STEPS TO START AN SSI

1. Decision to be self-employed
This is the most crucial decision a youth has to take, shunning wage employment and
opting for self-employment or entrepreneurship.
2. Analyzing strengths, weaknesses, opportunities and threats (SWOT analysis):
The potential entrepreneur has to analyze his strengths, weaknesses, opportunities and
threats, while deciding to go for entrepreneur career. This analysis enables him to know what
type and size of businesses would be the most suitable. This will vary from person to person.
3. Scanning of Business Environment: It is always essential on the part of the entrepreneur
to study and understand the prevailing business environment. In order to ensure success of his
enterprise, entrepreneur should scan the business opportunities and threats in the environment.
He should study the administrative framework, procedures, policies, rules and regulations and
other formalities implemented by the government.
4. Training: Before going to start the enterprise, the potential entrepreneur must assess his
own deficiencies which he can compensate through training. He can avail the facilities of
various training institutes like EDI, NIESBUD, IEDs existing in our country. These institutes
are providing tailor- made Entrepreneurship Development Programmes (EDPs) and skill up
gradation training programmes for the benefit of the new entrepreneurs, existing entrepreneurs
and for the employees of the small scale industries.
5. Product Selection: The most important step is to decide what business to venture into, the
product or range of products that shall be selected for manufacture and in what quantity. The
level of activity will help in determining the size of business and thus form of ownership. One
could generate as many project ideas as one can through environment scanning and short list
a few of them, closely examine with the help of opportunity analysis each one of them and
zero on the final product or products.
6. Market Survey: It is always convenient to manufacture an item but difficult to sell. So it
is rational on the part of the entrepreneur to survey the market thoroughly before embarking
upon production. Market survey implies systematic collection of data by the entrepreneur
about the product for manufacture, demand-supply lag, extent of competition, frequency of
demand, pattern and design of demand, its potential share in the market pricing, distribution
policy, etc. The principle is to produce what actually people demand. The entrepreneur can
contact the concerned authorities for this.
7. Form of Organization: A firm can be constituted as proprietorship, partnership,
limited company (public/private), cooperative society, etc. This will depend upon the type,
purpose and size of entrepreneur's business. One may also decide on the form of ownership
on the basis of resources at hand or from the point of view of investment.
8. Location: The next step will be to decide the location where the unit is to be
established. Will it be hired or owned? The size of plot, covered and open area and the exact
site will have to be decided.
9. Technology: To manufacture any item, technology is used. Information on all
available technologies should be collected by the entrepreneur and the most suitable one to
be identified. This will also be useful to determine the type of machinery and equipment to
be installed. The entrepreneur can contact DIC, TCO etc.
10. Machinery and Equipment: Having chosen the technology, the machinery and
equipment required for manufacturing, the chosen products have to be decided, suppliers have
to be identified
and their costs have to be estimated. One may have to plan well in advance for machinery and
equipment especially if it has to be procured from outside the town, state or country.
11. Project Report Preparation: After deciding the form of the ownership, location,
technology, machinery and equipment, the entrepreneur should be ready to prepare his project
report or the feasibility study. The economic viability and the technical feasibility of the
product selected have to be established through a project report. A project report that may now
be prepared will be helpful in formulating the production, marketing, financial and
management plans. It will also be useful in obtaining finance, shed, power connection, water
connection, raw material quotas, etc. The entrepreneur has to consider the guidelines given by
the Planning Commission in preparing the report.
12. Project Appraisal: Ordinarily, project appraisal implies the assessment of a project. It is
a technique for ex-ante analysis of a scheme or project. While preparing to set up an enterprise,
the entrepreneur has to carefully appraise the project from the standpoint of economic,
financial, technical, market, managerial and social aspects to arrive at the most socially-
feasible enterprise. To avail the finance from the financial institutions and banks, a
comprehensive appraisal of projects carrying techno-economic feasibility aspects should be
undertaken by the entrepreneur. Thus, a project which is selected should be technically
feasible and economically viable and then only it will be bankable. For this, the following
appraisals can be performed at the preliminary level:
(a) Economical appraisal
(6) Financial appraisal
(c) Technical appraisal
(d) Management appraisal
(e) Organizational appraisal
(f) Operational appraisal
(g) Market appraisal
13. Finance: Finance is the lifeblood of the enterprise. Entrepreneur has to take certain steps
and follow specified norms of the financial institutions and banks to obtain it. A number of
financial agencies provide capital assistance and venture capital for starting an enterprise.
There are some agencies which provide financial assistance on concession rates. Under
PMRY and REGP schemes financial assistance and subsidies are being provided to the
persons who want to set up their own enterprise.
14. Provisional Registration: It is always worthwhile to get the unit registered with the
government. The entrepreneur has to obtain the prescribed application form for provisional
registration from DIC or Directorate of Industries. After having duly filled in the application
form, he has to submit the application with all relevant documents in the local DIC or
Directorate of Industries. This will enable the entrepreneur to avail various government
facilities, incentives and assistances schemes including financial assistance from NSIC/SFCs/
KVIC.
15. Technical Know-How: In some cases, technical know-how may be arranged for setting
up enterprise. This can be arranged through TCOs, NSIC, SSIDC, DIC, private consultants,
SISI, ED- institutes, foreign collaborators, India Investment Centre, and Industry, etc.
Facilities are also available to SSI for making technical know-how arrangements including
turn-key jobs.
16. Power and Water Connection: The sites where the enterprise will be located, should
either have adequate power connections or this should be arranged. Entrepreneur can calculate
the total power requirement and determine the nearest pole from which power will be given
to the enterprise as it can materially affect the installation cost. Similarly, the water connection
will have to be obtained or provision should be made for adequate water supply to the firm.
17. Installation of Machinery: Having completed the above formalities, the next step is to
procure the machinery for installation. Machinery should preferably be installed as per the
plan layout.
18. Recruitment of Manpower. Once machines are installed, the need for manpower arises
to run them. So the quantum and type of manpower is to be decided. This presupposes the
skilled, unskilled and semiskilled labour, administrative staff etc. Further, sources of getting
desired labour and staff members be indented and recruited. Possibly, the labour force has to
be trained either at the entrepreneur's premises or in a training establishment.
19. Procurement of Raw Materials: Raw materials are the important ingredients for running
an enterprise. The labour will require raw materials to work upon the installed machinery.
These materials may be procured indigenously or may have to be imported by the
entrepreneur. Entrepreneur has to identify the cheap an assured sources of supply of raw
materials for running his own enterprise. Government agencies can assist in case the raw
materials are scarce or imported.
20. Production: The unit established should have an organizational setup. To operate
optimally, the organization should employ its manpower, machinery and methods effectively.
There should not be any wastage of manpower, machinery and materials. If items are-
exported, then the product and its packaging must be attractive. Production of the proposed
item should be taken up in two stages:
(i) Trial production
(ii) Commercial production
Trial production will help tackling problems confronted in production and test
marketing of the product. This will reduce the chances of loss in the eventuality of mistakes
in project conception. Commercial production should be commenced after the test-marketing
of the product.
21. Marketing: Marketing is the most important activity as far as the entrepreneurial
development is concerned. Various aspects like how to reach the customer, distribution
channels, commission structure, pricing, advertising, publicity, etc., have to be decided by the
entrepreneur. Like production, marketing should also be attempted cautiously, that is, in two
stages namely:
(i) Test stage
(ii) Commercial marketing stage
Test marketing is necessary to save the enterprise from going into disrepute in case
the product launched is not well accepted by the customers. It will also assist the entrepreneur
in carrying out modifications or additions in designs and features of the product. Having
successfully test marketed the product, commercial marketing can be undertaken. The
entrepreneur can contact the Small Industries Marketing Corporation.
22. Quality Assurance: Before marketing, the product quality certification from BIS (Bureau
of Indian Standards)/AGMARK/HALLMARK, etc., should be obtained depending upon the
product. If there is no quality standards specified for the products, the entrepreneur should
evolve his own quality control parameters. Quality, after all, ensures long term success.
23. Permanent Registration: After the small scale unit goes into production and marketing,
it becomes eligible to get permanent registration based on its provisional registration from
DIC or Directorate of Industries.
24. Market Research: Once the product or service is introduced in the market, there is strong
need for continuous market research to assess needs and areas for modification, upgradation
and growth. Market becomes waterloos for most SSI entrepreneurs as they ignore the vital
day-to-day operation. Initial success should not lure the entrepreneur into a sense of
complacency.

5.1 INTRODUCTION & MEANING OF INCENTIVES AND SUBSIDIES

Entrepreneurs in India are offered a number of incentives in order to encourage them
to set up small industrial units. As already witnessed, availability of incentives can reduce
concentration of SSIs in urban cities and help dispersal of industries over India's vast
geographical area. Incentives benefit the economy and assist entrepreneurs shift from
traditional technology to modern technology. Adoption of modern technology helps in
improving the skills, higher productivity, high wages and better standard of living.
Incentives, is a general term which includes concessions, subsidies and bounties.
Oxford dictionary defines an incentive as, "a thing that encourages somebody to do
something". A concession can be described as, "a reduction in price for particular categories
of people". Subsidy denotes a single lumpsum given by the Government to an entrepreneur to
cover the cost. It is granted to an industry which is considered to be essential in the national
interest. The term 'bounty' implies bonus or financial help given by the government to an
industry to help it to compete with other units in country or in a foreign market. It is given in
proportion to its output. Bounty gives benefits to a particular industry, while subsidy is given
in the interest of the nation.
The objective of incentives is to stimulate and motivate an entrepreneur to set up new ventures
so that the people and the nation as a whole benefit from that particular venture.
These incentives and subsidies can give following benefits.
(i) Incentives and subsidies act as a motivational force and push the prospective
entrepreneurs to an entrepreneurial line.
(ii) Entrepreneurs are encouraged to take action and decisive decisions.
(iii) It encourages entrepreneurs to set up their ventures in those states where incentives are
available. Thus, it results in regional dispersal of industries in rural and backward
areas. For example, in the State of Punjab, Bhatinda, Ferozpur, Gurdaspur, Hoshiarpur
and Sangrur, have been in the list of Industrially Backward Districts in the country.
(iv) Incentives and subsidies increase the ability of the entrepreneur to face competition.
(v) More and more young people are encouraged to become entrepreneurs and exploit
their skills. Failures also emerge but hidden talent also crops up.

NEED FOR INCENTIVES

Following reasons justify the need for incentives:
(i) To Remove Regional Disparities in Development: It is responsibility of respective
state/UT Government to develop village and small industries. By offering better
incentives in backward areas, the concentration of industry in cities will reduce
resulting in even distribution of industry all over the state. For example, Ludhiana
(Punjab) is heavily concentrated for hosiery manufacturing whereas Ferozpur district
has been declared as backward with nearly no industry. Similarly, the entire state of
Himachal Pradesh, Jammu & Kashmir, Tripura, Manipur and many others have been
listed as backward states/ districts in country. Incentives allure the entrepreneurs to
overlook the deficiencies of backward areas thus, removing the disparities and
utilising the local resources properly.
(ii) To Strengthen and Expand the Entrepreneurial Base: Entrepreneurial
development is an index to measure the development of any country. Whether
entrepreneurship is taken up out of necessity or as an opportunity, incentives do
strengthen them to face and overcome various problems coming up in their way. Many
incentives like reservation of products, infrastructural facilities, laboratory and testing
services, export-import incentives etc. encourage the entrepreneurs to take up new
ventures with much reluctance and many schemes of SIDBI, commercial banks etc.
help them to continue with their existing units.
(iii) To Provide Competitive Strength, Survival and Growth: Central and State
governments have a variety of incentives for the industrialists. Some incentives, like
seed money are for establishing the new unit while others, like interest free loans,
exemption from income-tax are concerned with survival and growth of industries.
Some benefits are available only in beginning years of setting up a unit while few are
available over a long period. Reservation Policy, for example, comprises 664 products
exclusively reserved for production by SSIs. Non-SSIs can also produce the same
products but with an obligation of 50 percent exports of the product. Thus, these
incentives encourage new comers in the market and also supports the existing
industrialists.
(iv) Ensure Employment Opportunities. Establishing a small unit ensures not only self-
employment but also generates employment for others and removes the evil of under-
employment. Proper availability and usage of incentives and subsidies can make it
happen. A prosperous and contended entrepreneur will be a satisfied owner also and
would give reasonable wages as well. He will be able to generate a conducive
environment and may also move from developed to backward area in order to diversify
his unit. As a result, more employment will be generated.
TYPE OF CENTRAL GOVERNMENT SUBSIDIES AND INCENTIVES
The Government of India (GOI), from time to time, announces various
schemes/concessions and support services for the promotion of industries. The aim behind
such incentives stimulate prospective entrepreneurs to establish themselves in backward areas
and, secondly, to reduce the regional imbalances. Some of the subsidies and incentives are as
follows :
Credit Linked Capital Subsidy. The GOI launched a new Credit Linked Capital Subsidy
Scheme with effect from October 2000. The subsidy is given to upgrade technology of SSIs
in selected products and to strengthen the units in the identified sectors to face the
competition. The 45 products/Sub-sectors selected sectors, inter alia, include leather and
leather products, including footwear and garments, food processing, information technology,
drugs, pharmaceuticals, auto components etc SIDBI implements this scheme and gives a
capital subsidy of 15% per cent on loans and advances to SSI units by scheduled commercial
banks and NSIC. The subsidy is extended to SFCs as well. The plan has been continued during
eleventh plan from 2006-2011.

Capital Investment Subsidy. Capital Investment Subsidy was notified on June 01, 1998 by
the Prime Minister for North- Eastern Region. Under the Capital Subsidy Scheme, subsidy at
the rate of 15 per cent of the investment in plant and machinery is given subject to a maximum
ceiling of Rs. 3 million. The subsidy is payable to (i) industry which is located in the growth
centres, (ii) to new industrial units, (iii) to industries undergoing substantial expansion in other
identified areas in the North Eastern Region. The subsidy is given through the respective stale
governments.
Transport Subsidy. The Transport Subsidy Scheme was introduced in July 1971 to promote
industries in hilly, remote and inaccessible areas. The scheme is applicable to the States of
Himachal Pradesh, J&K, the North Eastern States, Sikkim, Union Territories of Andaman &
Nicobar Islands, Lakshadwcep, Darjeeling district of West Bengal and eight hill districts of
Uttar Pradesh (now in Uttranchal State) comprising Almora, Chomoli, Dehradun, Nainital,
Pauri Garhwal, Pithoragarh, Tehri Garhwal and Uttar Kashi. Under the scheme, a subsidy
ranging from 50 per cent to 90 per cent is admissible on transport costs incurred on the
movement of raw-materials and finished goods from designated rail heads/parts upto the
location of the industrial units and vice-versa. The subsidy scheme has been extended upto
March 31, 2007.
Capital Subsidy for tannery Units. The subsidy is given for modernisation of tannery units
in the country. The capital subsidy is given against purchase of eligible machinery upto 30
percent of cost or Rs. 2.8 million whatever is lower. SIDBI is implementing the scheme for
SSI and non-SSI units through its direct and indirect finance routes.
Collateral-free and Third Party Guarantee free Loans. The GOI in association with SIDBI
set up a Credit Gurantee Fund Trust for small industries during financial year 2000-01. The
scheme provides a guarantee cover to the eligible lending institution (e.g. commercial banks)
in respect of their collateral free and third party guarantee free loans given to SSIs including
IT and software sector. The limit has been raised from Re 1 million to Rs. 2.5 million for
borrowing unit.
Power Subsidy. Power subsidy is not uniform in all the states/UTs; their nature, contents,
quantum and periodicity vary from state to state.
Incentive for Marketing Development. Ministry of Commerce. Government of India
reimburses the expenditure incurred by SSI delegates that visit foreign countries for the
purpose of exploring marketing possibilities. The incentive is given at the rate of 50 per cent
of expenditure incurred by the delegation. This incentive is extended for admissible items
only.
Price Preference to SSI Units. The NSIC extends following incentives to SSI units which
get registered under the Single Point Registration Scheme.
• Availability of tender sets free of cost,
• Exemption from payment of Earnest Money Deposit,
• Exemption from payment of Security Deposit,
• Price preference upto 15 per cent over lowest quotation of the large scale units
Availability of Industrial Estate. Industrial estates which provide industrial area, plots and
industrial sheds for allotment to SSI entrepreneurs is implemented through State or UT
Governments. These IEs provide infrastructural facilities which include subsidy on rent fo'r
factory accommodation, allotment of sheds on hire-purchase as well on outright sale. Other
incentives like concessional charges for water and power, exemption from sales tax and
Octroi duty etc. are also offered. Facilities of developed roads, banks, canteens, watch and
ward, communication network may also exist.
State Capital Investment Subsidy
In order to encourage setting up of Industrial units in their States, State Governments
provide State Capital Investment Subsidy to Priority Sector industries. The facilities are
available in Utlar Pradesh. Jammu & Kashmir. Andaman & Nicobar Islands., Sikkim,
Karnataka. Meghalaya, Himachal Pradesh, Gujarat, Punjab, Andhra Pradesh, Kerala,
Maharashtra, Tripura and Manipur.
Sales Tax concessions
State Governments give concessions in sales tax to new units/sick units on the sale of
their finished products at the first point of sale for a period of three to fifteen years. The
facilities are available in Uttar Pradesh, Jammu & Kashmir, Sikkim. Daman & Diu.
Karnataka, Meghalaya, Himachal Pradesh, Gujarat, Nagaland, Punjab, Rajasthan, Andhra
Pradesh, Kerala, Haryana and Tripura.
Exemption from stamp duty and local taxes
State Government exempt stamp duty in respect of land allotted by the Government to
the new industrial units. Machinery, equipments, raw materials and packing materials of new
units arc exempted from payment of octroi duty and other local taxes. The facilities are
available in Jammu & Kashmir, Sikkim, Daman, Karnataka, Meghalaya, Gujarat, Nagaland,
Rajasthan, Haryana, Maharashtra and Manipur.
Rebate in electricity charges and water charges
State Governments provide rebate in electricity charges and water charges to the new
and existing units in their respective States. The facilities are available in Sikkim, Daman,
Karnataka, Himachal Pradesh, Gujarat, Nagaland, Rajasthan, Andhra Pradesh, Kerala and
Maharastra.
Interest Sutsidy
State Governments provide interest subsidy to entrepreneurs on terms loans which
they get from State Financial Institutions/Scheduled Banks. The facilities are available in
Jammu & Kashmir,
Andaman & Nicobar Islands, Sikkim, Meghalaya, Himachal Pradesh, Punjab, Rajasthan,
Andhra Pradesh and Manipur.
State Transport Subsidy
Some State Governments provide State transport subsidy and notified rates from time
to time to industrial units on transportation of raw materials and finished products. The
facilities are available in Jammu & Kashmir, Andaman & Nicobar Islands, Nagaland and
Manipur.
Subsidy for technical know-how
Stale Governments provide subsidy on the cost of technical know- how obtained by
small scale industries from reputed and well established research and development
organizations. For obtaining such technical know - how, prior permission from State
Governments has to be obtained. The facilities are available in Jammu & Kashmir, Sikkim,
Delhi, Kerala and Manipur.
Marketing Support
The State Government Departments, Semi-Government Organizations, Autonomous
Government Organizations, Grant-in-Aid Institutions, Departmental Undertakings, etc. while
making purchases of their requirements of store items, give preference to the products
manufactured by the local SSI units. The facilities are available in Jammu & Kashmir, Sikkim,
Nagaland, Delhi, Kerala, Manipur and Tripura.
Special facilities for export oriented units
State Governments provide special package of incentives and better infrastructural
facilities for export oriented units. State Governments reimburse costs incurred by SSI units
for shipment of export samples from the nearest port/container depot to the port of destination.
The facilities are available in Uttar Pradesh, Karnataka, Himachal Pradesh, Punjab, Rajasthan
and Tripura.
Air Freight Subsidy
State Government provide Air Frieght Subsidy to SSI units on their finished goods for
any destination. The facilities are available in Uttar Pradesh.
Incentives to Non-Resident Indians (NRIs)
State Governments provide special incentives for setting up new industries by NRIs
in their respective States. The facilities are available in Uttar Pradesh, Himachal Pradesh,
Punjab and Rajasthan.
Special incentives for Women
SSI units owned and managed by women entrepreneurs having more than 80% women
labourers are provided special incentives like 50% subsidy for building and machinery, rent
subsidy, managerial grant, stipendary training, etc. The facilities are available in Tripura and
Kerala.
Incentive for ISO 9000/ISO 14001 Certificates.
The government introduced this incentive scheme for their technological
upgradation/quality improvement and environment management. The scheme provides
incentive to these small scale undertaking who have acquired ISO 9000/ISO 14001 certificate.
The scheme envisages reimbursement of charges of acquiring ISO- 9000/ISO-14001
certification to the extent of 75% of the expenditure subject to a maximum of Rs. 75,000/- in
each case. The scheme is valid upto 31st March 2007.
National Award for outstanding Entrepreneurship in Micro & Small Enterprises
engaged in manufacturing.
1. First National Award Rs. 1,00,000/ -cash prize, a Trophy and a Certificate.
2. Second National Award Rs. 75,000/- cash prize, a Trophy and Certificate.
3. Third National Award Rs. 50,000/- cash prize, a Trophy and a Certificate.
4. Special National Award to oustanding Woman Entrepreneur Rs.1,00,000/- cash prize, a
Trophy and a Certificate.
5. Special National Award to outstanding SC/ST Entrepreneur Rs.1.00.000/- cash prize, a
Trophy and a Certificate.
6. Special National Award to outstanding Entrepreneur from NER including Sikkim
Rs.1,00,000/- cash prize, a trophy and certificate.
National Award for outstanding Entrepreneurship in Micro & Small Enterprises
rendering services.
1. First National Award Rs. 1,00,000/- cash prize, a Trophy and a Certificate.
2. Second National Award Rs. 75,000/- cash prize, a Trophy and a Certificate.
National Award for outstanding Entrepreneurship in Medium Enterprises engaged
in manufacturing.
1. First National Award Rs. 1,00,000/- cash prize, a Trophy and a Certificate.
2. Second National Award ,Rs. 75,000/- cash prjze, a Trophy and a Certificate.
A Special "Recognition Award to those MSMEs scoring marks above 80 percent and
(50 percent in case of North Eastern Regions including Sikkim) will be given with a Cash
prize of Rs. 20,000/- each, a Certificate and a Trophy at the State Level Function to be
organized by Director, MSME-DI.
The awards will be presented in a public function.
 Periodicity & Eligibility
The Awards will be given for every calender year to deserving entrepreneurs
managing Micro, Small and Medium Enterprises having permanent registration/have filed
Entrepreneur’s Memorandum with the authorities notified by respective State
Governments/UT Administration in accordance with the provisions contained in the Micro,
Small and Medium Enterprises Development
(MSMED) Act, 2006, which has since come into force from 2 October 2006. The MSMEs
should have been in continuous production/servicing at least during last four years.

FOREIGN DIRECT INVESTMENT IN SSI SECTOR

(i) To provide access to capital market and to encourage modernisation and technological
upgradation, equity participation upto 24 per cent of the total shareholding is allowed
in SSIs by other industrial undertakings including foreign collaborators.
(ii) To encourage and promote the acquisition of technological capability, mechanism for
foreign technology agreements have been simplified. No permission is necessary for
hiring foreign technicians and hence no application needs to be made to the
government for this purpose.
(iii) Use of foreign brand names/trade marks on goods for sale within the country has been
permitted.
(iv) Procedure has been simplified for investment by NRI and Overseas Corporate Bodies
(OCBs), which are predominantly owned by NRIs. OCBs are those companies in
which NRIs hold at least 60 per cent of the equity.
(v) The RBI accords automatic approval to all proposals from NRIs and OCBs by
permitting NRI investment upto 100 per cent equity in high priority industries. The
approval includes full benefits of repatriation of capital invested and income accruing
thereon.
(vi) 100 per cent equity investment in industries reserved for the small scale sector is
permitted to NRIs and OCBs, provided the export obligation criteria (i.e. export of 50
per cent of the production) is undertaken by the unit.
Incentives of Exporters
(i) The Special Import Licence which was required to be obtained has been abolished
from April 01, 2001,
(ii) Import of second hand capital goods (less than 10 years old) is allowed without
obtaining any licence or surrender of SIL.
(iii) Export Promotion Capital Good Scheme is extended to all sectors and to all capital
goods without any threshold limit on payment of 5 per cent of duty,
(iv) Units set in the Special Economic Zones will be treated as being outside the
custom territory.
(v) In order to give recognition to the established exporters and large Export Houses
to build up marketing infrastructure and expertise required for export promotion,
a scheme of Export Houses, Super Star Trading Houses was initiated. Under this
scheme, registered exporters are granted the status of Export Houses/Trading
Houses/Star Trading/Super Star Trading Houses subject to certain requirements.

Participation in International Fairs/Exhibitions

The capability of SSI products is reflected by the fact that it has share of about 34% in
national exports. In case of readymade garments, leather goods, processed foods, engineering
items, the position of SSI in terms of value and their share within the SSI sector has been
commendable. In some cases like sports goods they account for 100% share to the total exports
of the sector.
If small scale industrialists want to exhibit their product in the international
exhibitions, the whole expenditure on account of space rent, handling and clearing charges,
insurance and shipment charges etc. are met by the-office of Development Commissioner
 (Small Scale Industries) under one of the plan schemes. The basic objective behind the scheme
is to promote exports. The strategy has been found to be successful for exporters from small
scale sector in identifying new foreign buyers markets.
With a view to acquiant SSI exporters of the latest packaging standards, techniques
etc for exports, training programmes are organised in various parts of the country in
association with Indian Institute of Packaging. Thus, entrepreneurs get educated about the
scientific techniques of packaging and get sensitized about the international standards of
packaging.
Technical and managerial consultancy services to SSI manufacturers and exporters is
provided through a net of field officers of this office.
Purchase and Price Preference Policy for Marketing SSI Products.
The policy of reservation of items for exclusive purchase from SSI sector has been in
vogue since late 60's as a measure of marketing support to SSI sector. The Store Purchase
Policy of the government prior to 1989 was in the form of categorization of items and was
divided in six major groups.
However, with effect from July 28, 1989, the Purchase Policy of the government was
reduced to two major groups :
(i) Items of stores were reserved for exclusive purchase from KVIC/Women's
Development Corporations/Small Scale units and
(ii) Others not so reserved. The first group comprised of 409 items earlier reserved for
exclusive purchase from small-scale sector.
The list of 409 items was reviewed recently and a list of 358 items including 8
handicrafts items reserved for purchase from the Handicraft Sector was revised in the year
1998.
(iii) Prime Minister's Rozgar Yojana (PMRY). PMRY, implemented since 1993, is
designed to create and provide sustainable self-employment opportunities to one
million educated unemployed youth in the country during the 8th Plan Period. The
Scheme has been modified from time to time.

ORGANIZATIONAL SUPPORT SERVICES – CENTAL & STATE GOVERNMENT

Entrepreneurship is a multifaceted phenomenon, which has gained popularity around the world.
Becoming an entrepreneur is a challenging task, which requires various resources and facilities.
Small-scale enterprises, given their small resources, find it difficult to have their own. Finance
has been an important resource to start and run an enterprise. In addition to finance, a minimum
level of prior built-up of infrastructural facilities such as transport and communication are
needed to start any enterprise. Creation of infrastructural facilities involves huge funds, which
the small entrepreneurs do lack. In view of this, various Central and State Government
institutions have come forward to help small entrepreneurs in this regard by providing them
various kinds of support and facilities.

✔ Central Level Institutions

✔ State level Institutions

✔ Other agencies

Central level Institutions

NSIC (National Small Industries Corporation)
NSIC has been working to promote, aid and foster the growth of micro, small and medium
enterprises in the country.
 NSIC has set up Training cum Incubation Centre managed by professional manpower.
Some of the main services provided by NSIC are described below
Machinery and Equipment (Hire-Purchase Scheme)

✔ Supply of indigenous and imported machinery on easy financial terms, mainly

targeted at first-generation entrepreneurs, women entrepreneurs, weaker sections, physically
challenged and ex-servicemen.
Machinery and equipment (Lease scheme)

✔ 100 per cent finance to facilitate SSIs in diversification and technology up gradation.

✔ Tax rebate on full-year rentals.

Financial Assistance Scheme

Provide finance to SSIs for the following activities.

✔ Marketing

✔ Bills discounting
✔ Raw material purchases

✔ Exports

Assistance for procurement of raw material

✔ Supply under the off-the-self basis scheme

✔ Import of raw materials

✔ Providing scarce materials on priority basis

✔ Supplies through NIST depots/godowns

National Institute for Entrepreneurship & Small Business Development (NIESBUD)

✔ It is a premier organization of the Ministry of Skill Development and

Entrepreneurship, engaged in training, consultancy, research, etc. in order to promote
entrepreneurship.

✔ Its goal is to promote, support and sustain entrepreneurship and small business through
training, Education Research and consultancy.

✔ The major activities of the Institute are Training of Trainers, Management

Development Programmes, Entrepreneurship-cum-Skill Development Programmes
and Entrepreneurship Development Programmes.

SMALL INDUSTRY DEVELOPMENT ORGANISATION (SIDO)

Central Small Industry Organization (CSIO) is the heart of all agencies dealing with the
development of small industry — renamed as Small Industries Development Organization
 (SIDO). The office of the Development Commissioner, SSIs is also known as the Small
Industries Development Organization (SIDO), established in 1954. It is a policy-making,
coordinating and monitoring agency for the development of SSI entrepreneurs. It is the nodal
agency that advises the Ministry of Industry and other Ministries in formulating policies and
programmes for the development of SSIs. It also overseas the 'package of services' rendered by
the SISIs at field level and provides comprehensive range of consultancy services and
technical, managerial and marketing assistance to SSI units.

The SIDO provides common facilities

✔ Technology support services

✔ Marketing assistance and

✔ Entrepreneurial development support through its network of 30 Small Industries

Service Institutes (SISIs), 28 Branch SISIs, 4 Regional Testing Centers (RTCs), 7 Field
Regional Testing Centers (RTCs), 2 Small Entrepreneur Promotion and Training
Institutes (SEPTIs) and 1 Hand Tool Design Development and Training Centre.

✔ The SIDO also has a network of Tool Rooms and Process-cum Product Development
Centers (PPDCs) to provide technology and training support
SIDO performs functions such as

✔ Conducting training courses through SISIs and Extension Centers

✔ Organizing EDPs and motivational campaigns for rural artisans,

educated unemployed, women entrepreneurs and physically handicapped persons;
✔ Securing reservations of certain products for SS's;

✔ Assisting and encouraging entrepreneurs to set up industrial units in rural areas and estimating
the requirements of raw materials of SSIs.
All SSIs except those falling within the specialized boards and agencies like KVIC, Coir
Boards and Central Silk Board fall under the purview of the SIDO.

NSTEDB

The National Science & Technology Entrepreneurship Development Board (NSTEDB),

established in 1982 by the Government of India to promote knowledge based technology driven
enterprises. The Board aims to convert "job-seekers" into "job-generators" through Science &
Technology (S&T) interventions.
 The NSTEDB has verities of programs. The programs starts from creating awareness (i.e.
Entrepreneurship Awareness Camp (EAC)) by sponsoring three day program in the academic
institutions with the aim to germinate entrepreneurs after the gap of 3-5 years

Here what we can say that just through the seeds in the wild without putting water & fertilizer
in the seed & with expecting some of them will germinate as entrepreneur. It is one of the very
low budget program but an effective program of this board. Its success rate is around 5%.

Then the next programs are the training programs like Entrepreneurship Development
Programme (EDP) of 6-8 weeks durations, aims at training the S&T graduates and the diploma
holders in the essentials of conceiving, planning, initiating and launching an economic activity
or an enterprise successfully.

Faculty Development Programme (FDP) is designed to train and develop professionals in

entrepreneurship development so that they can act as resource persons in guiding and
motivating young S&T persons to take up entrepreneurship as career. The duration of program
is 2-3 weeks;

Technology Based Entrepreneurship Development Programme (TEDP), its primarily focuses

on training and developing need of S&T entrepreneurs in a specific technology area (e.g.
Leather, Plastic, Electronics and communication etc.) The duration of program is about 6
weeks;

The flagship program that the NSTEDB have is the Technology Business Incubation (TBI)
program.

State level Institutions

DIC (District Industries Centers)

✔ The 'District Industries Centre' (DICs) programme was started by the central government
in 1978
✔ The objective of providing a focal point for promoting small, tiny, cottage and village

industries in a particular area and to make available to them all necessary services and
facilities at one place.
✔ The District Industries Centre is the institution at the District level, which provides all

the services and support facilities to the entrepreneur for setting up Micro, Small and
Medium Enterprises. This included identification of
o suitable schemes
 o preparation of feasibility reports
o arrangements for credit facilities
o machinery and equipment‘s
o Provision of raw materials and development of industrial clusters etc.

State Financial Corporations (SFCs)

✔ This is State level financial institutions which play a vital role in the growth of
small & medium enterprises in the concerned States.
✔ They offer financial assistance in the form of direct subscription to debentures/equity,

term loans, guarantees, discounting of bills of exchange & seed/ special capital, etc.

✔ SFCs have been set up with the purpose of catalyzing higher investment, engendering
greater employment & extending the ownership base of industries.
✔ They have also started offering assistance to newer types of business activities like

tissue culture, floriculture, poultry farming, services related to engineering,

marketing and commercial complexes. In India, there are 18 State Financial
Corporations (SFCs).
STATE INDUSTRIAL DEVELOPMENT CORPORATIONS (SIDCs)
The State Industrial Development Corporations (SIDCs) were incorporated under the
Companies Act, 1956, as wholly owned State Government Undertakings for promoting
industrial development.
The main functions of SIDCs are to provide assistance in the form of term-loans,
underwriting direct subscription to shares / debentures and guarantees. They also
undertake a variety of promotional activities like preparation of feasibility reports,
conducting industrial potential surveys, entrepreneurship development programmes and
developing industrial estates. Some SIDCs also offer a package of developmental
services such as technical guidance, assistance in plant locations and coordination‘s with
other agencies. In line with the changing environment, many SIDCs are making efforts
to diversify and mutual funds. There are 28 SIDCs in the country.

Other agencies
NABARD (National Bank for Agriculture and Rural Development):

✔ It formed based on the Committee to Review the Arrangements for Institutional

Credit for Agriculture and Rural Development (CRAFICARD) which outlined

the need for a new organizational device for providing undivided attention,
forceful direction and pointed focus to credit related issues linked with rural
development.
✔ Formation of National Bank for Agriculture and Rural Development (NABARD)
was approved by the Parliament through Act 61 of 1981.
 ✔ NABARD came into existence on 12 July 1982.

✔ It was dedicated to the service of the nation by the late Prime Minister Smt. Indira
Gandhi on 05 November 1982.
✔ Set up with an initial capital of Rs.100 crore, its‘ paid up capital stood at Rs.10, 580

crore as on 31 March 2018.

✔ It aimed at building an empowered and financially inclusive rural India through

specific goal oriented departments which can be categorized broadly into three
heads: Financial, Developmental and Supervision.
Industrial Finance Corporation of India (IFCI)

✔ IFCI Ltd. was set up in 1948 as Industrial Finance Corporation of India

✔ It provide medium and long term finance to industry.

✔ The Government of India, as per the Budget for FY 2014-15 has mandated IFCI for

setting up of a Venture Capital Fund under Social Sector initiatives with an aim
to promote entrepreneurship among the Scheduled Castes (SC) and to provide
concessional finance to them.
Small Industries Development Bank of India (SIDBI)

✔ Set up on 2nd April 1990 under an Act of Indian Parliament, acts as the Principal

Financial Institution for Promotion, Financing and Development of the Micro,

Small and Medium Enterprise (MSME) sector as well as for co-ordination of
functions of institutions engaged in similar activities.

✔ Over the years, SIDBI has been working towards the sustainable development of
MSME sector.

Government Subsidy for Small Business in India

Government subsidy for small business is very much effective in any small-scale
industry. Many incentives are provided with both by the Central and State Governments
to pro mote the growth of small-scale industries specially MSME.
[1.] The Credit Guarantee Fund Scheme for Micro and Small Enterprises
The Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGMSE)
was launched by the Government of India to provide collateral-free credit to
Indian MSMEs. Both the existing and the new enterprises are eligible for the
scheme.
The scheme provides credit facilities in the form of term loans and working
capital facility of up to Rs. 100 lakh per borrowing unit. The amount is
 contributed by the Government and SIDBI in the ratio of 4:1, respectively. The
scheme also offers rehabilitation assistance to sick units covered under the
guarantee scheme.
[2.] SAMPADA Scheme for Agro-Marine Produce Processing
SAMPADA stands for Scheme for Agro-Marine Produce Processing and
Development of Agro-Processing Clusters. With a budget of Rs. 6000 Crores,
the SAMPADA scheme is aimed to integrate current and new schemes in the
food processing sector. The main objective is reducing food wastage and
doubling farmers‘ income.
[3.] Government Subsidy for Small Business from NSIC
NSIC provides two basic subsidies. Such as raw material assistance and
marketing assistance. Raw Material Assistance Scheme aims at helping Small
Scale Industries/Enterprises by way of financing the purchase of Raw Material
(both indigenous & imported).
This gives an opportunity for SSI to focus better on manufacturing quality
products. Under the Scheme, marketing support is provided to Micro, Small &
Medium Enterprises through National Small Industries Corporation (NSIC) to
enhance competitiveness and marketability of their products.
[4.] Credit Linked Capital Subsidy Scheme for Technology Up gradation
(CLCSS) Up gradation of the process as well as the corresponding plant and
machinery is important to help SMEs reduce the cost of production and remain
price competitive in the global market. To help SMEs flourish in international
trade markets, the Ministry
of Small Scale Industries (SSI) runs a scheme for technology up gradation of
Small Scale Industries.
Known as the Credit Linked Capital Subsidy Scheme (CLCSS), it aims at
facilitating technology up gradation by providing the upfront capital subsidy of
15% (limited to maximum Rs.15 lakhs) to SSI units for credit availed by them
for the modernization of their plant and machinery. All sole proprietorship,
partnership firms, cooperative, private and public limited companies are eligible
for this scheme.
[5.] Capital Subsidy for Solar Lighting and Small Capacity PV Systems
The Government of India has launched the Jawaharlal Nehru National Solar
Mission (JNNSM) to promote sustainable energy generation and support the
growing need for energy in India while addressing India‘s energy security
challenge. The JNNSM provides a host of subsidies and soft loans for the
promotion and penetration of solar energy generation in the nation.
Through the capital subsidy for solar lighting and small capacity PV systems,
the JNNSM provides capital subsidy of up to 40% of the approved unit cost
(benchmark cost) for solar lighting systems and small capacity Photovoltaic
systems. Capital subsidy of 90% of the benchmark cost, would be available for
special category states, viz. NE, Sikkim, J&K, Himachal Pradesh and
Uttarakhand.
Incentives to Small Scale Industries in India

An incentive is a motivational factor which induces a person to work hard or to do his

work more efficiently.
[1.] Reservation:
To protect the small-scale industries from the competition posed by large-scale
industries, the Government has reserved the production of certain items
exclusively for the small-scale sector. The number of items exclusively re served
for the small- scale sector has been considerably increased during the Five Year
Plan Periods and now stands at 822.
However, prior to the 1997 – 98 Budget the number of items reserved for the
small- scale sector stood at 836. The Finance Minister de-reserved 14 items in
the 1997 – 98 Budget.
[2.] Preference in Government purchases:
The Govern ment as well as Government organizations shows preference in
procuring their requirements from the small-scale sector. For instance, the
Director General of Supplies and Disposals purchases 400 items exclusively
from the small-scale sector. The National Small-Scale Industries Corporation
assists the SSI units in obtaining a greater share of Government and defense
purchases.
[3.] Marketing assistance:
The National Small Industries Corporation (NSIC), the Small Industries
Development Organization (SIDO) and the various Export Promotion Councils
help SSI units in marketing their products in the domestic as well as foreign
markets. The SIDO conducts training programmers on export marketing and
organizes meetings and seminars on export promotion.
[4.] Excise duty:
In respect of SSI units excise duty concessions are granted to both registered and
unregistered units on a graded scale depending upon their production value. Full
exemption is granted up to a production value of Rs.30 lakhs in a year and 75 %
of normal duty is levied for production value exceeding Rs.30 lakhs but not
exceeding Rs.75 lakhs. If the production value exceeds Rs.75 lakhs, normal rate
of duty will be levied.
[5.] Supply of raw materials:
In order to ensure regular supply of raw materials, imported components and
equipment‘s, the Government gives priority allocation to the small-scale sector
as compared to the large-scale sector. Further, the Government has liberalized
the import policy and streamlined the distribution of scarce raw materials.