
Ancillary Industrial Undertakings
The following requirements are to be complied with by an industrial undertaking forbeing regarded as ancillary industrial undertaking: -
An industrial undertaking which is engaged or is proposed to be engaged in the manufacture or
production of parts, components, sub-assemblies, tooling or intermediates, or the rendering of
services and the undertaking supplies or renders or proposes to supply or render not less than 50per cent of its production or services, as the case may be, to one or more other industrial
undertakings and whose investment in fixed assets in plant and machinery whether held on
ownership terms or on lease or on hire-purchase, does not exceed Rs 10 million.
Tiny Enterprises
Investment limit in plant and machinery in respect of tiny enterprises is Rs 2.5 million
irrespective of location of the unit.
Women Entrepreneurs
A Small Scale Industrial Unit/ Industry related service or business enterprise, managed by one or
more women entrepreneurs in proprietary concerns, or in which she/ they individually or jointlyhave a share capital of not less than 51% as Partners/ Shareholders/ Directors of Private Limits
Company/ Members of Cooperative Society.
Investment LimitsThe definition of small-scale industries has undergone changes over the years in terms of
investment limits in the following manner: -
YEAR INVESTMENT LIMITS ADDITIONAL CONDITIONS
1950 Up to Rs 5 lacs in fixed assets Less than 50/100
persons withor without power
1960 Up to Rs 5 lacs in Plant & Machinery No condition
1966 Up to Rs 7.5 lacs in Plant & Machinery No condition
1975 Up to Rs 10 lacs in Plant & Machinery No condition
1980 Up to Rs 20 lacs in Plant & Machinery No condition
1985 Up to Rs 35 lacs in Plant & Machinery No condition
1991 Up to Rs 60 lacs in Plant & Machinery No condition
1997
(Dec)
Up to Rs 100 lacs in Plant & Machinery
R.V.College of Engineering, Bangalore 4
-
8/9/2019 Chapter 6_Small Scale Industrial Undertakings
5/31
Management & Entrepreneurship
Performance of Small Scale Industries
Employment Generation
SSI Sector in India creates largest employment opportunities for the Indian population , next
only to Agriculture. It has been estimated that a lakh rupees of investment in fixed assets in thesmall-scale sector generates employment for four persons.
According to the SSI Sector survey conducted by the Ministry and National Informatics Center
with the base year of 1987-88, the following interesting observations were made related to
employment in the small-scale sector.
Generation of Employment - Industry Group-wise
Food products industry has ranked first in generating employment, providing employment to4.82 lakh persons (13.1%).
The next two industry groups were Non-metallic mineral products with employment of 4.46 lakhpersons (12.2%) and Metal products with 3.73 lakh persons (10.2%).
In Chemicals & chemical products, Machinery parts and except Electrical parts, Wood products,
Basic Metal Industries, Paper products & printing, Hosiery & garments, Repair services andRubber & plastic products, the contribution ranged from 9% to 5%, the total contribution by
these eight industry groups being 49%.
In all other industries the contribution was less than 5%.
Per unit employment
Per unit employment was the highest (20) in units engaged in Beverages, tobacco & tobacco
products mainly due to the high employment potential of this industry particularly inMaharashtra, Andhra Pradesh, Rajasthan, Assam and Tamil Nadu.
Next came Cotton textile products (17), Non-metallic mineral products (14.1), Basic metal
industries (13.6) and Electrical machinery and parts (11.2.) The lowest figure of 2.4 was inRepair services line.
Per unit employment was the highest (10) in metropolitan areas and lowest (5) in rural areas.
However, in Chemicals & chemical products, Non-metallic mineral products and Basic metal
industries per unit employment was higher in rural areas as compared to metropolitanareas/urban areas.
In urban areas highest employment per unit was in Beverages, tobacco products (31 persons)
followed by Cotton textile products (18), Basic metal industries (13) and Non-metallic mineral products
R.V.College of Engineering, Bangalore 5
-
8/9/2019 Chapter 6_Small Scale Industrial Undertakings
6/31
Management & Entrepreneurship
Rural
Non-metallic products contributed 22.7% to employment generated in rural areas. FoodProductsaccounted for 21.1%, Wood Products and Chemicals and chemical products shared
between them 17.5%.
Urban
As for urban areas, Food Products and Metal Products almost equally shared 22.8% of
employment. Machinery and parts except electrical, Non-metallic mineral products, andChemicals & chemical products between them accounted for 26.2% of employment.
In metropolitan areas the leading industries were Metal products, Machinery and parts except
electrical and Paper products & printing (total share being 33.6%).
State-wise Employment Distribution
Tamil Nadu (14.5%) made the maximum contribution to employment.
This was followed by Maharashtra (9.7%), Uttar Pradesh (9.5%) and West Bengal (8.5%) thetotal share being 27.7%.
Gujarat (7.6%), Andhra Pradesh (7.5%), Karnataka (6.7%), and Punjab (5.6%) together
accounted for another 27.4%.
Per unit employment was high - 17, 16 and 14 respectively - in Nagaland, Sikkim and Dadra &
Nagar Haveli.
It was 12 in Maharashtra, Tripura and Delhi.
Madhya Pradesh had the figure of 2. In all other cases it was around the average of 6.
Production
The small-scale industries sector plays a vital role for the growth of the country. It contributes
40% of the gross manufacture to the Indian economy.It has been estimated that a lakh rupees of
investment in fixed assets in the small scale sector produces 4.62 lakhs worth of goods orservices with an approximate value addition of ten percentage points. The small-scale sector has
grown rapidly over the years. The growth rates during the various plan periods have been very
impressive. The number of small-scale units has increased from an estimated 8.74 lakhs units inthe year 1980-81 to an estimated 31.21 lakhs in the year 1999.
From the year 1990-91 this sector has exhibited a comparatively lower growth trend (thoughpositive), which continued during the next two years. However, this has to be viewed in the
background of the general recession in the economy. The transition period of the process of
economic reforms was also affected for some period by adverse factors such as foreign exchange
constraints, credit squeeze, demand recession, high interest rates, shortage of raw material etc.
R.V.College of Engineering, Bangalore 6
-
8/9/2019 Chapter 6_Small Scale Industrial Undertakings
7/31
Management & Entrepreneurship
When the performance of this sector is viewed against the growth in the manufacturing and the
industry sector as a whole, it instills confidence in the resilience of the small scale sector.
The estimates of growth for the year 1995-96 have shown an upswing. The growth of SSI sector
has surpassed overall industrial growth from 1991 onwards. The positive trend is likely tostrengthen in the coming years. This trend augurs a bright future for the small-scale industry.
Export contribution
SSI Sector plays a major role in India's present export performance. SSI Sector is contributing
45%-50% of the Indian Exports. Direct exports from the SSI Sector account for nearly 35% of
total exports. The number of small-scale units that undertake direct exports would be more than5000.
Besides direct exports, it is estimated that small-scale industrial units contribute around 15% toexports indirectly. This takes place through merchant exporters, trading houses and export
houses. 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.
It would surprise many to know that non-traditional products account for more than 95% of theSSI exports.
The export from SSI sector has been clocking excellent growth rates in this decade. It has beenmostly fuelled by the performance of garment, leather and gems and jewellery units from this
sector.The lucrative product groups where the SSI sector dominates in exports are sports goods,readymade garments, woolen garments and knitwear, plastic products, processed food and
leather products.
Opportunities
Small industry sector has performed exceedingly well and enabled our country to achieve a wide
measure of industrial growth and diversification.
By its less capital intensive and high labour absorption nature, SSI sector has made significantcontributions to employment generation and also to rural industrialization. This sector is ideallysuited to build on the strengths of our traditional skills and knowledge, by infusion of
technologies, capital and innovative marketing practices.
R.V.College of Engineering, Bangalore 7
-
8/9/2019 Chapter 6_Small Scale Industrial Undertakings
8/31
Management & Entrepreneurship
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 utilization 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
- Growth in Requirements for ancillary units due to the increase in number of
Greenfield units coming up in the large-scale sector. So this is the opportune time to set upprojects in the small-scale sector. It may be said that the outlook is positive, indeed promising,
given some safeguards. This expectation is based on an essential feature of the Indian industry
and the demand structures. The diversity in production systems and demand structures willensure long term co-existence of many layers of demand for consumer products / technologies /
processes. There will be flourishing and well grounded markets for the same product/process,
differentiated by quality, value added and sophistication. This characteristic of the Indianeconomy will allow complementary existence for various diverse types of units.
The promotional and protective policies of the Govt. have ensured the presence of this sector in
an astonishing range of products, particularly in consumer goods. However, the bug bear of thesector has been the inadequacies in capital, technology and marketing. The process of
liberalization will therefore, attract the infusion of just these things in the sector.
R.V.College of Engineering, Bangalore 8
-
8/9/2019 Chapter 6_Small Scale Industrial Undertakings
9/31
Management & Entrepreneurship
Economic Indicators
The Small Scale Industry today constitutes a very important segment of the Indian economy. 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 formof small-scale enterprises.
Small Scale Sector has emerged as a dynamic and vibrant sector of the economy.
Today, it accounts for nearly 35% of the gross value of output in the manufacturing sector andover 40% of the total exports from the country.
In terms of value added this sector accounts for about 40% of the value added in the
manufacturing sector.
The sector's contribution to employment is next only to agriculture in India. It is therefore anexcellent sector of economy for investment.
PROCEDURE FOR STARTING A SMALL SCALE INDUSTRY
For starting a Small Scale Industry (Other than Chemical, Chemical based industries and
highly polluting industries), entrepreneurs have to first apply to the Directorate of
Industries at Pondicherry. Branch Office at Karaikal, Sub Office at Mahe and Yanam,depending on the location of the unit for Provisional SSI Registration, in the form
prescribed by the Development Commissioner (SSI), New Delhi.
In case of Chemical and Chemical based industries, entrepreneurs have to first getclearance from the Committee for Chemical Industries through the Directorate of
Industries and then approach for provisional SSI registration after its clearance.
All the entrepreneurs irrespective of their size of investment may approach the 'Single
Window Committee' (Functioning in the District Industries Center) for getting the said
clearances expeditiously.
The District Industries Center will forward the complete set of applications received from
the entrepreneurs to the concerned Municipality/Commune Panchayat. In turn, the
Municipality/Commune Panchayat after getting clearances from the concernedDepartments/ Organizations will issue permission for establishment of the industrial
units. The Municipalities/Commune Panchayat will obtain the following clearances
depending upon the nature of the manufacturing activities: -
R.V.College of Engineering, Bangalore 9
-
8/9/2019 Chapter 6_Small Scale Industrial Undertakings
10/31
Management & Entrepreneurship
(a) NOC on pollution angle from the Department of Science, Technology and
Environment (Second working day of every month is earmarked for
environmental clearances meeting);
(b) Approval of Factory Building and Machinery lay out from the Inspectorate of
Factories;
(c) Site clearance from Town and Country Planning Department;
(d) Permission for land use conversion and ground water clearance from
Agricultural Department;
(e) Power feasibility Certificate from Electricity Department;
(f ) Building Plan approval from Pondicherry Planning Authority;
(g) Clearance from Health Department;(h) Clearance from Fire Service Department;
(i) Clearance from Revenue Department;
(j) Licence from Food and Drugs Administration;
(k) Licence from Civil Supplies Department.
In order to help the entrepreneurs to get the above clearances, procedures are being simplified.
Single Window Committee, under the Chairmanship of the Secretary to Government (Industries)is being given a new vigour with meaningful "Single Point Deliberation" with the concerned
decision making departments/authorities right in the presence of the promoters of the industries.
High degree of earnestness and transparency is being instilled into the process.
First working day of every month has been earmarked for this meeting.
After installing machinery, entrepreneurs have to get licences from the concerned
Municipality/Commune Panchayat.
Licence from Inspectorate of Factories and consent orders from the Department of Environment
for operation of the unit.
After commencement of regular production, the entrepreneurs have to apply for Permanent SSI
Registration to the Directorate of Industries.
R.V.College of Engineering, Bangalore 10
-
8/9/2019 Chapter 6_Small Scale Industrial Undertakings
11/31
Management & Entrepreneurship
IMPACT OF WTO:
Small Scale Industry
The WTO Agreements can be classified broadly in 3 components:
1. Those affecting QRs and the tarrification of productse.g. the GATT Agreements, Agreements
on Agriculture ATC.
2. Those, which deal with Intellectual Properly Rightse.g. the TRIPs Agreements.3. Those which deal with barriers to trade, standards, investment and subsidiese.g. SPS
Measures, TBT, TRIMS, ASCM.
Impact of WTO on SSI:
As a major part of our industry comprises Small and Medium Enterprises (SMEs), the impact ofWTO on the small-scale sector will not basically be very different from its impact on Indian
industry as a whole. As much as 35.19% of our total exports are the contribution of SSI. SSIaccounts for 52% of our non-traditional product exports and 10% of our traditional productexports. The positive factors are that the WTO regime allows the SSI sector to avail of MFN and
National Treatment for its exportable items the world over. These are unquantifiable benefits,
which India enjoys as a founder member of GATT and the WTO and to gain which benefits, at
least 30 countries (including China and Russia) are willing to make numerous concessions inreturn for accession to WTO. Tariff standstill on Electronic Commerce is one new area agreed to
through the Geneva Ministerial Conference in 1998, major beneficiaries of which would be the
small-scale sector, which is steadily gaining better market access through Internet. The impact ofthe removal of quantitative restrictions are mixed. It is true that till now the SSI the Reservation
Policy has largely protected through tariffs walls and sector. With the lowering of tariffs, there is
a great possibility that they would be subjected to foreign competition by way of cheap imports.These are many inherent weaknesses in the SSI
Sector, which can be listed as follow: Obsolete Technology
Un-competitive prices
Poor quality
Costly credit
Weak infrastructure backs up like power, roads, communication, etc.
Plethora of labour legislation.
Lack of cohesion among SSI units.
Ineffective Associations.
Lack of information
Lack of international exposure and sensitivity to the implications of the WTO
agreements.
Lack of standards conforming to international standards.
R.V.College of Engineering, Bangalore 11
-
8/9/2019 Chapter 6_Small Scale Industrial Undertakings
12/31
Management & Entrepreneurship
Impact of other WTO Agreements
The TRIPs Agreements would cover the entire gamut of goods and products. That sector whichhas essentially survived on the concept of reserve engineering, piracy, infringement of copy right
laws shall be most hard hit. These would include auto component parts, music cassettes; light
engineering goods, light machinery, chemicals, drugs and pharmaceuticals. The Sanitary andPhyto sanitary measurers would affect the products like, agro products, leather products,
chemicals, fertilizers, pesticide, weedicides, food products and marine products etc.
Attempts have been made thorough the Credit Guarantee Scheme and the TechnologyModernization Fund, the increase in excise limits, etc. In case of the removal of quantitative
restrictions, most sectors are likely to feel the impact in some form or the other. Out of these,
there may be a few sectors, which would have a greater impact because of the peculiar taste of
Indian Consumers. All those which are being manufactured, keeping in mind the Indianconsumer are likely to less affected while those which cater to universal demands are likely to
affect the units manufacturing such products. Examples of the products, which can be affected
are pencils, dry cells, stationery items, umbrellas, electronic components & Goods, leather
products, garments,watches etc. Those items, which may not be affected, would be certain food items like Papad,
Pickles, Masalas, Ghee, etc.The removal of QRs would imply that the raw material is available at cheaper rates, in turn,
reducing the cost of a product and thereby making it more competitive terms of pricing. In the
final, it is the consumer who is going to be benefited. There are certain areas in which largercorporations may not be able to supply goods. The small-scale sector can manufacture products
for niche markets. MNCs are increasingly outsourcing their components. Our SSI units have a
very good opportunity to ancillaries.
Means Available to protect Domestic Industry within the WTO Agreements:
Once the QRs are removed, there shall exist many ways to protect the domestic industry. Article6 of the WTO permits us to levy anti-dumping duty and countervailing duty (CVD). According
to Article 19 of GATT,
SMALL INDUSTRIES SERVICE INSTITUTES (SISIs)
There are 28 SISIs and 30 Branch SISIs set up in State capitals and other industrial cities all overthe country. The main activities of these institutions are as follows: -
Assistance/Consultancy to Prospective Entrepreneurs
Assistance/Consultancy rendered to existing units Preparation of State Industrial Profiles
Preparation/Updating of District Industrial Potential Surveys
Project Profiles
Entrepreneurship Development Programmes
Motivational Campaigns
Production Index
Management Development Programmes
R.V.College of Engineering, Bangalore 12
-
8/9/2019 Chapter 6_Small Scale Industrial Undertakings
13/31
Management & Entrepreneurship
Skill Development Programmes
Energy Conservation
Pollution Control
Quality Control & Upgradation
Export Promotion
Ancillary Development Common Facility Workshop/Lab.
Preparation of Directory of Specific Industry
Intensive Technical Assistance
Coordination with DICs
Linkage with State Govt. Functionaries
Market Surveys
Other Action Plan Activities assigned by Headquarters
SISIs and its Branches have common facility workshops in various trades. There are at present
42 such common facility workshops attached to SISIs/Branch SISIs.
Government Policies and Schemes
Export Promotion
Exim Policy for Small Scale Sectoro Export Promotion Programs & Measures
o National Small Industries Corporation
General
o Policies
Policy of Reservation Items Reserved for manufacturing in SSI
Licensing Policy
Trade Policy - Imports & Exports Price & Purchase Preference Policy Labour Policies
Rehabilitation of Sick Units
o Schemes
Single Window Scheme
Industrial Estates National Awards for Outstanding SSI Entrepreneurs National Awards for Quality Products in Small Scale Sector
R.V.College of Engineering, Bangalore 13
-
8/9/2019 Chapter 6_Small Scale Industrial Undertakings
14/31
Management & Entrepreneurship
Priority Sector
o Policies
Policy for Tiny Sector, Cottage & Village Industries, Handicrafts, Khadi& Handlooms
Development of Backward Areas
o
Schemes Prime Minister's Rozgar Yozna
Self Employment Scheme for Educated Unemployed Assistance to SC/ST Entrepreneurs
Funding & Finance
o Policies
Policy of Fiscal Support Policy of Priority Credit
Equity Participation OTC Exchange
o Schemes
Excise Exemption Scheme Tax Holiday
Venture Capital National Equity Fund Scheme Factoring Services Other SIDBI Schemes NSIC Schemes
Modernization & Training
o Policies
Quality Certification Schemes (ISO9000) Application for the Reimbursement of Certification Charges for acquiring
ISO-9000 Certification (or its equivalent)
Policy of Technology Upgradation (UPTECH) Technology Bureau for Small Enterprises
Policy for Development of Information Technology
o Schemes
Technology Development Fund Schemes
Testing Centers Integrated Infrastructure Development Training Infrastructure Growth Centers Technology Development & Modernisation Quality Certification Schemes
Modernisation of Small Scale Industries Ancillary Development Small Entrepreneur Management Assistants Scheme Entrepreneurship Development Programme
Management Training Programme Skill Development Programme
R.V.College of Engineering, Bangalore 14
-
8/9/2019 Chapter 6_Small Scale Industrial Undertakings
15/31
Management & Entrepreneurship
Energy & Environment
o Policies
Pollution & Control Measures Environmental Control
o Schemes
Pollution Control Schemes
Energy Conservation Schemes
Alternative Energy Use Schemes Ozone Depleting Substances Phase out
Incentive schemes by government to promote SSI
CENTRAL EXCISE
Excise exemption to small-scale units is mainly/chiefly granted under notification no.
8/99 - CE dated 28.2.99 as amended from time to time.
Key Feature of the Central Excise tariffs
Extension of Modvat to capital goods and petroleum products
Shift in the bulk of excise taxation from specific to ad valorem rates, which will assure muchgreater built-in buoyancy of revenues.
Application of Uniform rates for similar commodities to the extent possible. This will reduce
classification problems, scope for misuse and widespread litigation.
EXCISE DUTY & SMALL SCALE INDUSTRIES
Full exemption continues for many goods such as
Unbranded drugs
Domestic electric bulbs
Bicycles
Spices
Jams
Jellies
Sauces
Packaged Tea
Coffee
Ketchup
Butter
Cheese
Skimmed milk powder
Vegetable oils
Pickles
R.V.College of Engineering, Bangalore 15
-
8/9/2019 Chapter 6_Small Scale Industrial Undertakings
16/31
Management & Entrepreneurship
Canned fruits and dried vegetables
Certain soya products
Starches and
Preparations of meat and fish.
Other Major Features of Excise Tax Policy for SSI Sector
In the last budget the MODVAT adjustment allowed to manufacturing limits had been
capped at 95%. In the Union budget 1999-2000 MODVAT credit has been restored to
100%.
The structure has been rationalised. 11 major adv. Rates have been merged into following three
new rates.
(1) Merit rate: 8% (merging existing rates of 5%, 8%, 10% 12%).
(2) Central rate: 16% (merging existing rates of 13%, 15%, 18%).
(3) Demerit rate: 24% (merging existing rates of 25%, 30%, 32%, 40%).
As a measure for simplification of procedures and also to improve the liquidity position of
manufacturing units in the SSI Sector, the SSI units have been permitted to pay excise duty on amonthly basis.
Presently, small-scale units are allowed complete exemption from excise duty in respect ofclearance of specified goods up to a value of Rs.30 lakhs of the Central Excise Tariff.
Clearances of goods between Rs.50 lakhs and 100 lakhs attract central excise duty at the rate of5% adv. on clearances of goods between Rs.100 lakhs and above this attract normal duty.
The existing distinction between one chapter clearances and more than one chapter clearances
has been removed.
Tiny and small-sector units having sales turnover of less than Rs.50 lakh will not be required to
pay any excise duty. Also, no officer would visit any small-scale factory without the writtenauthorisation of the assistance collector indicating specifically the purpose of visit.
No registration with the Directorate of Industry or DCSSI would be necessary for availing of the
exemption under SSI scheme.
R.V.College of Engineering, Bangalore 16
-
8/9/2019 Chapter 6_Small Scale Industrial Undertakings
17/31
Management & Entrepreneurship
Export Promotion Programmes / Measures
Participation in International Fairs/Exhibitions
With a view to ensure that exporters from small-scale sector exhibit their products in the
International Exhibitions, required assistance & support is provided. Expenditure on account ofspace rent, handling and clearing charges, insurance and shipment charges etc. Are met by the
office of the Development Commissioner (Small Scale Industries) under one of the planschemes. During 1998-1999, O/o the DC(SSI) participated in the 7 International Trade Fairs/
Exhibitions namely 2nd SAARC Trade Fair, Colombo, Sri Lanka, Dakar International Trade
Fair, Dakar, Senegal, Quang Trung International Trade Fair, Ho-chi Minh City, Vietnam,International Hardware Fair, Cologne, Germany, Tehran International Trade Fair, Tehran (Iran),
Indian Trade Exhibition, Dhaka (Bangladesh). Participation in the named fairs/exhibitions
generated large number of Trade enquiries besides certain export orders. It also provided anopportunity to SSI units to display their products in the world market. During the current
financial year, it is proposed to participate in 8-9 International fairs/ exhibitions. The basic
objective behind this scheme is that SSI units which otherwise are not in a position to displaytheir products may participate in foreign exhibition/fairs so as to promote their exports. Enquiriesgenerated during such exhibitions abroad are disseminated to all SSI units through a network of
field offices of this organisation. This strategy has been found to be successful for exporters from
small-scale sector in identifying new foreign buyers/markets.
Packaging for Exports
Role of packaging for exports has gained much significance in view of trends in the world
markets. The need for better and scientific packaging for exports from small sector was
recognised long back. With a view to acquaint SSI Exporters of the latest Packaging standards,
techniques etc. training programmes on packaging for exports are organised in various parts ofthe country. These programmes are organised in association with Indian Institute of Packaging,
which has requisite expertise on the subject. During 1998-99, O/o the DC(SSI) organise 17 such
Training Programmes. It is proposed to conduct 25 such Training Programmes during the currentfinancial year. Basic objective of these programmes is to generate the much-needed
consciousness in the industry and to educate the entrepreneurs about the scientific techniques of
Packaging.
Technical & Managerial Consultancy Services
Technical & Managerial Consultancy Services to the SSI manufacturers/exporters is provided
through a network of field offices of this office so as to ensure higher level of production andgeneration of higher exports.
National Awards for Quality Products
With a view to encourage the small scale units for producing Quality goods, National Awards forQuality Products are given to the outstanding small scale units, who have made significant
contribution for improving quality of their products. The scheme is being operated since 1986.
R.V.College of Engineering, Bangalore 17
-
8/9/2019 Chapter 6_Small Scale Industrial Undertakings
18/31
Management & Entrepreneurship
Winners of National Awards get a Trophy, a Certificate and a Cash Prize of Rs.25, 000/-.
National Awards encourage Small Scale Industries units to produce quality goods, which further
enables them to enter into export market.
Marketing Development Assistance
Marketing Development Scheme (MDA) is being operated by Ministry of Commerce under
which MDA is given to exporters through FIEO and Export Promotion Councils/ Commodity
Boards to plan their marketing strategy for export growth. Guidelines in respect of single personsale-cum-study tours abroad and participation in fairs/ exhibition abroad have been revised with
effect from 1st May 1999. The revised scheme is as under:
(i) Eligible activities: -
- One-person sale-cum-study tour(s) abroad
- Participation in fairs/ exhibitions abroad.
(ii) Eligible exporters: -
Status Holder exporters namely Export Houses, Trading Houses etc. They would be eligible
to get MDA through FIEO.
Small Exporters who are not status holders but are eligible to get the Special Import License
(SIL) under Para 11.11 (a&b) of the Hand Book of Procedures 1997-2002. Such exporters
would be eligible to get MDA through their respective EPCs/Commodity Boards.
(iii) Quantum of Assistance: -
Sales-cum-Study Tour(s) abroad: -
MDA would be limited to 90% of the actual fare for SSI Exporters and 75% for other
than SSI exporters with upper ceiling of Rs. 60,000/- in all cases for travel in economyclass.
Participation in Fairs/Exhibitions abroad: -
MDA would be available on actual fair in economy class and space rent including
decoration, electricity, water etc. Only and would be limited to 90% of the total
expenditure on above mentioned items for SSI exporters and 75% for other than SSIexporters with combined upper ceiling of Rs.90, 000/- in all cases.
R.V.College of Engineering, Bangalore 18
-
8/9/2019 Chapter 6_Small Scale Industrial Undertakings
19/31
Management & Entrepreneurship
(iv) Number of activities permissible: -
MDA would be provided for a maximum of 3 activities in a financial year, combined
both for sale-cum-study tour abroad and participation in fairs/exhibitions abroad subjectto the condition that not more than two activities would be allowed in a financial year
either in sales-cum-study tour or in participation in fairs/exhibition abroad.
Second activity in a financial year of either of the activities indicated at sub-para (I) above
would be permissible only to those exporters who have achieved a minimum 5% exportgrowth in their global exports during the preceding financial year. One additional sale-cum-
study tour or participation fairs/ Exhibition in Latin American Countries (LAC) Region
would be permissible without any minimum export growth restriction in a financial year to
Status Holder's exporters only. NOTE: Ministry of Commerce, MDA Section may be approached for other
conditions/guidelines, payment terms, documents to be submitted etc. Their Circular No.
1(3)/99-MDA dated 28/4/1999 refers.
Awards to exporters
Ministry of Commerce gives awards to exporters for their outstanding export performance,
under the scheme of National Export Award for export performance. Earlier, a total of 17
Awards including 5 Awards for Small Scale Sector in the form of Trophy were given everyyear. However, from the year 1997-98 and onwards, the number of awards have been
increased to 20, out of which the number of Awards (Trophy) earmarked for small scale
sector have been increased from 5 to 8. Up to 8 awards will be given to the exporters in the
small scale and cottage sector subject to achievement of normative level of performance bythe concerned SSIs and cottage sector units. Out of 8 Awards. one will be given for Khadi &
Village Industry.
Promotional Schemes
To meet the challenges of international competition and to promote exports of SSI products,following promotional schemes are also being implemented.
(i) Technology Development and Modernization Fund Scheme
Small Industries Development Bank of India (SIDBI) has been implementing a scheme of
technology development and modernisation of SSI units with effect from April, 1995. Under
this scheme assistance is available for meeting the expenditure on purchase of capitalequipment, acquisition of technical know-how, upgradation of process technology and
products with thrust on quality improvement, improvement of packaging and cost of TQM
and acquisition of ISO-9000 series certification. The coverage of the scheme has beenenlarged from export-oriented units to non-exporting units also in September 1997. Under
this Scheme a sum of Rs. 152 crores has been sanctioned for 245 units by April 1999.
R.V.College of Engineering, Bangalore 19
-
8/9/2019 Chapter 6_Small Scale Industrial Undertakings
20/31
Management & Entrepreneurship
(ii) Quality Awareness Scheme
Small Industries Service Institutes organising Workshop on ISO-9000 certification and
awareness about quality.
(iii) Subsidy for obtaining ISO-9000 quality Certification
Under the scheme of promoting ISO-9000 certification SSIs are given financial support by
way of reimbursing 75% of their expenditure to obtain ISO-9000 certification subject to a
maximum of Rs.75, 000/-. Till 1998-99, number of units assisted is 381 and amount releasedis Rs. 207.5 lakhs. The scheme is being continued during Ninth Plan.
(iv) Other Schemes for technology improvement
Tool Rooms:
Tool Rooms provide tooling, dies, moulds and fixtures to small scale units at a very low price
to enable them to produce quality goods to meet the requirements of supplies of components
to large units as well as produce quality goods for direct sale. This enhances their
competitiveness and export potentials. There are 10 Tool Rooms established in various partsof the country.
Process-cum-Product Development Centres:
There are 7 Process-cum-Product Development Centres. These Centres take up jobs from
SSIs for specific product development as well process development to improve the quality ofproducts, reduce cost of product and enhance marketability of goods. These Centres deal
with specific product groups.
UPTECH:
A new scheme for technology upgradation for industrial clusters has been started recently. 10
clusters of industries producing different groups in various parts of country have beenselected. The scheme aims at diagnostic study of the clusters, identification of technological
needs, technological intervention and wider dissemination of information and technology
within the clusters. The expenditure involved on pilot plants etc. Is to be met on 50:50 costsharing basis by the Government and the concerned Industry Association of the clusters. The
scheme is flexible and provides for smooth sourcing of technology even from abroad.
R.V.College of Engineering, Bangalore 20
-
8/9/2019 Chapter 6_Small Scale Industrial Undertakings
21/31
Management & Entrepreneurship
PERSONAL INCOME TAX
A resident (staying for more than 182 days in a year) is taxed on his worldwide income if he is
also ordinarily resident in India (e.g. if he maintains resident status for 9 out of 10 preceding
years).
A non-resident is taxed only on income that is received in India.
Though the entire remuneration is taxable, concessional treatment is accorded to leave passage,reimbursement of medical expenses and benefits received in kind, such as, company-leased flat,
car, furnished housing, utilities etc.
A tax deduction is allowed at the rate of 20 percent on all eligible savings subject to a limit of Rs
60,000 savings per annum.
New rates for personal income tax:
- 10% on the first slab of Rs.40,000-Rs.60,000 +10% Surcharge
- 20% on the second slab of Rs.60,000 + 10% Surcharge
- Rs.1,50,000 - 30% on the third slab of income > Rs 1,50,000 +10% Surcharge
SALES TAX
The sales tax is a state government controlled revenue element.The sales tax structure varies from state to state and this ranges from 0% to 10% depending on
the state policies and the type of product in question.
National Small Industries Corporation
The National Small Industries Corporation (NSIC) through its export development programme is
playing a vital role to promote the SSI sector in exporting their products/projects in international,markets by providing following assistance to the small enterprises.
R.V.College of Engineering, Bangalore 21
-
8/9/2019 Chapter 6_Small Scale Industrial Undertakings
22/31
Management & Entrepreneurship
Marketing and Promotion
Organising International Exhibitions
Organising and participation in Buyers-Sellers meet
Sponsoring delegation from different SSI sectors to various countries Providing information related to sales opportunities available in international market
Product specific catalogue preparation Advertising and publicity in various countries through Indian High
Commissions, Offices abroad and Internet
Publication of Exporters Directory
Participating in Global Tenders
Providing assistance in deemed exports
Organisation of Seminars and Workshops to upgrade and update SSI with regard tointernational developments.
Financial Assistance
Pre and Post Shipment finance at concessional rate of interest
Financial assistance for procurement of indigenous and imported raw material
Financial assistance for upgradition and modernisation of SSI unit Assisting in the process of claiming exports incentives
Technical Assistance
Laboratory and Testing assistance for improving quality of products
Providing assistance in packaging
Providing assistance for obtaining, inspection documents Conducting various programmes related to technology upgradation
Assisting SSI Sector in Technology assimilation
Imparting technical training
Effecting product improvements
NSIC has been instrumental in developing a large number of small scale units to export high
quality products such as builders hardware, locks, light engineering products, giftware andnovelties, readymade garments and textile products.
R.V.College of Engineering, Bangalore 22
-
8/9/2019 Chapter 6_Small Scale Industrial Undertakings
23/31
Management & Entrepreneurship
Following activities are also undertaken by NSIC forExport Promotion through SSI
Study visit to various developed countries to identify the product range and their market
demand.
Arrange visits of delegations consisting of representatives of small-scale
industries/Associations to different specialises exhibitions and buyers-sellers meets. Collect samples during the above export promotion visits and to identify suitable small-
scale suppliers to develop counter samples. NSIC has already opened two offices abroad at South Africa and Dubai, U.A.E. These
offices will be utilised for generation of business for the small-scale sector.
Publication of a directory of identified products and possible buyers for circulation to thesmall-scale industries.
SSI FINANCE
State Financial Corporations (SFCs)
In pursuance of the SFCs Act, 1951, SFCs were set up mainly to finance small and medium scale
units. Their area of operation is generally restricted to the concerned States. SFCs also assist
small-scale units for their modernisation and technology upgradation programmes by providingsoft loans, restructuring the sick small-scale units through rehabilitation schemes and through
equity type assistance under SIDBI's seed capital scheme.
At present, there are 18 SFCs (including TIIC which was set up as a company) in existence for
more than 40 years and operate as Regional Development Banks. The SFCs have played an
important role in the evolution and growth of small and medium scale industries in theirrespective states. They provide financial assistance to industrial units by way of term loans,
direct subscription to equity, guarantees, etc. Over the years SFCs have expanded their activities
and coverage of assistance.
One-Man Committee set up by RBI under the Chairmanship of former Secretary, SSI&ARI, to
look into various problems regarding credit flow to SSI sector and support appropriate measures
for their redressal has given the following recommendations in its report submitted to RBI whichare being processed by them: -
- Restructuring of weaker SFCs by the Government.
- Funds for lending under Single Window Scheme by SFCs should be placed by SIDBI with the
SFCs in adequate measures.
- Each SFC should get into an MOU with one or two Public Sector banks and participate in joint
lending in which both term loan and working capital is provided jointly. For example, 80 per
cent of the term loan could be given by SFC and 20 per cent by bank. In case of working capitalwhich may be sanctioned at the same time as term loan, the proportion could be reversed, i.e., 80
per cent by bank and 20 per cent by SFC. However, the working capital account be managed and
supervised by the bank through its specialised SSI branches.
R.V.College of Engineering, Bangalore 23
-
8/9/2019 Chapter 6_Small Scale Industrial Undertakings
24/31
Management & Entrepreneurship
- SIDBI should sign MOUs with the State Governments to provide some assistance to SFC prior
to the approval of assistance packages by the Government of India/SIDBI.
- The staff of SFCs has to be adequately trained and SIDBI may be asked to make arrangements
for this purpose.
Small Industries Development Bank of India (SIDBI)
SIDBI was set up by an Act of Parliament, as an apex institution for promotion, financing and
development of industries in small-scale sector and for coordinating the functions of otherinstitutions engaged in similar activities. It commenced operations on April 2, 1990. SIDBI
extends direct/indirect financial assistance to SSIs, assisting the entire spectrum of small and tiny
sector industries on All India basis.
The range of assistance comprising financing, extension support and promotional, are made
available through appropriate schemes of direct and indirect assistance for the followingpurposes: -
Setting up of new projects
Expansion, diversification, modernisation, technology upgradation, quality improvement,
rehabilitation of existing units
Strengthening of marketing capabilities of SSI units.
Development of infrastructure for SSIs and
Export promotion.
Direct Assistance Schemes
SIDBI directly assists SSIs under Project Finance Scheme, Equipment Finance Scheme,Marketing Scheme, Vendor Development Scheme, Infrastructural Development Scheme, ISO-
9000, Technology Development & Modernisation Fund, Venture Capital Scheme, assistance for
leasing to NBFCs, SFCs, SIDCs and resource support to institutions involved in the developmentand financing of small-scale sector.
These Schemes are mainly targeted at addressing some of the major problems of SSIs in areas
such as high tech project, marketing, infrastructural development, delayed realisation of bills,
obsolescence of technology, quality improvement, export financing and venture capitalassistance.
R.V.College of Engineering, Bangalore 24
-
8/9/2019 Chapter 6_Small Scale Industrial Undertakings
25/31
Management & Entrepreneurship
Indirect Assistance Schemes
Under its indirect schemes, SIDBI extends refinance of loans to small scale sector by Primary
Lending Institutions (PLIs) viz. SFCs, SIDCs and Banks. At present, such refinance assistance isextended to 892 PLIs and these PLIs extend credit through a network of more than 65,000
branches all over the country.
All the Schemes of SIDBI both direct and indirect assistance are in operation in all the States ofthe country through 39 regional/branch offices of SIDBI.
Promotional and Development Activities
SIDBI is actively involved in promoting tiny and small scale industries by means of itspromotional and developmental activities through suitable professional agencies for organisingEntrepreneurship Development Programmes, Technology Upgradation & Modernisation
Programmes, Micro Credit Schemes and assistance under Mahila Vikas Nidhi to bring about
economic empowerment of women specially the rural poor by providing them avenues fortraining and employment opportunities.
A. Refinance against term loans in respect of
projects/activities eligible for assistance
under the Scheme
Interest on term loans for
fixed assets and working
capital advances (excluding
interest tax) (% p.a.)
Interest on
Refinance (%
p.a.)
(i) Up to and inclusive of Rs. 25,000 12.0 9.0
(ii) Over Rs. 25,000 and up to Rs. 2 lakh Not exceeding 13.5 10.5
B. Refinance against term loans in respect of
projects/activities eligible for assistance under
TDMF and ISO 9000 Schemes (Applicable to
all eligible institutions) (except RRBs)
Interest on term loans
(excluding interest tax) (%
p.a.)
Interest on
Refinance (%
p.a.)
(i) Up to and inclusive of Rs. 25,000 12.0 9.0
(ii) Over Rs. 25,000 and up to Rs. 2 lakh Not exceeding 13.5 10.5
(iii) Over Rs. 2 lakh Not exceeding 14.0* 12.0
R.V.College of Engineering, Bangalore 25
-
8/9/2019 Chapter 6_Small Scale Industrial Undertakings
26/31
Management & Entrepreneurship
Performance
SIDBI's efforts have resulted in increased flow of credit to SSI sector since inception as indicated
below:
Year Sanction Disbursement
1990-91 2410 18391991-92 2847 2028
1992-93 2909 2146
1993-94 3357 2672
1994-95 4706 3390
1995-96 6066 4801
1996-97 6485 4585
1997-98 7484 5241
SIDBI's assistance to:
(i) Tiny Units - about 89.2 per cent of the number of projects assisted under Refinance Schemeduring 1996-97 were tiny, receiving assistance up to Rs. 5 lakh per project. The sanctions for
such projects accounted for 39.6% of the total amount of sanctions in 1996-97 as against 36.0%
during the previous year.
(ii) Women entrepreneurs - under various schemes assistance amounting to Rs. 19.07 crores
was given to 1067 women entrepreneurs during 1996-97.
(iii) Backward areas - during 1996-97, projects enanating from backward areas received
assistance to the tune of Rs. 775 crores of sanction that accounted for 37% of total assistance
under Refinance Scheme of SIDBI.
Measures to simplify Rules/Regulations
To fill the gaps in the existing structure of credit delivery mechanism to the small-scale sector,
Small Industries Development Bank of India (SIDBI) keeps on effecting simplification of
procedures, liberalization of new schemes and introduction of new schemes.
Endeavor of SIDBI is to ensure that no worthwhile proposal is denied credit for want of funds.
Norms lay down by Reserve Bank of India and Government of India are followed by SIDBI for
granting assistance to SSI units.
R.V.College of Engineering, Bangalore 26
-
8/9/2019 Chapter 6_Small Scale Industrial Undertakings
27/31
Management & Entrepreneurship
Liberalisation effected
(i) Enhancement in the ceiling on loan amount of the Composite Loan Scheme to Rs. 2 lakh from
the earlier ceiling of Rs. 50,000/- to ensure timely availability of term loan and working capital
to the small units. The scheme was also liberalised to include units in all areas other thanmetropolitan areas.
(ii) Scope of Technology Development & Modernisation Fund Scheme and Refinance Schemefor Technology Development & Modernisation has been expanded to cover non-exporting
SSIs/ancillary units graduating out of SSI sector for assistance under the scheme.
(iii) Scope of Single Window Scheme has been enlarged to cover modernisation, technologyupgradation in addition to new SSI units. Project outlay under the scheme has been gradually
raised from s. 30 lakhs to Rs. 100 lakhs. Simultaneously, the sub-limits for working capital and
term loan components have been done away with.
Main Schemes of SIDBI
A brief summary of the Schemes available with SIDBI. More details are available under the
Section Policies & Schemes.
National Equity Fund Scheme, which provides equity support to small entrepreneurs setting upprojects in Tiny Sector.
Technology Development & Modernisation Fund Scheme for providing finances to existingSSI units for technology upgradation/modernisation.
Single Window Scheme to provide both term loans for fixed assets and loan for working capitalcapital through the same agency.
Composite Loan Scheme for equipment and/or working capital and also for work sheds toartisans, village and cottage industries in Tiny Sector.
Mahila Udyam Nidhi (MUN) Scheme provides equity support to women entrepreneurs forsetting up projects in Tiny Sector.
Scheme for financing activities relating to marketing of SSI products which provides assistancefor undertaking various marketing related activities such as marketing research, R&D, product
upgradation, participation in trade fairs and exhibitions, advertising branding, establishing
distribution networks including show room, retail outlet, wears-housing facility, etc.
R.V.College of Engineering, Bangalore 27
-
8/9/2019 Chapter 6_Small Scale Industrial Undertakings
28/31
Management & Entrepreneurship
Equipment Finance Scheme for acquisition of machinery/equipment including Diesel
Generator Sets, which are not related to any specific project.
Venture Capital Scheme to encourage SSI ventures/sub- contracting units to acquire capital
equipment, as also requisite technology for building up of export capabilities/import substitution
including cost of total quality management and acquisition of ISO-9000 certification and forexpansion of capacity.
ISO 9000 Scheme to meet the expenses on consultancy, documentation, audit, certification fee,equipment and calibrating instruments required for obtaining ISO 9000 certification.
Micro Credit Scheme to meet the requirement of well managed Voluntary Agencies that are in
existence for at least 5 years; have a good track record and have established network andexperience in small savings-cum-credit programmes with Self Help Groups (SHGs) individuals.
New Schemes
(i) To enhance the export capabilities of SSI units.
(ii) Scheme for Marketing Assistance.
(iii) Infrastructure Development Scheme.
(iv) Scheme for acquisition of ISO 9000 certification.
(v) Factoring Services and
(vi) Bills Re-discounting Scheme against inland supply bills of SSIs.
Major schemes
Technology Development & Modernisation Fund
SIDBI has set up Technology Development & Modernisation Fund (TDMF) scheme for directassistance of small sale industries to encourage existing industrial units in the sector, to
modernise their production facilities and adopt improved and updated technology so as to
strengthen their export capabilities. Assistance under the scheme is available for meeting theexpenditure on purchase of capital equipment acquisition of technical know-how, upgradation of
process technology and products with thrust on quality improvement, improvement in packaging
and cost of TQM and acquisition of ISO-9000 series certification.
R.V.College of Engineering, Bangalore 28
-
8/9/2019 Chapter 6_Small Scale Industrial Undertakings
29/31
Management & Entrepreneurship
SIDBI in July 1996 had permitted SFCs and promotional banks to grant loans for modernisation
projects costing up to Rs. 50 lakhs. The Coverage of the TDMF scheme has been enlarged w.e.f.1.9.1997. Non-exporting units and units which are graduating out of SSI sector are now eligible
to avail assistance under this scheme.
National Equity Fund
National Equity Fund (NEF) under Small Industries Development Bank of India (SIDBI)
provides equity type assistance to SSI units, tiny units at one per cent service charges. The scope
of this scheme was widened in 1995-96 to cover all areas excepting Metropolitan areas, raising
the limit of loan from Rs. 1.5 lakhs to Rs. 2.5 lakhs and covering both existing as well as newunits:
(a) The following are eligible for assistance under the scheme: -
i. New projects in tiny and small-scale sectors for manufacture preservation or processingof goods irrespective of the location (except for the units in Metropolitan areas).
ii. Existing tiny and small-scale industrial units and service enterprises as mentioned above
(including those which have availed of NEF assistance earlier), undertaking expansion,modernisation, technology upgradation and diversification irrespective of location
(except in Metropolitan areas).
iii. Sick units in the tiny and small-scale sectors including service enterprises as mentionedabove, which are considered potentially viable, irrespective of the location of the units
(except for the units in Metropolitan areas).
iv. All industrial activities and service activities (except Road Transport Operators).
(b) Project cost (including margin money for working capital) should not exceed Rs. 10 lakhs inthe case of new projects in the case of existing units and service enterprises, the outlay on
expansion/modernisation/technology upgradation or diversification or rehabilitation should not
exceed Rs. 10 lakh per project.
(c) There is no change in the existing level of promoters' contribution at 10% of the project cost.
However, the ceiling on soft loan assistance under the Scheme has been enhanced from the
present level of 15% lakh per project to 25% of the project cost subject to a maximum of Rs. 2.5lakh per project
R.V.College of Engineering, Bangalore 29
-
8/9/2019 Chapter 6_Small Scale Industrial Undertakings
30/31
Management & Entrepreneurship
National Small Industries Corporation (NSIC)
Bill Financing
Bills drawn by small scale units for the supplies made to the reputed and well established
enterprises and duly accepted by them will be financed / discounted by NSIC for a maximumperiod of 90 days.
Working Capital Finance
Finance for augmenting working capital of viable and well managed units, on selective basis in
case of emergent requirements, to enable them to payoff their purchases of consumable storesand spares and production related overheads particularly electricity bills, statutory dues, etc.
Export Development Finance
Finance for export development to export oriented units for meeting their emergent
requirements. Pre and post shipment finance shall also be provided to such units at usual terms &conditions.
Equipment Leasing Scheme
The object of the Leasing Scheme is to assist SSI Units to procure industrial equipment for
modernisation, expansion and diversification of their industries.
ELIGIBILITY
exclusively for existing && financially viable SSI units including ancillary units, duly registeredas SSI units with the Directorate of Industries.
BENEFITS
100% financing at very liberal terms with easy repayment schedule.
Simple formalities and speedy sanction.
Single window system for imported equipment. The Corporation undertakes to completeformalities like procuring import license, opening of Letter of Credit etc.
Tax rebate on full 5-year lease rental.
R.V.College of Engineering, Bangalore 30
-
8/9/2019 Chapter 6_Small Scale Industrial Undertakings
31/31
Management & Entrepreneurship
BASIC TERMS
Lease period of 5 years extendable by another 3 years.
Repayment as lease rental at the rate of Rs.24 per Rs.100 per month of the cost of machine.There is no separate interest.
Minimum assistance provided is Rs.100,000 and maximum subject to SSI ceiling ofRs.6,000,000 or Rs.7,500,000 in case of an ancillary unit. The value of installed machinery at
original cost including value of the machine proposed to be obtained under leasing should not
exceed Rs.6,000,000 or Rs.7,500,000 in case of an ancillary unit.
The unit will have to pay the following before the order for equipment can be placed on the
supplier: -
Amount equal to three months rental (six months rental for special equipment) and
Approximately 7% cost of the equipment (8% for Imported equipment) to cover the insurancecharges of the machinery for the period of lease i.e. 5 years and administrative charges of the
Corporation.
The unit/party must carefully read the terms and conditions and also the list of the documents tobe furnished along with the application as printed on the application form.
The party will have to execute an Agreement Bond before delivery of machine.
Payment of lease rental will start after three months of delivery of machine.
The cost of the application form is Rs.25/-.
The application can be submitted to NSIC Branch Office/Regional Office of the area in whichthe unit is located.