Institutional Support for Entrepreneurs

1. Chapter 4
INSTITUTIONAL SUPPORT TO ENTREPRENEURS

2. Introduction
 A Number of Organizations have been set up by the government of India and
the State Governments to promote and develop Small-Scale Industry.
 The Institutions that support the promotion and growth of Small-Scale
Industry at the state and national levels are explained in this chaper.

3. Institutions at the National Level
 Small-Scale Industries Board(SSIB)
 Small Industries Development Organization(SIDO)
 Small Industries Service Institute(SISI)
 National Small Industries Corporation(NSIC)
 National Productivity Council(NPC)
 National Research Development Corporation
 Khadi and Village Industries Commission

4. Small Scale Industries Board(SSIB)
 The Government of India Constituted the Small-Scale Industries Board in
1954.
 The main Task of the Board is to facilitate coordination and linkage between
various agencies/departments engaged in the development of Small Scale
Industry.
 The Minister of Small-Scale Industries, Govt of India is the Chairman of the
Board. The SSIB Comprises of 50 Members including the representatives of the
Central and State Governments, RBI, SBI and Industry Associations

5. Small Industries Development
Organization(SIDO)
 SIDO is the apex body and Nodal Agency for formulating, Coordinating and
monitoring the policies and programmes for promotion and development of
Small-Scale Industries
 Development Commissioner of Small-Scale Industries is the Chief of SIDO and
he is assisted by various directors and advisors.
 Functions:
The Main functions of SIDO are : 1) Coordination 2) Industrial Development
and 3) Extension

6. Coordination
The Coordinating functions include the following:
 To Evolve a national policy for the development of Small-Scale Industries
 To maintain liaison with central ministers, Planning Commission, State
Governments, Financial Institutions etc

7. Industrial Development
The Following functions relate to industrial development:
 To Collect data on consumer items which are important and to encourage the
setting up of Industrial Units to produce these items by providing coordinated
assistance.
 To Assess the requirement of imported raw Materials and components and
arranging the supply to small-scale units
 To Prepare Model Schemes, Project reports for prospective entrepreneurs.

8. Extension Services
The following extension services are provided by SIDO:
 To Provide technical services for improving process, Production Planning,
design and selection of Machinery etc.,
 To Render Marketing assistance
 To assist In economic investigation and to provide information service to
Small-Scale units.

9. Small Industries Service Institute(SISI)
 The Small Industries Service Institutes are set up to provide consultancy and
training to small entrepreneurs. There are 28 SISI’s set up all over India.
 Functions of SISI:
A) Technical Advisory Service:
Technical Advice for setting up of new small-scale units, choice of machinery
design, layout, Operation of Plant and Machinery.
B) Workshop and Laboratory Services:
SISI’s have workshops, Laboratories and Showrooms attached to them.
- Assist in testing raw materials and new products.
- Carry out experiments and laboratory analysis on new and substitute raw
materials

10. Contn..
C)Management consultancy services:
SISI’s provide guidance in proper methods of industrial
management, including cost reductions, production Management,
marketing etc.,
D) Training of Workers, Foreman and Managers:
SISI’s and extension centres train workers from small industry in
certain trades such as Machine shop practice, tool, welding etc.,

11. National Small Industries
Corporation(NSIC)
 The National Small Industries Corporation(NSIC) was set up in 1955 to promote
and foster the growth of Small-scale industry in the country. NSIC provides a
wide range of services which are promotional in character.
Functions:
1) Supply of Machines in Hire Purchase: It Supplies Machines on hire purchase to
small Industrial Unites. NSIC takes upon itself the entire purchase procedure,
Starting from locating competent suppliers to delivery of Machines. In case of
Imported Machines, it obtains import license from Director General to arrange
foreign Exchange. SSI Units can procure Industrial Equipment for Modernization,
Expansion and Diversification under equipment leasing scheme.

12. Contn..
2) Government Stores Purchase Programme:
Under this Programme, The Director General of Supplies and Disposal Arranges
for the Purchase of all stores required by the Government. The registration with
NSIC is a single point which avoids registration with various Government Agencies
and ensures that the units registered with NSIC are considered to be given
concessions like free cost of tender and exemption from Payment of Earnest
Money.
3) Marketing Assistance:
NSIC Provides diversified Marketing Support to Small-Scale Units. Giving Publicity
to products manufactured by Small-Scale Industries, Introducing Common Brand
Name are some marketing efforts done by NSIC. It follows Consortia Approach, A
Number of Small Units producing the same products are associated in the form of
Consortium. NSIC explores the Market and secures orders in bulk quantities.
Handmade Paper, Electric Fans are few items for which consortium has been
formed by NSIC

13. National Productivity Council
 National Productivity Council is an autonomous body which provides the
following services.
1. Consultancy in all areas relating to small-scale Industry.
2. Training Youth and Prospective Entrepreneurs.
3. Undertaking Market Surveys for State Governments

14. National Research Development
Corporation(NRDC)
 It was established in 1953, a Non-Profit Organization by the Govt of India. It
has been set up to develop and exploit local Know-how inventions, Patents
and processes derived from Research and Development Institutions in India.
 Functions:
1.Transfer of Technology: NRDC Releases to the interested entrepreneurs,
technologies and processes developed in various R&D Institutions in India.
2.Development of Projects: The Corporation finances upto 50% of the
expenditure involved in putting up pilot Plants, Laboratory Know-how suitable for
commercial exploitation to fill gap in existing rechnologies.
3. Guidance to Entrepreneurs: A Publication titled NRDC Processes, Containing
list of technologies/ Processes is made available to Entrepreneurs periodically

15. Khadi and Village Industries Commission
 It is a Statutory Organisation established in 1957. It assists in the promotion
and development of Khadi and Village Industries. The main Objective of KVIC
is rural industrialization.
 Functions:
1. To Plan and Organise training programmes for potential entrepreneurs.
2. To Build reserve raw materials and implements for supply to producers.
3. To Promote and Sale and Marketing of Khadi Products of Village Industries and
Handicrafts.

16. Industry Associations
World Associations for Small and Medium Enterprises(WASME)
 WASME Was founded in 1980, It is a Non-Governmental Organisation.
 WASME Provides the following facilities:
1. Strategies and support system for the promotion of SME’s in Member Countries
2. Opportunities for Marketing of Products
3. Facilitating Contacts with sources offering latest technologies
4. Identifying facilities for training of Entrepreneurs, Managers and Production
Personnel
5. Providing information on policies to Member Countries

17. Federation Of Associations of Small
Industries of India(FASII)
 FASII represents associations of Small Industries and Individual small-scale
Industrial Units.
 The Main Objects are:
1. To Promote the development of Small, tiny and cottage Industries.
2. To Cooperate with industrial, business and research institutions in collecting
and disseminating information.
3. To Establish trade centers, Display Centers, Sub-Contract Exchanges for the
benefit of Small Industries

18. Federation Of Indian Micro and Small
and Medium Enterprises(FISME)
 It is formed in 1967, Earlier it was named as National Alliance of Young
Entrepreneurs.
 The Main Functions are:
1. Providing assistance in export, Import and Marketing
2. Providing Opportunities for interactions with visiting foreign delegations.
3. Conduct Training Programmes in areas such as fashion design, Packaging for
exports etc.

19. Federations of Tiny and Small Industries
of India(FTSII)
 It was setup in 1988. The Main Objectives of the association are the
following:
1. To Promote and develop the tiny, Cottage and small-scale Industries.
2. To Organize seminars and workshops for disseminating information about
Industry.
3. To represent the problems of Industry to Government.

20. Indian Council of Small Industries(ICSI)
 It is an association representing the decentralized sector. It extends help to
Small, tiny and cottage Industries and artisans.The major services of the
association include consultancy, Training and research.

21. Industry Related Research Institutions
 The Government of India has established a number of research institutions for
the development of Small-Scale Industry.
1. Central Manufacturing Technology Institute:
The Objective of the institute is to provide technical assistance to machine
tools and other engineering industries in design and development of Modern
Machine Tools, Cutting Tools and Control Systems.
2. Central Pulp and Paper Research Institute:
This Institute helps to improve the technological competence and testing
facilities for paper industry.

22. Contn..
3. National Council for Cement and Building Materials:
Scientific, Technological and industrial services to cement and building
materials are provided by this institute.
4. Automotive Research Association of India:
This Institute is engaged in research and development for the automotive
engineering industry, Product design and development and application of modern
technology etc.
5. National Institute of Design:
The National institute of design at Ahmedabad conduct professional
programmes in industrial design in furnitute, ceramics, photography etc.

23. Institutions at Tamil Nadu
 SIDCO(State Industries Development Corporations)
1) SIDCO are set up in various states under the Companies Act, 1956.
2) In Tamilnadu, It was Set up in the year 1970 for the promotion and development of
small-scale Industries in the State.
SIDCO has been actively engaged in the following:
1) Formation of Industrial Estates: SIDCO is constructing industrial work sheds with all
infrastructural activities in selected locations. The required infrastructural facilities like
roads, lights, water supply, drainage facilities etc. are provided in the industrial estates.
Arrangements are also made with TNEB for getting power connections to the sheds
quickly.

24. 2) Marketing Assistance: It arranges Buyer-Seller Meet so that the government
departments will be aware of the SSI products and also to give an opportunity to SSI units
to know the demand of the departments.
3) Hire Purchase and Equipment Leasing Scheme: Under this Scheme, SIDCO renders a
package assistance to the allottees of sheds at Industrial Estates for the supply of
Machinery and equipment under hire and on lease.
4) Export House: SIDCO has been recognized as Export house by the Government of
Tamil Nadu. It identifies potential Industrial units supplying export-worthy products and
prospective buyers of the products abroad. It makes contacts with Overseas importers and
their agents in India and assists SSI units in exporting their products.

25. 5) Industrial Development in Backward Areas: In order to develop the backward areas
industrially and to provide employment to rural educated employment youth SIDCO
constructs industrial estates in rural areas.

26. Industrial and Technical Consultancy
Organisation at Tamil Nadu(ITCOT)
 It was incorporated in 1979, as a joint venture of Leading financial Institutions.
 The Promoters of ITCOT are IDBI, ICICI, IFC, SIPCOT, THC, SIDCO and commercial banks.
 ITCOT offers a wide range of consultancy services
1) Pre Investment Studies
1) Project Identification
2) Preparation of Project Profile
3) Techno Economic Feasibility Studies
4) Market Surveys

27. 2) Escort Services:
1) Assistance in Obtaining government approval
2) Loan Syndication
3) Project Appraisals
4) Stock Audit
5) Sick Unit Rehabilitation Studies
3) Renewable Energy:
1) Market Surveys
2) Techno Economic Feasibility Studies
3) Design Supervision
4) Project Monitoring.

28. 5) IT Consultancy:
1) Identification of IT activities having export Market
2) Setting up of Export-Oriented IT Project
3) Exploring Strategic Alliance possibilities Abroad
4) Computer Training
The Above Consultancy services are available to Small and Medium Enterprises,
Cooperatives etc.

29. Institutional Finance to Entrepreneurs
 State Financial Corporations (SFC’s):
1) SFC have been setup in different states under SFC’s act passed by the parliament on
September 28, 1951. The first SFC was set up in Punjab in 1953.
2) The corporation provides term loan up to 800 lakhs to private and pubic limited
companies and up to120 lakhs to proprietary or partnership firms.
Various schemes of Financial Assistance:
1) General Scheme: The Scheme in intended to provide financial assistance for new
projects to expand the existing projects. The present rate of Interest is 15% p.a. for term
loans up to 25 Lakhs. The term loan shall be repayable not exceeding 7 years including
initial moratorium of not more than 2 years.

30. 2) Soft Loan Scheme / Seed Capital Loan: The Soft Loan scheme is meant for Qualified /
Experienced Entrepreneurs who are unable to bring in Stipulated promoter’s contribution. The
assistance will be a maximum of 20% project cost subject to the maximum of 4 Lakhs per
project. The repayment period should not exceed 5 years, A nominal Rate of Interest of 1% is
payable.
3) Single Window Scheme: It is a composite loan for fixed capital and Working Capital. The
Projects not exceeding a total cost of 200 lakhs are eligible for assistance. Under this
Repayment of Working capital is fixed at 5 years and for term loans is 5 to 7 Years.
4) Scheme of Assistance for Acquisition of ISO 9000 series of Certification by SSI Units:
The Objective of the scheme is to promote Quality Management system in SSI with a view to
strengthen their Market and Export Potentialities. Expenses on Audit, Consultancy, Certification
Fees and equipment would be taken in to account for determining loan requirement. The
Assistance is considered for projects exceeding 2 Lakhs and up to a Maximum amount of 5
Lakhs.

31. 5) Marketing Assistance Scheme: The Scheme in intended to provide support to SSI in
Marketing their products. Existing units with good track record and earning continuous net
profit for the past 3 years are eligible for the loan for undertaking market research.
6) Generator Scheme: Under this scheme loan is granted for purchase of generator sets
to enable the industrial units to meet power shortage. Generator subsidy of 15 % is
considered by the Government.
7) Leasing Scheme: It is intended to provide assistance to purchase machinery/Equipment
on reasonable rentals. The assistance will be from 5 Lakhs to 80 Lakhs.100 % Finance is
provided on the Cost of Asset.
8) Scheme Of Assistance for Technology Development and Modernization for SSI Units:
SSI Units which are going for modernization/ Technology Upgradation can avail the
assistance. For getting this assistance the project cost should not exceed 100 Lakhs. The
rate of Interest will be 13 & and repayment period is 5 Years.

32. Small Industries Development Bank Of
India(SIDBI)
 SIDBI was set up under the Small Industries Development Bank of India Act,1989, as a
wholly owned subsidiary of IDBI. The important functions of SIDBI are as follows:
1) To initiate steps for technological upgradation and modernization of existing
industries
2) To expand the channels for marketing the products of SSO sector in domestic and
international markets.
3) To promote employment-oriented industries especially in semi urban areas to create
more employment opportunities and thereby checking migration of people to urban
areas.

33. Financial Assistance
SIDBI has assigned the task of being the main agency for term finance to small-scale sector
in the country.
1) Refinance: The financial assistance is provided to small-scale industries by way of
refinance through the existing agencies comprising of SFC’s, Commercial Banks and
Regional rural banks. SIDBI has been allotted 5000 crore for refinancing at concessional
rates to banks and SFCI.
2) Discounting of Bills: SIDBI discounts the bills arising out of sale of goods by Small-Scale
Industries and also rediscounts those bills which are discounted by banks.
3) Direct Finance is provided for:
1) MSME units for new/expansion/diversification/ modernization of projects

34. 2) Marketing development of Projects
3) Infrastructure development agencies for developing industrial units.
4) Existing export oriented units to get ISO 9000 series certification.
4) Venture Capital: A venture Capital fund of 10 crores has been setup for extending
venture capital support of new ventures promoted by technocrats and other
entrepreneurs based on innovative technologies.
5) Schemes for cottage, Village and Tiny Industries: This scheme is meant for artisans,
Village and Cottage Industries in tiny sector. Loan up to Rs 50000 is given for purchase of
equipment and also working capital.
6)Scheme for Road Transport Operators: Small Road transport operators who do not own
more than six vehicles are eligible to get loan to meet expenditure of Chasis, taxes and
working capital.

35. 7) Scheme for Professionals: Qualified professionals in Management, Medicine,
architecture, Engineering etc are eligible to get assistance upto 10 Lakhs for setting up
professional practice.
8) Scheme for Medical Profession:
(a) Scheme for Hospitals/ Nursing Home: Entrepreneurs who wish to setup small
hospital/ nursing homes can avail assistance up to 45 Lakhs under this scheme.
9) Scheme for Tourism Related Activities: Entrepreneurs setting up tourism-related
activities such as amusement parks, tourist service agencies etc., can get loan up to 45
Lakhs under this scheme.