CHAPTER - 4

INSTITUTIONAL SUPPORT, VARIOUS SCHEMES AND INCENTIVES FOR THE

DEVELOPMENT OF MSMEs IN KERALA

4.1. Institutional Support

The ministry of small-scale industries, Government of India and Government

of Kerala has been playing a major role in the development of the Micro, Small and

Medium Enterprises (MSMEs) in the State. Other than government organizations,

there are a number of NGOs, financial institutions and agencies, which provide

support for the growth of the MSMEs. The terms of reference of this study do not

insist on a thorough look at them. However , it is felt that, as they form part of the

overall development of the MSMEs in Kerala, a brief mention about them would be

desirable. The following are the main institutions which extend support to the

MSMEs, operating in Kerala.

4.1.1. MSME Development Institute (Formerly, Small Industries Service

Institute – SISI)

Micro, Small and Medium Enterprises Development Institute, Trissur

(formerly SISI) is a promotional and development agency under the Small Industries

Development Organization (SIDO) and the Ministry of Small Scale Industry, Govt.

of India. The Institute provides a wide range of need based support and services for

the promotion, development and modernization of small-scale industries in the State

of Kerala and the Union Territory of Lakshadweep. The Institute organizes a

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number of self supporting skill development programmes to promote efficiency and

self confidence among the educated youth and the potential entrepreneurs, which

help them to start their own ventures. Different programmes conducted by the

institute for the past 5 years are given in the Table 4.1.

Table 4.1

Main Activities Conducted by the MSMEs Development Institute, Trissur from 2006-07 to 2010-11

AchievementsSl. No. Name of Activity Unit 2006-

072007-

08 2008-09 2009-10

2010-11

1 Project Profile Nos. 21 28 21 7 11

2Entrepreneurship Skill Development Programme (ESDP)

Courses undertaken Nos. - - 33 41 46

3 Business Skill Development Programme (BSDP)

i Courses undertaken Nos. - 3 3 3 4

ii Persons trained Nos. - 139 79 85 156

4 EDPs – 4/6 weeks duration

i Courses undertaken Nos. 16 5 7 10 8

ii Persons trained Nos. 403 116 209 241 184

5 Management Development Programmes(MDP)

i Courses undertaken Nos. 11 4 8 13 8

ii Persons trained Nos. 267 87 180 287 245

6 Training programme organized under PD account

i Courses undertaken Nos. 23 - 18 17 15

ii Persons trained Nos. 413 - 230 94 134Source: MSME Development Institute Trissur & Economic Review, various issues, state

planning Board Tvm.

116

4.1.2. Directorate of Industries and Commerce Thiruvananthapuram

The Directorate of Industries & Commerce Department is located at Vikas

Bhavan, Thiruvananthapuram, headed by the Director (Industries & Commerce).

This is the functional arm of the Industrial Department for implementing various

industrial activities and is responsible for promoting / sponsoring, registering,

financing and advising MSMEs (Micro, Small and Medium Enterprises) in the State.

The role of the directorate is to act as a facilitator for industrial promotion and the

sustainment of MSME and traditional industrial sector in the State. The

Directorate of Industries and Commerce is the controlling office of the 14 District

Industries Centres. Besides, there are Common Facility Service Centres at

Changanacherry and Manjeri1.

4.1.3. District Industries Centres (DICs)

The District Industries Centers (DICs) were started on May 8, 1978, with a

view to promote SSIs and cottage industries beyond big cities and to generate

employment opportunities in rural and backward areas. In the State of Kerala, 14

DICs are functioning in the district head quarters.

The DICs are envisaged as a single window agency interacting with the

entrepreneurs at the district level. They implement the various schemes and

programmes connected with the industries, on behalf of the Central and State

Government 2. But some entrepreneurs do not view them as service providers.

They are seen only as registering agencies and not as promotional agencies.

The organizational structure of a DIC consists of one General Manager, 4

functional Managers, Assistant District Industries Officers (ADIOs) at Taluk levels

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and Industries Extension Officers (IEOs) at Block level.

Entrepreneurs may file memorandum Part I & Part II (instead of

memorandum filing, the process of registration was prevalent up to 2006) in the

DICs concerned, which will help them to get some financial help, incentives and

facilities from the State and Central Governments.

4.1.4. Kerala Financial Corporation (KFC)

KFC has been incorporated under the SFC Act 1951 and it has its head

quarters at Thiruvananthapuram. It provides financial assistance for starting new

industrial units, and also for the expansion, diversification or modernization of

existing units. Concessional terms are offered to industrial units especially those in

the backward districts. Its main functions are granting of long term loans to SSI

units, underwriting of shares and debentures and guaranteeing the loans raised by the

industrial concerns.

Some other schemes were also introduced by KFC, such as techno craft

assistance and quality certificate schemes3. The Corporation continued its thrust on

lending to the SME segment under the SME Fund Scheme and offered one time

settlement facility to borrowers, so that hard and deserving cases were settled

without recovery steps.

During 2009-10 the Corporation introduced a scheme for women

entrepreneurs offering them the opportunity to avail of loans at a low rate of interest

at 9 percent per annum. Loans to energy saving projects were also offered at a

reduced rate of interest. The Corporation has sanctioned 759 projects at a total cost

of 61593 lakh. Out of this, Rs. 46915 lakh has been disbursed on 502 projects. This

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includes 257 SSI units getting 14678 lakh4. Table 4.2 shows the performance KFC

for the last 5 years.

Table 4.2

KFC- Highlights of Performance for the last 5 year (Rs. In Lakh)

YearApplication

received No.

Application received amount

Applications sanctioned

No.

Applications sanctioned

amount

Disburse-ment

Amount

2006-07 541 22406 461 13583 9725

2007-08 567 28246 526 24557 18643

2008-09 619 43658 580 34910 29394

2009-10 855 79947 759 61593 41953

2010-11 769 59699 742 50736 44353

Source : Annual Report, Kerala Financial Corporation 2009-2010. P. 42, 2010-2011-p.46, Economic Review,2011.p. 135.

Table 4.3. Shows the loan disbursement details of the last 5 years to the SSI

segment.

Table 4.3

KFC Loan Disbursement to SSI Segment

Year No. of Projects Disbursement Amount (Rs. In lakhs)

2006-07 188 3726.52

2007-08 175 4315.90

2008-09 158 6208.54

2009-10 187 12153.53

2010-11 255 10514.61

Source : Economic Review various issues, State Planning Board Tvm.

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4.1.5 Kerala State Industrial Development Corporation (KSIDC)

The Kerala State Industrial Development Corporation (KSIDC) is a

government agency for industrial and investment promotion in Kerala, founded in

1961 with the objective of promoting, stimulating, financing and facilitating the

development of large and medium scale industries in Kerala. It offers professional

guidance and support to potential investors through a comprehensive set of services

that include developing business ideas, identifying viable projects, providing

financial assistance and offering guidance and assistance for implementation.

KSIDC has a proven track record of attracting a commendable volume of investment

to the State5.

4.1.5.1. Industrial Investment Promotion & Facilitation Programme of KSIDC

KSIDC, the premier industrial promotional agency of the State has been

undertaking different types of industrial investment and promotional efforts like

entrepreneur meets, industrial festivals, seminars, workshops, NRI meet, road

shows, Industrial visit to foreign countries, exhibition etc.

4.1.5.2. Industrial Growth Centres (IGC)

KSIDC has already set up full-fledged industrial Growth Centre in

Alapuzha, Malapuram, Kozhikode and Kannur Districts. The Corporation has

chalked out programmes for setting up industrial corridors and gas pipe line from

Kochi to Kasargod and Kochi to Palakkad6.

The financial and physical performance of KSIDC for the last five years is

given in Table 4.4.

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Table 4.4

K S I DC- Physical and Financial Performance from 2006-07 to 2010-11

Sl. No Particulars 2006-

072007-

082008-

092009-

102010-

11A Physical1 Project completed

(a) No. of projects 6 12 5 13 7(b) Aggregate cost(Rs. In crores) 47 35 38 153 83.63(c) Employment (Nos) 306 941 272 1631 196

2 Project under implementation (31.3.2007)

(a) No. of projects 35 29 35 25 28(b) Aggregate cost(Rs. In crores) 516 636 995 1078 157.7(c) Employment (Nos) 6176 3188 9074 4385 1321

3 Projects cleared by KSIDC Board

(a) No. of projects 16 23 11 14 34(b) Aggregate cost(Rs.in crores) 217 339 281 411 700.94(c) Employment (Nos) 1010 2548 1661 - 2831

4 MOU signed with private partied

(a) No. of projects Nil 54 10 1 Nil

(b) Estimated aggregate cost(Rs.incrores) Nil 2414 2734 8000 Nil

B Financial (Rs. in crores)

(a) Gross Sanction (share capital and loan) 112 98.12 95 79.87 214

(b) Disbursement (share capital and loan) 103 61.94 47 54.26 86

(c) Recovery 49 97.13 50 61.17 63(d) Operating profit 42 21.83 22 21.93 28Source : Kerala State industrial Development Corporation, Thiruvananthapuram &

Economic Review various issues from 2006-07 to 2009-10 , Appendix 8.40, and 2010-2011 Appendix 7.40, State Planning Board, Thiruvanathapuram

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Details relating to the private sector assistance by KSIDC for the last five

year is given in Table 4.5.

Table 4.5

Private Sector Units Assisted by KSIDC from 2006-07 to 2010-2011.

Year No. of Units Project Cost (Rs. in Crores)

2006-07 453 4724.49

2007-08 465 4724.61

2008-09 469 4737.77

2009-2010 478 4889.86

2010-2011 26 549.85Source: Economic Review 2006-2007 to 2009-10 , Appendix 8.12, and Economic

Review 2010-11, Appendix, 7.39, State Planning Board Trivandrum..

4.1.6 Kerala Small Industries Development Corporation Ltd. (SIDCO)

Kerala Small Industries Development Corporation Ltd (SIDCO) is a

promotional agency of small-scale industries. In the State, this was set up in the

year 1975. It provides infrastructure, raw-material input assistance, marketing

support, consultancy services, import and export services, technology upgradation,

training programmes, business information etc for strengthening the MSME sector

in the State.

There are 17 major industrial estates in which nearly 729 units are working.

Besides, there are 36 mini industrial estates under the SIDCO as per the statistics

collected upto 31. 03.2010 and the total number of sheds is 4217.

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Details regarding the important activities of the SIDCO from 2006-2007 to

2010-2011 are given in Table 4.6.

Table 4.6

Selected Activities of SIDCO from 2006-07 to 2010-2011

Sl. No Activities 2006-

072007-

082008-

092009-

102010-

11

1

Raw material distributionSSI units assisted for procurement of raw materials(Nos)

120 932 1217 391 398

2 Marketing of SSI Products

2.1 SSI units assisted in marketing of products (Nos) 100 110 250 110 125

2.2Value of SSI products marketed through SIDCO (Rs. in lakh) :-

• Domestic 1820.80 2223.30 3889.10 3821 5017.13

• Export Nil Nil Nil Nil Nil

• Total 1820.80 2223.30 3889.10 3821 5017.13

3Industrial Estates & Infrastructure development (Nos)

3.1 Major estates 17 17 24 24 24

3.2 Sheds available 540 540 1063 1063 1063

3.3 Sheds occupied 436 531 863 863 863

3.4 SSI Units: 694 780 1083 1083 1083

• Working 573 700 948 948 948

• Idle or closed 121 80 135 99 99

Source : SIDCO, Thiruvananthapuram & Economic Review various issues

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4.1.6.1. Marketing Division

The Marketing division of SIDCO provides assistance to small-scale units in

canvassing orders from Government Departments and public sector undertakings by

way of contract marketing and tender marketing. There are seven marketing centers

and seven sales emporium all over Kerala.

The SIDCO participates in exhibitions and trade fairs on behalf of the SSI

sector for the promotion of their products. In the light of government orders from

time to time the SIDCO can supply furniture to government departments without

submitting tenders8.

4.1.7. Kerala Industrial Infrastructure Development Corporation

(KINFRA)

KINFRA was setup by an Act of the State Legislature in February 1993,

aiming at accelerating the industrial development of the State by providing

infrastructure facilities to industries. It has been focusing attention on industrial

infrastructure development, especially the economic development of the industrially

backward regions of the State, by setting up industrial Parks/Townships/Zone etc

equipped with all the facilities required for the entrepreneurs to start an industry.

The industrial parks developed by KINFRA have facilities like developed land or

built-up space, dedicated power, continuous water supply, uninterrupted

communication facilities etc. It actually provides a ready-made manufacturing

environment for starting up industrial units with the minimum of time and cost.

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KINFRA has successfully completed 14 theme based industrial parks in

Kerala in areas such as garments, infotainment, Marine/seafood, Rubber, food

processing etc. Some of the notable achievements are the successful completion of

India’s first international apparel park at Trivandrum, India’s export promotion

Industrial park at Ernakulam, India’s first infotainment park, the film & video park

at Trivandrum and India’s first food processing industrial park at Malappuram.

KINFRA has developed small industrial parks at Trivandum, Ernakulam, Thrissur,

Wayanad, Kannur, Pathanamthitta, Kasargod etc.9.

4.1.8 Kerala Industrial and Technical Consultancy Organization

Limited (KITCO)

KITCO was set up in 1972 by IDBI in association with the Government of

Kerala, other National and State level financial institutions and banks. It provides

comprehensive consultancy services , particularly to small and medium industries

and new entrepreneurs. It also undertakes developmental activities.

The other activities include the preparation of detailed project reports,

valuation of assets, energy audit, appraisal of industrial projects on behalf of banks

and other financial institutions, diagnostic studies for the revival of sick units,

market surveys for specific products and services etc. Thus, KITCO plays a vital

role in the entrepreneurial development of Kerala10.

Financial Institutions

Finance is a key input of production, distribution and development. It is,

therefore, considered as the life blood of industry. During the pre-independence

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period, financial constraints had hampered the rapid development of industries in the

country. After independence, the Government has built up a network of specialized

financial institutions, with a fairly big capital base to provide financial assistance to

all type of industries, including small-scale industries11.

The important financial institutions functioning in Kerala for supporting

industries are :-

4.1.9. Small Industries Development Bank of India. (SIDBI)

The Small Industries Development Bank of India (SIDBI) is a wholly owned

subsidiary of the Industrial Development Bank of India and it commenced its

operation on April 2, 1990. The SIDBI has its head office at Lucknow and a net

work of 5 regional offices and 33 branch Offices all over the country. The Kerala

unit of the SIDBI is at Ernakulam.

The SIDBI is the principal financial institution , for the financing and

development of the MSMEs. It also acts as the nodal agency for the schemes

sponsored by the Government of India. It also extends indirect financial assistance

by way of refinance facilities to the primary lending institutions viz, KFC, KSIDC

and the commercial Banks against their loans granted to small scale units. SIDBI,

Kochi sanctioned 396.92 crore and disbursed 342.27 crore as assistance to various

schemes / programmes during 2009-10, under the small-scale sector including the

service sector in the State12.

The Rural Industrial Programme (RIP) of the SIDBI aims at the creation of

rural employment through enterprise promotion in the rural and semi urban areas

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and also at solving problems such as rural unemployment, urban migration, under

utilization of know-how etc. Table 4.7 shows the details regarding financial

assistance to the small-scale sector by the SIDBI from 2006-2007 to 2010-11.

Table 4.7Small Industries Development Bank of India’s Assistance to Small-Scale

Enterprises (Rs. In Crore)

Sanction and Disbursement

All India Kerala

Performance of Kerala as % of All

IndiaYear

Sanction Disburse-ment Sanction Disburse-

ment Sanction Disburse-ment

1 2 3 4 5 6 7

2006-07 11672 8922 497 457 4.26 5.12

2007-08 16164.4 15087.2 833.48 777.64 5.16 5.15

2008-09 29188 28297.8 1043 912.09 3.57 3.22

2009-10 35521.3 31917.97 397.17 342.58 1.12 1.07

2010-11 42223.3 38824.37 1405.06 768.25 3.33 1.98Source : SIDBI, Ernakulam.

4.1.10 Commercial Banks

Commercial Banks play an important role in the growth and development of

economy in general and of the enterprise sector in particular. Commercial banks in

India comprise the State Bank of India (SBI) and its subsidiaries, nationalized banks,

foreign banks and other scheduled commercial banks, regional rural banks and non-

scheduled commercial banks.

Most of the commercial banks have got specialized units in their

administrative structure to take care of the financial needs of small-scale industrial

units. They mostly provide short-term or working capital loan to small-scale

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industries. The fixed capital needs or the long and medium term needs of the small-

scale industrial units are presently being taken care of by the banks under their

integrated scheme of credit for the small entrepreneurs. Most of the commercial

banks are now geared to provide counselling services to prospective and existing

entrepreneurs13.

4.1.11 Regional Rural Banks

Regional Rural Banks are intended to promote agriculture, trade, commerce

and industry in rural areas. With the restructuring of 139 Regional Rural Banks, the

Government of India , has brought about a radical change in the working of RRBs,

whereby the needs of the SSIs are being attended to.

4.1.12. Co-operative Banks

The Co-operative banks, through their network of branches provide working

capital funds to small entrepreneurs. The Primary Agriculture Co-operative

Societies (PACS) provide funds for the development of agriculture and agriculture

related industries. The primary co-operative Banks play a vital role in meeting the

working capital needs of cottage and tiny industries.

4.1.13. Non-Governmental Organizations

Besides the Government Institutions and Financial Institutions, the country

witnessed the emergence of many NGOs providing training, finance, marketing

support and other assistance to the SSIs. The 1991 SSI policy favoured assistance to

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SSIs through NGOs. In the present scenario, the role of NGOs in the development

of SSIs is very significant.

4.2. Incentives, Subsidies and Facilities to the Small Enterprises in

Kerala

Kerala is industrially backward when compared to the other major States of

India. Micro, Small and Medium Enterprises play a pivotal role in the economic

development of Kerala, because, this sector contributes significantly to the

manufacturing output, employment and exports of the country. The Government of

Kerala has offered a number of subsidies, concessions and exemptions for the

development of industries in Kerala. The various facilities, incentives and subsidies

are discussed below.

4.2.1. Seed Capital Assistance / Margin Money Loan from District

Industries Centres

All newly registered SSI units other than those categories of industries

specifically excluded by the government shall be eligible for assistance under this

scheme. Co-operative societies and public limited companies are not eligible. The

scheme is to assist deserving entrepreneurs in setting up new small-scale industrial

units, by providing soft loans to raise the required equity (margin) insisted on by

the financial institutions. Existing units are not eligible for the loan.

Margin money loans are given as term loans and working capital loan.

Rupees 2.5 lakhs is the maximum limit of Margin Money Loans under term loans

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and working capital loans put together and it shall be limited to 20 per cent of the

project cost in the case of MML against Term Loan requirements and 20 per cent of

the total working capital requirement in case of MML for working capital. It shall

not exceed 50 per cent of the margin stipulated by the financial institution either for

term loan or working capital loan. The promoter will have to raise a minimum of 10

per cent of the project cost and working capital. The interest rate is 6 per cent per

annum. The loan is to be repaid in16 equal quarterly instalments14.

The application for margin money loan must be given to the General

Manager, District Industries Centre, and it shall be submitted within one month ,

from the date of availing of the first installment of term loan or working capital loan

from the financial institution. It is disbursed to the unit through the financial

institution concerned.

4.2.1.1. Margin Money Loan to SSI Units Promoted by Non Resident

Keralites (NRKs)

The objective of this scheme is to assist technically qualified Non-resident

Keralities to start industrial units in Kerala , utilizing the experience and expertise

they have acquired while working in the industrial units in other States or abroad.

The margin money loan shall be limited to 20 per cent of the cost of project or of the

working capital requirement. The maximum limit under this scheme is Rs.

5,00,00015. The rate of interest is 11.5 per cent per annum. The loan shall be repaid

in 24 equal quarterly instalments.

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Details of the margin money loan disbursed by the industrial Department of

Kerala for the past 5 years are given in Table 4.8

Table 4.8

Details of the Margin Money Loan

Margin money loanYear

No. of units Amount released (Rs. in lakhs)

2006-07 367 500

2007-08 80 105

2008-09 321 471.09

2009-10 228 364.22

2010-11 377 600.00Source : Subject Committee – IV, Demand No XXXV11,2011-12, page – 10,

Directorate of Industries and Commerce, Vikas Bhavan, Thiruvananthapuram.

4.2.1.2. Grant-in-Aid to Micro Enterprises Promoted by the Educated

Unemployed Women under Women’s Industrial Scheme (WIS)

Grant-in-Aid scheme is to help the educated unemployed women within the

age group of 18-40 years who have studied up to XII standard or passed ITI

certificate course or undergone any Government sponsored technical course for a

minimum period of 6 months. This scheme aims at promoting women’s industrial

units within the State. Grant-in-Aid shall be given for the following purposes.

(a) Margin Money Grant

Under this scheme, the promoter should meet a minimum of 10 per cent of

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the cost of the project and a minimum of 70 per cent as institutional finance. The

remaining 20 per cent of the project cost, subject to a maximum of 3 lakh will be

given as margin money grant.

(b) Marketing Assistance

Marketing assistance shall be given for the following purposes:

(i) Obtaining BIS, AGMARK, and Bar coding of HACCP certification:

50 per cent of the expenses subject to a maximum of Rs. 1 lakh.

(ii) Developing packaging material: 50per cent of the expenses subject

to a maximum of Rs. 50,000/

(iii) Advertising through media: 50per cent of the expenses subject to a

maximum of Rs. 50,000/-

(iv) Participating in exhibitions / Trade Fares:- 50 per cent of the

expenses subject to a maximum of Rs. 75,000/-

(c) Training

Three days training will be given to the selected beneficiaries to develop

entrepreneurship skills. Further, a specialized training programme shall be arranged,

if necessary16.

4.2.2. State Investment Subsidy

In the light of the industrial policy 1998 and information policy 1998, the

Government of Kerala has issued necessary orders streamlining the State investment

subsidy manual. The rules relating to investment subsidy are as follows:

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(a) An investment subsidy of 10 per cent , subject to a limit of Rs. 5 lakh ,will be

payable on the fixed capital investment of all industrial units set up in the

State except those industries, included in the negative list and notified from

time to time by the Government.

(b) The investment subsidy to the thrust sector will be 15 per cent of fixed

capital investment , subject to a ceiling of 15 lakhs. The thrust sectors are

the rubber based industries, information Technology, agro based industries

including food processing units, readymade garments, Ayurvedic medicines,

mining, marine products, light engineering, bio-technology and 100 per cent

export oriented units.

(c) The investment subsidy to units setup in Idukki, Wayanad and other notified

industrial areas like industrial growth centres and industrial parks will be 10

percent of fixed capital subject to a ceiling of Rs. 10 lakh.

(d) 25 per cent, subject to a ceiling of Rs. 25 lakh for units in the thrust sectors

set up in Idukki, Wayanad and notified industrial areas like industrial growth

centres and industrial parks.

(e) 20 per cent, subject to a maximum of Rs. 25 lakh for I.T. units.

(f) An additional investment subsidy of 5 per cent of the value of fixed capital

investment, subject to a ceiling of Rs. 1 lakh will be payable to the micro and

SSI units established by SC/ST, women, Physically handicapped and ex-

servicemen entrepreneurs17.

Details relating to State investment subsidy disbursed to small enterprises for

the last five years are given in Table 4.9.

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Table 4.9

Details Relating to State Investment Subsidy Disbursed

State investment subsidy disbursedYear

No. of units Amount (Rs. In Lakhs)

2006-07 792 1286

2007-08 180 434.60

2008-09 345 810.50

2009-10 326 889.56

2010-11 273 848.94Source : Subject Committee – IV, Demand No XXXV11,2011-12, page – 8,

Directorate of Industries and Commerce, Vikas Bhavan, Thiruvananthapuram.

The above Table reveals that there is no notable increase in the number of

industrial units which received investment subsidy from 2009 to 2011. The same

pattern is seen in the case of amount disbursed during the last three years. So the

Government of Kerala should give more attention to this area.

4.2.3 Marketing Scheme / Incentive for Marketing

Two types of assistance are contemplated under this scheme- 15 per cent

margin money loan on working capital and 15 per cent Investment subsidy on fixed

capital investment. The scheme is intended to provide finance to organizations for

marketing the SSI products of the State, particularly for setting up show rooms,

installing improved packaging machinery, meeting the expenses for securing quality

certification ,paying up the marketing consultancy services etc.18

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4.2.4. Incentives for Bar Coding

Financial assistance to small-scale industries for registration for bar-coding

under Market Development Assistance Schemes is provided by the D.I.C. All

categories of SSI units which have adopted Bar- code on or after 1st January 2003

are now eligible to get the financial assistance of Rs.15000 (75% of the registration

fee of Rs 20000). It is further clarified that those units which have adopted bar-code

before 1-1-2003 will be reimbursed the old registration fee as was applicable to

SSI/Tiny units earlier.19

4.2.5. Incentives for ISO 9000/ISO 14001 Certification

The scheme provides incentives to small-scale / ancillary undertaking which

have acquired ISO 9000/ISO14001 certification, The salient features of the scheme

are the following.

(a) The scheme envisages reimbursement of charges for acquiring ISO 9000/ISO

14001 certification to the extent of 75 per cent of the expenditure subject to a

maximum of Rs. 75000/ in each case.

(b) The permanent registered Small-scale/ Ancillary/ Tiny/Small Scale Service

Business Enterprises (SSSBE) units are eligible to avail themselves of the

incentive scheme.

(c) A screening committee under the Chairmanship of AS & DC (SSI) has been

set up to consider the applications for the approval of reimbursement.

(d) The scheme shall provide one time reimbursement only against a permanent

SSI registration certification. The amount of Incentives/Subsidy/ Grant

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already availed of for acquiring ISO 9000 or ISO 14001 certification under

any Central Government/ State Government/ Financial Institution Shall be

adjusted against the entitlement of reimbursement20.

Facilities

4.2.6. Training & Development Programme

Training programmes on the various aspects of the management of industry

(Entrepreneur Development Programme, EDP) as well as on plant training and job

oriented training are arranged periodically by the industrial department. EDP

training is arranged in collaboration with other institutions like the Centre for

Management Development (CMD), KFC, IDBI etc. Other major agencies in Kerala

which provide training and development facilities are KIED (Kerala Institute for

Entrepreneurship Development) at Ernakulam, MSME Institute (Micro small and

Medium Enterprises) at Trichur, etc. The NGOs are also providing training facilities

to entrepreneurs.

4.2.7. Credit Guarantee Fund Trust for Micro and Small Enterprises

(CGTMSE)

The availability of bank credit, without the hassles of collaterals / third party

guarantees would be a major source of support to the first generation entrepreneurs

to realize their dream of setting up a unit of their own in the small-scale sector.

Keeping this objective in view, the Ministry of SSI, Government of India , has

launched a credit guarantee scheme to strengthen credit delivery system. To operate

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the scheme, Credit Guarantee Fund Trust for Micro and Small Enterprises was set

up by the GIO and the SIDBI21.

The lender should give importance to project viability and sanction his loan

purely on the primary security of the assets financed. The other objective is that the

lender availing of guarantee facility should endeavour to give composite loans to the

borrowers so that both term loans and working capital facilities are obtained from a

single agency. The guarantee scheme seeks to assure the lender that, if an SSI unit,

which has availed of collateral free credit facilities, fails to discharge its liabilities to

the lender, the Guarantee Trust would make good the loss incurred by the lender

paying up to 80 per cent of the credit facility. Under this scheme, the borrower

should pay guarantee fee to the lending institution.

4.2.8. Prime Minister’s Employment Generation Programme (PMEGP)

The Government of India has introduced a new credit linked subsidy

program called PMEGP from 2008-09 by merging the two schemes viz PMRY and

REGP, which were in operation till 31.03.2008. The Khadi and Village Industries

Commission (KVIC) was approved as the nodal agency for the implementation of

the scheme at National level. In Kerala, the State KVIC Directorate, State Khadi

and Village Industries Board (KVIB), District Industries Centres (DICs) and Banks

are the agencies for the implementation of the scheme.

The maximum cost of the project/ unit admissible under manufacturing

sector is 25 lakh and in business / service sector is 10 lakh. The beneficiary

contribution of general category is 10 per cent and that of special category is 5 per

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cent. The balance amount of the total project cost will be provided by banks as term

loan / working capital/ cash credit22.

Levels of Funding under PMEGP

Categories of Beneficiaries under PMEGP

Beneficiaries contribution (Margin of

project cost)

Rate of subsidy (of project cost)

Location of Project / Unit

Urban RuralGeneral Category 10%

15% 25%

Special Category (including SC/ST/OBC/Minorities/Women/ Ex-service men/Physically handicapped, Hill and Boarder area etc)

5% 25% 35%

Source: A guide for investors to set up enterprises, compiled & edited by DIC Kannur, p. 21.

Eligibility Conditions of Beneficiaries

• Any individual above 18, who has passed the VIII standard .

• Assistance will be available only for new projects.

• Existing units and the units already availed of Government subsidy are not

eligible.

• Self Help Groups, Institutions registered under Societies Registration Act

and Charitable Trust are also eligible for getting assistance under PMEGP.

Banks will take their own credit decision on the basis of the viability of each

project. Normal rate of interest shall be charged. Repayment schedule may range

between 3-7 years.

138

References

1. www.dic.kerala.govt.in.2. Khanka, S.S. (2010), Entrepreneurial Development, New Delhi: S. Chand

and Co. Ltd, p. 163.3. Vinod, A. (2010), Entrepreneurship Development, Calicut: Calicut

University Central Co-Operative Stores Ltd, pp. 98-99.4. Government of Kerala (2010), Economic Review, Trivandrum: State

Planning Board, p. 192.5. Ibid., p.192.6. Ibid., p.193.7. Ibid., p.1968. Kerala SIDCO (2009), A hand Book, Thiruvanathapuram: p.1.9. Government of Kerala, State Planning Board, op.cit., p. 194. 10. Vinod, A, op.cit., p. 95.11. Desai, Vasant (2006), Small-Scale Industries and Entrepreneurship, Mumbai:

Himalaya Publishing House, p. 162.12. Government of Kerala, State Planning Board, op.cit., p. 192.13. Vinod, A, op.cit. p. 94.14. Industries Executive Officers Association (2011), Diary,

Thiruvanathapuram: p.34.15. Ibid., p. 35.16. Government of Kerala (2011), Letter No.10224/B2/Dt. 4.7.2011,

Thiruvanathapuram: Industries Department.pp-1-3.17. Vinod, A, op.cit., pp. 85-86. 18. Industries Executive Officers Association, op.cit., p. 46.19. Ibid., p.34.20. Ibid., p.44.21. Ibid., p. 38-39.22. Government of Kerala,(2011), Background Paper on MSMEs, Formulation

of Twelfth Five Year Plan, Thiruvanathapuram: State Planning Board, p.7.