The primary objective of the Small Scale Industrial Policy during the nineties would be to impart more vitality and growth-impetus to the sector to enable it to contribute its mite fully to the economy, particularly in terms of growth of output, employment and exports. The sector has been substantially delicensed. Further efforts would be made to deregulate and debureaucratise the sector with a view to remove all fetters on its growth potential, reposing greater faith in small and young entrepreneurs

1.0 TINY ENTERPRISES

1.1 Government have already announced increase in the investment limits in plant and machinery of Micro, Small and Medium Enterprises, ancillary units and export – oriented units to Rs 6 million, Rs 7.5 million, and Rs 200 thousand respectively. Such limits in respect of "TINY" ENTERPRISES would now be increased from the present Rs 200 thousand to Rs. 500 thousand, irrespective of location of the unit. Limit in plant and machinery for determining the status of MSME/Ancillary units as on date is Rs 10 million. For tiny it is Rs 2.5 million and for SSSBE Rs 500 thousand.

1.3 A separate package for the promotion of Tiny Enterprises is now being introduced. This constitutes the main thrust of Government’s new policy.

1.4 While the small scale sector (other than ‘Tiny Enterprises’) would be mainly entitled to one-time benefits (like preference in land allocation/power connection, access to facilities for skill/technology upgradation), the ‘Tiny’ enterprises would also be eligible for additional support on a continuing basis, including easier access to institutional finance, priority in the Government Purchase Programme and relaxation from certain provisions of labour laws.

1.5 It has also been decided to widen the scope of the National Equity Fund Scheme to cover projects upto Rs. 1 million for equity support (upto 15 per cent). Single Window Loan Scheme has also been enlarged to cover projects upto Rs 2 million with working capital margin upto Rs 1 million. Composite loans under Single Window Scheme, now available only through State Financial Corporations (SFCs) and twin function State Micro, Small and Medium Enterprises Development Corporation (MSMEDCs), would also be channelised through commercial banks. This would facilitate access to a larger number of entrepreneurs.

2.0 FINANCIAL SUPPORT MEASURES

2.1 Inadequate access to credit – both short term and long term – remains a perennial problem facing the small scale sector. Emphasis would henceforth shift from subsidised/cheap credit, except for specified target groups, and efforts would be made to ensure both adequate flow of credit on a normative basis, and the quality of its delivery, for viable operations of this sector. A special monitoring agency would be set up to oversee that the genuine credit needs of the small scale sector are fully met.

2.2 To provide access to the capital market and to encourage modernisation and technological upgradation, it has been decided to allow equity participation by other industrial undertakings in the MSME, not exceeding 24 per cent of the total shareholding. This would also provide a powerful boost to ancillarisation & sub-contracting, leading to expansion of employment opportunities.

2.3 Regulatory provisions relating to the management of private limited companies are being liberalised. A Limited Partnership Act will be introduced to enhance the supply of risk capital to the small scale sector. Such an Act would limit the financial liability of the new and non-active partners/entrepreneurs to the capital invested.

2.4 A beginning has been made towards solving the problem of delayed payments to Micro, Small and Medium Enterprises by setting up of ‘factoring’ services through Micro, Small and Medium Enterprises Development Bank of India (SIDBI). Network of such services would be set up throughout the country and operated through commercial banks. A suitable legislation will be introduced to ensure prompt payment of Micro, Small and Medium Enterprises’ bills.

3.0 INFRASTRUCTURAL FACILITIES

3.1 To facilitate location of industries in rural/backward areas and to promote stronger linkages between agriculture and industry, a new Scheme of Integrated Infrastructural Development (including Technological Back-up Services) for Micro, Small and Medium Enterprises would be implemented with the active participation of State Governments and financial institutions. A beginning in this direction will be made this year itself.

3.2 A Technology Development Cell (TDC) would be set up in the Micro, Small and Medium Enterprises Development Organisation (MSME Development Organization (formerly known as SIDO)) which would provide technology inputs to improve productivity and competitiveness of the products of the small scale sector. The TDC would coordinate the activities of the Tool Rooms, Process-cum-Product Development Centres (PPDCs), existing as well as to be established under MSME Development Organization (formerly known as SIDO), and would also interact with the other industrial research and development organisations to achieve its objectives.

3.3 Adequacy and equitable distribution of indigenous and imported raw materials would be ensured to the small scale sector, particularly the tiny sub-sector. Policies would be so designed that they do not militate against entry of new units. Based on the capacity needs, Tiny/Small Scale units would be given priority in allocation of indigenous raw materials.

3.4 A proper and adequate arrangement for delivery of total package of incentives and services at the District level will be evolved and implemented.

4.0 MARKETING AND EXPORTS

4.1 In spite of the vast domestic market, marketing remains a problem area for small and tiny enterprises. Mass consumption labour intensive products are predominently being marketed by the organised sector. The tiny/small scale sector will be enabled to have a significant share of such markets. In addition to the existing support mechanism, market promotion would be undertaken through cooperative/public sector institutions, other specialised/professional marketing agencies and consortia approach, backed up by such incentives, as considered necessary.

4.2 National Micro, Small and Medium Enterprises Corporation (NSIC) would concentrate on marketing of mass consumption items under common brand name and organic links between NSIC and MSMEDCs would be established.

4.3 Government recognises the need to widen and deepen complementarily in production programmes of large/medium and small industrial sectors. Parts, components, sub-assemblies, etc. required by large public/private sector undertakings would be encouraged for production in a techno-economically viable manner through small scale ancillary units. Industry associations would be encouraged to establish sub-contracting exchanges, in addition to strengthening the existing ones under the MSME Development Organization (formerly known as SIDO). Emphasis would also be laid on promotion of a viable and competitive ‘component’ market.

4.4 Though the Small Scale Sector is making significant contribution to total exports, both direct and indirect, a large potential remains untapped. The MSME Development Organization (formerly known as SIDO) has been recognised as the nodal agency to support the Micro, Small and Medium Enterprises in export promotion. An Export Development Centre would be set up in MSME Development Organization (formerly known as SIDO) to serve the Micro, Small and Medium Enterprises through its network of field offices to further augment export activities of this sector.

5.0 MODERNISATION, TECHNOLOGICAL AND QUALITY UPGRADATION

5.1 A greater degree of awareness to produce goods and services conforming to national and international standards would be created among the small scale sector.

5.2 Industry Associations would be encouraged and supported to establish quality counselling and common testing facilities. Technology Information Centres to provide updated knowledge on technology and markets would be established.

5.3 Where non-conformity with quality and standards involves risk to human life and public health, compulsory quality control would be enforced.

5.4 A reoriented programme of modernisation and technological upgradation aimed at improving productivity, efficiency and cost effectiveness in the small scale sector would be pursued. Specific industries in large concentrations/clusters would be identified for studies in conjunction with SIDBI and other banks. Such studies will establish commercial viability of modernisation prescriptions, and financial support would be provided for modernisation of these industries on a priority basis.

5.5 Indian Institutes of Technology (IITs) and selected Regional/other Engineering Colleges will serve as Technological Information, Design and Development Centres in their respective command areas.

6.0 PROMOTION OF ENTREPRENEURSHIP

6.1 Government will continue to support first generation entrepreneurs through training and will support their efforts. Large number of EDP trainers and motivators will be trained to significantly expand the Entrepreneurship Development Programmes (EDP). Industry Associations would also be encouraged to participate in this venture effectively.

6.2 EDP would be built into the curricula of vocational and other degree level courses.

6.3 Women entrepreneurs will receive support through special training programme. Definition of "Women Enterprises" would be simplified. The present stipulation regarding employment of majority of women workers would be dispensed with and units in which women entrepreneurs have a majority shareholding and management control, would be defined as "Women Enterprises".

7.0 SIMPLIFICATION OF RULES AND PROCEDURES

7.1 The persistent complaint of small scale units of being subjected to a large number of Acts and Laws, being required to maintain a number of registers and submit returns, and face an army of inspectors, would be attended to within a specified time frame of three months.

7.2 Procedures would be simplified, bureaucratic controls effectively reduced, unnecessary interference eliminated and paper work cut down to the minimum to enable the entrepreneurs to concentrate on production and marketing functions.

Home     About Us     Activities      SENET/TRC     Publication     Links    Contact Us     Upcoming Events