Ancilarisation in India-JUNAID ALI

ANCILLARISATION
IN
INDIA
Ancillary and small scale industry
 Investment in plant and machinery
 Restriction on supply of production
 Types of goods manufactured
 Control by large scale unit

Registration
1) Provisional registration:
 Form 4-A
 DIC
 Within 1 week
 Initial validity 1 year, can be renewed for 2 more years in
four 6 monthly extensions
Benefits:
 Power and water connection

 Financial assistance
 NSIC for machinery on hire purchase
 Shed in industrial estate
 NOC to local authorities
 Registration for sale-tax, excise duty etc.
2) Permanent registration:
Apply: When factory ready, power

connection, machinery
installed.
Inspection: Within 7 days of receipt

of application by DIC
Post-
Registration: Half yearly reports on
production and sales to be
submitted to Directorate of
Industries
DE-REGISTRATION
Reasons for De-registration
 Unit closed continuously for period exceeding
1 year
 Fails to submit half-yearly reports
 Unit misuses the raw material allocated to it
Process:
Show cause 30 days time
De-registration
notice to appeal
RELATION BETWEEN SMALL
AND LARGE UNITS
1. Supplementary
2. Competitive
3. Complementary
4. Ancillarisation
5. Jobbing
6. Merchandising
7. Servicing
DIFFERENCES
1)Cottage and Small- Scale Industries
• Kind of goods
• Use of manual labour
• Technological advancement
• Sources of raw material
• Type of enterprise
• Quantum of hired labour
• Markets Served
Small and large scale units
 Investment
 Labour
 Area of operation
 Character
 Scope for expansion
 Kind of labour
 Size
 Kind of organization
 Location
 Management style
Selection of a project
 Project is a work plan to achieve certain
objectives within a specified period.
Steps in project planning:

4. Discovery of business opportunity
5. Preliminary investigation
6. Technical requirement study
7. Initial feasibility study
8. Final preparatory step:
Capital, policies, programmes, structures,
process, work-flow
Feasibility study
Feasibility of the project is to find out the

Practical utility/ future prospects of the
project
Areas of feasibility study:

5. Technical
6. Economic/ market
7. Commercial/ financial
8. Managerial
Decide on the constitution
 Sole proprietorship
 Partnership
 Corporation public/ limited company
 Cooperative
Clearance from department
 Agricultural land conversion

 Urban land ceiling clearance
 Trade license
 Building plan approval
 Pollution control board (PCB) Clearance
 Sales tax registeration
 Central excise registeration
 Bureau of Indian Standards (BIS)
certificate
 Other licenses and approval as per the
type of SSI Unit
INDUSTRIAL POLICY
FRAMEWORK
 Guides and fosters industrial
development in a country.
 Reflectsattitude and intentions of

the government
 1st
Industrial policy came into force in
1948
INDUSTRIAL POLICY, 1977
 Presented
to the parliament on
23/12/1977
 Main thrust:
Effective promotion of cottage and
small scale industries widely
dispersed in rural areas and towns
Features:
 Listof industries under SSI: 504 items

 Tiny sector defined as unit with
investment in plant and machinery
upto Rs. 1 Lakh
 IDBI set up a separate wing to look
after credit needs
 “NAI KHADI” Government set up
 No licenses to large scale industries
around metros
 DIC setup in each district having
special wing for SSI
 Presentedto the parliament on
23/07/1980
 Investment limits:
Tiny Units Rs. 2 Lacs
Ancillaries Rs. 25 Lacs
Small Units Rs. 20 Lacs
• Nucleus Plants
• Stress on R & D
• Early warning systems for sickness
 Presentedto the parliament on 06/08/1981
 Investment limits:
Tiny Units Rs. 5 Lacs
Ancillaries Rs. 75 Lacs
Small Units Rs. 60 Lacs
Export Oriented Rs. 75 Lacs

Units
ANCILLARY INDUSTRY
“A unit which sells not less that 50% of
its
manufactures to one or more industrial
unit.”
 Investment limit: 1 Crore

 Eg: Diamond polishing
 Sub Contractors
 “Dragon Dance”- China
Advantages
 Marketing
 Provision of finance
 Predetermined market
 Concentration on important problems
 Economical
Disadvantages
 Variations in demand
 Captive unit
 Delay in payments
 Isolation paradox
 Promotional deficiency

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ANCILLARISATION

 Investment in plant and machinery

 Restriction on supply of production

 Types of goods manufactured

 Control by large scale unit

 Power and water connection

Apply: When factory ready, power

Inspection: Within 7 days of receipt

Steps in project planning:

Feasibility of the project is to find out the

Areas of feasibility study:

 Agricultural land conversion

 Reflectsattitude and intentions of

 Listof industries under SSI: 504 items

Small Units Rs. 20 Lacs

Tiny Units Rs. 5 Lacs

Ancillaries Rs. 75 Lacs

Small Units Rs. 60 Lacs

Export Oriented Rs. 75 Lacs

 Investment limit: 1 Crore

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