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After attaining independence in 1947 India adopted mixed economic planning as a method to achieve economic development. Along with the Large Scale sector the thrust was on Small Scale sector because of it decentralized, its small size, use mainly indigenous technology, employment intensity and its suitability for rural area with limited techno-economic structure.
Industrial policies over the year have focused to promote SSIs through various incentives related to financial, fiscal and infrastructure measure; along with a heavy industrial base.
2.1 It stated that besides continuing the policy support to cottage, village and small industries by differential taxation or direct-subsidies, the aim of state policy would be that the development of this sector is integrated with that of large scale industry.
2.2 The focus was to improve the competitive strength of SSIs.
2.2.1 to achieve this 128 items were exclusively reserved for production in SSIs, and 166 items were reserved for exclusive purchase by government from this sector.
The national commission on Enterprises in the Un-organized/Informal Sector was set up in September 2004.It suggested measures considered necessary for improvement in the productivity of these enterprises, generation of large scale employment opportunities, linkage of the sector to institutional framework in area like credit ,raw material supply, infrastructure, technology up gradation ,marketing facilities and skill development by training .
85 items were de-reserved in October 2004.
The investment limit in plant and machinery was raised from Rs One crore to Rs 5 crore in October 2004,in respect of seven item of sports goods to help to upgrade the technology and enhance competitiveness.
The Small and Medium Enterprise (SME) fund of Rs 10000 crores was stared by SIDBI since April 2004,with 80% of the lending for SSI units. The interest rate was 2%below the prevailing Prime Lending Rate (PLR) of the SIDBI.
The reserve Bank of India raised the composite loan limit from Rs 50 lakhs to Rs One crore.
Promotional Package for small enterprises was initiated.
Small and Medium Enterprises were recognized in the services sector , and were treated on par with SSIs in the manufacturing sector.
The corpus of the Credit Guarantee Fund was raised from Rs 1132 crore in March 2006 to Rs 2500 crore in five years.
Credit Guarantee Trust for Small Industries (CGTSI) was advised to reduce the one time guarantee fee from 2.5% to 1.5% for all loans.
Insurance cover was extended to proximately 30,000 borrowers, identified as chief promoters, under the CGTSI. The sum assured would be Rs 200000 per beneficiary and the premium will be paid by CGTSI.
The emphasis was laid on Cluster Development model not only to promote manufacturing but also to renew industrial towns build new industrial township . The model is now being implemented, in nine sector including khadi and village industries, handlooms, textiles, agricultural products and medicinal plants.
1, SS units producing goods up to Rs.100 lakhs are exempted from payment of excise duties.
2. SSI units having turnover less than Rs.60 lakhs per annum need not have a separate storeroom for storing the finished products.
3.SSIs are also not required to maintain any statutory records such as daily stock account of production and clearance , raw material account ,personal ledger account etc. their own record are adequate for excise purpose.
4. There is no distinction between registered and unregistered units for SSI concessions for SSIs has been based on annual turnover rather than SSI registration . Duty liability is to be discharged by 15 th of following month.
5. The SSI exemption is available for home consumption ,as well as in respect of goods exported to Nepal & Bhutan.
6. Normally ,excise officers are not expected to visit SSI units paying less than Rs.11lakhs duty annually .
7.With effect from 1-4-1994, Gate –Pass System was replaced by manufacturer invoice to cover clearance of goods as the duty-paying document.
SSI Scheme (without CENVAT) : With effect from 1 st April 2000.
The rate of duty applicable to such manufactures whose turnover does not exceed Rs.3 crores in the pervious financial year in respect of excisable goods for home consumption from one or more factories of the same manufacturer or from factory by one or more manufacturer:
RATE OF DUTY IN RESPECT OF CLEARNCE OF EXCISABLE GOODS
SSI Scheme (with CENVAT): with effect 1 st April 2003.
It provides the concessional rate of duty in respect of clearance of specified goods for home consumption and also states that all clearance of the specified goods which are used for captive consumption in production of the specified goods shall be subjected to be ‘nil’ rate of duty.
Rate of duty in respect of clearance of Specified goods.
Value of clearance (Rs) Rate of duty
up to 100 lakhs 60%of normal rate
100-300 lakhs normal rate of duty
MEASURES FOR PROMOTION AND DEVELOPMENT OF SSIs
Central and state Government have formulated several schemes to make the SSIs vital and competitive.
Government’s purchased preference policy for SSI products.
Government’s price preference policy for marketing SSI products.
Out of 836 items reserved in 1989,39 items were dereserved in four phases viz.,
15 items in 1997’
9 items on 1999
1 item on 2001 and,
14 item on 2001.subsequently,
51 item were dereserved in 2002,
75 item in 2003 and
85 items in 2004,
108 in March 2005 and
180 in May 2006.
Now 298 items stand reserved for this sector.
GOVERNMENT’S PURCHASE PREFERENCE POLICY FOR SSI PRODUCTS
Under the Store Purchase Policy of the Government 409 items of store were reserved for exclusive purchase from KVIC/Women’s Development Corporation/Small Scale units in 1989.
This list reviewed .
In February2004, the Committee (set up to consider the question of inclusion of additional items) revised list and 358 items were approved , after deleting items having common nomenclature and addition of some new ones.
This list also includes 8 handicraft items reserved for purchase from the Handicraft Sector.
GOVERNMENT PRICE PREFERENCE POLICY FOR MARKETING SSI PRODUTS
These facilities includes the following :
Price preference up to 15%in case of selected items.
No registration fee.
A consortium to channelize and identify for the production of SSIs both in India and abroad.
The Single Point Registration scheme of NSIC the following benefits are given to SSIs units, which get them registered with the NSIC:
Availability of tender sets free cost.
Exempted from payment of Earnest Money Deposit.
Exempted from payment of Security Deposit up to the monetary limit for which the unit is registered.
Price preference up to15% over the lowest quotation of the large scale units.
The benefit is available to compensate them on a/c of non-availability of economies of scale ,poor resource base, poor access to raw –material as compared to the large scale sector.