SIDO Schemes

SIDO is actively involved in promoting tiny and small scale industries in India by
means of its promotional and developmental activities. To bring about economic
development of the country and to assist the small scale entrepreneurs to become
self reliant, SIDO offers the following schemes for the SSI Sector.

1. Credit Guarantee Fund Scheme for Small Industries:

The Board of Trustees of Credit Guarantee Fund Trust for small industries have
framed a scheme for providing guarantee to a substantial extent, in respect of credit
facilities to the borrowers in the SSI sector without any collateral security or third
party guarantee. The scheme came into force from 1st August, 2000. The following
facilities are provided under this scheme:

(a) The Trust covers credit facilities extended by a lending institution to a small
scale entrepreneur up to an amount of Rs. 25 lakhs (in respect of a single
borrower) by way of term loan and/ or working capital facilities. For this
purpose, the Trust requires no Collateral Security or Third Party guarantee.
However, the lending institution has to apply for a guarantee cover within a
period of 90 days from the date of sanction.

(b) The scheme covers all existing and new SSI units including information
technology and software industries to which credit facility has been provided
by the lending institutions.

(c) If working capital alone is extended to an eligible borrower, the guarantee

cover shall be for a period of 5 years or a block of 5 years or for such period
as may be specified by the Trust in this behalf.

2. Credit Linked Capital Subsidy Scheme for Technology up gradation of the

Small Scale Industries (CLCSS)

The purpose of the scheme is to facilitate technology up gradation in the SSI sector
in the specified products/sub sectors by providing 12% capital subsidy for induction
of proven technologies approved under the Scheme. Eligible borrowers under the
scheme include all sole proprietors, partnerships firms, and Co-operative societies,
private and public limited companies in the SSI sector. Under this scheme, Capital
subsidy is available only for such projects where term loans have been sanctioned by
the eligible Primary Lending Institutions on or after 1st, October, 2000.

The following products/sub sectors are covered under this scheme in the SSI Sector:

Leather and Leather products including footwear and garments

Food Processing
Information Technology (Hardware)
Drugs and Pharmaceuticals
Auto parts and Components
Electronic Industry particular relating to Design and Measuring
Glass and Ceramic items including Tiles
Dyes and intermediates
Toys
 Tyres
Hand Tools
Bicycle parts
Foundries – Ferrous and Cast Iron, and
Stone Industry.

SIDBI acts as the nodal agency for this scheme.

The financial assistance by the banks/SIDBI for technology up gradation is need

based. However, the subsidy support is limited to the loan amount indicated below:

Sl. Existing Investment Limit Maximum Ceiling of

No. Loan eligible for
support
01. Tiny units with investment in Plant & Machinery Rs. 8 lakhs
less than Rs. 10 lakhs
02. Tiny units with investment in Plant & Machinery Rs. 20 lakhs
between Rs.10 lakhs to Rs. 25 lakhs
03. SSI units with investment in Plant & Machinery Rs. 40 lakhs.
above Rs. 25 lakhs.

3. Scheme for Market Development Assistance for SSI exporters (SSI-MDA)

The Scheme for Market Development Assistance for SSI exporters (SSI-MDA) came
into operation w.e.f. 30th August, 2001. The basic objective of the scheme is to
encourage the exporters to tap and develop overseas exports. It is expected that
SIDOs participation in International Fairs coupled with the presence of exporters, will
help to augment export earnings.

Exporters eligible for assistance under this scheme are:

(a) Exporting unit must be registered as SSI/SSSBE.

(b) Exporting unit must be a member of FIEO/EPC.

(c) Those exporting units with aggregate exports of Rs. 2 crores and above
during last 3 financial years (Rs. 1 crore for ISO-9000 certified exporters)
shall receive assistance from the Ministry of Commerce through Export
Promotion Councils (EPCs) or other grantee organizations. Other exporting
units with aggregate exports less than this limit shall receive direct assistance
from the O/o DC(SSI), New Delhi.

(d) Those units who have not commenced exports are not eligible for assistance.

(e) Assistance under SSI-MDA will be given to an exporting unit only once in a
financial year.

Activities eligible for financing are:

(a) Individual participation in overseas fairs/exhibitors

(b) Individual overseas study tours as member of a trade delegation going
abroad.

(c) Publicity Overseas.

Assistance is given for travel by one permanent employee/director/partner/proprietor

of the SSI unit in economy class by Air India. Travel by other airlines is also
permissible provided their economy class air fare is not higher than Air India.

Permissible Funding limits:

i. 90% of cost of return ticket by economy class subject to an upper ceiling

of Rs. 60,000/= (Rs. 90,000/= of Latin American countries).

ii. 25% of the cost of production of publicity material limited to Rs. 15,000/=
in a financial year.

4. Integrated Infrastructural Development Scheme (IID) for Small Scale

Industries

The Integrated Infrastructural Development Scheme (IID) was launched in March,

1994 with the basic objective of facilitating growth of cluster of small scale and tiny
units so as to create employment opportunities and to promote exports. The IID
centers are to provide common service facilities and technology back up services to
the SSI entrepreneurs. The thrust of the scheme is on creation/up gradation of
infrastructural facilities like power, water, telecommunication, drainage, pollution
control facilities, effluent treatment and disposal system, road, banks, raw material
depots, marketing outlets etc. in the new/existing industrial centers. The IID Scheme
covers all areas with 50% reservation for rural areas. 50% of the Industrial plots
created under this scheme are to be reserved for the tiny sector. The State Govt.
selects an appropriate site of 15-20 hectares in rural/urban area which has potential
for setting up of SSI unit, prepare project report and send the same to SIDBI for
techno economic appraisal. SIDBI undertakes techno economic appraisal of the
Project Reports and sends the same to the O/o DC, SSI, New Delhi for formal
approval of Govt. of India. At the Central level, SIDO is the apex body for
coordinating and overseeing the progress of IID projects. The State/UT Govt. is
responsible for implementing the scheme at the ground level through a public sector
corporation or corporate body with good track record or NGOs with sound financial
position. The technology support in IID centers is provided by SISIs, NSIC, and
Research Centre etc. However, common service facilities are also provided by
Industry Association etc. for commercial operations. Up to December, 2001, 57 IID
Centers have been implemented under the Scheme.

5. Integrated Technology up gradation and Management Programme

(UPTECH).

The Integrated Technology Up gradation and Management Programme (UPTECH)

was launched in 1998. The Scheme applies to any cluster of industries where there
is a commonality in the method of production, quality control and testing, energy
conservation, pollution control etc. among the units of the cluster. The scheme aims
at technology up-gradation, improvement of productivity, energy conservation,
pollution control, product diversification their marketing and training needs, etc. The
Scheme also has provision for financial support for activities like conducting
diagnostic study of the cluster, carrying out industries related Research and
Development, setting up of new technology demonstration plant, setting up of
common facility centers, organizing Seminars, Workshops and training of users.
The proposals for technology up gradation and modernization of a cluster are
received from various agencies like State Govts. Industry Associations or Special
Institutions. The proposals are then discussed with the agencies and a consensus is
reached on the areas of intervention in fields of technology up gradation. The next
step is to decide the implementing agency for carrying out these technological
interventions. A demonstration plant is then set up by the pioneering unit (wherein
the technological interventions are implemented). For setting up of the
demonstration plant, the pioneering unit has to bear 50% of its cost. A Common
Facility Centre, if required, can be supported under the scheme. The amount of
financial support under this scheme is not fixed but varies from project to project as
decided by the Steering Committee. The Scheme is monitored by the
Implementation Committee headed by the Development Commission (SSI). The O/o
DC, SSI is the nodal agency to implement the scheme.

6. Prime Minister’s Rozgar Yojana (PMRY)

The PMRY scheme was launched by the Govt. of India in Oct. 1993 and is designed
to create and provide sustainable self employment opportunities to the educated
unemployed. The salient features of the scheme are:

A. Eligibility - Any unemployed educated youth satisfying the following

criterion:

a) Age : Between 18 to 35 years. Upper age limit relaxed by 10

years for women, SC/ST and Physically Handicapped
Persons.

b) Qualification: VIIIth Passed. Preference will be given to those who

have been trained for any trade in govt. recognized/
approved institutions for duration of at least six months.

c) Residency : Permanent resident of the area for at least three yrs.

d) Family Income: Neither the income of the beneficiary
along with spouse nor the income of the parents of the
beneficiaries shall exceed Rs. 40,000/= p.a.

e) Defaulter: Should not be a defaulter to any nationalized

bank/financial institutions.

B. Activities : Industry, Service or Business covers all economically

viable activities including agriculture and allied
activities but excluding direct agriculture activities.

C. Project Cost: Rs. 1.00 lakh for business sector, Rs. 2.00 lakhs for
other activities, loan to be of composite nature. If
two or more eligible persons join together in a
partnership, projects up to Rs. 10.00 lakhs are covered.
Assistance shall be limited to individual admissibility.

D. Subsidy & : i) Subsidy will be limited to 15% of the project cost

Margin Money subject to ceiling of Rs. 7,500/- per entrepreneur. Banks will be
allowed to take margin money from the entrepreneur varying from 5% to 16.50% of
the project
(d) cost so as
The Scheme to make
provides theone
only totaltime
of the subsidy and the
reimbursement. Themargin
amount money
of equal
to 20%subsidy/financial
of the project cost.
support if already received from State Govt/Financial
Institution shall be adjusted against the enlistment of reimbursement under
this scheme. ii) Subsidy @ 15% of the project cost subject to a
ceiling of Rs. 15,000/= for North Eastern States.
(e) The scheme has beenMarginextended up to
money the Tenth Five
contribution fromyear Plan i.e. 31st
the entrepreneur
March, 2007. may vary from 5% to 12.5% of the project cost so as
to make the total of the subsidy and the margin
The norms of reimbursementmoney under equal to 20%are:-
the Scheme of the project cost.
E. Collateral :
a) Payments made to Certification
Agency(excluding travelNo & collateral
hotel for units in industry sector with project
Full amount
Expenses & surveillancecostcharges)
up to Rs. 2 lakh (the loan ceiling under the
PMRY). For partnership projects under Industry
b) Payments made towards:-Sector, the exemption limit for obtaining of collateral
i) Consultancy security will be Rs. 5 lakhs per borrowers
Upto account. For
Rs. 30,000/=
ii) Training and units in service and business sector, no collateral for
iii) Calibration projects up to Rs. 1.00 lakh. Exemption from
collateral in case of partnership project will also be
c) limited to an amount of Rs. 1.00
The entitlement for reimbursement 75% lakh peramount+
(a) full person
participating in the project. (b) upto Rs. 30,000/=
(Total reimbursement not
F. Rate of interest: Normal rate of interest shall exceeding
be charged.Rs.The
75,000/=).
& Repayment repayment schedule & Repayment may range from 3
to 7 years after an initial moratorium as may be
prescribed.

G. Reservation: Preference shall be given to weaker sections including

women. The Scheme envisages 22.5% reservation
for SC/ST and 27% for other backward classed (OBC)

7. Incentive for ISO-9000 Certification

ISO-9000 is the synonym for International Organization for standardization. The

accreditation of ISO-9000 is a qualification to sell the product globally. The Incentive
Scheme of ISO-9000 Quality System launched in March, 1994, aims at encouraging
technological up-gradation & quality improvement in the SSI sector, thereby
preparing the sector to face global competition. The scheme provides
reimbursement of 75% of the amount spent for acquiring ISO-9000 certification, up
to a maximum limit of Rs. 75,000 to each unit. Besides the reimbursement factor,
other salient features of the scheme are:-

(a) All small scale/ancillary units are eligible to avail the incentive scheme

(b) The scheme is applicable only to those SSI/ancillary units who have already
acquired ISO-9000 (or its equivalent) certification.

(c) It is an all India Scheme administered by the O/o DC, SSI, New Delhi.
Formats of Application for reimbursement along with other necessary
documents and check list of enclosures are available on request from the O/o
DC, SSI, New Delhi or from Small Industries Service Institutes.