class 8 govt support to ssis

7/30/2019 Class 8 Govt Support to SSIs

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POLICY SUPPORT

TO SMALL SCALEINDUSTRIES


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INTRODUCTION

Since Independence, India adopted mixed economicplanning as a method to achieve economic development.

Along with the Large Scale sector the thrust was onSmall Scale sector because

- It is decentralized- Its small size

- Uses mainly indigenous technology

- Employment intensity

- Suitability for rural area with limited techno-economic structure.

.


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Industrial policies over the year have focusedto 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


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INDUSTRIAL POLICY RESOLUTION AND

SSIs1. INDUSTRIAL POLICY RESOLUTION 1948

1.1 SSIs are particularly suited for the utilization of

local resources and creation of employmentopportunities .

1.2 The primary responsibility for developing smallindustries by creating infrastructure has been provided

to state government .

1.3 Central government frame the broad policies andcoordinates the efforts of State Government fordevelopment of SSIs.


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2. INDUSTRIAL POLICY

RESOLUTION 19562.1 It stated that besides continuing the policy

support to cottage, village and small industries bydifferential taxation or direct-subsidies, the aim ofstate policy would be that the development of thissector is integrated with that of large scaleindustry.

2.2 The focus was to improve the competitivestrength of SSIs.

2.2.1 to achieve this 128 items were exclusivelyreserved for production in SSIs, and 166 items werereserved for exclusive purchase by government from thissector.


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3 INDUSTRIAL POLICY RESOLUTION 1977

The main thrust of policy was effective promotion of cottage,village and small industries widely dispersed in ruralarea and small towns.

1. 504 items were reserved for exclusive production inthe small scale industries .

2. The concept of District Industrial Centers (DICs) wasintroduced to that in each district a single agency couldmeet all the requirement of SSIs under one roof.

3. Technological up gradation was emphasized intraditional sector .

4. Special marketing arrangement through the provisionof services, such as, production standardization,quality control, market survey, were laid down.


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4. INDUSTRIAL POLICY RESOLUTION 1990

Main feature of this resolution are as follows:

1. It raised the investment ceiling in plant and machinery forSSIs.

2. It created central investment subsidy for this sector inrural and backward area.

Also, assistance was granted to woman entrepreneursfor widening the entrepreneurial base.

3. Reservation of items to be produced by SSIs wasincreased to 836.


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4. Small Industries Development Bank of India (SIDBI)was established to ensure adequate flow of credit toSSIs.

5. Stress was reiterated to upgrade technology to improvecompetitiveness.

6. Special emphasis was laid on training of woman and

youth under Entrepreneurial DevelopmentProgramme.

7. Activities of Khadi and Village Industries Commissionand Khadi and Village Industrial Board were to

expand.


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5.INDUSTRIAL POLICY RESOLUTION 1991

The basic thrust of this resolution was to simplifyregulations and procedures by delicensing,deregulation . Its salient feature are:

1. SSIs were exempted from licensing for all articles ofmanufacture.

2. The investment limit for tiny enterprises was raised toRs.5 lacs irrespective of location.

3. Equity participation by other industrial undertaking waspermitted up to a limit of 24% of shareholding in SSIs.


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1. Factoring services were to launch to solve the problemof delayed payment to SSIs.

2. Priority was accorded to small and tiny units inallocation of indigenous and raw materials.

3. Market promotion of products was emphasizedthrough co-operatives, public institutions and other

marketing agencies and corporations.


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INDUSTRIAL POLICY PACKAGE FOR SSI

2001-02

This policy emphasizes the following:

1. The investment limit was enhanced from Rs 1crore forto Rs 5 crore for units in hosiery and hand tool subsectors.

2. The corpus fund set up under the Credit GuaranteeFund Scheme was increased from 125 crore to 200crore .

3. Credit Guarantee cover was provided against anaggregate credit of Rs 23 crore till December 2001.

1. Market Development Assistant Scheme was launchedexclusively for SSI sector.


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INDUSTRIAL POLICY ON SSIS 2004-05

Policy initiatives for this year are as follows:

The national commission on Enterprises in theUn-organized/Informal Sector was set up in

September 2004.

It suggested measures considered necessaryfor

Improvement in the productivity of these enterprises, Generation of large scale employment opportunities,

Linkage of the sector to institutional framework in area likecredit ,raw material supply, infrastructure, technology upgradation ,marketing facilities and skill development bytraining


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Cont..

The investment limit in plant and machinery was raisedfrom Rs One crore to Rs 5 crore in October 2004,inrespect of seven item of sports goods to help toupgrade the technology and enhance competitiveness.

The Small and Medium Enterprise (SME) fund of Rs10000 crores was stared by SIDBI since April2004,with 80% of the lending for SSI units.

The interest rate was 2%below the prevailing Prime Lending

Rate (PLR) of the SIDBI.

Promotional Package for small enterprises wasinitiated.


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POLICY PACKAGE FOR SME 2005-06

1. Small and Medium Enterprises were recognized in the services sector ,and were treated on par with SSIs in the manufacturing sector.

2. The corpus of the Credit Guarantee Fund was raised from Rs 1132 crorein March 2006 to Rs 2500 crore in five years.

3. Credit Guarantee Trust for Small Industries (CGTSI) was advised toreduce the one time guarantee fee from 2.5% to 1.5% for all loans.

4. Insurance cover was extended to proximately 30,000 borrowers,identified as chief promoters, under the CGTSI. The sum assured wouldbe Rs 200000 per beneficiary and the premium will be paid by CGTSI

5. The emphasis was laid on Cluster Development model not only topromote manufacturing but also to renew industrial towns build newindustrial township . The model is now being implemented, in nine sectorincluding khadi and village industries, handlooms, textiles, agriculturalproducts and medicinal plants.


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FISCAL INCENTIVES TO SSIs

Fiscal incentives are provided through tax concessionsgranted in the form of exempted of direct or indirecttaxes leviable on production or profits, besides special

tax concessions.

These incentives have been provided to promote the SSIs


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TAX HOLIDAY

With effect from financial year 2005-06, deduction in respect ofprofit and gains for small scale industrial undertaking is availableunder Section 80IB.

Small scale industrial undertaking can claim deduction at thefollowing rates:

1. If SSI unit is owned by a company , the deduction available is30% for first 10 year,

2. If SSI unit is owned by a co-cooperative society, the deduction

to be availed is 25% for first 10 years, and

3. Ifany other person owns SSI units ,the deduction to be claimedis 25% for first 10 years.


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TAX EXEMPTION CONDITIONS:

1. No small scale or ancillary undertaking shall be subsidiary of, orowned or controlled by other industries undertaking .

2. The SSI unit should commence business between 1st April1991and 31st March 2002.

3. SSI unit can manufacture any nature/type of goods /article toavail deduction.

4. They should employ at least 10 workers in manufacturing processcarried out with aid of power or at least 20 worker inmanufacturing process carried out without the aid of power.

5. This tax exemption from total income is allowed from theassessment year in which the unit being to manufacture orproduce goods or articles.


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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.


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1, SS units producing goods up to Rs.100 lakhsare exempted from payment of excise duties.

2. SSI units having turnover less than Rs.60 lakhsper annum need not have a separate storeroom

for storing the finished products.

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

production and clearance , raw material account,personal ledger account etc. their own recordare adequate for excise purpose.


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

been based on annual turnover rather than SSIregistration . Duty liability is to be discharged by 15th offollowing month.

5. The SSI exemption is available for home consumption

,as well as in respect of goods exported to Nepal &Bhutan.

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

7.With effect from 1-4-1994, GatePass System wasreplaced by manufacturer invoice to cover clearance ofgoods as the duty-paying document.


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MEASURES FOR PROMOTION

AND DEVELOPMENT OF SSIsCentral 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


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RESERVATION POLICYOut of 836 items reserved in 1989, 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.


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GOVERNMENTS PURCHASE PREFERENCE

POLICY FOR SSI PRODUCTS

Under the Store Purchase Policy of the Government 409 items ofstore were reserved for exclusive purchase from KVIC/WomensDevelopment Corporation/Small Scale units in 1989.

This list reviewed .

In February2004, the Committee (set up to consider the question ofinclusion of additional items) revised list and 358 items wereapproved, after deleting items having common nomenclature and

addition of some new ones.

This list also includes 8 handicraft items reserved for purchasefrom the Handicraft Sector.


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GOVERNMENT PRICE PREFERENCE POLICY

FOR MARKETING SSI PRODUTS

These facilities includes the following :

1. Price preference up to 15%in case of selected items.

2. No registration fee.3. A consortium to channelize and identify for the

production of SSIs both in India and abroad.


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TECHNICAL ASSISTANCE

Technology audits and benchmarking

Technology needs assessment

Technology sourcing

Application of new acquisition.

Technology acquisition .

Material testing facilities through accredited laboratories.

Product design including Computer Aided Designs.

Common facility support in machining

Energy and environment services at selected centers.

Classroom and practical training for skill upgradation


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NEW INITIATIVES

Advisory and Mentoring services

Technology Business Incubators

> Information technology.

> Production design.

> Energy and Environment

> Bio-Technology .

> Electronics and Communications Suppliers Rating Accreditation Services.


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Thank You

class 8 govt support to ssis

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