b.b.a-sem-2-gsi- small scale n cottage industries
TRANSCRIPT
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SMALL-SCALE & COTTAGE INDUSTRIES
Kunal Upadhyay
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INTRODUCTION
• According to 1949-50 finance-commission
– A small scale industry operated with 10-50 labours– A cottage Industry operated with help of family
members as whole time or part time occupation– Small scale Industries highly located in urban area– Cottage Industries located in rural area – Small scale industries classify into two category
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Cont…• Traditional Small Scale Industries– Make use of traditional method of production– Handicrafts with help high-skill workmanship
• Mordent Small Scale Industries– Make use of modern technology like cycle parts,
razor blades
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CLASSIFICATION OF SSI
• The industrial policy of 1977 has classified the SSI as– Small-Sector Industries– Ancillary Industries (subsidiary)– Tiny Unit
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Cont…• Those units having the investment not more
than Rs.10 lakhs known as SSI• Those units having the investment not more
than Rs.15 lakhs known as Ancillary Industries• Those units having the investment not more
than Rs.1 lakhs known as Tiny unit• After period of time in 1997 the investment
limit for SSI & Ancillary & tiny unit was raised to Rs. 3 crores and Rs.25 lakh respectively.
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IMPORTANCE OF SSI IN INDIA
• Employment– The cottage and small scale ind. Based on labour
• More output with less Investment– Labour intensive Ind. – They can adapt changed as per market demand
• Export Earning– Exports product like handicrafts, embroidery,
handloom– 30% export earning based on these industries
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Cont…
• Labour Intensive• Low Gestation Period– Starts in low period of time– Based on labour intensive Ind.
• Decentralized economy and more even distribution of Income – Require less capital and provide large number of employment
• Balanced regional Growth– Easily set up in different part of country as the use local raw
material, labour, skill
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Cont…
• Saving in Social cost– like infrastructure road, power supply, housing
provision for drinking water, health care, education facilities
• Use of locally available inputs– Like use of land, forest, animal waste.
• Subsidiary industries – Also provide semi finished product to large scale
industries like nut n bolt, carriers for bicycle
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Problems of SSI
• Problem of finance• Problem of Availability of Raw Materials• Problem of Marketing• Low-Level Technology• Competition from Large-Scale Industries• Sickness• Lack of infrastructural facilities• Competition from imported Goods and MNCs
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Promotional Measures for Small Industries
• Intuitional Arrangement– The National Small Industries Corporation– State Financial Corporation– All India Handlooms and Handicrafts Board– The Khadi and Village Industries Commission
• Financial Assistants– Govt. provide credit for starting of the factory– Machinery, tools, renovation and modernization of
plants
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Cont…• Technical support– Small Industries Development provides technical
support & advice to SSI– The Govt. set up two institutes for of design to
help SSI (chemical electrical and metallurgical Industries )
• Marketing Support– The state Govt. the khadi and village industries
commission & all India handloom board have started their retail stores for popularized SSI
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Cont…
• Reservation Policy• Establishment of Industries Estates– Under this programme Govt. acquired suitable
pieces of land & developed also provide facilities water, road, electricity, banking and postal service.
• Provision of Raw-Material & Machinery– In order to overcome the problem of raw material
SSI use out of date machinery Govt.
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Cont…
• Store-purchase policy of the Govt.– Govt. provide 15% discount on purchase of SSI
products• Fiscal Incentive– Govt. provide tax holiday for undertaking of SSI
• Financial Support during Five-Year Plans– First Plan (1951-56) Rs.42 crores– Second Plan (1956-61) Rs.187 “– Eighth plan (1992-97) Rs.6334 “
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Industrial policy 1991 & SSI• Investment limit in plant & machinery– Rs.35lakhs to 60lakhs for SSI– Export oriented units Rs.45lakhs to 70lakhs for
Subsidiary industries• Financial Support– Non active partner & new partner extent capital
investment– Equity participant by non SSI up to 24% share
holding• Marketing policy
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Cont..
• The policy ensuring larger production and better quality of products through modernization of units
• Special measures for the development of handloom, handicrafts, khadi and village industries
• The policy provides for training, managers to simplify the rules and procedures
• Single Window Scheme
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• Set up by the government of India in April 1990• Principal Development Financial Institution for :
- Promotion - Financing- Development of Industries in the small scale sector and -Co-ordinating the functions of other institutions engaged in similar activities.
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Function of SIBDI• For setting up new micro and small enterprises and
for expansion, modernization, diversification• To discount and rediscount bill arising from the sale
of machinery by SSI• To provide beginning capital and soft loan assistance • To provide direct assistance as well as refinance for
SSI• To provide technical, leasing and other services to
the SSI • To provide financial support to SSI for providing
limited raw materials and marketing
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Performance & Progress of the Bank
• SIDBI retained its position in the top 30 Development Banks of the World in the latest ranking of The Banker, London.
• As per the May 2001 issue of The Banker, London, SIDBI ranked 25th both in terms of Capital and Assets.
• To initiative steps for technological up- gradation and modernization of existing units
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Cont…
• To extend channels for marketing the products of SSI
• To promote employment in sub-urban areas• A single window scheme for enlarged to cover
more units• Refinance facility • The bank has also set up a venture capital to
provide assistance to small entrepreneurs
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State Financial Corporation (SFC’s)
• The industrial Development Bank of India & the Industrial Reconstruction Bank of India were established & provide financial support to Industries
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Financial Resources of the SFC’s
• Their own share capital• Income from investment and repayment of
loan• Sale of bonds• Loans from the IDBI• Borrowing from the Reserve Bank of India• Deposits from public• Sometimes loans from the State Government
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Industries Eligible for Financial Assistance from the SFC’s
• Manufacture, processing of goods• Mining activities• Generation & distribution of electricity• Hotel Industries• Transport of passenger• Packing industries• Fishing• Maintenance, repair, testing and servicing
machinery
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Financial Assistance by the SFC’s
• Loans & subscription to debentures of industrial concern repayable within a period not exceeding 20years
• Providing guarantee for loans raised by Industrial units from commercial bank
• Providing guarantee for deferred payments in cases where industrial units have purchased capital goods on a differ payment
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Cont…
• To underwrite the issue of shares, bonds and debentures of industrial concerns
• To subscribe to shares, bonds & debentures of industrial units
• Main function of SFC’s to grant loans to Industrial units
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Industrial assistance by the SFC’s
Year Rs (in crores)
1980-81 284
1985-86 608
1990-91 1,260.01
1997-98 15,560
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National Small Industries Corporation (NSIC)
• NSIC was established in 1955. own and managed by the central Govt. o India
• Head office at Delhi and Regional offices at Bombay, Madras and Calcutta
• NSIC provide assistance to SSI through the provision of finance, making available raw-material and machinery
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Nature or Assistance by the NSIC
• Supply of machinery on hire-purchase basis• Securing purchase contracts from Central Govt.
stores purchase agencies• Providing training workers and supervisors at
prototype development centers at okhla, Rajkot• Management of Industrial Estate• Distribution of limited raw materials needed by
SSI• Helping promotion of exports SSI goods
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State Industrial Development Corporations (SIDCS)
• Many states Govt. and Union Territories have established sin 1960 SIDCS
• Main aim of SIDCS is to promote industrial development of respective States and Union Territories
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Services of SIDCS
• Provide financial assistance like direct investment, loans, guarantees, loan for deferred payments
• State like Karnataka and Bihar the SIDC are empowered to take special activities like managing estates, generation of electricity
• As at the end of June 1980 total financial assistance by the SIDCs was 260 crores