2. An entrepreneur requires a continuous flow of funds not only for setting up of
his/ her business, but also for successful operation as well as regular up
gradation/ modernization of the industrial unit. To meet this requirement, the
Government (both at the Central and State level) has been undertaking several
steps like setting up of banks and financial institutions; formulating various
policies and schemes, etc. All such measures are specifically focused towards
the promotion and development of small and medium enterprises.
The government of India has been taking active steps to promote
entrepreneurship in various industry & service sectors. It has declared several
policy measures and is implementing schemes and programmes to enhance
the global competitiveness of small enterprises across the country.
Government Support
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3. Policies and Incentives
The Ministry of Micro, Small and Medium Enterprises is the nodal Ministry for
formulation of policies, programmes and schemes, their implementation and related
co-ordination, for the promotion and development of small scale industries in India.
The role of the Ministry is to assist the States in their efforts for the growth of the small
scale sector, by enhancing their competitiveness in an increasingly liberalized economy.
It is assisted by an attached office and two public sector enterprise, namely:-
Micro, Small and Medium Enterprises Development Organization (MSME-DO)
National Small Industries Corporation Ltd (NSIC)
Khadi and Village Industries Commission (KVIC)
Coir Board
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4. Micro, Small and Medium Enterprises Development Organization (MSME-DO) :- the Office
of the Development Commissioner (Micro, Small and Medium Enterprises) is also known as
Micro, Small and Medium Enterprises-Development Organization (MSME-DO). It is the apex
body for assisting the Government in formulating, coordinating, implementing and
monitoring policies and programmes for micro, small and medium enterprises (MSMEs) in
the country. MSME-DO provides a comprehensive range of common facilities, technology
support services, marketing assistance, entrepreneurial development support, etc.
Coir Board :- is a statutory body, established under the Coir Industry Act, 1953, for the
promotion and development of coir industry in India as well as for uplifting the living
conditions of the workers engaged in this industry.
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5. National Small Industries Corporation Ltd (NSIC) :- was established by the Government
with a view to promoting, aiding and fostering the growth of micro, small and medium
enterprises in the country, with a focus on commercial aspect of their operations. It
implements several schemes to help the MSMEs in the areas of raw material procurement,
product marketing, credit rating, acquisition of technologies, adoption of improved
management practices, etc.
Khadi and Village Industries Commission (KVIC) :- established under the Khadi and Village
Industries Commission Act, 1956, as a statutory organisation engaged in promotion and
development of khadi and village industries for providing employment opportunities in the
rural areas.
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6. The other important policies for the sector
relate to:
I. Excise duty
II. Foreign direct investment approval
III. Labour laws
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7. Excise duty
Value of Clearance (Rs.) Rate of duty
Upto 100 Lakhs 60% of normal rate
100-300 Lakhs Normal rate of duty
Rate of duty in respect of Clearances of Specified goods
Rate of duty in respect of Clearances of Specified goods
Value of Clearance (Rs.) Rate of duty
Upto 100 Lakhs Nil
100-300 Lakhs Normal rate of duty
Rate of duty in respect of Clearances of Excisable Goods
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8. Foreign direct investment approval
FDI is an investment in a business by an investor from another country for which the foreign investor has
control over the company purchased.
An industrial undertaking, i.e., a company with interests in industry can invest up to 24% equity in a SSI unit.
If the equity goes beyond 24%, the industrial unit loses its SSI status.
There is no restriction on the extent of equity that can be held by a Non-resident Indian (NRI) as an
individual/partner in a SSI unit.
Investors need to file an application with the Reserve Bank of India (RBI) in the prescribed format and
approval is ordinarily granted within 15 days.
For foreign investment outside the automatic route, clearance has to be obtained from Foreign Investment
Promotion Board (FIPB).
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9. Labour laws
Employment Exchange (Compulsory Notification of
Vacancies) Act, 1959
Equal Remuneration Act, 1976
The Factories Act, 1948
The Industrial Disputes Act
The Industrial Employment (Standing Orders) Act,1946
The Inter-state Migrant Workmen (Regulation of
Employment and Conditions of Service) Act, 1979
Labour Laws (Exemption from Furnishing Returns &
Maintaining Registers by Certain Establishments) Act, 1988
The Sales Promotion Employees (Conditions of Service)
Act, 1976
The Shops and Establishments Act, 1953
The Trade Union Act, 1926
Workmen’s Compensation Act, 1923
The Weekly Holidays Act, 1942
Apprentices Act, 1961
The Bidi and Cigar Workers (Conditions of Employment)
Act, 1966
Bonded Labour System (Abolition) Act, 1976
Child Labour (Prohibition & Regulation) Act, 1986
The Children (Pledging of Labour) Act, 1933
The Contract Labour (Regulation & Abolition) Act, 1970
The Employees Provident Funds and Misc. Provisions Act,
1952
Employees State Insurance Act, 1948
Employers Liability Act, 1938
Maternity Benefit Act, 1961
The Minimum Wages Act, 1948
The Payment of Bonus Act, 1965
The Payment of Gratuity Act, 1972
The Payment of Wages Act, 1936
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10. Schemes and Programmes:
Besides, several schemes and programmes have been undertaken by the Government
with the aim of facilitating access to:-
i. adequate credit from financial institutions;
ii. funds for technology upgradation and modernisation;
iii. integrated infrastructural facilities;
iv. modern testing facilities and quality certification laboratories;
v. modern management practices, entrepreneurship development and skill up
gradation through appropriate training facilities; etc.
The schemes so announced include:- (next slide)
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11. Schemes and Programmes:…contd…
Tax Holiday Scheme
Composite Loan Scheme
Industrial Estate Scheme
Scheme for International Cooperation
Scheme of Surveys, Studies and Policy Research
Scheme of Fund for Regeneration of Traditional Industries (SFURTI)
Scheme of Product Development, Design Intervention and Packaging
(PRODIP)
Scheme of Khadi Karigar Janashree Bima Yojana for Khadi Artisans
Scheme of Interest Subsidy Eligibility Certification (ISEC)
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12. Government help & Assistance
Technical Assistance
Raw material Assistance
Cash Assistance
Supply of Machinery & Equipment
Marketing Assistance
Assistance to small Entrepreneurs
Rural Industrial Project Assistance
Help to disabled Entrepreneurs
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13. Government help & Assistance
Training Assistance to Women Entrepreneurs
Single point registration for Government Purchase
Facility of Exhibition
Buyer Seller Meet
Credit Support to MSMEs
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14. Government Incentives
Investment Subsidy
Export/ Import Subsidy
Research & Development Subsidy
Tax Subsidy
Subsidy relating to Resources
Capital Subsidy Scheme for Technology Upgradation
Excise duty Exception
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15. Government schemes for Infrastructural Facilities
Industrial Estates Programme
Integrated Infrastructural Development Scheme
Small Industry Clusters
MSME tool Rooms
Technology Development Centres
Testing Centres & Stations
Technology & Quality Upgradation
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16. Government schemes for Infrastructural Facilities
Design Clinics
Promotion of Information & Communication Tools
WTO sensitization Workshop
Vendor Development
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