Guidelines for Prospective Entrepreneur

General Information
Financial Assistance
Project Report
Training
Marketing
Promotional Schemes
General Information
hat can !e done for self"emplo#ment$
A micro or small or medium enterprise can easily be set up for self-employment. You can
choose an activity depending upon your interest and suitability not only to become self-
employed but also to generate employment for others.
hat is a Micro% Small or Medium Enterprise$
The earlier concept of Industries has been changed to Enterprises
Enterprises have been classified broadly into
!i" Enterprises engaged in the
#anufacture $ production of
%oods pertaining to any industry& '
!ii" Enterprises engaged in providing
$ (endering of services.
#anufacturing enterprises have been defined in terms of investment in plant and
machinery !e)cluding land ' buildings" and further classified into
- #icro Enterprises - investment up to (s.*+ la,h.
- -mall Enterprises - investment above (s.*+
la,h ' up to (s. + crore
- #edium Enterprises - investment above (s. +
crore ' up to (s../ crore.
-ervice enterprises have been defined in terms of their
investment in e0uipment !e)cluding land ' buildings" and further
classified into
- #icro Enterprises 1 investment up to (s../ la,h.
- -mall Enterprises 1 investment above (s../ la,h ' up to (s.* crore.
- #edium Enterprises1investment above (s. * crore ' up to (s. + crore
It is not necessary to engage in manufacturing activity for self-employment. 2ne can set
up service enterprises as 3ell .
&o' do I select an activit# for self"emplo#ment$
4or selecting an activity or enterprise5 you 3ill have to consider the follo3ing significant
issues
6here do you 3ant to promote the enterprise7
6hat resources are available near the location of the enterprise7
6hat ,ind of mar,et or consumer pattern e)ists near the site of enterprise7
6hat ,ind of contacts you have to e)ploit to your advantage for mar,eting of the
product7
6hat infrastructure is available at the location of your enterprise7
8o3 much capital is available7
There are many other considerations including availability of s,illed manpo3er5 ra3
material5 technology etc. before you narro3 do3n your choice for selection of industry or
activity.
ho 'ill assist in identif#ing the activit#$
MSME Development Institutes can assist you in identifying the activity based on the
Industrial 9otential -urvey and product specific mar,et studies. :istrict Industries
;enters$-tate :irectorate of Industries also facilitate in identification of a suitable
activity.
hat steps are re(uired for identif#ing the activit#$
A preliminary mar,et study of product!s" or service!s" needs to be underta,en to analyse
consumption and availability pattern. If there is a gap in demand and supply5 the activity
considered ideal for selection.
here is market information availa!le$
#ar,et information is available 3ith #-#E :evelopment Institutes !#-#E:Is" and
:I;<s of respective states$areas. #ar,et -urvey reports on various items and Industrial
potential surveys of particular areas provide the information about the mar,et potential of
items. Industry and Trade associations5 speciali=ed institutions li,e 99:; can also
provide such information.
&o' can market potential !e ascertained$
#ar,et potential can be ascertained by conducting preliminary study by prospective
entrepreneur to get an in sight of the product$ services to be setup. An entrepreneur can
estimate local demand5 demand 3ithin the state or country5 e)port mar,et and future
prospects of product!s"$service!s". >isit to 3holesale and retail mar,ets5 bul, consumers
etc. provides accurate information on mar,et potential.
Is there an# agenc# providing guidance on marketing potential$
#-#E:I and -tate %overnments agencies vi=. :I;s and -I:;s provide guidance on
mar,et potential. The gap in demand ' supply can be established through potential
surveys and mar,et assessments 3ith the help of these agencies.
here can the enterprise !e set up$
The enterprise can be set up in a designated industrial areas5 3here infrastructure
facilities are available and is near to the mar,et identified. It can also be set up in any
other area depending upon nature of activity and local municipal rules.
hat are the inputs re(uired for setting up an enterprise$
The follo3ing ma?or inputs are re0uired for setting up an enterprise
@and5 building or shed
#achinery and e0uipments
(a3 #aterials
9o3er and 6ater
-,illed manpo3er
;apital
Are there an# projects suita!le for non"technical and ine)perienced entrepreneurs$
There are many pro?ects5 3hich are suitable for non-technical and ine)perienced
entrepreneurs. -,illed manpo3er and technical personnel can be hired according to
needs. Entrepreneurs can also ?oin special short term training programmes. #-#E:I<s5
:I;<s5 A-I; etc. provide intensive consultancy to such first generation entrepreneurs.
&o' can a ne' entrepreneur compete 'ith the e)isting manufacturers$
A prospective entrepreneur can ta,e the advantage of opting for the latest technology and
production process and operate at higher volume of operation. This leads to reduced
production cost and production of 0uality goods and services. A ne3 entrepreneur can
thus provide improved 0uality goods and services at lo3er cost and further tap the mar,et
3ith innovative mar,eting approach.
Financial Assistance
hich are the agencies providing financial assistance$
4inancial assistance is available from institutions such as Aationalised Ban,s5 -mall
Industries :evelopment Ban, of India5 (egional (ural Ban,s5 Aational -mall Industries
;orporation5 -tate 4inancial ;orporations etc. depending upon the pro?ect re0uirement
and promoters bac,ground. 4inancial assistance has t3o components. @oan for fi)ed
capital is used to ac0uire 9lant and #achinery5 land and building. 6or,ing capital loan is
used to meet day to day operational cost of the production. -tate 4inancial ;orporation
and Aational -mall Industries ;orporation generally provide 3or,ing capital. 8o3ever
under a pac,age assistance5 -tate 4inancial ;orporations also provide a composite loan
covering plant and machinery and 3or,ing capital.
&o' to choose the most suita!le source of funding$
Any of the financial institutions can be approached to get funds ,eeping in vie3 their
specific schemes. Evaluate and compare the terms and conditions5 including rate of
interest and repayment period of loan offered by the different financial institutions. -elect
the financial institution5 3hich offers funds at minimum interest rate as per your
repayment plan to suit your pro?ect. ;hoose the Institution 3hich is in close pro)imity to
the pro?ect site if other terms and conditions are similar.
hat are the eligi!ilit# criteria for getting a loan$
The ma?or eligibility criteria is return on the investment and profitability of the pro?ect
proposed to be set up. Any financial institution 3ill support the pro?ect if repayment is
assured.
&o' much mone# the entrepreneur is re(uired to invest out of his o'n resources$
-ome portion of total investment has to be contributed by the Entrepreneur out of o3n
sources. This is called margin money. 4inancial Institutions insist on ./ to *+ per cent
margin money depending upon the category of the entrepreneur5 ris, factor and e)isting
scheme under 3hich the pro?ect 3ill be financed
hat to do if an entrepreneur does not have an# mone# of his o'n$
It is simple. 2ne can arrange for loan for margin money under the scheme being operated
by the -tate ;ommissioner$:irectorate of Industries or -tate Ban, of India. But this
scheme is generally offered to professionally 0ualified entrepreneurs. Alternately you
may have to prune do3n the si=e of your pro?ect in tune 3ith available margin money.
The financial institutions 3ill prefer to support an entrepreneur5 3ho is 3illing to put
his$her o3n sta,e to some e)tent.
hat is the procedure for getting a loan$
An entrepreneur should approach the concerned financial institution vi=. -tate 4inancial
;orporation5 A-I;5 Ban, branches etc. Application in prescribed proformae has to be
submitted along 3ith pro?ect report including proof of o3nership$availability of
land$building5 proof of residence5 collateral securities !3herever applicable" etc. The loan
is given by the institution if the application meets the norms.
*an the loan !e used to cover all t#pes of investment in the project$
The amount of loan can be used to cover all types of investment re0uired in the pro?ect5
such as machinery ' e0uipment5 and 3or,ing capital5 land and building. The lending
agency for each component of loan may be same or different.
Is there an# agenc# for funding the land and !uilding costs$
The Ban,s and -tate 4inancial ;orporations offer assistance for land$building$shed to
certain e)tent. 8o3ever5 some 0ualifying parameters have been laid do3n by these
institutions. In addition5 8ousing :evelopment ;orporation also provides funds for
land $building.
hat are the general conditions for availing financial assistance$
The general conditions for getting financial assistance are
Eligibility criteria
Technical $Economic viability
9romoters contribution
;apacity to repay loan
;ollateral securities$guarantee
Is loan availa!le from an# other source for small projects$
@oan is also offered under some special schemes li,e P.M.R.Y. 3hich are directed
to3ards creation of self-employment.
9ro?ect (eport
hat is a project report$
The pro?ect report is a document5 3hich gives an account of the pro?ect proposal to
ascertain the prospects of the proposed plan$activity. The pro?ect report contains detailed
information about
@and ' building re0uired
#anufacturing ;apacity per annum
#anufacturing 9rocess
#achinery ' e0uipment along 3ith their prices and specifications
(e0uirements of ra3 materials
9o3er ' 6ater re0uired.
#anpo3er needs
#ar,eting
;ost of the pro?ect and production.
4inancial analyses ' economic viability of the pro?ect.
&o' is a Project Report Prepared$
A pro?ect report is prepared 3ith the help of prescribed guidelines available 3ith
#-#E:I<s5 :I;<s ' financial institutions. Information about prices of machinery '
e0uipment5 ra3 material and other various inputs re0uired for setting up an enterprise
need to be collected from the mar,et.
Is there an# standard model for preparing the project report$
A model proforma for preparing the pro?ect report is available 3ith #-#E:I<s5 :I;<s '
financial institutions. Every institution has its o3n model proforma. 8o3ever contents of
all the proforma are almost similar.
Is a model project report availa!le$
Yes5 #odel pro?ect profiles are available 3ith the #-#E:Is!formerly -mall Industries
-ervice Institute<s" ' :I;<s for the guidance of entrepreneurs.. 8o3ever5 these pro?ect
profiles have to be recast in accordance 3ith specific needs of the entrepreneurs and the
current prices of inputs.
hich agenc# assists in preparation of Project Report$
MSMEDIs, NSIC and -tate %ovt. agencies vi=. DICs, SFCs can help you in preparing the
9ro?ect (eport. You can also prepare the 9ro?ect (eport yourself by collecting detailed
information on various points.
hat details are re(uired for preparation of Project Report$
Information in detail is re0uired about the technical process5 re0uirements of plant and
machinery5 ra3 materials5 manpo3er re0uirement5 mar,et information and statutory
representations !li,e pollution control and public safety" etc. The details of po3er and
3ater tariff5 land$shed$building and selling prices etc. needs to be collected as prevalent in
the mar,et.
hich agencies can !e approached for o!taining information for preparation of the
Project Report$
Entrepreneur can approach MSMEDIs and state %ovt. agencies vi=. Directorate of
Industries, SFCs, DICs and mar,et channels for getting information.
ho can help in selecting production process% e(uipment etc$
#icro5 -mall ' #edium Enterprises :evelopment Institutes !formerly -mall Industries
-ervice Institutes"5 :esign and :evelopment ;enters li,e #-#E Technology
:evelopment ;enters !formerly 99:;<s" $Tool (oom<s5 (esearch and :evelopmental
agencies such as A(:;<s and (egional (esearch @aboratories can help you in selecting
the right production process5 suitable e0uipment<s etc
Training
hat !asic training is re(uired for setting up an enterprise$
Basic training differs from product to product but 3ill necessary involve sharpening of
entrepreneurial s,ills. Aeed based technical training is provided by the %ovt. ' -tate
%ovt. technical Institutions.
hat are the other t#pes of training relevant for a ne' entrepreneur$
2ne can ac0uire entrepreneurial s,ills by under going Entrepreneurial :evelopment
9rogramme and #anagement :evelopment programme.
hat is the duration of such courses$
These are short-term courses of * 3ee,<s to C 3ee,<s duration.
hich are the agencies providing such training$
There are a number of %overnment organisations as 3ell as A%2s 3ho conduct E:9s
and #:9s. These E:9s and #:9s and are conducted by #-#E<s5 AIE-BD:5 A-I;5
IIE5 AI-IET5 Entrepreneurship :evelopment Institutes and other state government
developmental agencies.
Is different t#pe of training availa!le for different categories of entrepreneurs$
Aeed based training courses are available for different categories of entrepreneurs. 4or
e)ample5 ;entral 4oot3ear Training Institute<s provide training for foot3ear. Tool (oom
and Tool :esign Institutes provide training in Engineering Industry. @i,e3ise other
technical training is provided by various institutions of centre and state govt.
Are there an# preferential criteria for imparting training$
An entrepreneur desirous of setting up of enterprises or his representative is preferred for
attending these training programmes 3hich are offered on a nominal fee. 8o3ever5 there
is no fee charged for imparting training for the entrepreneurs of AE region. #oreover5
preference is accorded to 3ea,er sections such as -;$-T5 6omen5 E)-servicemen. and
9hysically handicapped persons.
Are there an# short terms courses availa!le$
-hort term technical training courses are conducted by -I-Is and other technical
institutions5 3hich vary from E to F months of duration depending on nature of training.
In addition5 short-term training programmes for managers ' supervisors are also
conducted by #-#E<s to upgrade their ,no3ledge and s,ills.
+oes an# agenc# give on the spot training for installation and commissioning of
e(uipment$
Aormally the suppliers of machinery ' e0uipment provide on the spot training as 3ell as
facilities on the spot for installation and commissioning of e0uipment. 8o3ever5 -I-Is
also assist the entrepreneurs for installation and commissioning of machinery e0uipment
at their premises.
Is there an# agenc# providing training for skill upgradation$
-,ill development$upgradation courses are offered by -I-Is5 A-I;5 99:;s etc. in
different disciplines to s,illed 3or,ers engaged in the micro5 small and medium
enterprises 3ith a vie3 to e0uip them 3ith better and improved technologies of
production.
hich are the organisations providing training to improve management of an
enterprise$
-I-Is5 #anagement :evelopment Institute<s5 A9;5 A-I; etc. offer #anagement
:evelopment 9rogrammes for ac0uiring ,no3ledge about the different aspects of the
management re0uired for an operation of industry. -hort-term courses of t3o to four
3ee,s are available on 9roduction #anagement5 #ar,eting #anagement5 4inancial
#anagement5 E)port #anagement5 E)port 9rocedure ' :ocumentation5 9ac,aging for
E)ports5 ;ost (eduction5 #aterial #anagement etc.
Are there institutions providing consultanc# for development or setting up of
project$
-I-Is5 :I;s and -tate industrial development corporations can provide consultancy for
development or setting up of pro?ect. -uitable technologies are also offered by ;-I(
@aboratories5 99:;<s5 A(:;s5 (': institutions also offer consultancy at nominal
charges.
hat kind of consultanc# is offered !# these agencies$
The consultancy provided by these institutions includes identification of suitable product5
mar,et5 technologies5 (a3 #aterials5 production method5 regulatory re0uirement etc. In
fact any problem can be addressed by these institutions for setting up or running of the
enterprise.
6hich agencies provide information on plant and machinery5 ra3 materials and other
e0uipments7
-I-Is5 :I;5 ;-I( @aboratories5 99:;<s5 A(:;5 (': institutions etc. provide
information on plant and machinery5 ra3 materials and other e0uipments.
&o' does one tackle pollution control needs of the project$
In case your product is covered under the list of the polluting industries as defined by the
state government5 it 3ill be necessary to get specific clearance from the state 9ollution
;ontrol Board$;ommittees. 9ollution control e0uipments$measures 3ill have to be
installed by the enterprise as per need. -uch polluting enterprises can only be set up in the
designated industrial areas or locations and may have to lin, up 3ith the common
affluent treatment facility5 if available in the area.
hich institutions provide details of pollution control re(uirements$
9ollution control board$ ;ommittees and -tate :irectorate of industries provide details of
pollution control re0uirements. -I-Is5 and :I;s also help in understanding of pollution
needs.
+oes an# agenc# provide training in pollution control$
#-#E<s provide training in pollution control for different type of industries as per their
local needs. 9ollution ;ontrol Boards ' #inistry of Environment also support training
efforts.
#ar,eting
&o' does a ne' entrepreneur market the product$
This is an era of globali=ation and liberali=ation. The manufacturers have to offer goods
and services of desired 0uality at optimum cost. -elect the right mar,et$consumers
identified at the time of planning the unit. Establish :irect mar,eting channels or a
net3or, of dealers as per re0uirement of the product based upon initial survey. 8ighlight
strengths of the product.
&o' does one popularise the ne' product$
You may create a3areness among the buyers or consumers about your product<s strong
points in order to convince them of the utility of the product. 9ublicity in various
available forms has to be arranged 3ithin the budgetary constraints. -ell your 0uality5 to
gain consumer<s confidence. (evie3 consumer feed bac,. (esort to live demonstration.
#-#E $A-I; help in popularising the product through domestic and international trade
fairs$e)hibitions.
Are there an# speciali,ed agencies 'hich offer marketing assistance$
There are %overnmental and non-governmental specialised agencies 3hich provide
mar,eting assistance. A-I; ' G>I; are the devoted govt. agencies for providing
mar,eting assistance to #-#E units.
Is there an# other assistance offered !# -SI* for marketing MSME Product$
Besides promotion of #-#E products through e)hibitions5 A-I; directly mar,et the
#-#E produce in the domestic and overseas mar,et. A-I; also manages a single point
registration scheme for manufacturers for %ovt. purchase. Dnits registered under this
scheme get the benefits of free tender documents and e)emption from earnest money
deposit and performance guarantee.
+oes an# agenc# help in e)hi!ition of the product$
#-#E ' A-I; help the micro5 small and medium enterprises for e)hibiting products of
#-#E in the domestic and international e)hibition.
+oes an# agenc# help in promoting e)ports$
IT925 :%4T5 4IE2 ' ;hambers of commerce in different countries #inistry of
;ommerce provide assistance in promoting e)ports. 2ffice of the :evelopment
;ommissioner !#-#E"5 %overnment of India provides financial assistance to micro5
small and medium scale entrepreneurs to display their products in overseas fairs and also
for sales-cum-study tours abroad.
Are there an# special !enefits for e)ports$
#-#E units gets special benefits such as duty dra3 bac,5 advance licensing for import
of capital goods and ra3 materials5 pre- shipment and post shipment credit against firm
e)port orders and mar,eting development assistance. Income ta) benefit is available on
e)ports earning.
9romotional -chemes
hat is the polic# of Government for promoting a micro% small and medium
enterprises $
%overnment accords the highest preference to development of #-#E by framing and
implementing suitable policies and promotional schemes. Besides providing developed
land and sheds to the entrepreneurs on actual cost basis 3ith appropriate infrastructure5
special schemes have been designed for specific purposes li,e 0uality upgradation5
common facilities5 entrepreneurship development and consultancy services at nominal
charges.
hat is the incentive provided for (ualit# upgradation $
%overnment of India has been e)ecuting the incentive scheme for providing
reimbursement of charges for ac0uiring I-2 H/// certification to the e)tent of I+J of the
cost sub?ect to a ma)imum of (s. I+5///$- in each case. I-2 H/// is a mechanism to
facilitate adoption of consistent management practices and production techni0ue as
decided by the entrepreneur himself. This facilitates achievement of desired level of
0uality 3hile ,eeping chec, on production process and management of the enterprise.
Is there an# concession on E)cise +ut# pa#a!le !# small units $
#-#E units 3ith a turnover of (s. . crore or less per year have been e)empted from
payment of E)cise :uty. #oreover there is a general scheme of e)cise e)emption for
#-#E brought out by the #inistry of 4inance 3hich covers most of the items. Dnder
this5 units having turnover of less than (s. E crores are eligible for concessional rate of
E)cise :uty. #oreover5 there is an e)emption from E)cise :uty for #-#E units
producing branded goods in rural areas.
Is priorit# there an# on providing credit to MSME $
;redit to micro5 small and medium scale sector has been covered under priority sector
lending by ban,s. -mall Industries :evelopment Ban, of India !-I:BI" has been
established as the ape) institution for financing the #-#E. -pecific schemes have been
designed for implementation through -I:BI5 -4;s5 -cheduled Ban,s5 -I:;s and A-I;
etc. @oans upto (s. + la,hs are made available by the ban,s 3ithout insisting on
collaterals. 4urther ;redit %uarantee 4und for micro5 small and medium enterprises has
been set up to provide guarantee for loans to #-#E up to (s. *+ la,hs e)tended by
;ommercial Ban,s and some (egional (ural Ban,.
hat are the policies and schemes for promotion of MSME !eing implemented !#
State Governments $
All the -tate %overnments provide technical and other support services to small units
through their :irectorates of Industries5 and :istrict Industries ;entres. Although the
details of the scheme vary from state to state5 the follo3ing are the common areas of
support.
a. :evelopment and management of industrial estates
b. -uspension$deferment of -ales Ta)
c. 9o3er subsidies
d. ;apital investment subsidies for ne3 units set up in a particular district
e. -eed ;apital$#argin #oney Assistance -cheme
f. 9riority in allotment of po3er connection5 3ater connection.
g. ;onsultancy and technical support
If I perform 'ell% 'ill m# efforts !e recogni,ed $
Yes5 %overnment of India runs a scheme for giving Aational A3ards to micro5 small and
medium scale entrepreneurs providing 0uality products in .. selected industry groups of
consumer interest. The 3inners are given trophy5 certificate and a cash price of (s.
*+///$- each.