INSTITUTIONAL SUPPORT

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INSTITUTIONS TO ASSIST SSI ARE TWO TYPES

i) State Level Institutions1. State Directorate of Industries2. State Small Scale Industries development

Corporation (SSIDC) 3. District Industries Centers (DICs)4. State Finance Corporations(SFCs)5. Technical Consultancy Organization(TCOs)6. State Industrial Area Development Board

(SIADB)

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ii. Central Government Institutions1. Department of Small Scale Industries (DSSI)2. Small Scale Industries Board(SSIB)3. Small Industries Development Organisation(SIDO)4. National Small Industries Corporations(NSIC).5. Industrial Credit and Investment Corporation of India(ICICI)6. Industrial Finance Corporation of India (ICFI)

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STATE SMALL INDUSTRIES DEVELOPMENT CORPORATION

(SSIDC)Under the companies Act, SSIDC were started in 1956 in all

the states.These State Government Undertakings take care of the

growth and development needs of village industries , tiny industries and small industries.

The main functions of SSIDC are i. Procurement and distribution of scarce raw materialsii. Supply of machinery on hire –purchase basisiii.Providing assistance for marketing of the products of small

scale units

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iv. Construction of industrial estates/sheds, providing allied infrastructure facilities and their maintenance.

v. Extending seed capital assistance on behalf of the State Governments.

vi. Providing management assistance to production units.

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SMALL SCALE INDUSTRIES

BOARD(SSIB)SSIB was started in 1954 by the Central Government with

the objective of developing small-scale industries throughout the country.

The development work of small-scale industries involves various Ministries and Departments and other factors like land owners, financial institutions etc.

The Director of the SSIB advises the Government about various development activities of small industries and related matters

The committee governing SSIB consists of Industries Minister(as chairman) and various Secretaries, Member of Parliament , State Government Industry Ministers and the Committee

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DISTRICT INDUSTRIES CENTERS (DICs)/SINGLE WINDOW CONCEPT

The District Industries Centres (DICs) programme was started during 1978 for promotion of small-scale industries in rural areas.

Services and Support to small entrepreneurs are provided under a single roof through the DICs

Registration of small industries is done at the District Industries Centres

The organizational structure of DICs consists of one General Manager, 4 Functional Manager and three Project Managers to provide technical service

Management of the DICs is done by the State Governments 7

Functions Of DICsi. To conduct industrial potential surveys keeping in view the

availability of resources in terms of material and human skill, infrastructure, demand for product etc., to prepare techno-economic surveys and identify product lines and then to provide investment advice to entrepreneurs.

ii. To prepare action plan to effectively implement the schemes identified

iii. To guide entrepreneurs in matters relating to selecting the most appropriate machinery and equipment, sources of its supply and procedure for procuring imported machinery , if needed , assessing requirements for raw materials etc.

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iv. To appraise the worthiness of the various proposals received from entrepreneurs.

v. To assist the entrepreneurs in marketing their products and assess the possibilities of ancillarisation and export promotion of their products.

vi. To undertake product development work appropriate to small industries.

vii. To conduct artisan training programmes.• About 430 District Industries Centres (DICs) have been set up

covering major districts of the country leaving out the metropolitan cities and some new districts

TECHNICAL CONSULTANCY ORGANISATION (TCOs)

`In various states TCOs were established to provide total consultancy services as a package under single roof .

Overall 17 organizations were started by the group of financial organizations like IDBI , IFCI and ICICI.

The activities of TCOs are as followsi. Identify potential industrial projects and prepare feasibility survey

reportsii. Evaluation of various project proposals put up by the

entrepreneurs.iii. Provide turn key services in project reports preparations and

project implementation.

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iv. Undertake market surveys for various existing and new products

v. Carry out study on sick industries and advice for rehabilitation schemes

vi. Undertake entrepreneurial development training programmes

vii. Undertake consultancy for export oriented projects

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SMALL INDUSTRIES SERVICE INSTITUTES (SISIs)

The SISIs are set up to provide consultancy and training to small entrepreneurs- both existing and prospective.

There are 28 SISIs and 30 Branch SISIs set up in state capital and other places all over the country.

The main functions of SISIs include:i. To serve as interference between Central and State Governments.ii. To render technical support services to conduct Entrepreneurship

Development Programmes.iii. To initiate promotional programmesiv. Economic Consultancy /Information /EDP Consultancy

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v. Trade and market informationsvi. Project profilesvii. State industrial potential surveyviii. District industrial potential surveysix. Modernisation and in-plant studies.x. Workshop facilitiesxi. Training in various trade/ activities

INDUSTRIAL CREDIT AND INVESTMENT CORPORATION OF INDIA LTD. (ICICI)

The ICICI was set up in January 1955 under the Indian Companies Act with the primary objective of developing small and medium industries in the private sector.

Its issue capital has been subscribed by the Indian banks, insurance companies , British Eastern Exchange Bank and other companies and general public in India.

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The ICICI performs the following functions.i. It provides assistance by way of rupee and foreign currency

loans, underwriting and direct subscriptions to shares/ debentures and guarantees.

ii. It offers variety of financial services such as deferred credit, leasing credit , installment sale, asset credit and venture capital.

iii.It guarantees loans from other private investment sources.

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The ICICI has set up a Merchant Banking Division , Asset management company Ltd , in June 1993 to operate the schemes of the ICICI Mutual Fund ,yet another subsidiary called ICICI Investors Services Ltd (March 1994) and ICICI Banking Corporation Ltd.,(January 1994) .

Assistance sanctioned by the ICICI during 1994-95 increased by 77% to Rs.15000 crore , while disbursements went up by 55.9% to Rs. 6,800 crore.

The ICICI assists all sectors , that is , private sector, joint sector, the public sector and the Co-operative sector.

Private sector continue to claim the largest share (90%)of ICICI sanctions during 1994-95, followed by public sector (5%), joint sector(4%) and co-operative sector(1%)

NATIONAL SMALL INDUSTRIES CORPORATION

NSIC was started by the Central Government in 1955 with objective of promoting and developing SSI units throughout the country.

It started with multiple objectives of helping SSI units for1. Providing machinery on hire purchase2. Assisting , marketing and exports3. Enlisting SSI units for tender participation in Government

purchases4. Organising supply of raw materials5. Training of personnel6. Assistance in modernisation of the units

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The functions of NSIC are

1. Financial assistance by way of hire purchase scheme for purchase of local and imported machinery

2. Provision for various equipments on lease basis3. Assistance for marketing the products in the country and also to

help in exporting the products of SSI units.4. Enlisting quality conscious good SSI units for sending enquiries of

Government stores and purchase departments5. Training of workers in various trades required for SSI units6. Assistance in up gradation of technology, processes and

modernisation of plant and machinery

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7. To make bulk purchase of important raw materials and distribute to SSI unit at reasonable rates.

8. To develop industrial estates and testing facilities in the industrial areas.

NSIC has got offices in various industrial cities and towns and is having socio-economic approach in industrialisation of non-industry areas

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SMALL INDUSTRIES DEVELOPMENT ORGANISATION(SIDO)

This organisation mainly created for development of various small-scale units in different areas.

SIDO identifies the needs of SSI units, Co-Ordinating and monitoring the policies and programmes for promotion of the small industries.

It undertakes various programmes of training consultancy, evaluation for needs of SSI and development of industrial estates.

All these functions are taken care with the organisation structure of 27 offices , 31 SISI, 31 extension centers of SISI and 7 centers related to production and process development

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(a) Coordination activities of SIDO1. To coordinate various programmes and policies of various state

Government pertaining to small industries

2. To maintain relation with the Central Industries Ministry, Planning Commission , State Level Industries Ministry and Financial institutions

3. Implement and coordinate in the development of industrial estates

INDUSTRIAL DEVELOPMENT ACTIVITIES OF SIDO

Develop import substitutions for components and products based on the data available for various volume –wise and value wise imports.

To give essential support and guidance for the development of ancillary units

To provide guidance to SSI units in terms of costing , market competition and encourage them to participate in the Government Stores and purchase Tenders.

To recommend the central Government for reserving certain items to produce at SSI level only.

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MANAGEMENT ACTIVITIES OF SIDOTo provide training development and consultancy services to

SISI to develop their competitive strength.

To provide marketing assistance to various SSI units

To assist SSI units in selection of plant and machinery , location , layout design and appropriate process.

To help them get updated with various information related to the small-scale industries activities

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INDUSTRIAL DEVELOPMENT BANK OF INDIA(IDBI)

The IDBI was established on july 1, 1964 under the ACT of parliament as the principle financial institution in the country.

In February 1976 the IDBI was made an autonomous institutions and its ownership passed from the Reserve Bank of India to the government of India.

The IDBI provides assistance to the small-scale industries through its scheme of refinance and through its bill rediscounting scheme

Its assistance to the large number of small scale industries reaches indirect in the form of refining of loans granted by the banks and state financial corporations.

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In 1988 the IDBI also launched the National Equity Fund Scheme(NEFS) for providing support in the nature of equity to tiny and small-scale industries engaged in manufacturing not exceeding Rs. 5lakhs.al assist

The IDBI has also introduced the single window assistance scheme for grant of term loans and working capital assistance to new, tiny and small-scale enterprises.

The IDBI has also set up a Voluntary Executive Corporation Cell(VECC) to utilise the services of experienced professionals for counseling small units , tiny and cottage units and for providing consultancy support in specific areas.

During 1987-88 the IDBI sanctioned assistance worth Rs.1500 crore to the small-scale industries out of total sanction of Rs.4580 crore

SMALL INDUSTRIES DEVELOPMENT BANK OF INDIASIDBI was set up in1989 as wholly owned subsidiary of the

IDBISIDBI does collaborative efforts to timely flow of credit for

both term loans and working capital to small-scale in collaboration with commercial banks.

Earlier SIDBI was doing refinancing and discounting of bills. Now in addition to this it directly participates in the equity type of loan on soft terms, term loan, working capital both in rupee and foreign currencies, bill discounting , venture capital support and different forms of resource support to banks and other institutions

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Amongst support functions SIDBI finances for technology transfer and upgradation, quality improvements , exports, environmental care and industrialisation.

For these activities SIDBI involves consultants and national and international level for improvements.

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STATE FINANCIAL CORPORATION (SFCs)SFCs are set up in 1948 to provide financial assistance to

medium and large-scale industries.In 1951 the role was extended for assistance to small-scale

units also.There are 18 SFCs in different states with each having prefix

of the state name. for example KSFC in Karnataka State Financial Corporation .

Each SFC has its own Managing Director, Executive Director , Board of Directors and Management team to take care activities independently.

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Term loans are provided to various small, medium and large industries in various categories like proprietary , partnership , Co-operative, private and public limited companies.

The loans are given based on securities like land , buildings , machineries and shares etc.

SFC has different schemes for women , ex-service men , physically handicapped and SC/ST to give them opportunity to become entrepreneurs.

Apart from industries , loan is given for Transport operators , Hotels , Hospitals , Nursing homes and Tourism facilities like lodges and guest houses

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OBJECTIVES OF SFCs1. To provide term loan for purchase of land, buildings,

machinery and other facilities.2. To promote self-employment for professionally qualified

men and women entrepreneurs interested in starting their own projects.

3. Financial assistance for expansion , modernisation and mechanisation in the existing set up.

4. Financial assistance for rehabilitation of sick units.5. To give financial assistance for transport vehicles and

tourism related activities.

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6. To entrepreneurial development programmes and seminars for up coming young industries.

7. To provide financial assistance for quality improvement and environmental control needs.

• SFC caters to all categories of small and big industries , tourism operators , service centers like Hospitals and Hotels, service activities thus attending the various needs of a socioeconomically developing society

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PROBLEMS OF SFCsSince SFCs are started by respective State Governments the

usual problems of State bureaucracy of procedures , delays , castism and favouritism do occur.

In the state offices problems of corruption and other malpractices continue to bother the applicants

In case of repayments very strict procedures are followed and units are sealed.

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INDUSTRIAL FINANCE CORPORATION OF INDIA LTD(IFCI)The Government of India set up the Industrial Finance

Corporation of India(IFCI) under IFCI Act july 1 , 1993, it has brought under Companies Act 1956.

The IFCI extends financial assistance to the industrial sector through rupee and foreign currency loans , underwriting /direct subscriptions to shares/debentures and guarantees and also offers financial services through its facilities of equipment procurement , equipment finance , buyers and suppliers credit, equipment leasing and finance to leasingand hire purchase companies

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The financial resources of the IFCI are constituted of the three components i.) Share capital ii.)Bonds and Debenture iii.) other borrowings.

The Idustrial Development Bank of India, scheduled banks , insurance companies, investment trusts and the cooperative banks are the share holders of the IFCI.

IFCI has started new promotional schemes, such as interest subsidy scheme for women entrepreneurs ; consultancy fee subsidy for providing marketing assistance to small-scale industries .

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Flaws of IFCI in its functioning1. The IFCI lending operations have encouraged concentration

of wealth and capital.2. There are great delays in sanctioning loans and then, making

the amount of loan available3. The IFCI has failed to exercise necessary control over the

defaulting borrowers

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