The document discusses the role and importance of small scale industries (SSI) in India's economic development. It outlines how SSIs have been classified in different ways over time, including by investment size, traditional vs modern industries, and for policy vs accounting purposes. The key organizations that support SSIs are also summarized, such as the Small Industries Development Bank of India (SIDBI), Technical Consultancy Organizations (TCOs), and State Industrial Development Corporations (SIDCs). Industrial estates, export promotion councils, and export consortia are also mentioned as important mechanisms for aiding small businesses.

1. Prepared by: Dr. Parul Chotalia,
Director, TNRCMS, Rajkot

2.  Industrialization plays a significant role in the
economic development
 Industrial structure of a country- large,
medium, small scale industries
 The idea to promote the development of SSI
mooted by Mahatma Gandhi in 1937
 Low capital intensity and high employment
potential
Prepared by: Dr. Parul Chotalia,
Director, TNRCMS, Rajkot

3.  SSI broadly classified into two:
 Traditional Industries
 Small Scale Industrial Units
 Traditional Industries:
 Khadi and Village Industries (KVI)
 Handlooms
 Handicrafts
 Coir
Prepared by: Dr. Parul Chotalia,
Director, TNRCMS, Rajkot

4.  Small Scale Industrial Units:
 Small scale industries undertakings
 Export-oriented SSI units
 Ancillary industrial undertakings
 Tiny enterprises
 Small-scale services and business enterprises
 Power looms
Prepared by: Dr. Parul Chotalia,
Director, TNRCMS, Rajkot

5.  The term small-scale industries
has been classified in three ways:
 Conventional small-scale
 Operational small-scale &
 National Income Accounting
Prepared by: Dr. Parul Chotalia,
Director, TNRCMS, Rajkot

6.  Conventional small-scale :
 It includes cottage and
handicraft units which employ
traditional labour-intensive
methods to produce
traditional products, mostly in
village households
Prepared by: Dr. Parul Chotalia,
Director, TNRCMS, Rajkot

7.  Operational small-scale :
 For policy purposes, includes all
those undertakings having an
investment of up to Rs. 60 lakh in
fixed assets in plant and
machinery, whether held on
ownership terms or on lease or
buy or hire-purchase
Prepared by: Dr. Parul Chotalia,
Director, TNRCMS, Rajkot

8.  Tiny units and Ancillary units also
come under the umbrella of
small-scale industries
 Tiny units is one whose
investment in fixed assets in plant
& machinery does not exceed Rs.
5 lakh
Prepared by: Dr. Parul Chotalia,
Director, TNRCMS, Rajkot

9.  Ancillary undertakings is one whose
investment in plant & machinery does
not exceed Rs. 75 lakh and is engaged in
any of the following:
 Manufacture of parts, components, sub-
assemblies or tooling
 Rendering services of supplying 1/3 per
cent of their total service or production,
as the case may be, to other units for
production of other articles
Prepared by: Dr. Parul Chotalia,
Director, TNRCMS, Rajkot

10.  National Income Accounting:
 It includes all manufacturing and
processing activities, including
maintenance and repair services,
undertaken by both household
and non-household small-scale
manufacturing units which are not
registered under the Factories Act
Prepared by: Dr. Parul Chotalia,
Director, TNRCMS, Rajkot

11.  Latest Classification of SSI:
 Micro, Small and Medium Enterprises
Development Act, 2006 coming into force,
the definitions and nomenclature have been
revised from October 2006
 Enterprises have been classified into the
following two categories:
1.Enterprises engaged in the manufacture and
production of goods pertaining to any
industry
2.Enterprise engaged in providing or rendering
services
Prepared by: Dr. Parul Chotalia,
Director, TNRCMS, Rajkot

12. Prepared by: Dr. Parul Chotalia,
Director, TNRCMS, Rajkot

13. Prepared by: Dr. Parul Chotalia,
Director, TNRCMS, Rajkot

14.  Govt. single larger buyer of a variety of goods
from the small scale sector
 The programme is operated by Director-General
of Supplies and Disposals
 The items of govt. purchases divided into six
groups:
 Group-I : Items purchased from large scale units
 Group-II : Items purchased from large scale units
but sub-contracted to ancillaries and SSI
 Group-III : Items purchased from LSU & SSI
 Group-IV : Items purchased entirely from SSI
 Group-V : 75% of requirement from SSI
 Group- VI : 50% of requirement from SSIPrepared by: Dr. Parul Chotalia,
Director, TNRCMS, Rajkot

15.  Work as indirect marketing assistance
 Work for ancillary development
 Promote sub-contracts between large and
medium scale industries
 Intermediary as Trade Centres for SSI & Buyers
 Work for promotion of SSI export
 Regularly collects and assimilates useful statistics
about SSI by surveys and studies includes:
industry outlook reports, industry prospect
sheets, area surveys, market surveys…
Prepared by: Dr. Parul Chotalia,
Director, TNRCMS, Rajkot

16.  It was established by the Union Ministry of
Industry in 1955
 It was set up with the objective of supplying
machinery and equipment to SSI on hire-
purchase basis
 It is established to promote, aid and foster
the growth of SSI
 It has been re-orienting its strategies for
developing competitive ability in small scale
units
Prepared by: Dr. Parul Chotalia,
Director, TNRCMS, Rajkot

17.  It offers an integrated package of financial
services of long range interest to small scale
sector
 Its focus is on the direction of helping SSI :
 To strengthen their efforts at technological
upgradation
 Adoption of new processes and technologies
 Diversification and improvement of R & D
capabilities
 Export orientation
Prepared by: Dr. Parul Chotalia,
Director, TNRCMS, Rajkot

18.  It is founded in 1990
 Wholly owned subsidiary of IDBI
 ACTIVITIES:
 Refinancing of term-loans granted by SFCs/SIDCs
 Provides term-loan and equipment finance to
existing well-run small scale units
 Provides pre-shipment credit in foreign currency
to SSIs
 Direct equity investment in SSIs
Prepared by: Dr. Parul Chotalia,
Director, TNRCMS, Rajkot

19.  Financial assistance to enable well-run
export-oriented units to acquire ISO
9000 series certification
 Provides assistance for infrastructure
development
 Assist in creation of marketing
channels and development of
industrial areas
Prepared by: Dr. Parul Chotalia,
Director, TNRCMS, Rajkot

20.  Introduced various schemes:
 Seed capital
 National Equity Fund
 Mahila Udyam Nidhi
 Self Employment Scheme for Ex-servicemen
 Self Employment Scheme Under Prime
Minister’s Rozgar Yojana
 Micro Credit Scheme
 Rural Industrial Programme
Prepared by: Dr. Parul Chotalia,
Director, TNRCMS, Rajkot

21.  Established on 1st July 1964 as an apex
national development bank in the field
of industrial finance in India
 For the first 12 years functioned as a wholly
owned subsidiary of RBI
 IDBI Assistance
 Project costing more than Rs. 3 crore are
provided direct assistance under various
schemes of IDBI
Prepared by: Dr. Parul Chotalia,
Director, TNRCMS, Rajkot

22.  Projects costing less than 3 crore,
comprising small and medium size units,
village and cottage industrial units in tiny
sector are given assistance by way of re-
financing
 Criteria for refinance assistance:
 Cost of project should not exceed Rs. 3
crore
 Interest rates and other terms and
conditions of loans as per stipulation
made by IDBI Prepared by: Dr. Parul Chotalia,
Director, TNRCMS, Rajkot

23.  TCOs provides consultancy services and
counseling to Small Scale Entrepreneurs
for preparation of :
 Techno-economic reports
 Market surveys
 Modernization and diversification
programmes
 Preparing applications to financial
institutions and banks
Provides these services at reasonable
rates...
Prepared by: Dr. Parul Chotalia,
Director, TNRCMS, Rajkot

24.  Subsidy ranging 50% to 75% of the TCOs
fees subject to certain ceiling is
provided by IFCI to TCOs for passing it
on to the beneficiary units
 Facilitate small scale and ancillary units
to put together modernization packages
and adopt improved and updated
technology and methods of
production... Prepared by: Dr. Parul Chotalia,
Director, TNRCMS, Rajkot

25.  Over 16 TCOs are currently
functioning in different parts of
the country
Prepared by: Dr. Parul Chotalia,
Director, TNRCMS, Rajkot

26.  Set up in most states to promote the SSI
 Perform the following functions:
 Distribution of raw materials
 Provide marketing assistance
 Operate industrial estates and develop
industrial plots
 Supply machinery on hire-purchase basis
 Manage units taken over by the Govt.
 Grant financial assistance
Prepared by: Dr. Parul Chotalia,
Director, TNRCMS, Rajkot

27.  The programme of establishing industrial estate
started in 1955
 Objectives:
 Encouraging and promoting SSI
 Promoting decentralized industrial development
in small towns and large villages
 Provide built in factory sheds, power and water
facilities, roads, godowns, common facility
services and workshops
 Assisting growth of ancillary industries in the
townships surroundings major industrial
undertakings
Prepared by: Dr. Parul Chotalia,
Director, TNRCMS, Rajkot

28.  Types of Industrial Estates:
 General Purpose or Composite
Industrial Estates
 Ancillary Industrial Estate
 Functional Industrial Estate
 Flatted Industrial Estate
 Special Purpose Industrial Estate
 Rural Industrial Estate
Prepared by: Dr. Parul Chotalia,
Director, TNRCMS, Rajkot

29. Prepared by: Dr. Parul Chotalia,
Director, TNRCMS, Rajkot

30.  Established in 1970 as an autonomous non-
profit society to assist export promotion
 Plays a role of catalyst/medium
 It emphasize on specific products, specific
markets and specific buyers following the
concept of selectivity
 Assists the SSI in form of technical guidance
through product adaption and amendment,
product development, trade fairs, buyer-
sellers meet, etc.
 Compiles and brings out country bulletins to
convey information to exportersPrepared by: Dr. Parul Chotalia,
Director, TNRCMS, Rajkot

31.  A fully Govt-owned organization
 India’s premier premier trading house
 Assists the SSI in developing a
reliable supply base for increasing
their exports
 Assists in upgrading the quality of
products, technical expertise, supply
of equipment and machinery at low
interest rates
Prepared by: Dr. Parul Chotalia,
Director, TNRCMS, Rajkot

32.  Formulated in 1981
 Provides strength to potential small scale
units
 Export consortium of small industries can be
formed by 10 or more small scale units for
selected items/products manufactured by
them
 Assists the member units in organized
marketing efforts, negotiate and obtain
orders, establish distribution channels and
organizes marketing and sales promotion
programmes
Prepared by: Dr. Parul Chotalia,
Director, TNRCMS, Rajkot

33.  Established in 1966
 Functions as catalyst for the
promotion and strengthens industrial
co-operation
 Its marketing assistance role:
 Opens branches, establishes godowns
and sales depots
 Undertakes publicity programmes to
promote salability of the products
Prepared by: Dr. Parul Chotalia,
Director, TNRCMS, Rajkot

34.  Organizes/encourage participating in
exhibitions
 Establishes liaison/link with
prospective consumers within and
out-side country
 Conducts/commissions market
research and surveys and provides
information to group members
Prepared by: Dr. Parul Chotalia,
Director, TNRCMS, Rajkot

35.  ECGC is an export promotion co. that
works under the command of Dept. of
commerce, Ministry of Commerce &
Industry and Govt. of India
 It offers covers of credit risk insurance
to exporters
 Assistance to SSI:
 Offers insurance protection to exporters
against payment risk
Prepared by: Dr. Parul Chotalia,
Director, TNRCMS, Rajkot

36.  Makes it easy to obtain export finance
from banks/financial institutions
 Provides information on credit-
worthiness of overseas buyers
 Assists exporters in recovering bad
debts
 Offers assistance in export-related
actions
Prepared by: Dr. Parul Chotalia,
Director, TNRCMS, Rajkot

37.  Established in 1963 as an autonomous
organization to promote small industry
exports
 Renders services in regards with training
and research
 Organizes research studies and publishes
the data in interest to the small scale
sector
 Recent innovative services like preparation
of film documentary on “success story of a
small manufacturer-exporter”Prepared by: Dr. Parul Chotalia,
Director, TNRCMS, Rajkot

38.  Established in January 1982
 Provides financial assistance to
exporters and importers
 EXIM Banks export financing schemes
comprise of the following:
 Direct financial assistance to Indian
exporters
 Pre-shipment credit to Indian exporters
for purchasing raw-materials to
facilitate production for export
Prepared by: Dr. Parul Chotalia,
Director, TNRCMS, Rajkot

39.  Refinance of export credit to
commercial banks authorized to deal
in foreign exchange
 In 1984, EXIM introduced a new
financial programme to support
deemed exports in India which result
in foreign exchange earning or
savings of foreign exchange.
Prepared by: Dr. Parul Chotalia,
Director, TNRCMS, Rajkot

40.  First national level development bank
 Set up in 1948, soon after
independence by an Act of Parliament
 Provides medium and long term
finance to eligible industrial concerns
in the country
 IFCI’s activity classified into two:
 Project Financing Operations
 Promotional Activities
Prepared by: Dr. Parul Chotalia,
Director, TNRCMS, Rajkot

41.  Project Financing Operations
 Benefit to medium-large and large sized
industrial projects organized in co-
operative or corporate sector
 Provide support measures to improve
productivity of human and material
resources and accelerate the process of
industrialization
 It participates with IDBI and ICICI to
provide a range of services
Prepared by: Dr. Parul Chotalia,
Director, TNRCMS, Rajkot

42.  Promotional Schemes
 Divided into three categories:
 Consultancy Fee Subsidy Schemes
 Interests’ Subsidy Scheme
 Assistance Schemes
Prepared by: Dr. Parul Chotalia,
Director, TNRCMS, Rajkot

43.  Consultancy Fee Subsidy Schemes
 Scheme of subsidy for meeting cost of
feasibility studies to small entrepreneurs in
rural, cottage, tiny and small scale sector
 Scheme of subsidy for promotion of
ancillary and small scale industries
 Scheme of subsidy to new entrepreneurs
for meeting cost of market
research/surveys
 Scheme of subsidy for providing marketing
assistance to SSI Prepared by: Dr. Parul Chotalia,
Director, TNRCMS, Rajkot

44.  Scheme of subsidy for revival of sick units in
tiny and small scale sector
 Scheme of subsidy for implementing
modernization programme of small scale
sectors
 Scheme of subsidy for control of pollution in
small and medium scale units
 Interest’ Subsidy Scheme
 Interest subsidy for Self Development and Self
Employment of Unemployed Young Persons
Prepared by: Dr. Parul Chotalia,
Director, TNRCMS, Rajkot

45.  Scheme of interest subsidy to women
entrepreneurs
 Interest subsidy for encouraging
adoption of indigenous/local technology
 Scheme of interest subsidy for
encouraging quality control measures in
SSI
 Assistance Scheme
 Scheme of assistance for encouraging
quality control measures in small scale
sector Prepared by: Dr. Parul Chotalia,
Director, TNRCMS, Rajkot

46.  IRBI-Industrial Reconstruction Bank of
India
 IFCI-Industrial Finance Corporation of
India
 ICICI-Industrial Credit and Investment
Corporation of India Ltd.
 EDII-Entrepreneurship Development
Institute of India
 IRDP-Integrated Rural Development
Programme Prepared by: Dr. Parul Chotalia,
Director, TNRCMS, Rajkot