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PRESENTED BY:
MANU SINGH
HITESH SHARMA
JITENDRA KHATRI
MANISHA YADAV
Definition

R Having an investment in fixed asset not

exceeding 10 lakhs.
R Using power with less than 50 employees.
R Not using power with not more than 100
employees.
R Not owned, controlled or subsidiary of any
other industrial undertaking.
R Regulated by Ministry of Small Scale Industry
In India.
wont..

R Mocated in rural or semi urban areas.

R Generally a sole proprietor business.
R Funding from the entrepreneurǯs personal
funds or sometimes from loans.
R Organizing and management skills are often
neglected.
R Encourages entrepreneurial growth.
mome facts about mm s

R £.2 million such units are present in India.

R Employing 17.2 million persons.
R Accounts for a share of £
on India's total
exports.
R contributes a whooping 40
of India's total
manufacturing.
6
antages of mm
Vasic Objecti
es

R Promotion of capital formation.

R Increase in supply of manufactured goods.
R Creation of broader employment opportunities.
R Development of indigenous entrepreneurial
talents and skills.
R Reduction of regional economic balances.
R Decentralization and dispersal of manufacturing
activities from metropolitan to non metropolitan
or rural areas.
§ssentials of an
entrepreneur
R Should be fully conversant with the product
line.
R Should have adequate shop floor experience.
R Should be familiar with the raw materials.
R Should know how to keep accounts.
R Should have knowledge of marketing.
R Should know how to ensure the stipulated
quality of his product.
wont..

R Should be well versed in taxation and other

laws governing SSIs.
R Should know how to avail himself of the
various benefits available to SSIs.
R Should possess perseverance, because there
is no substitute to hard work.
R Should know the RIGHT THING at RIGHT
TIME.
?rocess for setting up a mm

Underlying Formulation Project

motivation of ideas planning

Practical
The start
elaboration
›ow to start

1) Selection of the industry.

2) Market/business analysis.
£) Micensing.
4) Registration of SSI.
5) Infrastructure.
) Machinery.
7) Raw materials.
8) Finance.
9) Recruitment of personnel.
10) Marketing.
11) Incentives.
mickness in mm s

R A sick industry is defined as Dzwhen it fails to

generate surplus on a continuous basis and
depends on the infusion of external funds for
its revival.
R The sick industrial companies Act 1985
identifies sickness in terms of cash losses for
two consecutive years and accumulated
losses equaling or exceeding the net worth of
the company at the end of second financial
year.
|easons for sickness of mm s

R Management deficiency.
R Inadequate availability of finance.
R Shortage of working capital.
R Non availability of raw material.
R Power shortage.
R Mabour problems.
R Marketing problems.
R Outdated technology.
|eme ial measures

R Financial institutions and banks.

R Take over by another company.
R Incentives should be provided to the
managers helping in revival of sick units.
R Early diagnosis.
R Finding out the exact cause of sickness.
|ole of Vanks
å at o t ey o

R Provide funds to the new entrepreneurs.

R Aid the growth of micro and small scale
enterprises in India.
R Helps in revival of sick units.
R Encourages new entrepreneurs.
m DV

R Small Industries Development Bank Of India

was set up on April 2, 1990 as a wholly owned
subsidiary of IDBI.
R It is an independent financial institution
aimed to aid the growth of small and medium
scale enterprises.
R SIDBI Venture Capital Mtd. Is a venture capital
company aimed at SME.
Gunctions of m DV

R Refinances loans given to small scale sector by

primary lending institutions.
R Discounts and rediscounts bills relating to the
transaction of machinery of the small scale
sector.
R Extends seed capital through specified agencies.
R Assistance for export of products of small-scale
sector.
R Provides services like leasing and factoring.
R Give financial support to purchase raw material
and the sales of finished products.
„

 m  


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|ODUw O

After attaining independence in 1947 India adopted
mixed economic planning as a method to achieve
economic development. Along with the Marge Scale
sector the thrust was on Small Scale sector because
of it decentralized, its small size, use mainly
indigenous technology, employment intensity and
its suitability for rural area with limited techno-
economic structure.

Industrial policies over the year have focused to

promote SSIs through various incentives related to
financial, fiscal and infrastructure measure; along
with a heavy industrial base.
R The various provisions under Industrial
Policy Resolutions formulated by the
government in assisting the small scale
industries (SSI)
R The various fiscal incentives for SSIs

DUm| 6 ?O w |§mOU O

6
D mm s
1. INDUSTRIAL POLICY RESOLUTION 1948

1.1 SSIs are particularly suited for the utilization of local resources
and creation of employment opportunities .

1.2 The primary responsibility for developing small industries by

creating infrastructure has been provided to state government .

1.£ Central government frame the broad policies and coordinates

the efforts of State Government for development of SSIs.
º.
DUm| 6 ?O w
|§mOU O
1956
º.1 It stated that besides continuing the policy support to
cottage, village and small industries by differential
taxation or direct-subsidies, the aim of state policy
would be that the development of this sector is
integrated with that of large scale industry.

º.º The focus was to improve the competitive strength of

SSIs.
º.º.1 to achieve this 1º8 items were exclusively reserved
for production in SSIs, and 166 items were reserved for
exclusive purchase by government from this sector.
£
DUm| 6 ?O w
|§mOU O
1977
The main thrust of policy was effective promotion of cottage ,village and small industries
widely dispersed in rural area and small towns.

This thinking specified the following things:

1. 504 items were reserved for exclusive production in the small scale industries .

2. The concept of District Industrial Centers (DICs) was introduced to that in each
district a single agency could meet all the requirement of SSIs under one roof.

£. Technological up gradation was emphasized in traditional sector .

4. Special marketing arrangement through the provision of services, such as,

production standardization, quality control, market survey, were laid down.
-
DUm| 6 ?O w |§mOU O
1990

ain feature of this resolution are as follows:

1. It raised the investment ceiling in plant and machinery for SSIs.

º. It created central investment subsidy for this sector in rural and backward area.
Also, assistance was granted to woman entrepreneurs for widening the entrepreneurial base.

3. Reservation of items to be produced by SSIs was increased to 836.

4. Small Industries Development Bank of India was established to ensure adequate flow of credit
to SSIs.

5. Stress was reiterated to upgrade technology to improve competitiveness.

6. Special emphasis was laid on training of woman and youth under Entrepreneurial Development
Programme.

7. Activities of Khadi and Village Industries Commission and Khadi and Village Industrial Board
were to expand.
5.
DUm| 6 ?O w |§mOU O
1991

The basic thrust of this resolution was to simplify regulations and procedures by
delicensing, deregulation . Its salient feature are:

1. SSIs were exempted from licensing for all articles of manufacture.

º. The investment limit for tiny enterprises was raised to Rs.5 lacs irrespective of
location.

3. Equity participation by other industrial undertaking was permitted up to a limit

of º4% of shareholding in SSIs.

4. Factoring services were to launch to solve the problem of delayed payment to

SSIs.

5. Priority was accorded to small and tiny units in allocation of indigenous and raw
materials.

6. arket promotion of products was emphasized through co-operatives, public

institutions and other marketing agencies and corporations.
 wOM?|§›§
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1. The exemption for excise duty limit raised from 50 lakhs to Rs One crore to improve the
competitiveness.

2. The third census of small scale industries by the ministry of SSI was conducted. which
also covered sickness and its causes in SSIǯs.

£. The limit of investment was increased in industry related service and business
enterprises from Rs 5 lakhs to Rs 10 lakhs.

4. The scheme of granting Rs 75000 to each small scale enterprise for obtaining ISO 9000
certificate was continued till the end 10th plan.

5. SSI associations were motivated to develop and operate testing laboratories. One time
capital grant of 50
was given on reimbursement basis to each association.

. The limit of composite loan was increased from Rs10 lakhs to Rs 25 lakh.

7. The coverage of ongoing Integrated Infrastructure Development (IID) was enhanced to

cover all area in the country with 50
reservation for rural area and 50
earmarking of
plots for tiny sector.

8. The family income eligibility limit of Rs 24000 was enhanced to Rs 40000 per annum
under the Prime Minister Rozgar Yozna (PMRY).

DUm| 6 ?O w ?6w6§
GO| mm º001-0º
This policy emphasizes the following:

1. The investment limit was enhanced from Rs 1crore for to Rs 5 crore for units in
hosiery and hand tool sub sectors.

2. The corpus fund set up under the Credit Guarantee Fund Scheme was increased
from 125 crore to 200 crore .

£. Credit Guarantee cover was provided against an aggregate credit of Rs 2£ crore till
December 2001.

4. 14 items were de-reserved in June 2001 related to leather goods, shoes and toys.

5. Market Development Assistant Scheme was launched exclusively for SSI sector.

. Four UNIDO assisted project were commissioned during the year under the Cluster
Development Programme .

DUm| 6 ?O w O
mm m º00--05
Policy initiatives for this year are as follows:

Ȉ The national commission on Enterprises in the Un-organized/Informal Sector was set up

in September 2004.It suggested measures considered necessary for improvement in the
productivity of these enterprises, generation of large scale employment opportunities,
linkage of the sector to institutional framework in area like credit ,raw material supply,
infrastructure, technology up gradation ,marketing facilities and skill development by
training .

Ȉ 85 items were de-reserved in October 2004.

Ȉ The investment limit in plant and machinery was raised from Rs One crore to Rs 5 crore
in October 2004,in respect of seven item of sports goods to help to upgrade the
technology and enhance competitiveness.

Ȉ The Small and Medium Enterprise (SME) fund of Rs 10000 crores was stared by SIDBI
since April 2004,with 80
of the lending for SSI units. The interest rate was 2
below the
prevailing Prime Mending Rate (PMR) of the SIDBI.

Ȉ The reserve Bank of India raised the composite loan limit from Rs 50 lakhs to Rs One
crore.
Ȉ Promotional Package for small enterprises was initiated.
 ?O w ?6w6§ GO| mM§ º005-
06
THIS POMICY PACKAGE CONTAINS THE FOMMOWING POINTS

1. 180 items were dereservation.

2. Small and Medium Enterprises were recognized in the services sector , and were treated
on par with SSIs in the manufacturing sector.

£. The corpus of the Credit Guarantee Fund was raised from Rs 11£2 crore in March 200 to
Rs 2500 crore in five years.

4. Credit Guarantee Trust for Small Industries (CGTSI) was advised to reduce the one time
guarantee fee from 2.5
to 1.5
for all loans.

5. Insurance cover was extended to proximately £0,000 borrowers, identified as chief

promoters, under the CGTSI. The sum assured would be Rs 200000 per beneficiary and
the premium will be paid by CGTSI.

. The emphasis was laid on Cluster Development model not only to promote
manufacturing but also to renew industrial towns build new industrial township . The
model is now being implemented, in nine sector including khadi and village industries,
handlooms, textiles, agricultural products and medicinal plants.
G mw6
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Fiscal incentives are provided through tax

concessions granted in the form of exempted
of direct or indirect taxes leviable on
production or profits, besides special tax
concessions.
These incentives have been provided to
promote the SSIs and discussed in following:
6 ›O D6
With effect from financial year º 5- 6, deduction in
respect of profit and gains for small scale industrial
undertaking is available under Section 80IB.

Small scale industrial undertaking can claim deduction at

the following rates:

1. If SSI unit is owned by a company , the deduction

available is 3 % for first 1 year,

2. If SSI unit is owned by a co-cooperative society, the

deduction to be availed is º5% for first 1 years, and

£. If any other person owns SSI units ,the deduction to be

claimed is º5% for first 1 years.
 6 §§M? O
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1. No small scale or ancillary undertaking shall be subsidiary of, or owned
or controlled by other industries undertaking .

2. The SSI unit should commence business between 1st April1991 and £1st
March 2002.

£. SSI unit can manufacture any nature/type of goods /article to avail

deduction.

4. They should employ at least 10 workers in manufacturing process

carried out with aid of power or at least 20 worker in manufacturing
process carried out without the aid of power.

5. This tax exemption from total income is allowed from the assessment
year in which the unit being to manufacture or produce goods or
articles.
§w m§ wO
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m

Government of India has provided a major

relief by grating full exemption from the
payment of central excise duty on a specified
output and thereafter slab-wise concessions.
The following concessions are available to
them in this regard:
1, SS units producing goods up to Rs.100 lakhs are exempted from payment of excise
duties.

2. SSI units having turnover less than Rs. 0 lakhs per annum need not have a
separate storeroom for storing the finished products.

£.SSIs are also not required to maintain any statutory records such as daily stock
account of production and clearance , raw material account ,personal ledger
account etc. their own record are adequate for excise purpose.

4. There is no distinction between registered and unregistered units for SSI

concessions for SSIs has been based on annual turnover rather than SSI
registration . Duty liability is to be discharged by 15th of following month.

5. The SSI exemption is available for home consumption ,as well as in respect of
goods exported to Nepal & Bhutan.

. Normally ,excise officers are not expected to visit SSI units paying less than
Rs.11lakhs duty annually .

7.With effect from 1-4-1994, Gate ȂPass System was replaced by manufacturer
invoice to cover clearance of goods as the duty-paying document.
M§6mU|§m GO| ?|OMO O
6
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D§§O?M§
 OG mm s
Central and state Government have formulated several schemes to make the SSIs
vital and competitive.

Ȉ Reservation policy

Ȉ Governmentǯs purchased preference policy for SSI products.

Ȉ Governmentǯs price preference policy for marketing SSI products.

Ȉ Technical assistance

Ȉ Raw material assistance

Ȉ Financial assistance

Ȉ New initiatives
|§m§|6 O
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Out of 8£ items reserved in 1989,£9 items were dereserved in four
phases viz.,
R 15 items in 1997ǯ
R 9 items on 1999
R 1 item on 2001 and,
R 14 item on 2001.subsequently,
R 51 item were dereserved in 2002,
R 75 item in 200£ and
R 85 items in 2004,
R 108 in March 2005 and
R 180 in May 200 .
R Now 298 items stand reserved for this sector.
 O§|
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w§ ?O w GO| mm
?|ODUwm
R Under the Store Purchase Policy of the Government 4 9
items of store were reserved for exclusive purchase from
KVIC/Womenǯs Development Corporation/Small Scale units
in 1989.
R This list reviewed .
In February2004, the Committee (set up to consider the
question of inclusion of additional items) revised list and 358
items were approved, after deleting items having common
nomenclature and addition of some new ones.
This list also includes 8 handicraft items reserved for
purchase from the Handicraft Sector.
O§|
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These facilities includes the following :

1. Price preference up to 15
in case of
selected items.
2. No registration fee.
£. A consortium to channelize and identify for
the production of SSIs both in India and
abroad.
  e mingle ?oint |egistration sc eme of

m w t e following benefits are gi
en to
mm s units, w ic get t em registere wit
t e
m w

R Availability of tender sets free cost.

R Exempted from payment of Earnest Money Deposit.
R Exempted from payment of Security Deposit up to the monetary limit
for which the unit is registered.
R Price preference up to15
over the lowest quotation of the large scale
units.
The benefit is available to compensate them on a/c of non-availability of
economies of scale ,poor resource base, poor access to raw Ȃmaterial as
compared to the large scale sector.
§w›
w6 6mm m6
w§
R Technology audits and benchmarking
R Technology needs assessment
R Technology sourcing
R Application of new acquisition.
R Technology acquisition .
R Material testing facilities through accredited
laboratories.
R Product design including Computer Aided Designs.
R Common facility support in machining
R Energy and environment services at selected centers.
R Classroom and practical training for skill upgradation

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 6 §m

R Advisory and Mentoring services

R Technology Business Incubators
> Information technology.
> Production design.
> Energy and Environment
> Bio-Technology .
> Electronics and Communications
R Suppliers Rating Accreditation Services.