INTRODUCTION

The far-reaching developments and the scale and

scope of operation of small-industries have brought to fore the importance of provision of administrative and institutional assistance at various levels.

NEED FOR INSTITUTIONAL SUPPORT

The success of small-scale industries depends

solely on the well established institutional set-up. The government has given adequate institutional support to small-scale industries to become successful. The role of various institutions set-up specially to promote growth of small-scale industries is quite unique.

Development Commissioner, SSI State Small Industries Board Advisory Bodies Directorate of Industries Export Promotion Council Commodity Boards National small Industries Corporation Small Industries Service Institutes State Trading Corporation Central institute of Tool and design Industrial Development Bank of India

SMALL INDUSTRIES

Government Institutions

Corporate Institutions

 There are a number of Institutions offering

FINANCIAL INSTITUTIONS

Financial assistance to small scale industries: 1. State Financial Corporation (SFC) 2. Small Industries Development Bank of India (SIDBI) 3. Commercial Banks 4. Industrial Finance corporation of India (IFCI) 5. Industrial Credit and Investment Corporation of India 6. Industrial Reconstruction Bank of India 7. Industrial Development Bank of India 8. Life Insurance Corporation. Etc.

STATE FINANCIAL CORPORATION (SFC)

The SFC was established by the Government of

India in each state according to the provisions of State Financial Corporations Act 1951. At present there are 18 SFCs in the country. SFCs are established to cater to the long-term financial needs of the small and medium scale industries. According to the SFC Act, loans are extended to the industrial units which are engaged in the areas of manufacturing, processed foods, mining, hotel industry, etc.

BENEFICIARIES OF SFC
Purchase machinery

Modernization
Hotels and Restaurants Hospitals, Nursing Homes and Diagnostic

Centers General loan scheme for the technically feasible and viable projects Women Entrepreneurs Tourism and many more.

SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA (SIDBI)

It was established on April 2nd, 1990.

The SIDBI of India act, 1989 envisaged SIDBI to

be the principal financial institution for the promotion, financing and development of industry in the small scale sector and to coordinate the functions of the institutions engaged in the promotion and financing or developing industry in the small scale sector and for matters connected therewith or incidental Thereto.

RANGE OF SERVICES FROM SIDBI

SSI units for new/expansion/ diversification /

modernization projects. Marketing development projects which expand the domestic and international marketability of SSI products. Existing well-run SSI units and ancillaries/subcontracting units/vendor units for modernization and technology upgradation. Infrastructure development agencies for developing industrial areas. Leasing and hire purchase companies for offering leasing/hire purchase facilities to SSI units. Existing export-oriented units to enable them to acquire ISO-9000 series certification.

 SIDBI Provides Foreign Currency Loans to: Import equipment by existing export-oriented SSIs

and new units having definite plans for entering export markets. Executive confirmed export orders by way of preshipment credit/letter of credit and provides postshipment facilities. SIDBIs Venture Capital Fund Provides Assistance to small scale entrepreneurs using innovative indigenous technology and expertise.

 SIDBI re-finances:
Loans granted by PLIs for new SSI projects and for

expansion, technology upgradation, modernization, quality promotion. Loans sanctioned by PLIs to small road transport operators, qualified professionals for selfemployment, small hospitals and nursing homes and to promote hotels and tourism-related activities.

COMMERCIAL BANKS
The Government of India recognized the need for

a focused credit policy for SSIs and came up with the following components of credit policy: Priority Sector Lending: The commercial banks are required to compulsorily ensure that a defined percentage (currently 40 %) of their overall lending is made to priority sectors like agriculture, small industries, export etc. Institutional Arrangement: SIDBI was set up as the apex refinance bank. Term loans are provided by State Financial Corporations and scheduled Banks. Credit lending was undertaken by NABARD etc.

COMMERCIAL BANKS
Commercial banks are also extending other

financial assistance to SSIs through their schemes like, General Purpose Term Loans. Entrepreneur Scheme. Equity Fund Scheme Stree shakti Package Margin Money Scheme Mahila Udyama Nidhi Schemes (soft loans) Export Finance Schemes etc.

KARNATAKA STATE INDUSTRIAL INVESTMENT AND DEVELOPMENT CORPORATION (KSIIDC)

KSIIDC is an institution which extends financial

support to SSIs in Karnataka. This organization of Karnataka has no specific financial programme for adaptation of pollution control etc. But provides medium and long-term loans, equipment financing and direct equity participation.

INDUSTRIAL FINANCE CORPORATION OF INDIA (IFCI)

IFCI, the first development financial institution in

India was established in 1948 as a statutory corporation to lend credit to medium and largesized industries. Besides providing project finance, financial service, non-project specific assistance, corporate advisory services, IFCI has promoted institutions such as National Stock Exchange, Management Development Institute, LIC Housing Finance Ltd etc.

NON-FINANCIAL INSTITUTIONAL ASSISTANCE TO SSIs

Apart from financial assistance the SSIs need

non-financial assistance like training in entrepreneurial skills, financial management, Human Resource Management, technical training etc. Hence, there are a number of Non-financial institutions established to cater to the needs of the SSIs.

NON-FINANCIAL INSTITUTIONS
District Industries Centre (DIC) Small Industries Services Institute (SISI) Entrepreneurship Development Institute (EDI) Small Industries Development Organization (SIDO) Association of Women Entrepreneurs of Karnataka

(AWAKE) Technical Consultancy Organizations (TCO) Technical Consultancy Services Organization of Karnataka (TECSOK) Khadi and Village Industries Corporation (KVIC)

DISTRICT INDUSTRIES CENTRE (DIC)

The Government of India has established DIC in

every district of the country to accelerate Industrial Development. The DICs are given power to implement various state government schemes in their respective districts by coordinating with other departments and agencies of the Government. The DICs are the first link of the IndustryGovernment line for resolving various issues of Industry for its all round and healthy government.

Accelerate the Industrialization Process

Minimize time required to obtain licenses, registrations, subsidies etc.

OBJECTIVES OF DIC

Decentralize the industrialization

Encourage Industries to Rural areas

Support schemes of Government

FOCUS OF DICs
Industrialization process in district.

Encourage Entrepreneurs through various

schemes. Educate and train people in Entrepreneurship Financial assistance through credit schemes. Marketing assistance Raw material and technical assistance Special attention to Tiny and Cottage Industries.

SMALL INDUSTRIES DEVELOPMENT ORGANISTION (SIDO)

SIDO functions under Department of SSI,

Government of India. The main functions of SIDO are; 1. Framing of policies pertaining to SSI sector 2. Coordination with different bodies/agencies in the SSI sector 3. Monitoring policy implementation 4. Industrial development 5. Extension Services.

SIDO
SIDO helps SSIs which participate in International

fairs under the Market development Assistance Scheme operated by the Ministry of Commerce with a view to encourage exporters. SIDO provides exhibition space and shipment of exhibits free of cost at the international fairs. SIDO also organizes training programmes on packaging for exports . It also provides technical and managerial consultancy services. It gives National Awards for Quality products to encourage SSIs to produce quality goods. This scheme is being operated since 1986. The winner gets a trophy, a certificate and a cash prize of Rs. 25,000.

SIDO
SIDO has established Regional Testing Centers

(RTC) at Delhi, Calcutta, Mumbai and Chennai for testing raw materials, semi-finished products and end products to ensure quality products from SSIs. SIDO has set up 10 tool rooms in the country to assist SSI units in their technical upgradation. SIDO also helps in modernization in the units located in dense industrial sectors and Subcontract exchanges for ancillary Development in order to give marketing support and facilitate ancillary industries.

SMALL INDUSTRIES SERVICES INSTITUTE (SISI)

The SISI is established by the Government of India to

help the SSI on various sector. Every state has SISI and functions under the guidance of Director. At present there are 28 SISIs and 30 branches set up at various state capitals and other industrial cities all over the country. The main activities of SISI are: Assistance to Prospective Entrepreneur is provided on various issues like, various opportunities existing in the market, how to go about starting a business, what and how to produce, where to market, where to raise the required capital, etc. Assistance rendered to existing units on issues like, raw material procurement, technology adoption, quality

 Preparation of State Economic and Industrial profiles

pertaining to economic and industrial activities of the state is done by SISI. This information is spread to the Entrepreneurs through books, seminars and training programmes. Updates the District Industrial Potential Surveys carried out by SISI to the upcoming entrepreneurs who are taking up potential business opportunities. SISI assists Entrepreneurs in exporting SSIs goods and also offers export documentation assistance to Entrepreneurs. Quality Control and Upgradation is promoted by SISI through various training programmes, workshop and seminars. Project Profiles are prepared by SISI after proper research and analysis which can be used by the prospective entrepreneurs Entrepreneurship Development Programmes are

ENTREPRENEURSHIP DEVELOPMENT INSTITUTE (EDI)

EDI of India, an autonomous body and not-for-profit

institution was set up in 1983. It has been sponsored by IDBI, IFCI, ICICI and SBI. EDI has been spearheading entrepreneurship movement throughout the nation with a belief that Entrepreneurship can be developed through well-conceived and welldirected activities. Some of its aims are: Creating a multiplier effect on opportunities for selfemployment. Increasing the supply of competent entrepreneurs through training. Increasing the supply of entrepreneur trainermotivator Inculcating the spirit of Entrepreneurship in youth. Promoting micro enterprises at rural level. Improving managerial capabilities of small scale

ASSOCIATION OF WOMEN ENTREPRENEURS OF KARNATAKA (AWAKE)

AWAKE is a not-for profit, Non-Governmental

Organization, established in 1983, with the mission of 'Empowering Women through Entrepreneurship for Economic Development'. It is established to improve their economic condition, enhance their social status and develop a spirit of individuality and creativity. AWAKE helps women entrepreneurs in Karnataka for the growth of Small Scale Units. The distinctive feature of AWAKE is that, it is run by women entrepreneurs, volunteering their time o support potential women entrepreneurs in setting up the their enterprises. AWAKE organizes seminars for women entrepreneurs on a frequent basis to enhance their Entrepreneurial

OBJECTIVES OF SEMINARS OF AWAKE

To provide an international platform focusing

on economic empowerment of women and international trade. To provide an opportunity for interaction between entrepreneurs to learn about the best business practices. Business to Business trade meets. Networking of Business Associations. To evolve pro-women entrepreneur policies. Exposure to new ideas of marketing access to finance/technology/innovation. Exploring business opportunities.

TECHNICAL CONSULTANCY SERVICES ORGANIZATION OF KARNATAKA (TECSOK)

TECSOK a Government of Karnataka Organization, is a wing of the Department of Industries and commerce promoted during 1976. It assists the entrepreneurs in the preparation of feasibility reports at a subsidized costs. SERVICE PROVIDED BY TECSOK Identification of project ideas and selection of investment opportunities. Selection of suitable locations for setting up industrial units. Conducting market surveys, industrial potential surveys. Preparation of detailed techno-economic feasibility report/detailed project reports. Turnkey assistance Assistance in obtaining necessary licenses and clearances.

(TECSOK) Contd..
Energy audit and conservation.

Modernization studies
giving out information on industrial policies

and procedures of central as well as state governments. Coordinating and conducting management development programmes Identification and development of ancillary industries. Assistance to government in providing information about new policies, programmes and schemes

(TECSOK) Contd..
TECSOK is recognized by All India Financial

Institutions like IDBI, IFCI, ICICI etc. Some of the schemes of IFCI operated through TECSOK are: Subsidy to Small entrepreneurs in rural, cottage and Small Scale Sectors. Subsidy for consultancy to industries relating to animal husbandry, dairy farming, poultry farming and fishing. Subsidy to control pollution in small and medium scale industries. Subsidy to New Entrepreneurs for meeting the cost of market research/surveys.

TECHNICAL CONSULTANCY ORGANIZATIONS (TCO)

TCOs were established by many financial institutions

like ICICI, IFCI, IDBI,SFCs etc. in collaboration with state level financial institutions and commercial banks. Functions of TCO are to;
Advice Small and Medium Enterprises about

technical aspects of Business. Prepare project profiles and feasibility reports. Technical collaboration and transfer of technology. Encourage, assist and offer technical consultancy to new entrepreneurs. Advice on industrial management. Undertake market research and survey for specific product.

KHADI AND VILLAGE INDUSTRIES CORPORATION (KVIC)

The Government has established Khadi and

Village Industries Corporation as per the provisions of a special Parliamentary Act 1956. The Objectives of KVIC are: Preserve traditional arts and crafts Equip artisans to modern market Promote village handicrafts Develop product market Explore Export Opportunities Financial Assistance

TAXATION BENEFITS TO SSI

In a developing country like India, Small Scale

Industries play a significant role in economic development of the country. They are a vital segment of Indian economy in terms of their contribution towards country's industrial production, exports, employment and creation of an entrepreneurial base. Given their importance, the Government policy framework right from the First plan has highlighted the need for the development of SSI sector keeping in view its strategic importance in the overall economic development of India. The most important promotional policy of the Government for the SSI's is fiscal incentives in the

TAX BENEFITS
The tax benefits that the small scale enterprises receive

relate to income tax, excise duty, sales tax etc. Income tax: The tax charged on the income earned by the industries. Excise duty: An excise or excise tax is an inland tax on a good produced for sale or sold within a country or licenses for specific activities. A sales tax is a tax paid to a governing body by a seller for the sales of certain goods and services. Concession in matters of taxation for industries have three supportive roles
1. 2.

Concessions in excise duties and sales-tax aim at marketing support Concessions in profit tax/dividend tax etc., offer investment support.

TAX HOLIDAY AND DEPRECIATION

A tax holiday is a temporary reduction or

elimination of a tax. Governments usually create tax holidays as incentives for business investment. Tax holidays have been granted by governments at national, sub-national, and local levels, and have included income, property, sales, VAT, and other taxes. Depreciation: A noncash expense that reduces the value of an asset as a result of wear and tear, age, or obsolescence. Under Section 32 of the Income-Tax Act, a smallscale industry is entitled to a deduction on depreciation account on buildings, furniture, plant and machinery at the prescribed rates.