EDP

Chapter 2

Chapter 2

*Institutional support to Entrepreneurs*

Entrepreneurs play an important role in the economy of India.

Most of the entrepreneurs who starts a MSME do not have a strong financial background.

Therefore A NUMBER OF INSTITUTIONS HAVe been SET UP BY THE CENTRAL GOVERNMENT AND STATE
GOVERNMENT TO SUPPORT ENTREPRENEURS AND TO PROMOTE MSMEs

1. Directorate of industries and Commerce (Department of industries and Commerce)

the directorate of industries and Commerce is an implementing agency of micro small and medium
enterprises related policy decisions of the industries department of Government of Kerala.

the role of the department is to act as a facilitator for industrial promotion and gives all assistance to
start and sustain the MSME.

THE MAJOR FUNCTIONS OR SERVICES OF THE DIRECTORATE OF INDUSTRIES AND COMMERCE:-

1. Coordinates all industrial activities

2. Implement schemes as explained in the industrial policy of the state

3. Develops SSI

4. Act as an interface between SSI and government

5. Monitors schemes executed by general manager of district Industries centre

6. Keep the database

7. Organise EDP
8. Participate in exhibitions

9. Identify entrepreneurs and motivate them

10. Provide project ideas

11.provide information on the availability of infrastructure

12. act as an intermediary between financial institutions other departments or agencies

*District Industries centre*

*DIC*

THE DISTRICT INDUSTRIES CENTRE PROGRAMME WAS LAUNCHED ON 1ST MAY 1978.

the main aim of the programme is an effective promotion of cottage and small industries widely
dispersed in rural areas and small towns. Is district has a DIC at its headquarters.

THE MAIN RESPONSIBILITY OF DC IS TO ACT AS A CHIEF COORDINATOR OR MULTIFUNCTIONAL AGENCY

IN RESPECT OF VARIOUS GOVERNMENT DEPARTMENTS AND OTHER AGENCIES.

the for metropolitan cities of Mumbai Kolkata Chennai and New Delhi are outside the list of DIC

*Functions of DIC*

Identifies and develops new entrepreneurs

Offers technical advice to new entrepreneurs

help in issue of provisional SSI registration which is mandatory for getting financial assistance

It is sponsors loan applications to CIDCO and nationalised banks

it takes the initiative to get clearances from other departments

makes necessary recommendations to the concerned raw material suppliers

arranges for the financial assistance to village artisans and handicraft

It gives training to rural entrepreneurs

the scheme of self employment for unemployed educated youth was introduced in 1983- 84 through
DIC

*Small Industries Development Corporation- SIDCO*

MANY STATE GOVERNMENTS FOR THE PROMOTION OF SMALL SCALE INDUSTRIES IN SEPARATE
CORPORATION HAS BEEN SET UP AND THIS OPERATION IS KNOWN AS SMALL INDUSTRIES
DEVELOPMENT CORPORATION.

They undertake all kinds of activities for the promotion of small scale industries right from the stage of
installation to the stage of kaman Singh production these corporations help small scale industries in
many ways.

They provide infrastructure facilities to small scale industries.

*Objectives of SIDCO*

1. Stimulate the growth of industries in small scale sector

2. Provide infrastructure facilities

3. Promote industrial estates

4. Provide technical assistance through training facilities to the entrepreneurs

5.promote skilled labour through the setting up of industrial training institutes.

*Kerala State Small Industries Development Corporation Limited*

in Kerala the seed coat to shape in 1975 with the merger of two other corporations namely the Kerala
State Small Industries Corporation KSSIC and the Kerala Employment Promotion Corporation KEPCO.

the newly formed SIDCO combines the functions of the two amalgamated corporations , responsibility
of implementing government policies and decisions at a rapid pace to the benefit of the small industries
in the state.

It was incorporated under the Companies Act on 6th November 1975.

*Functions of Kerala State Small Industries Development Corporation Limited*.

1. SUPPLIES scarce raw materials

2. Provide marketing assistance

3. Assist in bills discounting

4. Provides export marketing assistance

5. Promote skill development centres

6. Promotes women entrepreneurs

*Responsibilities of SIDCO*

1. Undertakes construction of industrial sheds

2. Development of infrastructure

3. Implements sick units rehabilitation programs jointly with IRBI

4. Allots sheds or industrial plots in industrial estates

5. Provides technical consultancy services

6. Assist in selecting and procuring machinery

7. provides seed capital assistance 50 percentage margin money requirements to SSI units

8. Supply scores and important raw materials for the benefit of SSI through sales deposits in all districts

SIDCO brings out a monthly journal 'Vyavasaya Keralam'

The responsibilities of CIDCO Corporation are handled by 12 divisions

Research and development division

Industrial estate and infrastructure division

Production division

Raw material division

Machinery division

Finance division

Technical consultancy division

Entrepreneur development division

Imports and exports division

Marketing division

Sick units rehabilitation division

Information and publicity division

*National Small Industries Corporation*

NSIC

NSIC

WAS SET UP IN 1955 TO PROVIDE MACHINERY TO SMALL SCALE UNITS ON HIRE PURCHASE BASIS AND
TO ASSIST THIS UNIT IN OBTAINING ORDERS FROM GOVERNMENT DEPARTMENT AND OFFICES

Its head office is at Delhi.

it has four regional offices at Delhi Mumbai Chennai and Kolkata.

It has 11 branch offices also.

Functions of NSIC

To developed small scale units as ancillary units to large scale industries.

To provide machinery to SSI units on hire purchase basis.

To obtain orders for SSI units from government department and offices.

To help the small scale industries in procurement of scarce and imported raw materials.

To market the product of SSIs at home and abroad.

TO construct industrial estate and established and run prototype production cum training centres.

To impart training to industrial workers.

To import and supply scarce raw materials.

*Smallll Industries Development Bank of India*

SIDBI
SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA WAS SET UP ON APRIL 2ND 1990 AS A WHOLLY
OWNED SUBSIDIARY OF IDBI.

it commenced its operation by taking over the activities of IDBI relating to small scale sector.

it is operating through its head office at Lucknow and a network of five regional offices and 25 branch
offices in all the states.

According to SIDBI act 1989"SIDBI is the principal financial institution for the promotion, financing and
development of industry in the small scale factor and to co-ordinate the functions of institutions
engaged in the promotion and financing or developing industry in the small-scale sector and for matters
connected therewith or incidental thereto"

*Functions of SIDBI*

1. taking steps for technological upgradation and modernisation of existing units

2. Expanding the channels for marketing the products of small scale industry sector

3. Promoting employment oriented industries thereby creating more employment opportunities

4. Refinancing of loans and advances

5. Discounting and re discounting of bills

6. Extension of seed capital assistance

7. Providing services like factoring leasing etc

8. extending financial support to National Small Industries Corporation for providing leasing hire
purchase and marketing support to small scale industrial units

*Khadi village Industries Commission*

KVIC is a statutory Organisation established in 1957 under an act of parliament and is engaged in
promoting khadi and village Industries with a view to create employment opportunities in the rural
areas.

Objectives of KVIC
1. RURAL DEVELOPMENT THROUGH RURAL INDUSTRIALISATION

2. Creation of employment opportunities in rural areas

3. Promotion of self-reliance among people

4. Building up a strong rural community base

5. Eradication of rural poverty

Functions of KVIC

1. TO PLAN AND ORGANISE TRAINING PROGRAMS FOR POTENTIAL ENTREPRENEURS

2. To supply raw materials at reasonable rate

3. To promote marketing and sale of khadi products of village industries and handicraft

4. To explore the possibilities of exports of KVIC products

5. To provide consultancy for the revival of sick units

6. To provide financial support to eligible individuals and institutions

7. undertake research and development programmes to enhance productivity of rural workers and
artisans

*Small Industries Service Institutes* SISIs

small industries service institute has been established in each state in 1956 as agencies of SIDO.

THE OBJECTIVE IS TO DEVELOP SMALL SCALE INDUSTRIES. These are set up to provide consultancy and
training to small entrepreneurs. There are 28 SISIs set up all over India.

Functions and Services of SISIs

1. Provide techno economic and managerial consultancy services to SSI units

2. provide workshop common facilities to industrialists

3. Conduct entrepreneurship development programs

4. Conduct detailed plant studies

5. The institute assist in rehabilitation of sick units

6. It helps to develop and ancillary industries

7. the institute conduct modernization studies for technology upgradation

8. Undertakes quality control energy conservation and pollution control

9. nice today also conduct surveys and studies for identification of industries having scope of promotion
and development

10. advises the Government of India and state government on policy matters relating to small industry
development.

11. It ensures that the small industry development in India is being done in right lines

12. It prepares designs and drawing for production equipment and accessories

13. It provide technical guidance on the efficient use of wastages and scrap

14. The supply market information

15. Conduct economic survey

16. It help the small industries in getting financial assistance from financial institutions

Qú. it promotes Entrepreneurship and development of SSI in rural and other underdeveloped areas

*Kerala Industrial and Technical Consultancy organisation Limited*

*KITCO*

IT WAS SET UP IN 1972 BY IDBI

It is a public sector consultancy organisation.

it has been established with the objective of meeting the technical consultancy needs of the
entrepreneurs in the small , medium and large scale industrial sectors.

The lead banks of Kerala namely SBI , Indian Bank, Indian overseas Bank, Canara Bank, Syndicate bank
and national and state level financial corporations namely IFCI, KSIDC and KF have become members of
KITCO.

*FUNCTIONS AND SERVICES OF KITCO*

1. Identification of project ideas

2. Appraisal of industrial projects

3. Entrepreneurial guidance and development

4. Management Consultancy services

5. Selection of executive and staff

6. studies relating to modernization expansion and diversification of Industrial enterprises

8. Diagnostic studies for revival of sick units

9. Economic surveys to evaluate impact of developmental schemes

10. Executive development programs

11. Project monitoring for large units

12. Market service for specific products and services

*Science and Technology Entrepreneurship Development Project*

*(STED Project)*

This is an autonomous organisation working under the department of Science and Technology
Government of India.

The main objective of STED is development of entrepreneurship and generation of employment through
Science and Technology inputs.

In Kerala the department of industries is entrusted with the administration of *STED*

It has branchey in all 14 districts of Kerala.

the main aim of this institution is to bring about a socio economic development of an area through the
intervention of Science and Technology.

*Activities of STED PROJECT*

1.To identify feasible resource based projects in the region covering both rural and semi urban areas

2. to improve working of existing enterprises through Science and Technology *(S&T)* intervention.
3. to regularly organise enterprise awareness programs and skill development programs

4. To launch micro enterprises in the selected location

5. To disseminate project information at different townships

6. To seek cooperation of other organisations involved in similar activities as well as development

agencies and scientific collaborators

NEDB

NATIONAL ENTREPRENEURSHIP DEVELOPMENT BOARD

it is the Apex body for determining the policy for development of entrepreneurship in the country and it
was formed in 1983. industry minister is its Chairman and minister of state as its vice chairman along
with other 20 members. It act as an Apex body for entrepreneurship development.

*Functions of NEDB*

1. To identify and remove entry barriers for potential entrepreneurs

2. To focus on existing entrepreneurs in micro, tiny and small sector

3. To facilitate the growth and diversification of existing entrepreneurial Ventures

4. To support skill upgradation

5. To support agencies in the area of entrepreneurship

6. to help entrepreneurship development institutions and other organisations in setting up of

incubators.

*Strategies of NEDB*

1. Evolving training methodology

2. Evolving syllabus for various training programs

3. Developing training aids, tools

4. assisting the activities of other agencies engaged in the training of potential entrepreneurs.

5. Training the trainers

6. Developing entrepreneurial culture among the people

NIESBUD

NATIONAL INSTITUTE FOR ENTREPRENEURSHIP AND SMALL BUSINESS DEVELOPMENT

It was established in 1983 by Government of India.

it is an Apex body to supervise the activities of various agencies in the entrepreneurial development
programs. It is a society formed under Government of India society Act of 1860.

*Objectives of NIESBUD*

1. To evolve standardized materials and process for selection, training and support of potential and
existing entrepreneurs.

2.to help or support affiliate institutions and organisations in carrying out training

3. is there as an Apex National level resource institute for accelerating the process of entrepreneurship
development.

4. you provide vital information and support to trainers promoters and entrepreneurs by organising
research and documentation relevant to entrepreneurship development

5. To train the trainers

6. To train the promoters and consultants

7. To offer Consultancy services

8. to share National and international expertise and experience in entrepreneurship development

*Functions or activities of NIESBUD*

1. To develop effective strategies for overall development

2. To set model syllabus for training

3. To develop training tools and manuals

4. to conduct workshops, seminars and conferences

5. Evaluate the benefits of EDP

6. Undertake research and development in the field of EDPs

7. to help the Government in executing entrepreneurial development programs

*Technopark*

Technopark simply refers to technology park.

techno what is a technology park worth infrastructure and support facilities needed for high Technology
Industries to start and operate are provided.

in Kerala we have a technopark in Thiruvananthapuram and it was established on 18th November 1990
by the government of Kerala.

Functions of technopark

Business support

Business introduction, startup support

Technology innovation

strengthening cooperation between different organisations in the region

Act as a business incubation centre

*Incentives to entrepreneurs*

Incentive means stimuli for action.

the incentive is a motivational factor that induces a person to work hard or to do his work more
efficiently.

in general the financial and promotional assistance provided by the government to the industries for
boosting up industrial development in all regions particularly in backward areas.

Incentives include concession, subsidies and bounties.

*Importance or advantages of incentives*

1. Decentralization of economic power

2. Balanced regional development

3. Helps in transformation of technology from traditional to modern

4. Help to Overcome difficulties

5. Generate industrialisation

6. Encourages entrepreneurship

7. Helps to overcome competition

*Need for incentives*

1. To remove regional disparities in development

2. To promote entrepreneurship

3. To provide competitive strength, survival and growth

4. To generate more employment and remove unemployment

*Classification of incentives*

1. Financial incentives- incentives in terms of money

2. Non financial incentives- non monetary incentives. example, marketing assistance, technical
assistance

3. Concession- charging of less fees for services to enable the enterprises to compete with others

4. Subsidy- it denotes a single lump sum which is given by a government to an entrepreneur to cover the
cost.

5. Bounty- it denotes bonus or financial aid which is given by a government to an industry to help it
compete with other units in home market or in a foreign market.

6. Non tax based incentives- not based on tax. Example seed capital assistance and capital investment
subsidy

7. Tax based incentives- these are incentives based on taxes and duties

It is again classified into two

physical incentives and financial incentives

a) physical incentives are in the form of exemption, rebate or refund or postponement of direct or
indirect taxes leviable on production or profit. Example: income tax concession, GST benefits, duty free
imports. Etc..
b) financial incentives are incentives which include various types of credit facilities at the concessional
rates, direct and indirect cash subsidies for price advantage and direct cash subsidies for special
promotional effort

Subsidy

Subsidy denotes a single lump sum which is given by a government to an entrepreneur to cover the cost.

Types of subsidies

1. Credit linked capital subsidy scheme CLCSS

an effort to facilitate the technology upgradation of SSI in India the ministry of small scale industries is
operating a scheme for technology upgradation and this scheme is called the credit linked capital
subsidy scheme.

2. Subsidy to acquire quality management system

subsidy is provided by the government to adopt quality standards in the Indian MSME units my
subsidising the cost of acquiring ISO certificate. THIS GAME PROVIDES REIMBURSEMENT CHARGES OF
ACQUIRING ISO CERTIFICATIONS TO ALL INDUSTRIES REGISTERED AS SSI UP TO AN EXTENT OF 75
PERCENTAGE OF EXPENDITURE SUBJECT TO A MAXIMUM OF RUPEES 75000.

3. CAPITAL SUBSIDY FOR SOLAR LIGHTING AND SMALL CAPACITY PV SYSTEMS

Government of India has launched the Jawaharlal Nehru National solar mission JNNSM. TO PROMOTE
SUSTAINABLE ENERGY GENERATION AND SUPPORT THE GROWING NEED FOR ENERGY IN INDIA.. this
mission provides a horse subsidies and soft loans for the promotion and pant ration of solar energy
generation in the nation. it provides capital subsidy up to 40% age of the abroad unit cost for solar
lighting systems and small capacity PV systems. capital subsidy of 90 % of the benchmark cost would be
available for special category states namely NORTH EASTERN STATES, Sikkim, Jammu and Kashmir,
Himachal Pradesh, Uttarakhand.

4 subsidy for patent cost

department of it mcit and government started a scheme to provide subsidy to the various small medium
enterprises and Technology startups for international patent filing to increase their innovation and
provides for subsidy of 50 % of the pattern cost incurred by the industry.

5. Technology upgradation fund scheme for textile sector

industry investment of 5% it is provided on interest charged by The financial institutions or banks for
textured energy upgradation project and capital subsidy for investment is also provided.

6. Subsidy for food processing industry

assistance in the form of grant up to 25 percentage of plant and machinery and Technical civil work
subject to a maximum of rupees 50 lakhs in general area and 33% subject to a maximum of rupees 75
lakh in difficult areas is provided by the government of India.

7. Subsidy for market development for MSME

THE GOVERNMENT OF INDIA WILL REIMBURSE 75 PERCENTAGE OF AIR TICKET AND 50 PERCENTAGE OF
RENTAL CHARGE FOR M S M E

for women and SC ST entrepreneurs the government will reimburse 100% age of space rent and airfare.

8. Subsidy for barcode

can Hans the competitiveness of MSM me subsidy up to 75% and registration fee for getting barcode for
recurring fee for three years is provided

9. Subsidy for backward areas

a subsidy of 15 % of investment in plant and machinery is provided to units set up in backward areas.

10. Transportation subsidy

50 percentage to 90 percentage of investment in plant and machinery is provided as subsidy in areas not
accessible and in hill areas
11. Prime minister's Employment generation programme

Projector cost of 15 % to urban entrepreneurs and 25% 82 rural entrepreneurs is provided under this
scheme in general category.

for weaker sections 25 percentage to urban and 35% to rural entrepreneurs are provided respectively.

12. Subsidy for acquisition of efficient Technology

reimbursement of 50 % of technology transfer fee or rs 50 lakhs whichever is lower is granted to

individual industry.

13. subsidy for manufacturing equipment for controlling pollution and water conservation

the manufacturing unit will be provided with a subsidy of 10 % of capital expenditure incurred on new
plant maximum of rupees 50 lakhs for or equipment machines and devices used for controlling pollution
reducing energy consumption and water conservation.