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Government Encouragement to Entrepreneurship

From-BADM Dept.

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An entrepreneur requires a continuous flow of funds not only for setting up of his/ her business, but also for successful operation as well as regular up gradation/ modernization of the industrial unit. To meet this requirement, the Government (both at the Central and State level) has been undertaking several steps like setting up of banks and financial institutions; formulating various policies and schemes, etc. All such measures are specifically focused towards the promotion and development of small and medium enterprises.

The government of India has been taking active steps to promote entrepreneurship in various industry & service sectors. It has declared several policy measures and is implementing schemes and programmes to enhance the global competitiveness of small enterprises across the country.

Government Support

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Policies and Incentives

The Ministry of Micro, Small and Medium Enterprises is the nodal Ministry for formulation of policies, programmes and schemes, their implementation and related co-ordination, for the promotion and development of small scale industries in India. The role of the Ministry is to assist the States in their efforts for the growth of the small scale sector, by enhancing their competitiveness in an increasingly liberalized economy. It is assisted by an attached office and two public sector enterprise, namely:-

Micro, Small and Medium Enterprises Development Organization (MSME-DO)

National Small Industries Corporation Ltd (NSIC)

Khadi and Village Industries Commission (KVIC)

Coir Board

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Micro, Small and Medium Enterprises Development Organization (MSME-DO) :- the Office of the Development Commissioner (Micro, Small and Medium Enterprises) is also known as Micro, Small and Medium Enterprises-Development Organization (MSME-DO). It is the apex body for assisting the Government in formulating, coordinating, implementing and monitoring policies and programmes for micro, small and medium enterprises (MSMEs) in the country. MSME-DO provides a comprehensive range of common facilities, technology support services, marketing assistance, entrepreneurial development support, etc.

Coir Board :- is a statutory body, established under the Coir Industry Act, 1953, for the promotion and development of coir industry in India as well as for uplifting the living conditions of the workers engaged in this industry.

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National Small Industries Corporation Ltd (NSIC) :- was established by the Government with a view to promoting, aiding and fostering the growth of micro, small and medium enterprises in the country, with a focus on commercial aspect of their operations. It implements several schemes to help the MSMEs in the areas of raw material procurement, product marketing, credit rating, acquisition of technologies, adoption of improved management practices, etc.

Khadi and Village Industries Commission (KVIC) :- established under the Khadi and Village Industries Commission Act, 1956, as a statutory organisation engaged in promotion and development of khadi and village industries for providing employment opportunities in the rural areas.

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The other important policies for the sector relate to:

I. Excise dutyII. Foreign direct investment approvalIII. Labour laws

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Excise duty

Value of Clearance (Rs.) Rate of duty

Upto 100 Lakhs 60% of normal rate

100-300 Lakhs Normal rate of duty

Rate of duty in respect of Clearances of Specified goods

Rate of duty in respect of Clearances of Specified goods

Value of Clearance (Rs.) Rate of duty

Upto 100 Lakhs Nil

100-300 Lakhs Normal rate of duty

Rate of duty in respect of Clearances of Excisable Goods

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Foreign direct investment approval

FDI is an investment in a business by an investor from another country for which the foreign investor has control over the company purchased.

An industrial undertaking, i.e., a company with interests in industry can invest up to 24% equity in a SSI unit.

If the equity goes beyond 24%, the industrial unit loses its SSI status.

There is no restriction on the extent of equity that can be held by a Non-resident Indian (NRI) as an individual/partner in a SSI unit.

Investors need to file an application with the Reserve Bank of India (RBI) in the prescribed format and approval is ordinarily granted within 15 days.

For foreign investment outside the automatic route, clearance has to be obtained from Foreign Investment Promotion Board (FIPB).

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Labour laws

Employment Exchange (Compulsory Notification of Vacancies) Act, 1959

Equal Remuneration Act, 1976The Factories Act, 1948The Industrial Disputes ActThe Industrial Employment (Standing Orders) Act,1946The Inter-state Migrant Workmen (Regulation of Employment

and Conditions of Service) Act, 1979Labour Laws (Exemption from Furnishing Returns & Maintaining

Registers by Certain Establishments) Act, 1988The Sales Promotion Employees (Conditions of Service) Act, 1976The Shops and Establishments Act, 1953The Trade Union Act, 1926Workmen’s Compensation Act, 1923The Weekly Holidays Act, 1942

Apprentices Act, 1961The Bidi and Cigar Workers (Conditions of Employment) Act, 1966Bonded Labour System (Abolition) Act, 1976Child Labour (Prohibition & Regulation) Act, 1986The Children (Pledging of Labour) Act, 1933The Contract Labour (Regulation & Abolition) Act, 1970The Employees Provident Funds and Misc. Provisions Act, 1952Employees State Insurance Act, 1948Employers Liability Act, 1938Maternity Benefit Act, 1961The Minimum Wages Act, 1948The Payment of Bonus Act, 1965The Payment of Gratuity Act, 1972The Payment of Wages Act, 1936

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Schemes and Programmes:

Besides, several schemes and programmes have been undertaken by the Government with the aim of facilitating access to:-

i. adequate credit from financial institutions;

ii. funds for technology upgradation and modernisation;

iii. integrated infrastructural facilities;

iv. modern testing facilities and quality certification laboratories;

v. modern management practices, entrepreneurship development and skill up gradation through appropriate training facilities; etc.

The schemes so announced include:- (next slide)

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Schemes and Programmes:…contd…

Tax Holiday Scheme Composite Loan Scheme Industrial Estate Scheme Scheme for International Cooperation Scheme of Surveys, Studies and Policy Research Scheme of Fund for Regeneration of Traditional Industries (SFURTI) Scheme of Product Development, Design Intervention and Packaging

(PRODIP) Scheme of Khadi Karigar Janashree Bima Yojana for Khadi Artisans Scheme of Interest Subsidy Eligibility Certification (ISEC)

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Government help & Assistance

Technical Assistance

Raw material Assistance

Cash Assistance

Supply of Machinery & Equipment

Marketing Assistance

Assistance to small Entrepreneurs

Rural Industrial Project Assistance

Help to disabled Entrepreneurs

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Government help & Assistance

Training Assistance to Women Entrepreneurs

Single point registration for Government Purchase

Facility of Exhibition

Buyer Seller Meet

Credit Support to MSMEs

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Government Incentives

Investment Subsidy

Export/ Import Subsidy

Research & Development Subsidy

Tax Subsidy

Subsidy relating to Resources

Capital Subsidy Scheme for Technology Upgradation

Excise duty Exception

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Government schemes for Infrastructural Facilities

Industrial Estates Programme

Integrated Infrastructural Development Scheme

Small Industry Clusters

MSME tool Rooms

Technology Development Centres

Testing Centres & Stations

Technology & Quality Upgradation

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Government schemes for Infrastructural Facilities

Design Clinics

Promotion of Information & Communication Tools

WTO sensitization Workshop

Vendor Development

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