edp 4module

7/31/2019 EDP 4MODULE

1/17

Divyesh Kumar, GAT Bangalore 1

MODULE-4

Industrial supporting Entrepreneurs

SMALL INDUSTRIES

Small industry is a term usually used for companies operating on relatively smaller

establishments. The definition of small scale industries differs from country to

country, but usually it is based on the index of investment in plant and machinery.

In India, if the investment in plant and machinery is up to 1 Crore then it is called as

small scale industry.

TYPES OF SSI

Small scale industries can be classified into five main types

Manufacturing industries: industries producing complete articles for direct

consumption and also processing industries.

Feeder industries: specializing in certain types of products and services i.e.,casting, electro plating, welding etc.

Serving industries: covering light, repair, shops necessary to maintain

mechanical equipment.

Ancillary to large industries: producing parts and components and rendering

services and

Mining or quarrying.

FEATURES OF SSISMALL IS BEAUTIFUL

Generally, a one-man show.

Owner himself/herself is a manager, hence managed in a personalized way.The owner has first hand information of what is actually going on in business,

hence takes effective participation in all matters of business decision making.

Lesser gestation period, i.e., the period after which the return on investment

starts.

The scope is generally localized, catering to the local and regional demand.

Uses indigenous resources and hence can be located anywhere subject to

availability of RM and labor.

Fairly labor intensive with comparatively smaller capital investment.

Using local resources, they are decentralized and dispersed to rural areas,

and there by balanced regional development.

Last but not the least, SSI s are more change susceptible and highly reactive

and receptive to socio economic conditions. They are more flexible to adapt

changes like introduction of new products, new method of production, new

materials, new markets, new forms of organization etc.

Problems of SSI

Problem of raw materials

Financial problem

Problem of marketing

Problem of under utilization


2/17


Firstly, power supply is not always available and whenever available it is

rationed out, limited to few hours in a day.

Secondly, unlike large industries SSI s cannot afford to go in for alternatives;

like installing own thermal units, because of heavy investments.

Other problems

Technological obsolescenceInadequate and irregular supply of raw materials

Lack of organized market channels

Imperfect knowledge of market conditions

Constraint of infrastructure facility &

Deficient managerial and technical skills.

SMALL INDUSTRIES FINANCING IN DEVELOPING COUNTRIES:

AN OVERVIEW

Small industry is a term usually used for companies operating on relatively smallerestablishments. The definition of small scale industries differs from country to

country, but usually it is based on the index of investment in plant and machinery. In

India, if the investment in plant and machinery is up to 1 crore then it is called as

small scale industry.

Importance of small scale industries has been realized by one and all. They not only

help in providing employment opportunities to many, but also help in balanced

regional development. They help in development of entrepreneurship, in developing

local resources and in decentralization of the industry and hence lead to equitable

distribution of income and health.

Since small scale industries are usually run by an entrepreneur alone or a small

group of Entrepreneurs and hence availability of finance is a matter of concern for

them. These entrepreneurs face the problems of insufficient ownership capital to start

up and run a business enterprise. They usually adapt the following measures to

overcome the problem of insufficiency of funds:

(a) Rent a building

(b) Purchase of second hand machineries

Keep inventory level low

(d) Seek cash sales

(e) Hire machinery

(f) Substitute equipments by labourThough all the above mentioned methods reduce the requirement of capital but they

further create problems in their own unique way respectively. Hence the lack of

availability of finance affects the growth and development of small-scale industries.


3/17


In a developing country like India, SSI plays a vital role and hence holds a prominent

place in the five year plans. In conformity with the plans, SSIs have been given the

privilege of priority sectors of the economy and have received active encouragement

from government, banks and financial institution.

SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA (SIDBI)

SIDBI was established in April 2, 1990 for :

___Promotion

___Financing

___Development of Industries in the small scale sector

___Co-coordinating the functions of other institutions engaged in similar activities.

Business Domain of SIDBI

The business domain of SIDBI consists of small-scale industrial units, which

contribute significantly to the national economy in terms of production, employment

and exports. (Small scale industries are the industrial units in which the investment in

plant and machinery does not exceed Rs.1 crore)

Channels of assistanceIndirect assistance to Primary Lending Institutions (PLIs): SIDBIs

schemes of indirect assistance envisage credit to SSI s through a large

network of 913 PLIs spread across the country, with a branch network of

over 65000. The assistance is provided by way of refinance, bills

rediscounting, and resource support in the form of short term loans / Line of

Credit (LoC) in lieu of refinance etc.

Direct assistance to small units:

Scheme for specialized marketing agencies- Cost of project between

Rs.25 Lakh and Rs.300 lakhs, with a Debt-Equity Ratio of 2:1 Down

payment of 70- 80% of value of goods purchased.

Schemes for Ancillary/ Sub-contracting units- Cost of project is need

based and proposals for assistance are to be recommended by theMother unit.

Schemes for Development of Industrial Areas for SSI Sector.

Eligible borrowers are SIDCs/SSIDCs and cost of project not

exceeding Rs.300 lakhs.

For development of village industrial areas /estate for VSI

units- cost of project to need based.

Development and support services: Over the years, the initiatives of SIDBI

under promotional and developmental activities have crystallized in the

following important areas

Enterprise promotion with emphasis on rural industrializationHuman Resource Development to suit the SSI sector needs


4/17


Technology up gradation

Quality and environment management

Marketing & promotion

Information dissemination.

EDPs of SIDBIEntrepreneurship Development Programs are conducted through specialized

agencies:

Entrepreneurship Development Institute of India,

Institutes of Entrepreneurship Development (IEDs),

Centre for Entrepreneurship Development (CEDs),

Technical Consultancy Organizations (TCOs), and

Non-Governmental Organizations (NGOs)

SIDBI is constantly endeavoring to address problems like management deficiency

and low level of skill and technology, by bringing reputed management and technical

institutions close to SSIs and arranging specially designed programs, viz., Small

Industries Management Assistant Program (SIMAP) & Skill & Technology Upgradation Program (STUP)

SIDBIs schemes are as follows:

A.

1. Schemes for setting up SSI units- Cost of projects not to exceed Rs.300 lakhs.

2. Composite loan scheme (cottage, tiny and Villages industries)The loan limit

not

Exceed Rs.50,000 repayable with in 7-8 years.

3.

Scheme for SC/ST and physically handicapped persons-Loan limit not toexceed

Rs. 50,000 The scheme is meant for cottage tiny and village industries.

4. Scheme for acquisition of:(a)In-house quality control facilitiesLoan not to exceed Rs.7.5 lakh.(b)Diesel generating sets and pollution control equipment- The loan is

need based.

(c) Computers- Loans limit not exceed Rs. 5 lakhs.(d)For indigenization /import substitutionLoan limit no to exceed Rs. 5

lakhs per annum.

(e) For manufacturing and installation of renewable energy /energysavings systems- Loan limit is need based.5. Equipment refinance scheme-operated through SFCs /twin function SIDCs.

Loan limit is need based.

6. Scheme for Small Road Transport OperationsLoan limit is need based.7. Scheme for professionals- The cost of the project should not exceed Rs. 10

lakhs and cost of land and building not to exceed 50% of total outlay.

8. Schemes for Marketing Activities.(a)Scheme for marketing organizations- Cost of project not to exceed Rs.

25


5/17

Divyesh Kumar, GAT Bangalore

lakhs. Down payment of at least 50% of value of goods purchased.

(b)Scheme for purchase of mobile sales vans- Loans limit not to exceedRs.3 lakhs per vehicle.

9. Scheme for medical profession:(a) Scheme for Hospital /Nursing Homes- cost of project not to exceed Rs.45

lakhs,(b) Schemes for acquisition of Electro-medical and other equipment-Cost of

equipment not to exceed Rs. 60 lakhs.

10.Schemes for Tourism related activities Cost of project not to exceed Rs. 45lakhs.

11.Schemes for hotel and restaurant projectsCost of project no to exceed Rs.45lakhs.

12.Schemes for Infrastructure Development:(a)Scheme for setting up Industrial estates- Cost of project not to exceed

Rs. 300 lakhs.

(b)Scheme for development, maintenance and construction of roads- Theloan limit is need based.

13.Equity type Assistance schemes:(a)Seed capital scheme- Scheme operated through SFCs / SIDCs. The

soft loan limit is 10% of the project cist subject to a maximum of Rs.

15 lakhs. The loan carries a nominal service charge @ 1%p.a for the

first 5 years and there after interest @10%.

(b)National Equity Fund Scheme- Cost of the project not to exceed Rs. 10lakhs. The soft loan limit is up to 15% of the project cost subject to a

maximum of Rs. 15 lakh per project with service charge @ 1%p.a.

14.Scheme for Women Entrepreneurs(a)Mahila Udyam Nidhi Scheme- Scheme operated through SFCs /

SIDCs.

Cost of the project not to exceed Rs. 10 lakhs. The soft loan limit is up

to

15% of the project cost subject to a maximum of Rs.1.5 lakh per

project

Cost subject to a maximum of Rs.1.5 lakh per project with a service

charges @ 1% p.a.

(b)Scheme for Women EntrepreneurFor training and extension servicessupport to the women entrepreneurs.

15.Special scheme for assistance to Ex-servicemen- Scheme operated throughSFCs/ twin function SIDCs. The cost of the project not to exceed Rs.15 lakhs

to meet gap in equity subject to a maximum of Rs.2.25 lakh per project @ 1%

p.a.

service charge.

16.Single window scheme- operated through SFCs/ twin function SIDCs/scheduled

Commercial Banks.-Cost of project not to exceed Rs.20 lakhs and totalworking


6/17


capital requirement not to exceed Rs.10 lakhs.

B. Scheme of Direct Assistance:1. Scheme for specialized marketing agencies- Cost of project between

Rs.25 Lakh and Rs.300 lakhs, with a Debt-Equity Ratio of 2:1 Down

payment of 70- 80% of value of goods purchased.2. Schemes for Ancillary/ Sub-contracting units- Cost of project is need

based and proposals for assistance are to be recommended by the

Mother unit.

3. Schemes for Development of Industrial Areas for SSI Sector.(a) Eligible borrowers are SIDCs/SSIDCs and cost of project not

exceed

Rs.300 lakhs.

(b) For development of village industrial areas /estate for VSI units-cost of project to need based.

C.Bills Schemes:1. Bill Rediscounting scheme (Normal)- Minimum down payment10%

and usances of bills are normally 5 years. (usance of bills means: A

Bill of Exchange calling for payment at a fixed or determine able

future time.)

2. Bills Rediscounting ;scheme (short-term)Unexpired usance not more90 days. Both schemes are operated by scheduled commercial Banks.

3. Bills Rediscounting scheme (Normal) Minimum down payment is10%. Usance of bills is normally 5 years and minimum transaction

value is Rs.1 lakh.

NATIONAL BANK FOR AGRICULTURE AND RURAL

DEVELOPMENT (NABARD)

National Bank for Agriculture and Rural Development (NABARD) came

into Existence on 12th

July 1982 by an act of Parliament. Its objective is

providing focused and undivided attention to the development of rural India.

NABARD mission statement underscores to promote sustainable & equitable

agricultural & rural prosperity through effective support, related services,

institution development and other innovative initiatives.

NABARD at present has 28 regional offices at the state capitals, a sub-

office at Port Blair and 376 district development offices. NABARD is an apex

institution accredited with all matters concerning policy, planning and operations

in the field of credit for agriculture and other economic activities in rural areas. It

is an apex refinancing agency for the institutions providing investment and

production credit for promoting the various developmental activities in rural

areas. It takes measures towards institution building for improving absorptive

capacity of the credit delivery system, including monitoring, formulation of

rehabilitation schemes, restructuring of credit institutions, training of personnel,

etc. It coordinates the rural financing activities of all the institutions engaged indevelopmental work at the field level and maintains liaison with Government of


7/17


India, State Governments, Reserve Bank of India and other national level

institutions concerned with policy formulation. It also prepares, on annual basis,

rural credit plans for all districts in the country, these plans form the base for

annual credit plans of all rural financial institutions. It further undertakes

monitoring and evaluation of projects refinanced by it.

It promotes research in the fields of rural banking, agriculture and rural

development.

FUNCTIONS

Credit Support: At its business, NABARD provides credit support that suits every

activity in rural India. It refinances commercial, co-operatives and regional banks

for lending to our farm activities (minor irrigation, animal husbandry, farm

mechanization, forestry, fisheries, land development, horticulture, plantation and

medic al crop) & non-farm activities (rural industries, artisans, handicrafts,

handlooms, rural housing, rural tourism and so on). Refinance is provided byNABARD for both long-term investment credit as well as short-term production

credit for crop rearing and working capital for non-financial activities.

NABARD has introduced several innovations in the rural credit domain:

(a)Self Help Group: More famously called as SHG are a group of homogenousmembers who voluntarily collaborate mainly to overcome financial

difficulties. With the modest beginning of just 500 SHGs in 1992, the

programme boasts of as many as 6, 20,109 groups in the year 2005-06 alone.

(b)Rural Infrastructure Development Fund: It is very important to have properinfrastructure for agriculture, industrial and overall economic development.

Moreover infrastructure also provides basic amenities that improve the

quality of life of people also provide basic amenities that improve the quality

of life of people at large. NABARD has sanctioned funds under RIDF for

improvement of rural connectivity through road network & bridges, power

development of social sector.

(c)Watershed Development :With the entire country facing the problems of waterscarcity, NABARD was engaged in perfecting its experiments in creating a

sustainable cost effective solution to the water harvesting techniques in rural

India.

(d)Tribal Development & WADI Approach: With over 8% of the populationcomprising tribals largely development on forests, livestock and agriculture,

NABARD found a holistic approach by addressing production, processing and

marketing of the produce with WADI as the core of the programme.

(e)Attracting youth to rural non-farm sector: NABARD has formulated severalschemes like Assistance to Rural Women in Non-Farm Development

(ASWIND), Assistance for marketing of Non-Farm products of Rural Women

(MAHIMA), development of Women Through Area programme (DEWTA) for

providing support to women in rural areas.

(f)District Rural Industries project (DRIP): The objective of DRIP is to createsustainable employment opportunities in rural areas.


8/17


(g)Rural Entrepreneurship Development Programme (REDP): REDP is apromotional programme to motivate train educated unemployed rural youth to

set up their enterprises.

(h)Marketing: A number of marketing interventions have been made formarketing of rural non-farm products since marketing is a key factor in the

success of any programme.With the support of NABARD under in variouspromotional programmes like rural haats, rural marts, participation in fairs,

exhibition etc.artisants and entrepreneurs get larger marker to showcase their

talents and products to urban markets.

(i)Rural Innovation Fund: In association with Swiss Agency for Developmentand Cooperation (SDC) NABARD has constituted the NABARD-SIDC Rural

Innovation Fund (RIF) to support innovative projects in farm, non-farm and

micro-finance sectors.

CENTRAL LEVEL INSTITUTIONS

1. Small-scale Industries Board (SSI Board)

The SSI Board was constituted in 1954 to facilitate the coordination and inter-

institutional linkages for the development of SSI sector. The Board is apex advisory

body constituted to render advice to the government on all issues pertaining to the SSIsector. The office of the Development Commissioner (Small-scale-Industry) serves as

the secretariat for the board. The Union Industry Minister is the Chairman of the

Board, which has State Industry Ministers; select Members of Parliament; secretaries

of various departments of the Central Government, financial institutions, public

sector undertakings, industry associations, and eminent experts in the field as the

members. The Board broadly operates in the following areas.

* Policies and programmes.

* Development of industries in a specific region such as North East.

* Ancillary development, quality improvement and marketing assistance.

* Industrial sickness.

2. Khadi and Village Industries Commission (KVIC)

CENTRAL LEVEL

SSI BOARD

KVIC

SIDO

NSIC

NSTEDB

NPS

NISIET

NIESBUD

IIE

SSI

STATE LEVELDIs

DICs

SFCs

SIDCs /SIICs

SSIDCsOTHERSIndustry Associations

Non Government

Organizations

Research and

Development

Laboratories


9/17


The KVIC is a statutory body created by an act of parliament (No. 61 1956 and as

amended by Act No. 12 of 1987). It is charged with planning, promotion,

organization, and implementation of the programme for the development of khadi and

other village industries engaged in rural development wherever necessary, KVICs

functions also comprise building up a reserve of raw materials and implements forsupply to producers, creation of common service facilities for marketing of KVIC

products apart from organization of training of artisans engaged in these industries

and encouragement of cooperative efforts amongst them. KVIC is entrusted with the

task of providing financial assistance to institutions or persons engaged in the

development and operation of khadi and village industries and guide them through

supply of designs, prototypes, and other technical information.

3. Small Industries Development Organization (SIDO)

The small and Medium Enterprises (SME) sector is one of the fastest growing

industrial sectors all over the world. Many countries of the would have established aSME Development Agency (SMEDA) at the nodal agency to coordinate and oversee

all government interventions in respect of the development of this sector. In India,

although a separate medium sector is not defined, the Office of Development

Commissioner (small-scale Industries), also known as Small Industries Development

Organization (SIDO) functions under the Ministry of SSI.

SIDO was established in 1954 on the recommendations of Ford Foundation. Over the

years, it has seen its role evolve into an agency for advocacy, handholding and

facilitation for the small industries sector. It has over 60 offices and 21 autonomous

bodies under its management. These autonomous bodies include tool rooms, training

institutions, and project-cum-process development process development centres.

SIDO provides a wide spectrum of services to the small industries sector. These

include facilities for testing, tool mending, training for entrepreneurship development,

preparation of project and product profiles, technical and managerial consultancy,

assistance for exports, pollution and energy audits, and so on. SIDO provides

economic information services and advises the government in policy formulation for

the promotion and development of SSIs. The field offices also work as effective links

between the Central and the state governments.

4.National Small Industries Corporation Ltd. (NSIC)

NSIC, established in 1955 by the Government of India, provides vital services for the

promotion of SSIs. Its main objective is to promote, aid, and foster the growth of SSIs

in the country. With its various programmers and projects to assist the SSI sector in

the country, NSIC continues to remain at the forefront of industrial development.

For over four decades of transition and growth in the SSI sector, NSIC has provided

strength to the sector through a progressive attitude of modernization. Up gradation

of technology, quality consciousness, strengthening linkages with large and medium-

scale enterprises, and boosting exports of products from small enterprises.


10/17


5.The National Science and Technology Entrepreneurship Development Board

(NSTEDB)

Established in 1982, by the Government of India under the aegis of Department of

Science and Technology, NSTEDB is an institution al mechanism to help promote

knowledge-driven and technology-intensive enterprises. The Board, withrepresentations from socio-economic and scientific ministries/departments, aims to

convert job-generators through Science and Techno logy (S&T) interventions.

The major objectives of NSTEDB are

* to promote and develop high-end entrepreneurship for S&T manpower as well as

self-employment by utilizing S&T infrastructure and by using S&T methods;

* to facilitate and conduct various informational services relating to promotion of

entrepreneurship;

* to network agencies of the support system, academic institutions, and R & D

organizations to foster entrepreneurship and self-employment using S & T with

special focus on backward areas as well;

* to act as a policy advisory body with regard to entrepreneurship.

6. National Productivity Council (NPC)NPC is an autonomous institution functioning under the overall supervision of

the Ministry of Industry, Government of India. The primary objective of NPC

is to act as a catalyst in enhancing the productivity of all sectors of the

economy, including industry and agriculture. NPC is administered by a

tripartite Governing Council (GC), which has equal representation from the

government, industry, and trade unions. The Council has the Minister for

Industry, Government of India, as its exofficio President and is chaired by the

Secretary for Industrial Development. The Director General of NPC is the

Chief Executive Officer, dealing with the day-to-day management of the

council.

7. National Institute for Small Industry Extension and Training (NISIET)Set up in the early 1950s in Hyderabad, NISIET has been imparting training

to entrepreneurs, managers and various development functionaries of state

governments, financial institutions and other agencies. NISIET organizesabout 45 national level and 15 international level programmes every year. It

also acts as on important resource and information centre for small units and

undertakes research and consultancy for small industry development.

The NISIET since its inception by the Government of India has taken

gigantic strides to become the premier institution for the promotion,

development and modernization of the SME sector. An autonomous arm of the

Ministry of Small Scale Industries, the Institute strives to achieve its avowed

objectives through a gamut of operations ranging from training, consultancy,

research and education, to extension and information services.

8. National Institute of Entrepreneurship and Small Business Development(NIESBUD)


11/17


The National Institute for Entrepreneurship and Small Business Development

(NIESBD) ,New Delhi, is an autonomous body under the administrative control of

Office of the DC (SSI), NIEBUD, an apex body established by Ministry of

Industries, Govt. if India for coordinating, training and overseeing the activities of

various institutions/agencies engaged in Entrepreneurship DevelopmentParticularly in the area of Small industry and small business.

The National Institute of Entrepreneurship and Small Business Development

(NIEBUD) was established in 1983 by the Ministry of Industry (now Ministry

Small-scale Industries), Govt. of India, as an apex body for coordinating and

overseeing the activities of various institutions/agencies engaged in

Entrepreneurship Development particularly in the area of small industry and

small business. The institute which is registered as a society under Govt. Of India

societies Act (XXI of 1860) started functioning from 6th

July 1983.

9. Indian Institute of Entrepreneurship (IIE)With an aim to undertake training, research and consultancy activities in the

small industry sector focusing on entrepreneurship development, the Indian

Institute of Entrepreneurship was established in the year 1993 at Guwahati by

the erstwhile Ministry of Industry (now Ministry of Small Scale Industry)

Government of India as an autonomous National institute. The institute

started its operations from April 1994 with North East Council, Govt. of

Assam, Arunachal Pradesh and Nagaland and SIDBI as other stakeholders.

The policy direction and guidance is provided to the Institute by its

Board of Management whose Chairman is the Secretary to the Government of

India, Ministry of Small Scale Industries, Chairman, NEC heads the governing

council of the institute and the Secretary, SSI and ARI, and Govt,. of India

head the Executive Committee.

Objectives:

To organize and conduct training for entrepreneurship development.

To evolve strategies and methodologies for different target groups

and locations and conduct field tests.

To identify training needs and offer training programmers to

Government and non-Government organizations engaged in

promoting and supporting entrepreneurship. To document and disseminate information needed for policy

formulation and implementation related to self-employment.

To identify, design and conduct training programmers for existing

entrepreneurs.

To prepare and publish literate related to entrepreneurship and

industrial development.

To organize seminars, workshops and confer conferences for

providing a forum for interaction and exchange of views by agencies

and entrepreneurs.

To conduct research for generating knowledge to accelerate the

process of entrepreneurship development.


12/17


To act as a catalyst for development of self-

employment/entrepreneurship, industry/business.

To evolve, design and help in the utilization of various media for

creating entrepreneurship.

10.Entrepreneurship Development Institute of India (EDII)The entrepreneurship Development Institute of India, Ahmedabad, is an

autonomous non-profit institution, set up in 1983, sponsored by financial

institutions, such as Industrial Development Bank of India, Industrial Finance

Corporation of India, Industrial Credit and Investment Corporation of India

and State Bank of India. The Government of Gujarat has also provided

assistance for the setting up of EDII.

EDII has been spearheading an entrepreneurship movement throughout the

nation in the belief that entrepreneurs need not necessarily be born, they can

be developed through well-conceived and well-directed activities. Inconsonance with this belief, the objectives of the EDII are as follows:-

* Augment the supply of trained entrepreneurs through training.

* Generate a multiplier effect on opportunities for self-employment.

* Improve managerial capabilities of small-scale industries.

* Contribute to the dispersal of business ownership and thus expand the social

Base of the Indian entrepreneurial class.

* Augment the supply of trainer motivators for entrepreneurship development.

* Participate in institution-building efforts.

* Sensitize the support environment to facilitate potential as well as existing

Entrepreneurs to establish and manage their enterprises.

* Promote micro enterprise and manage their enterprises.

* Inculcate the spirit of entrepreneurship amongst youth.

* Collaborate with similar organizations in India and other developing

countries

To accomplish the above objectives.

STATE LEVEL INSTITUTIONS

1. Directorate of Industries:-At the state level, the Commissioner/Director of Industries implements policiesfor the promotion and development of small-scale, cottage, medium-and large-

scale industries. The Central policies for the SSI sector serve as guidelines but

each state evolves its own policy and package of incentives. The

commissioner/Director of Industries in all the States/UTs, oversee the

activities of field offices. That is, the District Industries Centers(DICs) at the

district t level.

2. District Industries Centers (DICs)In order to extend the promotion of small-scale and cottage industries beyond

big cities and state capitals to the district headquarters, the DIC programme

was initiated in May 1978 as a centrally sponsored scheme with the objectiveof developing small, tiny and cottage sector industries in the country. DICs


13/17


were also established with the aim of generating greater employment

opportunities especially in the rural and backward areas in the country.

These centers provide support facilities/concessions/centrally in widely

dispersed rural areas and other small towns. There were 430 centrally

approved DICs which covered almost all the districts of the country (except

the metropolitan cities) at the time of the withdrawal of the centralsponsorship in 1993-94. At present, DICs operate under respective State

budgetary provisions.

It extend services of the following nature.

Economic investigation of local resources

Supply of machinery and equipment

Provision of raw material

Arrangement for credit facilities

Marketing

Quality inputs

Consultancy and extension services

3. State Financial CorporationsSFCs, established under the SFCs Act, 1951, play an important role in the

development of small and medium enterprises. The main objectives of SFCs

are to finance and promote small and medium enterprises in their respective

states for achieving balanced regional growth, catalyses investment, generate

employment and widen the ownership base of industry. At present, there are

18 SFCs of which one as set up under the SFCs Act, while Tamil Nadu

Indsutrial and Investment Corporation Ltd., was set up under the Companies

Act.

Financial assistance to small and medium enterprises is provided by way of

term loans, direct subscription to equity/debentures, guarantees, discounting

of bill of exchange and seed capital assistance. SFCs operate a number of

schemes of refinance of IDBI and SIDBI and also extend equity type

assistance. SFCs have tailor-made schemes for artisans and special target

groups such as SC/ST, women, ex-servicemen, physically challenged and also

provide financial assistance for small road transport operators, hotels

tourism-related activities, hospitals, nursing homes, and so on. Under the

Single Window Scheme of SIDBI,SFCs have also been extending working

capital along with term loans to mitigate the difficulties faced by SSIs inobtaining working capital limits on time.

4. State Industrial Development /Investment Corporation:-SIDCs/SIICs, set up under the Companies Act, 1956, as wholly owned

undertakings of the state governments, act as catalysts for industrial

development in their respective states. SIDCs play an important role by

developing land providing industrial infrastructural facilities in the form of

ready made factor sheds and or developed plots together with facilities like

road, power water supply, drainage and other amenities. Set up primarily for

providing assistance to medium and large-scale industries. SIDCs/SIICs alsoextend assistance to the small-scale sector by way of term loans, subscription


14/17


to equity and promotional services. Presently, there are 28 SIDCs in the

country, of which 11 also function as SFCs and are therefore, termed Twin-

Function IDCs.

5. State Small Industrial Development Corporations:SSIDCs established under the companies Act, 1956, as State government

undertaking, cater to the needs of the small, tiny and village industries in

their respective state/Union Territory. Being operationally flexible,SSIDCs

undertake a variety of activities of the benefits of the SSI sector. Some of the

important activities undertaken by SSIDCs include

1. Procurement and distribution of scarce raw materials.2. Supply of machinery to SSI units on hire-purchase basis;3. assistance for marketing of products;4. construction of industrial estates, provision of allied infrastructure

facilities and their maintenance;

5. extending seed capital assistance on behalf of State government; and6. providing management assistance to production units.

INDUSTRIAL POLICY: It covers rules, regulations, principles, policies, & procedures laid down by

government for regulating & controlling industrial undertakings in the

country.

It prescribes the respective roles of the public, private, joint, cooperative

large, medium & small scale sectors for the development of industries.

It incorporates fiscal & monetary policies, tariff policy, labor policy.

It shows the government attitude not only towards external assistance but also

toward public & private sectors.

Objectives: To maintain a sustained growth in productivity

To enhance gainful employment

To prevent undue concentration of economic power

To achieve optimal utilization of human resources

To attain international competitiveness and

To transform India into a major partner and player in the global arena

Industrial Policy Resolution of 1948 (6

th

April 1948)The Resolution emphasized at the following;

1. The importance to the economy of securing a continuous increase in

production.

2. Its equitable distribution.

3. State must play progressively active role in the development of Industries.

4. It laid down that besides arms and ammunition, atomic energy and railway

transport, which would be the monopoly of the Central Government, the State

would be exclusively responsible for the establishment of new undertakings in

six basic industries-except where, in the national interest, the State itself found

it necessary to secure the cooperation of private enterprise.


15/17


5. The rest of the industrial field was left open to private enterprise though it

was made clear that the State would also progressively participate in this

field.

Industrial Policy Resolution of 1956 (30th

April 1956):

1. Improving living standards and workingconditions for the mass of the people.

2. To reduce disparities in income and wealth.

3. To prevent private monopolies and concentration of economic power in

different fields in the hands of small numbers of individuals.

4. The State will progressively assume a predominant and direct responsibility

for setting up new industrial undertakings and for developing transport

facilities.

5. At the same time private sector will have the opportunity to develop and

expand.

6. The principle of cooperation should be applied whenever possible and a

steadily increasing proportion of the activities of the private sector developedalong cooperative lines.

7. The adoption of the socialist pattern of society as the national objective.

8. The need for planned and rapid development.

10. All industries of basic and strategic importance, or in the nature of public

utility services, should be in the public sector.

11. It is always open to the State to undertake any type of industrial

production.

12. Categorization of industries;

i) In the first category will be industries the future

development of which will be the exclusive responsibility of the State.

ii) The second category will consist of industries which

will be progressively state- owned and in which the State will, therefore,

generally take the initiative in establishing new undertakings, but in which

private enterprise will also be expected to supplement the efforts of the State.

iii) The third category will include all the remaining industries,

and their future development will, in general, be left to the initiative and

enterprise of the private sector.

13. The Government of India would stress the role of cottage and village and

small scale industries in the development of the national economy.

14. Disparities in levels of development between different regions should be

progressively reduced.

Industrial Policy Resolution of 1973 (February 02, 1973):

1. The Industrial Policy Resolution of 1956 still remained valid, but certainstructural distortions had crept in the system.

2. The new policies were hence directed towards removing these distortions.3. It provided for a closer interaction

between the agricultural and industrial sectors.

4. Accorded the highest priority to the generation and transmission of power.

5. An exhaustive analysis of industrial products was made to identify productswhich are capable of being produced in the small scale sector.


16/17


6. The list of industries exclusively reserved for the small scale sector was

expanded from 180 items to more than 500 items.

7. Within the small scale sector, a tiny sector was also defined with investment in

machinery and equipment up to Rs.1 lakh and situated in towns with a population

of less than 50,000 according to 1971 census figures, and in villages.

9. It was also decided that compulsory export obligations, merely for ensuring theforeign exchange balance of the project, would no longer be insisted upon while

approving new industrial capacity.

10. In the areas of price control of agricultural and industrial products, the prices

would be regulated to ensure an adequate return to the investor.

Industrial Policy Resolution of 1977 (December 23, 1977):

1. Industrial Policy Highlights on producing inputs needed by a large number ofsmaller units and making adequate marketing arrangements.

2. To boost the development of small scale industries, the investment limit in thecase of tiny units was enhanced to Rs.2 lakh, of a small scale units to Rs.20lakh and of ancillaries to Rs.25 lakh

3. A scheme for building buffer stocks of essential raw materials for the Small

Scale Industries was introduced for operation through the Small Industries

Development Corporations in the States and the National Small Industries

Corporation in the Center.

4. Industrial processes and technologies aimed at optimum utilization of energy or

the exploitation of alternative sources of energy would be given special

assistance, including finance on confessional terms.

Industrial Policy Resolution of July 1980

It was based on the Industrial Policy Resolution of 1956

(i) Optimum utilization of installed capacity;

(ii) Maximum production and achieving higher productivity;

(iii) Higher employment generation;

(iv) Correction of regional imbalances;

(v) Strengthening of the agricultural base through agro based industries and

promotion of optimum inter-sectoral relationship;

(vi) Promotion of export-oriented industries;

(vii) Promotion of economic federalism through equitable spread of

investment and dispersal of returns;(viii) Consumer protection against high prices and bad quality.

The New Industrial Policy of 1991 (July 24, 1991):

1. Government is pledged to launching a reinvigorated struggle for social and

economic justice, to end poverty and unemployment and to build a modern,

democratic, socialist, prosperous and forward-looking India.

2. Such a society can be built if India grows as part of the world economy and not

in isolation.

3. While Government will continue to follow the policy of self-reliance, there

would be greater emphasis placed on building up our ability to pay for importsthrough our own foreign exchange earnings.


17/17

Divyesh Kumar GAT Bangalore 17

4. Government is also committed to development and utilization of indigenous

capabilities in technology and manufacturing as well as its up gradation to world

standards.

5. Government will continue to pursue a sound policy framework encompassing

encouragement of entrepreneurship, development of indigenous technology

through investment in research and development, bringing in new technology,dismantling of the regulatory system, development of the capital markets and

increasing competitiveness for the benefit of the common man.

6. The spread of industrialization to backward areas of the country will be

actively promoted through appropriate incentives, institutions and infrastructure

investments.

7. Government will provide enhanced support to the small-scale sector so that it

flourishes in an environment of economic efficiency and continuous technological

up gradation.

8. Foreign investment and technology collaboration will be welcomed to obtain

higher technology, to increase exports and to expand the production base.

9. Government will endeavor to abolish the monopoly of any sector or anyindividual enterprise in any field of manufacture, except on strategic or military

considerations and open all manufacturing activity to competition.

10. The Government will ensure that the public sector plays its rightful role in the

evolving socioeconomic scenario of the country. Government will ensure that the

public sector is run on business lines as envisaged in the Industrial Policy

Resolution of 1956 and would continue to innovate and lead in strategic areas of

national importance.

11.Government will fully protect the interests of labour, enhance their welfare and

equip them in all respects to deal with the inevitability of technological change.

12. Labour will be made an equal partner in progress and prosperity.

13. Workers participation in management will be promoted.

14. Workers cooperatives will be encouraged to participate in packages

designed to turn around sick companies.

15. The major objectives of the new industrial

policy package will be to build on the gains already made, correct the

distortions or weaknesses that may have crept in, maintain a sustained growth in

productivity and gainful employment and attain international competitiveness.

16. need to preserve the environment and ensure the efficient use of available

resources.

17. Governments policy will be continuity with change.

18. In pursuit of the above objectives, Government have decided to take a series ofinitiatives in respect of the policies relating to the following areas.

A. Industrial Licensing.

B. Foreign Investment.

C. Foreign Technology Agreements.

D. Public Sector Policy.

E. MRTP Act.

edp 4module

Documents