EDP Notes

Some of the measures taken by the government are as follows:
ADMINISTRATIVE FRAMEWORK: Administrative mechanism for SSI is being looked
after by the Department of Small Scale Industries, Agro and Rural Industries within the
Ministry of Industry. With the Department there is Small Industries Development Organization
(SIDO) headed by a department commissioner. SIDO has 27 small industries service institutes,
31 branch institutes, 37 extension centres, 18 field testing centres, four production centres and
two footwear training centres. To provide different services and support to village and small
entrepreneurs under a single roof, 422 Districts Industries Centres (DIC) have been set up to
cover 431 districts out of the total of 436 districts of the country. National Institute of Small
Industries Extension Training (NISIET) conduct research and training programmes and
provides consultancy services. National Small Industries Corporation (NSIC) deals with
marketing including Government purchases and supplying machinery on hire purchase.
POLICY INSTRUMENTS: Policy instruments adopted by the government to encourage the
growth of SSI comprise: (1) Financial incentives. (2) Fiscal incentives. (3) General incentives.
(4) Special incentives in backward areas, and (5) Reservation of items for SSI.
(1) Financial Incentives: SIDBI provides direct assistance, among others for specialized
marketing agencies, industrial estates, acquisition of machinery/ equipment, both
indigenous and imported, seed capital scheme and National Equity Fund Scheme, bills rediscounting
and direct discounting scheme. State and Local Government provides financial
subsidies like interest rate and capital subsidies, and water and electricity subsidies and
subsidies for the acquisition of land.
(2) Fiscal Incentives: These comprise investments allowance, tax holidays, additional
depreciation for new plant and machinery and state and local Governments provide
exemption from electricity tariffs.
3) General Incentives: These include, among other things, reservation of items for exclusive
purchases from SSI, price preference over medium and large units in public sector
purchases and scheme for Self- Employment to Educated Unemployed Youths (SEEUY).
(4) Special Incentives in Backward Areas: Some of the schemes which are operational are
concessional finance scheme, transport subsidy scheme, intrest subsidy scheme and income
tax incentives, etc.
RESERVATION OF ITEMS: As per the policy certain items have been exclusively
reserved for manufacturing in the MSME sector. The objective is to protect MSMEs
engaged in the manufacturing of such items from the competition of medium and largescale
units.
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STATUTORY BOARDS: Govt. has setup six exclusive boards, namely, (1) Khadi and
Village Industries Board. (2) Handloom Board (3) Handicrafts Board (4) Coir Board (5)
Seri Culture Board, and (6) Small Scale Industries Board.
ESTABLISHMENT OF INDUSTRIAL ESTATES: Industrial estate is place where the
required facilities and factory accommodation are provided by the government to the
entrepreneurs to establish their industries there.
SETTING UP OF NATIONAL MANUFACTURING COMPETITIVENESS
COUNCIL(NMCC): The NMCC suggest a three-pole structure, “one of the effective
measures for accelerating manufacturing growth in this segment lies in promoting growth
poles or industrial clusters, referred to in the PURA(Provision of Urban Amenities in Rural
Areas) context, in the 05-06 union budget speech. The growth poles can cover all three
elements of the cluster approach-industrial clusters, artisan clusters and agro-based
clusters,” The NMCC also suggests that the time is right for exploring mechanisms of how
Indian MSMEs could tie up with MSMEs in developing countries for technology as well as
trade.
PENALITIES FOR DELAYED PAYMENTS TO MSMEs: The Govt. has enacted the
interest on delayed Payments Act for the benefit of MSMEs. The Act prescribes that the
customers of MSMEs should make the payments within 120 days of accepting the goods.
Delays beyond this would attract interest at 11/2 times the prime lending rate of the SBI.
PRIME MINISTER’S ROZGAR YOJNA (PMRY): It was launched on 2nd October
1993, with the objective of creating one million jobs in 5 years by giving loans for the
creation of tiny and micro enterprise.
INDUSTRIAL CLUSTER DEVELOPMENT: An industrial cluster can be defined as a
sectorial and geographical concentration of enterprises, especially Micro, Small and
Medium Enterprises (MSMEs), which have common opportunities and face similar threats.
ASSISTANCE FOR MSME EXPORTS: Following are the assistance to MSME exports:
(a) MSMEs are helped in participating in trade exhibitions. The Govt. would meet the expenses
in this regard on space rent, handling and clearing charges, insurance and shipment charges
etc.
(b) MSMEs are given triple weightage for being recognized as Export Houses, Trading Houses,
Star Trading Houses and Super Star Trading Houses.
(c) Capital Goods Zero Duty Scheme is extended to MSMERs without any conditions.
(d) Marketing Development Assistance is given to MSMEs to facilitate market research,
publicity etc.
OTHER SCHEMES: Important schemes are briefly discussed as below.
(a) Integrated Infrastructural Development Scheme: Under this scheme the Central Govt. would
contribute Rs 5 crore in the ratio of 2:3 for the development of industrial infrastructure in rural
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ENTREPRENEURSHIP DEVELOPMENT 33
and backwards areas. The objective of the scheme is to promote the location of MSMEs in rural
and backward areas and facilitate linkage between agriculture and industry.
(b) Marketing Development Assistance Scheme: MDA is a new scheme launched in August
2001. This scheme provides following five types of assistance:
1) Assistance to individuals for participating in overseas trade fairs and exhibitions.
2) Assistance to individuals to go on overseas study tours or as a member of a trade
delegation going abroad.
3) Assistance for production of publicity material for overseas publicity.
4) Assistance to small industry association to conduct sector- specific market studies
abroad, and
5) Assistance to SSI Associations to initiate/contest anti-dumping cases.
(c)Trade Related Entrepreneurship Assistance And Development For Women: TREAD is a
scheme for giving trade-related assistance to women entrepreneurs in the form of Loans, grants,
trade-related training and information, counseling and extension services.
(d) Preferential Govt. Purchases: It is made compulsory for various govt. departments and
agencies to buy their requirements of a number of items from the constituents of the MSME
sector.