assignment debu

7/29/2019 Assignment Debu

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Chaitannya Bhangale M1162

Introduction

A small scale industry (SSI) is an industrial undertaking in which the investment in fixed

assets in plant & machinery, whether held on ownership term or on lease or hire purchase, does not

exceed Rs. 1Crore. However, this investment limit is varied by the Government from time to time.Entrepreneurs in small scale sector are normally not required to obtain a licence either from the

Central Government or the State Government for setting up units in any part of the country.

Registration of a small scale unit is also not compulsory. But,its registration with the State

Directorate or Commissioner of Industries or DIC's makes the unit eligible for availing different

types of Government assistance like financial assistance from the Department of Industries, medium

and long term loans from State Financial Corporations and other commercial banks, machinery on

hire-purchase basis from the National Small Industries Corporation,etc. Registration is also an

essential requirement for getting benefits of special schemes for promotion of SSI viz. Credit

guarantee Scheme, Capital subsidy, Reduced custom duty on selected items, ISO-9000 Certification

reimbursement & several other benefits provided by the State Government.

The Ministry of Micro, Small and Medium Enterprises acts as the nodal agency for growth and

development of SSIs in the country. The ministry formulates and implements policies and

programmes in order to promote small scale industries and enhance their competitiveness. It is

assisted by various public sector enterprises like:-

Small Industry Development Organisation (SIDO) is the apex body for assisting the

Government in formulating and overseeing the implementation of its policies and

programmes/projects/schemes.

National Small Industries Corporation Ltd (NSIC) was established by the Government with

a view to promoting, aiding and fostering the growth of SSI in the country, with focus on

commercial aspects of their operation.

The Ministry has established three National Entrepreneurship Development Institutes which

are engaged in development of training modules, undertaking research and training and

providing consultancy services for entrepreneurship development in the SSI sector. These

are:-

o National Institute of Small Industry Extension Training (NISIET) at Hyderabad,

o National Institute of Entrepreneurship and Small Business Development

(NIESBUD) at NOIDA

o Indian Institute of Entrepreneurship (IIE) at Guwahati

The National Commission for Enterprises in the Unorganised Sector (NCEUS) has been

constituted with the mandate to examine the problems of enterprises in the unorganised

sector and suggest measures to overcome them.

Small Industries Development Bank of India (SIDBI) acts as apex institution for financing

SSIs through various credit schemes.

Provisions relating to taxation of Small Scale Industries

In a developing country like India, Small Scale Industries play a significant role in economic

development of the country. They are a vital segment of Indian economy in terms of their

contribution towards country's industrial production,exports,employment and creation of an

entrepreneurial base.These industries by and large represent a stage in economic transition fromtraditional to modern technology. Small industry plays a very important role in widening the base of

entrepreneurship. The development of small industries offers an easy and effective means of


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achieving broad based ownership of industry, the diffusion of enterprise and initiative in the

industrial field.

Given their importance,the Government policy framework right from the First plan has highlighted

the need for the development of SSI sector keeping in view its strategic importance in the overall

economic development of India. Accordingly, the policy support from the Government towards

Small Scale Industries has tended to be conducive and favourable to the development of small

entrepreneurial class. Government accords the highest preference to development of SSI by framingand implementing suitable policies and promotional schemes.

The most important promotional policy of the Government for the SSI's is fiscal incentives in the

form of tax concessions and exemptions of direct or indirect taxes leviable on production or profits.

POLICY SUPPORT

After attaining independence in 1947 India adopted mixed economic planning as amethod to achieve economic development. Along with the Large Scale sector the thrust was on

Small Scale sector because of it decentralized, its small size, use mainly indigenous technology,

employment intensity and its suitability for rural area with limited techno-economic structure.

Industrial policies over the year have focused to promote SSIs through various incentives related to

financial, fiscal and infrastructure measure; along with a heavy industrial base.The various

provisions under Industrial Policy Resolutions formulated by the government in assisting the small

scale industries (SSI) The various fiscal incentives for SSIs

INDUSTRIAL POLICY RESOLUTION AND SSIs INDUSTRIAL POLICY RESOLUTION

1948

1. SSIs are particularly suited for the utilization of local resources and creation of

employment opportunities.

2. The primary responsibility for developing small industries by creating infrastructure has

been provided to state government.

3. Central government frame the broad policies and coordinates the efforts of State

Government for development of SSIs.

INDUSTRIAL POLICY RESOLUTION 1956

1. It stated that besides continuing the policy support to cottage, village and small industries

by differential taxation or direct-subsidies, the aim of state policy would be that the

development of this sector is integrated with that of large scale industry.

2. The focus was to improve the competitive strength of SSIs. 3.

To achieve this 128 items were exclusively reserved for production in SSIs, and 166 items

were reserved for exclusive purchase by government from this sector.


The main thrust of policy was effective promotion of cottage, village and small industries

widely dispersed in rural area and small towns. This thinking specified the following things: 504items were reserved for exclusive production in the small scale industries. The concept of District

Industrial Centers (DICs) was introduced to that in each district a single agency could meet all the


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requirement of SSIs under one roof. Technological up gradation was emphasized in traditional

sector. Special marketing arrangements through the provision of services, such as, production

standardization, quality control, market survey, were laid down.


Main feature of this resolution are as follows: 1. It raised the investment ceiling in plant

and machinery for SSIs. 2. It created central investment subsidy for this sector in rural andbackward area. Also, assistance was granted to woman entrepreneurs for widening the

entrepreneurial base. 3. Reservation of items to be produced by SSIs was increased to 836. 4. Small

Industries Development Bank of India was established to ensure adequate flow of credit to SSIs. 5.

Stress was reiterated to upgrade technology to improve competitiveness. 6. Special emphasis was

laid on training of woman and youth under Entrepreneurial Development Programme. 7. Activities

of Khadi and Village Industries Commission and Khadi and Village Industrial Board were to

expand.


The basic thrust of this resolution was to simplify regulations and procedures by

delicensing, deregulation Its salient feature is: SSIs were exempted from licensing for all articles ofmanufacture. The investment limit for tiny enterprises was raised to Rs.5 lacs irrespective of

location. Equity participation by other industrial undertaking was permitted up to a limit of 24% of

shareholding in SSIs. Factoring services were to launch to solve the problem of delayed payment to

SSIs. Priority was accorded to small and tiny units in allocation of indigenous and raw materials.

Market promotion of products was emphasized through co-operatives, public institutions and other

marketing agencies and corporations.

COMPREHENSIVE POLICY PACKAGE FOR SSIS AND TINY SECTOR 2000

The exemption for excise duty limit raised from 50lakhs to Rs One crore to improve the

competitiveness. The third census of small scale industries by the ministry of SSI was conducted.

which also covered sickness and its causes in SSIs. The limit of investment was increased in

industry related service and business enterprises from Rs 5lakhs to Rs 10lakhs. The scheme of

granting Rs 75000 to each small scale enterprise for obtaining ISO 9000 certificate was continued

till the end 10 th plan. SSI associations were motivated to develop and operate testing laboratories.

One time capital grant of 50% was given on reimbursement basis to each association. The limit of

composite loan was increased from Rs10lakhs to Rs 25lakh. The coverage of ongoing Integrated

Infrastructure Development (IID) was enhanced to cover all area in the country with 50%

reservation for rural area and 50%earmarking of plots for tiny sector. The family income eligibility

limit of Rs 24000 was enhanced to Rs 40000 per annum under the Prime Minister Rozgar Yozna

(PMRY).

INDUSTRIAL POLICY PACKAGE FOR SSI 2001-02

This policy emphasizes the following: The investment limit was enhanced from Rs 1crore for

to Rs 5 crore for units in hosiery and hand tool sub sectors. The corpus fund set up under the Credit

Guarantee Fund Scheme was increased from 125 crore to 200 crore . Credit Guarantee cover was

provided against an aggregate credit of Rs 23 crore till December 2001. 14 items were de-reserved

in June 2001 related to leather goods, shoes and toys. Market Development Assistant Scheme was

launched exclusively for SSI sector. Four UNIDO assisted project were commissioned during the

year under the Cluster Development Programme .

INDUSTRIAL POLICY ON SSIS 2004-05

Policy initiatives for this year are as follows: The national commission on Enterprises inthe Un-organized/Informal Sector was set up in September 2004.It suggested measures considered

necessary for improvement in the productivity of these enterprises, generation of large scale


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employment opportunities, linkage of the sector to institutional framework in area like credit,raw

material supply, infrastructure, technology up gradation ,marketing facilities and skill development

by training . 85 items were de-reserved in October 2004. The investment limit in plant and

machinery was raised from Rs One crore to Rs 5crore in October 2004,in respect of seven item of

sports goods to help to upgrade the technology and enhance competitiveness. The Small and

Medium Enterprise (SME) fund of Rs 10000 crores was stared by SIDBI since April 2004,with

80% of the lending for SSI units. The interest rate was 2%below the prevailing Prime Lending Rate(PLR) of the SIDBI. The reserve Bank of India raised the composite loan limit from Rs 50 lakhs to

Rs One crore. Promotional Package for small enterprises was initiated.

POLICY PACKAGE FOR SME 2005-06

Small and Medium Enterprises were recognized in the services sector , and were treated on

par with SSIs in the manufacturing sector. The corpus of the Credit Guarantee Fund was raised from

Rs 1132 crore in March 2006 to Rs 2500 crore in five years. Credit Guarantee Trust for Small

Industries (CGTSI) was advised to reduce the one time guarantee fee from 2.5% to 1.5% for all

loans. Insurance cover was extended to proximately 30,000 borrowers, identified as chief

promoters, under the CGTSI. The sum assured would be Rs 200000 per beneficiary and the

premium will be paid by CGTSI. The emphasis was laid on Cluster Development model not only topromote manufacturing but also to renew industrial towns build new industrial township . The

model is now being implemented, in nine sector including khadi and village industries, handlooms,

textiles, agricultural products and medicinal plants.

FISCAL SUPPORTFiscal incentives are provided through tax concessions granted in the form of exempted of

direct or indirect taxes leviable on production or profits, besides special tax concessions. These

incentives have been provided to promote the SSIs and discussed in following:

TAX HOLIDAYWith effect from financial year 2005-06, deduction in respect of profit and gains for small

scale industrial undertaking is available under Section 80IB. Small scale industrial undertaking can

claim deduction at the following rates: If SSI unit is owned by a company , the deduction available

is 30% for first 10 year , If SSI unit is owned by a co-cooperative society, the deduction to be

availed is 25% for first 10 years , and If any other person owns SSI units ,the deduction to be

claimed is 25% for first 10 years .

TAX EXEMPTION CONDITIONS

No small scale or ancillary undertaking shall be subsidiary of, or owned or controlled by

other industries undertaking. The SSI unit should commence business between 1 st April1991 and

31 st March 2002. SSI unit can manufacture any nature/type of goods /article to avail deduction.They should employ at least 10 workers in manufacturing process carried out with aid of power or

at least 20 worker in manufacturing process carried out without the aid of power. This tax

exemption from total income is allowed from the assessment year in which the unit being to

manufacture or produce goods or articles.

EXCISE CONCESSIONS

Government of India has provided a major relief by grating full exemption from the

payment of central excise duty on a specified output and thereafter slab-wise concessions. The

following concessions are available to them in this regard:

1. SS units producing goods up to Rs.100 lakhs are exempted from payment of excise

duties.2. SSI units having turnover less than Rs.60 lakhs per annum need not have a separate

storeroom for storing the finished products.


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3.SSIs are also not required to maintain any statutory records such as daily stock account of

production and clearance , raw material account ,personal ledger account etc. their own record are

adequate for excise purpose.

4. There is no distinction between registered and unregistered units for SSI concessions for SSIs has

been based on annual turnover rather than SSI registration . Duty liability is to be discharged by 15

th of following month.

5. The SSI exemption is available for home consumption ,as well as in respect of goods exported toNepal & Bhutan.

6. Normally ,excise officers are not expected to visit SSI units paying less than Rs.11lakhs duty

annually.

7.With effect from 1-4-1994, Gate Pass System was replaced by manufacturer invoice to cover

clearance of goods as the duty-paying document.

SSI Scheme (with CENVAT)

With effect 1 st April 2003. It provides the concessional rate of duty in respect of clearance

of specified goods for home consumption and also states that all clearance of the specified goods

which are used for captive consumption in production of the specified goods shall be subjected to

be nil rate of duty. Rate of duty in respect of clearance of Specified goods. Value of clearance (Rs)Rate of duty up to 100 lakhs 60%of normal rate 100-300 lakhs normal rate of duty

MEASURES FOR PROMOTION AND DEVELOPMENT OF SSIs

Central and state Government have formulated several schemes to make the SSIs vital and

competitive. Reservation policy Governments purchased preference policy for SSI products.

Governments price preference policy for marketing SSI products. Technical assistance Raw

material assistance Financial assistance New initiatives

RESERVATION POLICY

Out of 836 items reserved in 1989,39 items were dereserved in four phases viz., 15 items

in 1997 9 items on 1999 1 item on 2001 and, 14 item on 2001.subsequently, 51 item were

dereserved in 2002, 75 item in 2003 and 85 items in 2004, 108 in March 2005 and 180 in May

2006. Now 298 items stand reserved for this sector.

CREDIT SUPPORT

The Central and the State Governments have been making all efforts for meeting the financial

requirements of the entrepreneurs. These are in the form of several financial schemes and fundingoptions offered by the ministries, public and private banks, small industries development

organisation, national small industries corporation limited, state financial corporations, etc. Thus,

India has a sound financial structure which is capable of providing a strong base for setting up of

business units in the country.

Government Funding and Schemes

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 upgradation/ modernisation 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 focussed towards the promotion and developmentof small and medium enterprises.


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The public sector banks are the major source of financial assistance to the industrial sector. They

extend credit support to the firms in the form of loans, advances, discounting bills, project

financing, term loans, export finance, etc. Some of the major examples of such banks are:-

1. State Bank of India (SBI) provides a wide range of financial products and services that can

cater to any business or market requirement. It deploys multiple channels to deliver

integrated solutions for all financial challenges faced by the corporate universe. Its variousfunding schemes are:-

Working capital finance, extended to all segments of industries and services

sector.

Corporate term loans to support capital expenditures for setting up new ventures

as also for expansion, renovation, etc.

Deferred payment guarantees to support purchase of capital equipments.

Project finance

Structured Finance

The bank also provides financial assistance to agriculturists through a network of rural and

semi-urban branches. These specialized branches have been set up in different parts of the

country exclusively for the development of agriculture through credit deployment. Their

schemes cover a wide range of agricultural activities like crop loan, finance to horticulture,

farm mechanization schemes, land development schemes, minor irrigation projects,

agricultural term loans, etc.

2. Bank of Baroda offers various products and services that meet the specific requirements of

business enterprises, particularly the small scale units. Various schemes relating to the

provision of loans and advances by the bank include:-

Working Capital Finance Term Finance

Small and Medium Enterprise (SME) Loan Pack

Small Business Borrowers

Traders Loan

3. Andhra Bank has also devised a host of loan schemes to meet the financial requirements of

an enterprise. These particularly cater to the corporate and agricultural sector. Some of its

important funding options include:-

Working Capital Loans

Export & Import Finance

Advance against Shares

Term Finance

Corporate Loans

Project Finance

Infrastructure Project Finance

Kisan Vikas Card

Kisan Sampathi

Self Help Groups-Bank Linkage Programme

Kisan Green Card

Small scale industries need credit support on a continuous basis for running the enterprise as well asfor its diversification and modernisation. Recognising the need for a focused financial assistance to

such industries, the Government of India, together with the State Governments, has formulated


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several policy packages including schemes and funds for their growth and development. Most of

these programmes of the Central Government are implemented through two principal

organisations:-

1. Small Industries Development Organisation (SIDO) is an apex body for promotion and

development of small scale industries in the country.For achieving its objectives, SIDO has

devised a comprehensive range of schemes for providing credit facilities.Some of the majorschemes are:-

Credit Linked Capital Subsidy Scheme for Technology Upgradation

Credit Guarantee Scheme

ISO 9000/ISO 14001 Certification Reimbursement Scheme

Integrated Infrastructure Development (IID Scheme)

SSI MDA Scheme

Assistance to Entrepreneurship Development Institutes

Micro Finance Programme

2. National Small Industries Corporation Ltd (NSIC), has been established with the objective

of promoting, aiding and fostering the growth of small scale industries in the country. It has

been assisting small enterprises through a set of specially tailored schemes which facilitate

marketing support, credit support, technology support and other support services.

Credit support schemes:- NSIC facilitates credit requirements of small enterprises in several areas.

These include:-

Equipment financing through schemes like 'Hire Purchase' and 'Term Loan' for the

procurement of equipments.

Financing for procurement of raw material by facilitating bulk purchase of basic raw

materials at competitive rates, import of scares raw materials, etc. NSIC also takescare of all the procedures, documentation and issue of letter of credit in case of

imports.

Financing for marketing activities such as internal marketing, exports and bill

discounting, etc.

Financing through syndication with banks by entering into strategic alliances with

commercial banks so as to facilitate fund requirement of the small enterprises. It

involves an arrangement of forwarding the loan applications of the interested small

enterprises to the banks.

Performance and credit rating scheme for small industries so as to enable the small

enterprises to ascertain the strengths and weaknesses of their existing operations andtake corrective measures accordingly. NSIC is operating the scheme through

agencies like ICRA, ONICRA, Duns & Bradstreet (D&B), CRISIL, FITCH, CARE

and SMERA.

At the State level, various State Financial Corporations (SFCs) have been set up by the respective

State Governments for providing financial assistance to the industrial units. For this purpose, these

institutions have brought out several funds and schemes, from time to time. There are 18 State

Financial Corporations (SFCs) in the country.

INFRASTRUCTURAL SUPPORT

The Scheme of Integrated infrastructure Development (including technological backup


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services) for small scale industries to facilitate the location of industries in rural/backward areas, to

promote stronger linkages between agriculture and industry and to generate employment was

launched in 1994. By the end of December 1998. 46 IID Centres have been sanctioned in the

rural/backward areas which were not covered under the Growth Centres Scheme being implemented

by the Deptt. of Industrial Policy Promotion to create and develop infrastructural facilities like

developed sites, power distribution network, water, telecommunication s, drainage and pollution

control facilities, road, banks, raw materials depots, storage and marketing outlets, commonfacilities and technological back up services.

Salient features

1. Project size of each Centre would be around15 to 20 hectares.

2. Each IID Centre is expected to accommodate 40 to 450 Small Scale/Tiny Units.

3. Scheme will create and augment infrastructural needs within the project area with full

technological back up.

Technological Support

Technical Development Trust Funds for Technology upgradation / acquisition / transfer in the

small scale sector.

Towards facilitating Industry Associations and NGOs in the programme of technology upgradation

and transfer in small scale sector, a Plan Scheme has been approved for providing grants including

assistance to Technology Development Funds to be created in various states with the involvement

of State Governments and Industry Associations. Total Outlay for this scheme is Rs. 150 lakhs

during Eighth Plan period.

The ratio of contribution to the fund could be 60% from Government of India, 40% from State

Government, Industry Associations and other developmental agencies including banks put together.

The initiative could be with the state Govts./Industry Associations, to rise their contribution of 40%

by mobilising resources at the State level. Assistance to such a fund is restricted to Rs. 30 lakhs per

fund. The scope and activities to be generated out of the Fund are as follows :

This technology fund, inter-alia, is to bring about technological upgradation in selected areas of the

SSI Sector with the involvement of CEIR Labs, Tool rooms, Testing Centres, PPDC etc. It will also

help in development of prototypes, designs, drawing and dissemination of the information through

seminars, workshops, Consultancy etc.

Arranging of technology transfer between SMEs within the country and also by way of arranging

tie-ups for technology transfer between large and small industries, particularly for ancillarisation

and vendor development.

Arranging of technology transfer from Indian small enterprises to small enterprises in other

developing countries.

Quality Support


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Incentives to SSI Units acquiring ISO-9000 Certification

The Government has been considering a scheme to enhance the international competitiveness

of the Small Scale Sector. As a step in that direction, Govt. is operating a scheme to provide

incentives to those Small Scale Undertakings who acquire ISO-9000 Certification or its equivalent .

Salient Features

1. The scheme envisages reimbursement of charges of acquiring ISO-9000 or its equivalent

to the extent of 50% of the cost subject to the maximum of Rs. 75,000/.

2. The Small Scale/Ancillary Undertakings are eligible to avail the incentives.

3. The scheme is applicable for one hundred Small Scale/ Ancillary Units on first come

first serve basis.

4. The scheme is administered by Development Commissioner (SSI).

MARKETING SUPPORTFast changing global economic scenario has thrown up various opportunities and

challenges to the MSMEs in India. While on the one hand, many opportunities are opened up for

this sector to enhance productivity and look for new markets at national and international level, it

has also, on the other hand, put an obligation to upgrade their competencies to meet the competition

as new products are launched at an astonishing pace and are available world wide in short time.

Micro, Small & Medium Enterprises do not have any strategic tools / means for their business/

market development as available with large industries. In the present competitive age, Marketing is

one of the weakest areas wherein MSMEs face major problems.

The Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 addresses

these issues and also other issues relating to credit, marketing, technology upgradation etc

concerning the micro, small and medium enterprises. The enactment of MSMED Act 2006, w.e.f.

from 2nd October, 2006 has brought medium scale industries and service related enterprises also

under the purview of the Ministry, accordingly the name of Ministry has also been changed.

The need of the hour presently is to provide sustenance and support to the whole MSME sector

(including service sector), with special emphasis on rural and micro enterprises, through suitable

measures to strengthen them for converting the challenges into opportunities and scaling new

heights. Under the Scheme, it is proposed to provide marketing support to Micro, Small & Medium

Enterprises through National Small Industries Corporation (NSIC) and enhance competitiveness

and marketability of their products, through following activities:

1. Organizing International Technology Exhibitions in Foreign Countries by NSIC and

participation in International Exhibitions/Trade Fairs

2. Participation in International Exhibitions/Trade Fairs held in Foreign Countries

3. Organizing Domestic Exhibitions and Participation in Exhibitions/ Trade Fairs in India

4. Buyer-Seller Meets

5. Intensive Campaigns and Marketing Promotion Events

Ministry of MSME implements the scheme through National Small Industries Corporation (NSIC),

which carries out the various activities under the Scheme through its offices located all over the

country. Funds for implementing the scheme are placed at the disposal of NSIC, which is wholly

responsible for proper utilisation of the same and submission of Utilisation Certificates and other

reports as required.


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The proposals received under the Marketing Assistance Scheme are examined by a

Screening Committee headed by Director (Planning & Marketing), NSIC which also includes

representatives from Finance and Exhibitions divisions. The Screening Committee shall meet at

least once every month or as and when required.

The progress of the scheme is reviewed and monitored by NSIC as well as Ministry of

MSME from time to time and periodic reports on the progress shall be submitted to the Ministry.

The impact and benefits of the scheme shall also be evaluated through internal studies, samplesurveys, feedback reports etc. as well as study by an independent agency.

Streamlining Inspections/Rules and Regulations

To minimise harassment to Small Scale Sector a Group will be set up to recommend within

3 months, means of streamlining inspections. This will include repeal of laws and

regulations applicable to the sector that have since become redundant.

Self-certification will be progressively encouraged in lieu of inspections, which should be

prescribed under the three following conditions:

1. On receipt of specific complaint;

2. Selection of unit for sample check (Say 10 per cent of total units); and

3. For audit and safety purposes.

Entrepreneurship Development

Capacity building in the SSI sector, both for entrepreneurs as well as workers, will be given toppriority. The Ministry of SSI & ARI and Ministry of Labour will work out the strategy jointly.

Facilitating Prompt Payment

1. The Reserve Bank of India is being requested to appoint a Task Force to go into the question

of strengthening and popularising factoring services, without recourse to the SSI suppliers.

The Task Force shall give its report within six months of its constitution.

2. RBI is being requested to take up with the banks, the question of sub-allocating overall

limits to the large borrowers specifically for meeting the payment obligations in respect of

purchases from the SSIs, either on case basis or on bills basis

Rehabilitation of Sick Units

The recent global slowdown has adversely impacted the Indian economy in general

and more specifically the Micro and Small Enterprises (MSEs). The MSEs suffer the most in

such situations especially from discontinuity of business, which they normally are not in a

position to bear and become sick immediately

In recognition of the problems being faced by the Micro and Small Enterprises (MSE) particularly

with respect to rehabilitation of potentially viable sick units, the Reserve Bank had constituted a

Working Group under the Chairmanship of Dr. K. C. Chakrabarty, then Chairman & Managing

Director, Punjab National Bank.The Working Group, among others, recommended a change in the


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definition of sickness and a procedure for assessing the viability of sick MSE units, with a view to

hasten the process of identification of a MSE unit as sick.

The emphasis of the revised guidelines is to hasten the process of identification of a unit as sick,

early detection of incipient sickness, and to lay down a procedure to be adopted by banks before

declaring a unit as unviable.

Banks have also been advised to review and put in place MSE loan policy, restructuring or

rehabilitation policy and non-discretionary one time settlement scheme for recovery of non-performing loans, duly approved by their board of directors. Inspite of various measures taken by

the RBI and the government, availability of credit for the sector remains a major issue.

Promoting Rural Industries:

Special emphasis on the industrial development of backward, tribal and hilly areas has been the

concern of the Government of India expressed in all the Five year plans & Industrial policy

statements.

The implementation of integrated rural development programme is one such attempt made by the

government to develop rural areas.

Land: Every state offers developed plots for setting up industries. The terms and conditions may

vary. Some states dont charge rent in the initial years, while some allow payments in instalments.Power: Electricity is supplied at a concessional rate of 50% or exemption is made in some states in

initial years

Water: Is supplied at no profit, no loss basis with 50% concession or exemption from water charges

for a period of 5 years.

Sales Tax: In all union territories , Industries are exempted from sales tax while some states extend

exemption for 5 year period.

Raw Materials: Units located in backward areas get preferential treatment in the matter of

allotment of scarce raw materials like cement, iron and steel etc.

Finance: Subsidy of 10-15% is given for building capital assets. Loans are also offered at

concessional rates.

Industrial estates: Some states encourage setting up of industrial estates in backward areas.

Tax Holiday: Exemption from paying taxes for 5 or 10 years is given to industries established in

backward, hilly and tribal areas.

Improving the Database

There is no system of regular collection of data relating to SSI units in the country

regarding important indicators such as new investment, production, exports, employment creation,

sickness etc., This data is essential for monitoring the development of the sector and to analyze the

impact of government policiesEfforts will be made to introduce a scientific data collection system in the office of the

Commissioner of Industries which will be computerized so that it is easily accessible.

A fresh Census of Small Scale Industries will be conducted across India covering the incidence of

sickness, Details about the incidents, Recovery probability and the root causes for the same.

Government supports for the promotion of small scale sector in

India.

The government has been enlisted many policies. Term and benefits for small scale industries but

practical it has not helped the small scale industries to flourish as in other countries.The government has been successful in improving the scenario of small scale industries. The

banking policies and easy fund management along with lower interest added to the advantage of


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promoting the small scale industries. At times they were not able to maintain the recovery system

and their debts became bad debts and doubtful debts at times. Keeping an regular update about the

sick companies and helping them at the right moment, has resulted in improving the conditions of

small scale industry in India

Recommendation to make such supports more robust andeffective

According to me the knowledge of been an Entrepreneur must be imparted to all.

Government initiatives and support which can be enjoyed by a person and small scale

industry must be promoted on a larger scale.

Marketing initiative has been rightly started by the government but it need to done on larger

scale, Business idea competition to be conducted on similar lines as held by Private

Companies, and support the idea by providing him with necessary support

A common database of the small scale industries must be made available which will benefitsother SSI and other big industries

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