MICRO, SMALL & MEDIUM ENTERPRISES IN INDIA

Contents
• Concept and Definition
• Registration procedure
• Whom to approach for what – Organizations
of assistance under MSME sector.
 Concept and Definition
There exist several definition of the term small and medium enterprise, varying
from country to country. The commonly used criteria at the international level
to define SMEs are “THE NUMBER OF EMPLOYEES, TOTAL NET ASSETS, SALES
AND INVESTMENT LEVEL”.
In the Indian context, micro, small, medium enterprises as per the MSME
development Act, 2006 are defined based on their investment in plant and
machinery (for manufacturing enterprise) and on equipment for providing or
rendering services.

A micro enterprise is where the investment in plant and machinery does

not exceed 25 lakh rupees.

A small enterprise is where the investment in plant and machinery is more

than 25 lakh rupees but does not exceed 5 core rupees.

A medium enterprise is where the investment in plant and machinery is

more than 5 core rupees but does not exceed 10 core rupees.
 In the case of the enterprise engaged in providing or rendering
of services as,

A micro enterprise is where the investment in equipment does not exceed

10 lakh rupees.

A small enterprise is where the investment in equipment is more than 10

lakh rupees but does not exceed 2 core rupees.

A medium enterprise is where the investment in equipment is more than

2 core rupees but does not exceed 5 core rupees.
 Registration Procedure
• The entrepreneurs wanting to obtain provisional or
permanent SSI registration have to apply to the Registering
Authority in the prescribed Application form and
Supplements.
• The Application forms for SSI registration are available at
Sigma Counter in District Industries Centres.
• The provisional and permanent SSI registration are issued
on the same day of application.
• In their own interest, all existing small – scale units or
proposing entrepreneurs employing more than 10 workers
should get themselves registered with the director of
Industries in their State.
• Copy of this application for registration should be sent to
the Director of Small Industries Service Institutes in the
concern state
• Such registration with the Director of Industries and the
Small Industries Service Institute will be of considerable help
to small scale unit in obtaining financial assistance from the
government and for obtaining machinery on hire purchase
basis from the National Small Industries Corporation.
• Assistance in the supply of controlled raw materials, specific
certificate for raw materials and components, and facilities for
export promotion, would then be easily made available to
small – scale units registered with the State Director of
Industries.
• The registration number is now required to be mentioned
while submitting application.
• The director of Industries can be approached to provide you
with built up factory space in an industrial estate, or develop
the factory site, power, etc.
• After the initial clearance from the State Director of
Industries, the Municipality issues a “ No Objection
Certificate”.
 The Procedure of Putting up a new factory are:

1) Apply to the Industries Commissioner, Industries and Labour

Department, and obtain a “No objection Certificate”.
2) With a copy of the above NOC, apply in factory form A to the
Ward Engineer.
3) Clarifications and submission of further details on the
information supplied in form A may follow.
4) The sub-engineer will inspect the premises and submit form No.
2 to his assistance engineer.
5) The assistance engineer will scrutinize and confirm if the
applicant’s activity conforms to the zone and will intimate to the
applicant in form No. 3 if there is no objection or in form No. 4
if there is any objection.
6) Form B will be received by the applicant if form No. 3 is issued
to him. This form should be filled in and submitted.
7) Within 21 days after the submission of form A, B and the factory
plans in triplicate, the assistant engineer will issue form No. 5 and 6
in which he will specify.

(a)The electric power sanctioned;

(b)Adequate water facilities provided;
(c)The various requirements, requisitions and conditions for
operating the factory, including those required by the chief
inspector of factories.

8) Form C will also be issued along with these forms.

9) Subsequently, permission to commence production will be given.
Whom to approach for what - organizations for assistance
under MSME sector:

For Selection of Industry

1. Small Industries Service Institutes They guide entrepreneurs in the Selection of

Industries, areas, suitable raw materials and
machinery.

2. Indian Investment Centre, They advice on foreign capital Formation and

Parliament Sheet, New Delhi – 1 technical collaboration.

3. Ministry of Industrial Development, They approve cases of foreign collaborations.

Govt. of India, New Delhi.
For Registration

1. Director of Industries S.S.I. Registration number.

2. Small Industries Service Institutes They register you to enable you to participate
in the Central Government Stores Purchase
Programme.

For Factory Accommodation

1. Directors of Industries (State They provide built up factory space in

Government) industrial domains of developed factory sites.
Power, water, etc. (Although the building
designs, have to be approved by the
Municipalities Corporations. While power
and water connections are sanctioned by
state governments/ Undertakings).
For Machinery

1. Small Industries Service Institutes They advice about the machinery and
equipment needed for the manufacture of
different products.

2. National Small Industries They supply local as well as imported

Corporation, New Delhi. machinery on purchase basis.

3. State Small Industries Corporation They provide local machinery on credit basis.

4. Chief Controller of Imports and They issue import licenses for machinery of
Exports, New Delhi. foreign origin on the recommendation of the
Directors of Industries.
For Raw Materials

1. Development Commissioner, Small They arrange local raw materials & distribute
Scale Industries Organizations, New through state governments. They also arrange
Delhi. imports of raw materials, through the
minerals and metals trading Corporation and
State Trading Corporation of India.

2. Directors of Industries They allot quotas of limited (scarce) raw

materials.

3. State Small Industries Corporations They supply raw materials.

4. Chief controller of Imports and They issue licenses for import of raw
exports and its Port offices. materials.
For Finance

1. Small Industries SIDBI has been set up as a principal financial

Development Bank of institution for the promotion, financing and
India (SIDBI) development of industry in the tiny and small
sector and co-ordinate the functions of
institutions engaged in similar activities.
SIDBI provides finance for new projects,
expansions, diversification, modernization,
rehabilitation.
It provides refinance assistance, to other
intuitions engaged in similar activities.

2. State financial They provide long term credit for purchase of fixed
Corporations assets.

3. State Directors of They provide loans under State Aid Industries Act/
Industries Rules for block capital
For Finance

4. State Bank of India (SBI) They sanction medium term and instalment credit
and its Subsidiaries loans for purchase of machinery and construction
of factory buildings.

They also provide working capital for purchase of

raw materials and meeting day to day
requirements.

5. Commercial Banks They sanction loans for meeting working capital

needs.

6. Small Industries Service They provide technical support to the State Bank of
Institutes India on the applicant units.
For Technical Know-How

1. Small Industries They prepare improved designs and drawings for the products.
Service
Institutes (SISI) They assist in making tools, dies, springs, fixtures.

They help in the optimum utilization of men, material and

machinery through technological and management consulting.

They train managers and supervisors in industrial management.

They train workers to upgrade their skills. They demonstrate

modern technical processes.
For Technical Know-How

2. National Small Industries They give advanced training in their

Corporation, New Delhi. (NSIC) prototype Production-cum-training centres
in the operation of modern machines.

3. Council of Scientific and Industrial They develop new technological processes .

Research, New Delhi

4. Production Councils They join the factory owners in getting

higher productivity.

5. Small Industry Extension Training They give full time management training to
Institute, Hyderabad. the managers / proprietors of small industry
sector.
For Standardization

1. Small Industries Service They provide technical guidance in the production of

Institutes goods according to prescribed standards.

2. Indian Standards They prescribe specifications for the products and give
Institutions ISI marks.

3. Directors of Industries They prescribe standards and give “Q” mark to the
small industry’s products.
For Marketing

1. Small Industries They conduct distribution and surveys for the benefit of small
Services industries.
Institutes
They enlist the units for participation under Central
Government Stores Purchase programme.

They issue competency certificates to the units receiving

governments orders.

They promote supplementary relationship with the large and

medium-scale units in the public as well as private sectors.

2. National Small They Secure contracts from the Directors – General of Supplies
Industries and Disposals, Railways and Defence for supply of
Corporation, manufactured goods on behalf of small scale units.
New Delhi.
For Marketing

3. State Small Industries Corporations They secure orders from the state
governments and other semi government
organizations for the supply of stores.

For Inventions

1. The Inventions Promotion Board. They promote workable inventions of

practical utility, through financial assistance
and tax incentives.

For Problems

1. The Federation of Associations of They represent the problems faced by the

small Industries of India, Rohtak small industries to the government
Road, New Delhi.
 SPECIAL ASSISTANCE TO SC/ST ENTREPRENEURS:

1. Investment Subsidy SC/ST participation is quite low. The government

therefore will grant enhanced investment subsidy
on fixed capital to the tune of 25% of the
investment.

Maximum of Rs. 25 lakhs for the units started by

SC/ST entrepreneurs.

2. Interest Subsidy For the loans obtained for setting up of loan an

industry by SC/ST entrepreneur, Interest subsidy of
5.5% is granted for a period of 5 years, subject to
maximum of Rs. 20,000/- per unit every year.
3. Rent Subsidy Rent subsidy at the following sliding percentage for a period
of 5 years is granted to SC/ST entrepreneur, who start
industry in rented sheds owned by Industries Department.

1st two years – 50% of the rent

3rd year – 40% of the rent

4th and 5th year – 30% of the rent

10% of the plots and sheds will be reserved for the SC/ST
entrepreneurs for setting up units subject to the condition
that interest shall not be transferred to non SC/ST.

11.25% reservation is extended under Prime Minister’s

Rojgar Yojana for SC/ST entrepreneurs.