This document discusses entrepreneurial support systems for micro, small and medium enterprises (MSMEs) in India. It outlines how enterprises are classified based on investment levels, and describes various policy initiatives, financial support schemes, and the role of District Industries Centers in promoting MSMEs. Concessions, incentives, and export promotion facilities aim to generate employment, disperse industries across areas, and earn foreign exchange through supporting small businesses.

1. Entrepreneurial Support System
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2. Learning Objectives (LO):
2
 To understand the concept of Micro, Small and Medium Enterprises &
their available Export Promotion facilities;
 To discuss policy & development of the small scale industries in India;
 To explain concession and Incentive facilities available for small business
enterprises;
 To know the different financial support schemes;
 To understand the role of DIC (District Industries Centre)

3.  Micro, Small and Medium Enterprises DevelopmentAct 2006.
 Concessions and Incentives,
 Financial support schemes,
 DIC (District Industries Centre’s role and functions),
 Policies regarding SSI sector,
 Export Promotion facilities for SMEs and GlobalVision for
Entrepreneur.
3

4.  Enterprises have been classified broadly into:
 Enterprises engaged in the Manufacture / production of Goods pertaining to
any industry; &
 Enterprises engaged in providing / Rendering of services.
4

5.  Manufacturing enterprises have been defined in terms of investment in plant and machinery
(excluding land & buildings) and further classified into :
 Micro Enterprises - investment up to Rs.25 lakh.
 Service enterprises have been defined in terms of their investment in equipment (excluding
land & buildings) and further classified into: -
 Micro Enterprises – investment up to Rs.10 lakh.
5

6.  Manufacturing
enterprises
 Small Enterprises
- investment
above Rs.25 lakh
& up to Rs. 5
crore
 Service enterprises
 Small Enterprises
– investment
above Rs.10 lakh
& up to Rs.2
crore.
6

7.  Manufacturing enterprises
 Medium Enterprises - investment above Rs. 5 crore & up to
Rs.10 crore.
 Service enterprises
 Medium Enterprises–investment above Rs. 2 crore & up to
Rs. 5 crore
7

8. 8

9. 9
As per Ministry of small scale industries notification dated 5th October,
2006, the investment in Plant & Machinery to in respective limits is the
original price, irrespective of whether the plant & machinery are new or
second hand. In respect of imported machinery, the following is to be included in
calculating the value:
 Import duty (excluding miscellaneous expenses such asTransportation from the port
to the site of the factory);
 Shipping charges;
 Customs clearance charges and
 Sales tax or value added tax.

10. 10
 As per the said notification, further, the following are excluded while
calculating the investment in plant & machinery:
 Equipments such as tools, jigs, dies, moulds and spare parts of maintenance
and the cost of consumable stores;
 Installation expenditure for plant & machinery;
 Research & development equipment and pollution control equipment;
 Power generation set and extra transformer installed by the enterprise as per
the regulations of the state electricity board;

11. 11
 The following are excluded while calculating the investment in plant
& machinery:
 Installation of cables, wiring, bus bars, electrical control panels (not
mounted on individual machines), oil circuit breakers or miniature
circuit breakers which are necessarily to be used for providing electrical
power to the plant & machinery or for safety measures;
 Gas producer plants;
 Fire fighting equipment;

12. 12
 The following are excluded while calculating the investment in plant
& machinery:
 Charges paid for technical know-how for assembly of plant &
machinery and
 Such storage tanks which store raw materials and finished products
only and are not linked with the manufacturing process.
 Bank charges and service charges paid to the national small industries
corporation of the state small industries corporation;

13. 13
SMEs have strategic importance for each national economy due a wide
range of reasons such as
 Simpler way to create new job positions,
 Increasing GDP and
 Rising standard of population
Therefore government are supporting entrepreneurship and encouraging
and supporting people who dare to start their own business.
Every surviving and successful business means new jobs and
growth of GDP.

14. 14
 Therefore, Council of Ministers and entity governments provide full
coordination of activities through numerous governmental
institutions (like chambers of commerce, employment bureaus, etc.) and
NGOs dealing with entrepreneurship and SMEs.

15. 15
 Governments create different types of support institutions:
i) To provide information on regulations, standards, taxation, customs duties,
marketing issues;
ii) To advise on business planning, marketing and accountancy, quality control and
assurance;
iii) To create incubator units providing the space and infrastructure for business
beginners and innovative companies, and helping them to solve technological
problems, and to search for know-how and promote innovation; and
iv) To help in looking for partners. In order to stimulate entrepreneurship and improve
the business environment for small enterprises.

16. 16
 Training,
 Marketing Assistance,
 Promotional Schemes,
 Concession on Excise Duty and
 Credit Facility to MSME
Credit to micro, small and medium scale sector has been covered under priority sector lending by
banks. Small Industries Development Bank of India (SIDBI) has been established as the apex institution for
financing the MSME. Loans upto Rs. 5 lakhs are made available by the banks without insisting on
security/guarantee. Further Credit Guarantee Fund for micro, small and medium enterprises has been set
up to provide guarantee for loans to MSME up to Rs. 25 lakhs extended by Commercial Banks and some
Regional Rural Bank.

17. 17
All the State Governments provide technical and other support services to small units
through their Directorates of Industries, and District Industries Centers. The
details of the scheme vary from state to state, the following are the common areas of
support.
1. Development and management of industrial estates
2. Suspension/deferment of SalesTax
3. Power subsidies
4. Capital investment subsidies for new units set up in a particular district
5. Seed Capital/Margin MoneyAssistance Scheme
6. Priority in allotment of power connection, water connection.
7. Consultancy and technical support

18. 18
Government of India runs a scheme for giving National Awards
to micro, small and medium scale entrepreneurs providing quality
products in 11 selected industry groups of consumer interest. The
winners are given trophy,certificate and a cash price of Rs.25000/- each.
Through framing and implementing suitable policies and
promotional schemes, government play supportive role in developing
entrepreneurs.

19. 19
 Have a place of pride in India because they have potential among other for
 Generating employment,
 Dispersal of manpower to semi-urban & rural areas, and
 Earning foreign exchange etc.
 SSI even would absorb semi or un skilled persons
 Growth or gestation period of SSI is very short as compare to large scale,
 Large units mostly concentrated in metropolitan cities as a result people migrate in
large nos. from village to cities which creates social, environmental & personal
problems. Whereas SSI are mostly established in small towns & villages to satisfy the
local demand.

20. 20
Government for the first time announced a separate small scale industries (SSIs) policy in
August 1991. This policy promises to meet 100% credit demand of small & tiny
industries.
The policy Highlights are –
1) The Small Industries Development Organization (SIDO) has been recognized as the nodal
agency to support the SSIs export promotion.
2) An export development center would be set up in SIDO to serve the SSIs through its
network of field officers to further augment export activities of the sector.
3) A Technological Development Cell (TDC) will be set up in SIDO which could provide
technology inputs to improve quality & competitiveness of products of SSI sector.

21. 21
The policy Highlights are –
4) The Scheme for the Handloom sector which contributed 30% of the total textile
production in the country would be redesigned keeping in view the local & regional
needs. It would be the policy of government to promote handloom to sustain
employment in rural areas & to improve quality of life for handloom weavers.
5) The National Small Industries Corporation (NSIC) would concentrate on marketing of
mass consumption items under common brand name & organizational links between
NSIC & SSIDCs would be established.
6) The scope of the national equity fund scheme will be widened to cover projects up to
Rs. 10 lakhs for Equity Support (up to 15%)

22. 22
The policy Highlights are –
7) The Single Window Loan Scheme has also been enlarged to cover projects up to
Rs. 20 lakhs with working capital margin up to Rs. 10 lakhs.
8) SSIs can have equity support to the extent of 24 % of the investment from the
medium & large scale industries, public undertakings, NRIs or foreign
investment.
9) Limited partnership act was proposed to be introduced.
10) To avoid delayed payments by the large units, factoring services through SIDBI
was proposed. Some of the title of important schemes are – Soft Loan Schemes,Seed
Capital Assistance,Risk Capital Assistance,Concessional Schemes,etc.

23. 23
Source: http://dcmsme.gov.in

24. 24
 MSMED act was established to provide for facilitating the promotion and
development and enhancing the competitiveness of micro, small and medium
enterprises.
 The previous act i.e. Industrial Development Regulation Act
(IDRA) was restricted only to SSI. However, during last 60 years of
independence, the norms for the promotions and development have changed and
the requirement to motivate the higher and different versions of SSI is felt.
The MSMED Act not only addresses these issues but it also takes care of Micro,
Small and Medium Scale enterprises (“MSM enterprises”).

25. 25
TheAct is operational from October 2,2006.
The MSMEDAct was framed with the following objects:
 To facilitate the promotion and development of micro, small and
medium scale enterprises (MSM enterprises);
 To enhance the competitiveness of MSM enterprises;
 To concentrate on the related matters of MSM enterprises;

26. 26
 Schemes implemented directly by the Ministry of MSME
 Schemes implemented through NSIC
 Schemes implemented through KVIC (Khadi &Village Industries Commissions)
http://www.kvic.org.in
 Schemes implemented through Coir Board
http://coirboard.gov.in
 Schemes implemented by the Office of the DC(MSME)

27. 27
 Any person who intends to establish Micro, Small & Medium enterprise engaged
either in manufacturing of products or providing or rendering of services shall file
Part-I. Once Enterprise starts the production or starts providing or rendering
services then they shall file Part-II of the Entrepreneur Memorandum.
 Validity of Entrepreneur’s Memorandum (Part-I) is two years.
 No Renewal shall be granted.
 Existing enterprise shall file Part-II of Entrepreneurs Memorandum.

28. 28
 Entrepreneur shall have to inform the District Industries Centre
(DIC) in writing within three months of the change
 In case of change in investment in Plant & Machinery or in equipments, the
enterprises, which have already filed Entrepreneurs Memorandum
 In case of change of products & that of services or addition in product or
services, the enterprises which have already filed Entrepreneurs
Memorandum
 Failure to do so is contravention of law and is punishable as specified in
section 27 of MSMED Act.

29. 29
would normally get registered to avail some benefits like –
 Incentives or support given either by the Central or State Govt.
 Marketing assistance
 TechnologyTrainingAssistance
 Arrange exhibitions
 Domestic exhibitions
 International exhibitions
 Space available on lease

30. 30
Sr.
No
.
Benefits available under the act
Whether
available to
Micro
enterprises
Whether
available to
Small
enterprises
Whether
available to
Medium
enterprises
1.
Protection against delayed payments by
buyers of goods/services
Yes
(see Note 1
below)
Yes
(see Note 1
below)
No
2.
Central Governments' measures for
promotion and development [Sec 9 of the
act]
Yes Yes Yes
3.
RBI’s progressive credit policies for
ensuring timely and smooth flow of credit
[Sec 10 of the act]
Yes Yes
Yes
(see Note 4
below)
4.
Reservation of items for manufacture and
production u/s 29B of the 1951Act
Yes
(see Note 2
below)
Yes
(see Note 2
below)
No
Note 1: This benefit shall be available only if the micro/small enterprise has filed memorandum u/s 8 of the act.
Note 2: This benefit is available only to enterprises engaged in manufacturing or production of goods in any scheduled industry.
There is no provision under any law which permits the government to reserve any services for exclusively being rendered only by
micro and small enterprises.

31. 31
Sr.
No
.
Benefits available under the act
Whether
available to
Micro
enterprises
Whether
available to
Small
enterprises
Whether
available to
Medium
enterprises
5.
Preference policies (preference to micro
enterprises in respect of goods and services
procured by Government Departments/aided
institutions/ PSEs) notified by Central/ state
government [Sec 11 of the act].
Yes Yes No
6.
Simplified exit scheme (winding up the
business) u/s 25 of the act.
Yes
(see Note 3
below)
Yes
(see Note 3
below)
Yes
(see Note 3
Below)
Note 3: This scheme shall not apply to companies.
Note 4: As per RBI’s master circular, dated 2-7-2007 lending by banks to medium enterprises is not considered
as “priority sector credit”.

32. 32
INSTITUTIONAL SUPPORT TO
ENTREPRENEURS

33. 33
 Works under the Union Ministry of Industries
 Was set up in 1955
 For aid & foster the growth of SSI in country.
 Provides a wide range of services to promote SSIs.

34. 34
 Its main functions are –
 To provide machinery on hire-purchase of SSIs.
 To provide equipment leasing facility.
 To help in export marketing of product of SSIs.
 To participate in bulk purchase programme of the government.
 To develop prototype of machines & equipments to pass on to SSIs for
commercial production.
 To distribute basic raw material among SSIs through raw material depots.

35. 35
 Its main functions are –
 To help in development & up gradation of technology &
implementation of modernization programmes of SSIs.
 To impart training in various industrial trades.
 To set up SSIs in other developing countries on turn-key basis.
 To undertake the construction of industrial estates.

36. 36
 SIDO is a subordinate office of the department of Small Scale Industries (SSI)
& Agro and Rural Industries (ARI).
 It is an apex body & nodal agency for formulating, co-ordinating & monitoring
the policies & programmes for promotion & development of SSIs.
 The main function of SIDO are classified into
 Co-ordination,
 Industrial Development, and
 Extension

37. 37
 These functions performed through a national network of institutions &
associated agencies created for this reason.
 The SIDO functions through –
 27 offices,
 31 Small industries Service Institutes 9sisi0,
 37 Extension Centers,
 3 Product-cum-Process Development Centers 7
 4 Production Centers.

38. 38
 All SSIs fall under the scope of the SIDO
except those falling within the specialized
boards & agencies like
 KVIC,
 Coir Board,
 Central Silk Board, etc.

39. 39
 Main Functions performed by SIDO in each of its three categories are as
follows –
 Functions relating to Co-ordination
1) To evolve a national policy for the development of SSIs,
2) To co-ordinate the policies & programmes of various state governments,
3) To maintain a proper link with the related Central Ministries, Planning
Commission, State Governments, Financial Institutions, etc.
4) To co-ordinate the programme for the development of Industrial estates.

40. 40
 Functions relating to Industrial Development
1) To reserve items for production by SSIs,
2) To collect data on consumer items imported & then, encourage the setting of
industrial units to produce these items by giving coordinated assistance,
3) To render required support for the development of ancillary units, and
4) To encourage SSIs to actively participate in Government Stores Purchase
Programme by giving them necessary guidance, market advice & assistance.

41. 41
 Functions relating to Extension
1) To make provision of technical services for improving technical process,
production planning, selecting appropriate machinery, preparing ,
2) To collect data on consumer items imported & then, encourage the setting of
industrial units to produce these items by giving coordinated assistance,
3) To render required support for the development of ancillary units, and
4) To encourage SSIs to actively participate in Government Stores Purchase
Programme by giving them necessary guidance, market advice & assistance.

42. 42
•Constituted in 1954 to advice on development of SSIs in the country.
•It is also called as Central Small Industries Board (CSIB).
•The Industries Minister of the Government of India is the chairman of the
SSIB.
It comprises of 50 members including
State Industry Minister,
some members of parliament,
Secretaries of various departments of government of India,
Industry associations &
Eminent experts in the field.

43. 43
 set up to provide consultancy & training to small entrepreneurs.
 All over the country they have 30 branch SISIs in state capital.
 The main functions SISIs include –
 To serve as interface between Central 7 state governments.
 To render technical support services.
 To conduct Entrepreneurship Development Programs.
 To initiate promotional programs.

44. 45
In each district one agency was created to deal with all
requirements of small & village industries which is called as
“District Industries Centre”

45. 46
In Industrial Policy announced by the Government of the
India on 23rd December 1977 laid special stress on the
development of Small Scale, Village & Cottage industries. The
policy statement indicated that the District would be the main
focus of efforts & agency for promotion of small scale, village
& cottage industries would be a new organization called as
“District Industries Centre”

46. 47
 The District Industries Centers (DIC’s) programme was started
in 1978 for promotion of small scale industries in rural areas.
 The DIC’s are pictured as a single window interacting agency at the
district level providing service and support to small
entrepreneurs under a single roof.
 DIC’s are the implementing arm of the central and state
governments of the various schemes and programmes.

47. 48
 To develop Entrepreneurial Skills of people.
 To motivate for self employment.
 To provide all the necessary facility under one roof.
 To reduce regional imbalance of development.
 To courage in migration.

48. 49
 Registration of small industries is done at the district industries centre
and PMRY (Pradhan Mantri Rojgar Yojana) is also implemented by
DIC.
 Prime Minister RozgarYojona (PMRY)
It is a self-employment scheme for educated unemployed youth with eligibility...
a) ClassVIII passed
b)Age – 18 to 35 years (relaxable up to 45 years for SC / ST /Women / Physically
handicapped / Ex-Servicemen)
c) Project up to Rs 2.00 lakh for Industries/Service and Rs 1.00 lakh for Business
d)Annual family income – Rs 40,000/- (Max)

49. 50
 The organizational structure of DICs consists of
 General Manager,
 Functional Managers and
 Project Managers to provide technical services in the areas relevant
to the needs of the district concerned.
 Management of DIC is done by the state government.

50. 51

51. 52
The main functions of DIC are:
 To prepare and keep model project profiles for reference of the
entrepreneurs.
 To prepare action plan to implement the schemes effectively
already identified.
 To undertake industrial potential survey and to identify the types
of feasible ventures which can be taken up in ISB sector, i.e.,
industrial sector, service sector and business sector.

52. 53
 To guide entrepreneurs in matters relating to selecting the most
appropriate machinery and equipment, sources of it supply and
procedure for importing machineries.
 To provide guidance for appropriate loan amount and
documentation.
 To assist entrepreneurs for availing land and shed equipment and
tools, furniture and fixtures.

53. 54
 To appraise the worthiness of the project-proposals received
from entrepreneurs.
 To help the entrepreneurs in obtaining required
licenses/permits/clearance.
 To assist the entrepreneurs in marketing their products.
 To conduct product development work appropriate to small
industry.

54. 55
 To help the entrepreneurs in clarifying their doubts about the
matters of operation of bank accounts, submission of monthly,
quarterly and annual returns to government departments.
 To conduct artisan training programme.
 To act as the nodal agency for the district for implementing
PMRY (Prime Minister RojgarYojana).
 To help the specialized training organizations to conduct
Entrepreneur development programmes.

55. 56
 The Department of small-scale industries was created in 1991, in the
Ministry of Industry to exclusively formulate the policy framework for
promoting and developing small-scale industries in the country.
 These activities are supported by a host of other central/state government
departments, promotional agencies, autonomous institutions, non-
government organizations and so on.
 The range of services cover consultancy in techno-economic and managerial
aspects, training, testing facilities, and marketing assistance through the
agencies created for the specified functions.

56. 57
 The implementation of policies, programmes and schemes for
providing infrastructure and support services to small enterprises is
undertaken through these offices, namely Small Industries
Development Organization (SIDO), Khadi Village and Industry
Commission (KVIC) and Coir Board, National Small Industry
Corporation (NSIC) and various training institutes.

57. 58
 The institutional network can be
broadly classified as
 Central level
institutions/agencies
 State level institutions/agencies
 Other agencies
Fig.: Institutions supporting small-scale industries

58. 59
 National Productivity Council (NPC)
 Indian Institute of Entrepreneurship (IIE)
 National Institute for Entrepreneurship and Small Business Development (
NIESBUD).
 National Science &Technology Entrepreneurship Development Board ( NSTEDB).
 National Institute of Small Industry ExtensionTraining (NISIET)
 State Financial Corporations (SFC )
 State Small Industries Development Corporations (SSIDCS)

59. Review Question
60
 Explain in brief the stages in entrepreneurial process.
 Distinguish between Micro, Small & medium enterprise. Discuss Micro, Small and Medium
Enterprises DevelopmentAct 2006.
 What do you mean by Small-Scale industry? Explain the role of SSI.
 Discuss the support provided by NSIC to small scale industries.
 Explain various activities of SIDO.
 Explain the functions of SISI. Enumerate various types of assistances rendered by it.
 Discuss the important functions of SSIDC.
 Explain in brief the main functions of DIC.

60. A humble efforts……
……..Dr. Giri
61