Government Schemes and Incentives For

GOVERNMENT SCHEMES AND INCENTIVES FOR
ENTREPRENEURSHIP DEVELOPMENT
GOVERNMENT POLICY
ON SMALL AND MEDIUM ENTERPRISES (SMES)/SSIS.
DBM 3212 SUBMITTED BY ,

ENTREPRENEURSHIP DEVELOPMENT ARJUN VASUDEV
AND INDUSTRIAL CONSULTANCY 2018-BDK-05
CONTENTS
1. GOVERNMENT INCENTIVES
2. AIMS AND OBJECTIVES OF INCENTIVES
3. GOVERNMENT SUPPORT TO ENTREPRENEURS
4. SCHEME OF STATE GOVERNMENT
5. GOVERNMENT POLICY ON SMALL AND MEDIUM ENTERPRISES (SMES/SSIS)
6. CLASSIFICATION OF SSI
7. GOVERNMENT POLICY
8. ABID HUSSAIN COMMITTEE RECOMMENDATIONS
1. GOVERNMENT INCENTIVES
Encourage and
support
entrepreneurs
Government
incentives
To
Motivate Enhance
entrepreneurs productivity
INCENTIVES CATEGORIZED AS
CONSESSION SUBSIDIES BOUNTIES
A concession agreement is a Subsidies are a one time lump Bounty is a financial help

grant of rights, land or property sum amount given to the provided to an industry so that
by a government, local Entrepreneur by the it can compete with other units
authority, corporation, government of the country as well as any
individual or other legal entity. foreign industry in the same
business.
2. AIMS AND OBJECTIVES OF INCENTIVES
1.To eliminate economic constraints :
 Entrepreneurs face several problem like

 lack of adequate infrastructure
 locations of supporting offices for projects
 lack of related knowledge E.g. managerial skills , market intelligence etc
 Provision of government incentives like availability of power, concessional finance, capital

investment subsidies, transport subsidies, etc.
 Aims at eliminating such constraints and promote entrepreneurship

2.To bring about regional parity in development:
Imbalance in development across different region
Some are well established some are under developed
For equal development of all the regions, government provides special incentives for establishing
entrepreneurs in the backward regions
3.To enhance competitive capability:
Entrepreneurs face stiff competition from big firm
For their survival government incentives are needed
Help to improve competitive strength
E.g. Reservation policy , price preference , preferential purchase etc.

3.GOVERNMENT SUPPORT TO ENTREPRENEURS
Government provides support to entrepreneurs in the following ways:
1.Training :
Aim at improving entrepreneur skills
Varies from product to product
Basic technical training are provided by central and state government’s institutions
Entrepreneurship development programs are conducted by many Govt. and non Govt.
organizations
2.Marketing assistance :
 Provided by Govt. and non Govt. agencies
 Promote MSME product through exhibition

The National Small Industries Corporation ( NSIC)
 NSIC market MSME product directly in national and international market
 Manages single point registration scheme for Govt. purchases
 Enterprise registered under this scheme obtain benefit of free tender document and exception
from earnest money deposit and performance guarantee
3.Promotional scheme:
 Highest development of MSME
 By formulating and implementing policies and govt. Scheme
 Provides development land and sheds on actual cost basis with appropriate infrastructure
 Special scheme for purposes such as:

 quality upgradation
 common facilities
 entrepreneurships development and consultancy services at minimal charges
 provide financial support to obtain ISO 9000 certificate
4. Concession of Excise duty :
 Exemption to MSME unit for a particular level of annual turn over from excise dutty
 Limit of turn over is variable
5.Credit facility:
 Credit to MSME sector is covered under priority sector lending by banks
 SIDBI responsible for implementing various financial support scheme to small entrepreneur
 Loans are provided by scheduled bank without collateral security
 Limit is variable
4.SCHEMES OF STATE GOVERNMENT
State Govt. provide technical and other support to small enterprise through their directorate of
industries and district industries centre
Support types:
 Deferment / suspension of sales tax
 Power subsidy
 Capital investment subsidies to new enterprises established in some selected districts
 Margin money/seed capital assistance schemes
 Priority in providing power connection/water connection
 Technical and consultancy support
5. GOVERNMENT POLICY ON SMALL AND MEDIUM
ENTERPRISES (SMES/SSIS)
MEANING Small scale industries(SSI)
Convectional
Definition
Operational Definition
-Covers cottage and
handicraft industries - For policy making
-Employs labour intensive - Based on investment limit
methods
-Include all establishment
-Do not depend upon hired having investment in fixed
labor and is largely asset in plant and machinery
predominant in village whether held on ownership or
households lease
e.g. Khadi and village -Not exceeding sixty lakhs
industries, handlooms
handicrafts, coir and
sericulture
6.CLASSIFICATION OF SSI
Types Manufacturing sector (amount in rupees) Service sector (amount in rupees)
Micro Does not exceed 25 lakhs Does not exceed 10 lakhs
Small More than 25 lakhs but not exceed 5 crores More than 10 lakhs but not exceed 2 crores
Medium More than 5 crores but not exceed 10 crores More than 2 crores but not exceed 5 crores
7.GOVERNMENT POLICY
A)Policy
initiative
Government
policy
B)
C)Credit
Institutional
dispersion
support
A) Policy Initiative
1.Small industries polices and incentives :
 Central Govt. announced industrial policy resolution from 1948 onwards
 Central Govt. announces financial, fiscal and infrastructure related initiative
 State Govt. also announces suitable policy initiative
 Director general of supplies and disposal purchases goods from small scale units
2. Liberalization and SSIs :
 India adopted policy of liberalization since 1991
 Foreign direct investment in SSIs sector allowed up to 24 persons
 It improve financial strength and leads to up gradation of technology

3. Infrastructural facilities :
 Industrial estates programme , integrated infrastructure development scheme and growth

centre scheme initiated by central government
 All state government also implement such scheme in their states

4. Small industry clusters :
 Area where similar kind of industries located
 Gain advantages of obtaining material and services at low cost
 Govt help in development of clusters
 E.g. Brass part unit in Jamnagar of Gujarat

5. Marketing support :
 NSIC to promote marketing of SSIs product to Govt. department under preferential

purchase policy
 Govt. organises training programmes related to marketing and export
 Organizes exhibition and international trade fair for SSIs
 Reimburses expenses for foreign visit for marketing purposes by SSIs delegates
B) Institutional support
Central and State Govt., industry associations provides institutional support

Network of institutional support
Central government State government Industry association
1.Small scale industries board 1. District industries centres 1. Confederation of Indian
industries
2. Small scale industries development bank of 2. State financial cooperation 2. Federation of Indian chamber of
India commerce and industry
3. Small industries development organization 3. Small industries 3. Consortium of women
development /Investment entrepreneurs
corporations
4. Small industries service institute 4.Technical consultancy 4. Indian council of small
organizations industries
5. Product cum process development centre
6. Regional testing centre
7. Central footwear training institute
8. National small industries corporation
limited
9. Technology transfer centre
10. National productivity council
C) Credit support
 Several financial institutions/banks etc. have been established specifically to cater to the
needs of SSIs
 E.g. Small Industries Development bank of India etc.

8.ABID HUSSAIN COMMITTEE RECOMMENDATIONS
Constituted in Dec 1995
Under the chairmanship of Shri Abid Hussain, Vice Chairman, Rajiv Gandhi Institute of
Contemporary Studies, New Delhi.
The major recommendations of the Abid Hussain Committee are as follows.
1. Abolition of reserved items.

2. Hiking the investment limit for SSIs.
3. Scrapping the foreign investment of 24 percent.
4. New law to cover business practices.
5. Special incentives to clusters of units.
6. Inclusion of service sector under SSIs.
7. National Research Institutions for SSIs.
8. Sanctioning of composite loans and credit rating of SSIs.
9. Liberalizing excise benefits for manufacturing brand name items
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DBM 3212 SUBMITTED BY ,

CONSESSION SUBSIDIES BOUNTIES

A concession agreement is a Subsidies are a one time lump Bounty is a financial help

1.To eliminate economic constraints :

 Entrepreneurs face several problem like

 Provision of government incentives like availability of power, concessional finance, capital

 Aims at eliminating such constraints and promote entrepreneurship

Imbalance in development across different region

Some are well established some are under developed

Entrepreneurs face stiff competition from big firm

For their survival government incentives are needed

Help to improve competitive strength

E.g. Reservation policy , price preference , preferential purchase etc.

Government provides support to entrepreneurs in the following ways:

Varies from product to product

 Provided by Govt. and non Govt. agencies

 Promote MSME product through exhibition

 NSIC market MSME product directly in national and international market

 Manages single point registration scheme for Govt. purchases

 Highest development of MSME

 By formulating and implementing policies and govt. Scheme

 Special scheme for purposes such as:

 Credit to MSME sector is covered under priority sector lending by banks

 Loans are provided by scheduled bank without collateral security

Types Manufacturing sector (amount in rupees) Service sector (amount in rupees)

Micro Does not exceed 25 lakhs Does not exceed 10 lakhs

1.Small industries polices and incentives :

 Central Govt. announced industrial policy resolution from 1948 onwards

 Central Govt. announces financial, fiscal and infrastructure related initiative

 State Govt. also announces suitable policy initiative

 India adopted policy of liberalization since 1991

 Foreign direct investment in SSIs sector allowed up to 24 persons

 It improve financial strength and leads to up gradation of technology

 Industrial estates programme , integrated infrastructure development scheme and growth

 All state government also implement such scheme in their states

 Area where similar kind of industries located

 Gain advantages of obtaining material and services at low cost

 Govt help in development of clusters

 E.g. Brass part unit in Jamnagar of Gujarat

 NSIC to promote marketing of SSIs product to Govt. department under preferential

 Govt. organises training programmes related to marketing and export

 Organizes exhibition and international trade fair for SSIs

Central and State Govt., industry associations provides institutional support

 E.g. Small Industries Development bank of India etc.

Constituted in Dec 1995

1. Abolition of reserved items.

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