Institutional support to start up and incentives for ssi

Prepared by: Dr. Parul Chotalia, Director, TNRCMS, Rajkot

Industrialization plays a significant role in the economic development

Industrial structure of a country- large, medium, small scale industries

The idea to promote the development of SSI mooted by Mahatma Gandhi in 1937

Low capital intensity and high employment potential


SSI broadly classified into two:

Traditional Industries

Small Scale Industrial Units

Traditional Industries:

Khadi and Village Industries (KVI)

Handlooms

Handicrafts

Coir


Small Scale Industrial Units:

Small scale industries undertakings

Export-oriented SSI units

Ancillary industrial undertakings

Tiny enterprises

Small-scale services and business enterprises

Power looms


The term small-scale industries has been classified in three ways:

Conventional small-scale

Operational small-scale &

National Income Accounting


Conventional small-scale :

It includes cottage and handicraft units which employ traditional labour-intensive methods to produce traditional products, mostly in village households


Operational small-scale :

For policy purposes, includes all those undertakings having an investment of up to Rs. 60 lakh in fixed assets in plant and machinery, whether held on ownership terms or on lease or buy or hire-purchase


Tiny units and Ancillary units also come under the umbrella of small-scale industries

Tiny units is one whose investment in fixed assets in plant & machinery does not exceed Rs. 5 lakh


Ancillary undertakings is one whose investment in plant & machinery does not exceed Rs. 75 lakh and is engaged in any of the following:

Manufacture of parts, components, sub-assemblies or tooling

Rendering services of supplying 1/3 per cent of their total service or production, as the case may be, to other units for production of other articles


National Income Accounting:

It includes all manufacturing and processing activities, including maintenance and repair services, undertaken by both household and non-household small-scale manufacturing units which are not registered under the Factories Act


Latest Classification of SSI:

Micro, Small and Medium Enterprises Development Act, 2006 coming into force, the definitions and nomenclature have been revised from October 2006

Enterprises have been classified into the following two categories:

1.Enterprises engaged in the manufacture and production of goods pertaining to any industry

2.Enterprise engaged in providing or rendering services


Govt. single larger buyer of a variety of goods from the small scale sector

The programme is operated by Director-General of Supplies and Disposals

The items of govt. purchases divided into six groups:

Group-I : Items purchased from large scale units

Group-II : Items purchased from large scale units but sub-contracted to ancillaries and SSI

Group-III : Items purchased from LSU & SSI

Group-IV : Items purchased entirely from SSI

Group-V : 75% of requirement from SSI

Group- VI : 50% of requirement from SSIPrepared by: Dr. Parul Chotalia,

Director, TNRCMS, Rajkot

Work as indirect marketing assistance

Work for ancillary development

Promote sub-contracts between large and medium scale industries

Intermediary as Trade Centres for SSI & Buyers

Work for promotion of SSI export

Regularly collects and assimilates useful statistics about SSI by surveys and studies includes: industry outlook reports, industry prospect sheets, area surveys, market surveys…


It was established by the Union Ministry of Industry in 1955

It was set up with the objective of supplying machinery and equipment to SSI on hire-purchase basis

It is established to promote, aid and foster the growth of SSI

It has been re-orienting its strategies for developing competitive ability in small scale units


It offers an integrated package of financial services of long range interest to small scale sector

Its focus is on the direction of helping SSI :

To strengthen their efforts at technological upgradation

Adoption of new processes and technologies

Diversification and improvement of R & D capabilities

Export orientationPrepared by: Dr. Parul Chotalia,


It is founded in 1990

Wholly owned subsidiary of IDBI

ACTIVITIES:

Refinancing of term-loans granted by SFCs/SIDCs

Provides term-loan and equipment finance to existing well-run small scale units

Provides pre-shipment credit in foreign currency to SSIs

Direct equity investment in SSIs


Financial assistance to enable well-run export-oriented units to acquire ISO 9000 series certification

Provides assistance for infrastructure development

Assist in creation of marketing channels and development of industrial areas


Introduced various schemes:

Seed capital

National Equity Fund

Mahila Udyam Nidhi

Self Employment Scheme for Ex-servicemen

Self Employment Scheme Under Prime Minister’s Rozgar Yojana

Micro Credit Scheme

Rural Industrial Programme


Established on 1st July 1964 as an apexnational development bank in the fieldof industrial finance in India

For the first 12 years functioned as a whollyowned subsidiary of RBI

IDBI Assistance

Project costing more than Rs. 3 crore areprovided direct assistance under variousschemes of IDBI


Projects costing less than 3 crore,comprising small and medium size units,village and cottage industrial units in tinysector are given assistance by way of re-financing

Criteria for refinance assistance:

Cost of project should not exceed Rs. 3crore

Interest rates and other terms andconditions of loans as per stipulationmade by IDBI Prepared by: Dr. Parul Chotalia,


TCOs provides consultancy services andcounseling to Small Scale Entrepreneursfor preparation of :

Techno-economic reports

Market surveys

Modernization and diversificationprogrammes

Preparing applications to financialinstitutions and banks

Provides these services at reasonablerates...


Subsidy ranging 50% to 75% of the TCOsfees subject to certain ceiling isprovided by IFCI to TCOs for passing iton to the beneficiary units

Facilitate small scale and ancillary unitsto put together modernization packagesand adopt improved and updatedtechnology and methods ofproduction...


Over 16 TCOs are currentlyfunctioning in different parts ofthe country


Set up in most states to promote the SSI

Perform the following functions:

Distribution of raw materials

Provide marketing assistance

Operate industrial estates and develop industrial plots

Supply machinery on hire-purchase basis

Manage units taken over by the Govt.

Grant financial assistancePrepared by: Dr. Parul Chotalia,


The programme of establishing industrial estate started in 1955

Objectives:

Encouraging and promoting SSI

Promoting decentralized industrial developmentin small towns and large villages

Provide built in factory sheds, power and waterfacilities, roads, godowns, common facilityservices and workshops

Assisting growth of ancillary industries in thetownships surroundings major industrialundertakings


Types of Industrial Estates:

General Purpose or Composite Industrial Estates

Ancillary Industrial Estate

Functional Industrial Estate

Flatted Industrial Estate

Special Purpose Industrial Estate

Rural Industrial Estate


Established in 1970 as an autonomous non-profit society to assist export promotion

Plays a role of catalyst/medium

It emphasize on specific products, specificmarkets and specific buyers following theconcept of selectivity

Assists the SSI in form of technical guidancethrough product adaption and amendment,product development, trade fairs, buyer-sellers meet, etc.

Compiles and brings out country bulletins toconvey information to exporters


A fully Govt-owned organization

India’s premier premier trading house

Assists the SSI in developing areliable supply base for increasingtheir exports

Assists in upgrading the quality ofproducts, technical expertise, supplyof equipment and machinery at lowinterest rates


Formulated in 1981

Provides strength to potential small scaleunits

Export consortium of small industries can beformed by 10 or more small scale units forselected items/products manufactured bythem

Assists the member units in organizedmarketing efforts, negotiate and obtainorders, establish distribution channels andorganizes marketing and sales promotionprogrammes


Established in 1966

Functions as catalyst for thepromotion and strengthens industrialco-operation

Its marketing assistance role:

Opens branches, establishes godownsand sales depots

Undertakes publicity programmes topromote salability of the products


Organizes/encourage participating inexhibitions

Establishes liaison/link withprospective consumers within andout-side country

Conducts/commissions marketresearch and surveys and providesinformation to group members


ECGC is an export promotion co. that works under the command of Dept. of commerce, Ministry of Commerce & Industry and Govt. of India

It offers covers of credit risk insurance to exporters

Assistance to SSI:

Offers insurance protection to exporters against payment risk


Makes it easy to obtain export finance from banks/financial institutions

Provides information on credit-worthiness of overseas buyers

Assists exporters in recovering bad debts

Offers assistance in export-related actions


Established in 1963 as an autonomousorganization to promote small industryexports

Renders services in regards with trainingand research

Organizes research studies and publishesthe data in interest to the small scalesector

Recent innovative services like preparationof film documentary on “success story of asmall manufacturer-exporter”Prepared by: Dr. Parul Chotalia,


Established in January 1982

Provides financial assistance toexporters and importers

EXIM Banks export financing schemescomprise of the following:

Direct financial assistance to Indianexporters

Pre-shipment credit to Indian exportersfor purchasing raw-materials tofacilitate production for export


Refinance of export credit tocommercial banks authorized to dealin foreign exchange

In 1984, EXIM introduced a newfinancial programme to supportdeemed exports in India which resultin foreign exchange earning orsavings of foreign exchange.


First national level development bank

Set up in 1948, soon after independence by an Act of Parliament

Provides medium and long term finance to eligible industrial concerns in the country

IFCI’s activity classified into two:

Project Financing Operations

Promotional ActivitiesPrepared by: Dr. Parul Chotalia,


Project Financing Operations

Benefit to medium-large and large sizedindustrial projects organized in co-operative or corporate sector

Provide support measures to improveproductivity of human and materialresources and accelerate the process ofindustrialization

It participates with IDBI and ICICI toprovide a range of services


Promotional Schemes

Divided into three categories:

Consultancy Fee Subsidy Schemes

Interests’ Subsidy Scheme

Assistance Schemes


Consultancy Fee Subsidy Schemes

Scheme of subsidy for meeting cost of feasibility studies to small entrepreneurs in rural, cottage, tiny and small scale sector

Scheme of subsidy for promotion of ancillary and small scale industries

Scheme of subsidy to new entrepreneurs for meeting cost of market research/surveys

Scheme of subsidy for providing marketing assistance to SSI Prepared by: Dr. Parul Chotalia,


Scheme of subsidy for revival of sick units in tiny and small scale sector

Scheme of subsidy for implementing modernization programme of small scale sectors

Scheme of subsidy for control of pollution in small and medium scale units

Interest’ Subsidy Scheme

Interest subsidy for Self Development and Self Employment of Unemployed Young Persons


Scheme of interest subsidy to women entrepreneurs

Interest subsidy for encouraging adoption of indigenous/local technology

Scheme of interest subsidy for encouraging quality control measures in SSI

Assistance Scheme

Scheme of assistance for encouraging quality control measures in small scale sector Prepared by: Dr. Parul Chotalia,


IRBI-Industrial Reconstruction Bank of India

IFCI-Industrial Finance Corporation of India

ICICI-Industrial Credit and Investment Corporation of India Ltd.

EDII-Entrepreneurship Development Institute of India

IRDP-Integrated Rural Development Programme


Institutional support to start up and incentives for ssi

Documents

Transcript of Institutional support to start up and incentives for ssi