Professional Documents
Culture Documents
10 Chapter 5
10 Chapter 5
10 Chapter 5
5:1 Intnoduction: -
The Small Scale Industries Policy reflects the direction and pattern of
related subjects relating to small-scale industries covering all sectors. Thus the
that, since much attention was given to policies and programmes of assistance to
small-scale sector, the policy environment could accelerate the growth of small-
presented as follows.
was regarded by them as a source of raw material and as a vast market for their
125
protection. As such, they could not face the competition of foreign companies
It may be said that, the Industrial Policy of India started with the
introduction of Khadi in 1920 mainly with the intention of boycotting the foreign
for spinner and weavers, providing relief from unemployment. In order to take
up the above programme, an All India Khadi Board was set up with branches in
all states inDec.l923. Matratma Gandhi was mainly responsible for the creation
Gandhiji may tle looked upon as the architect of these programmes of the
During the trd world war, eight industrialist of Bombay published a plan
planning.2
t26
industries a sound and firm industrial policy was essential. Accordingly, the
documents. The policy statements also indicate the line on which the
Government has been taking concrete steps. Referring to the Industrial Policy
Industrial Policy Resolution 1948 made a specific reference to the role and
infrastructure, glowth of SSI was found to be an ideal solution. Not only these
industries were particularly suited for the better utilization of local resources and
local unskilled labour force but more importantly it would helps in achieving
local self sufficiency in respect of certain tlpes of essential consumer goods like
In addition to this, IPR 1948 mentioned in the statement that, the healthy
127
factors like the provision of raw material, cheap power, technical advice,
At the time of the first five-year plan, Small Scale Sector (SSS) mainty
namely,
3) Handicraft Board,
4) Coir Board
The role of the Small Scale Industries Board is to promote modern Small
Scale industry whereas the rest are for promoting traditional industries. The
The Karve Committee Report (1955) was one of the earliest of the
in India. The Industrial Policy Resolution 1956 brought out the regulatory
128
the development of the national economy. Indushial Policy Resolution 1956 re-
The indushial policy resolution of 1956 observed that, "the state has been
entire Small Scale Industry Sector (SSIS) was kept outside the purview of
industrial licensing. IPR 1956 also underlined the need for modernization &
129
The industrial estate prcgramme was launched by the central
Government. However, in 1977, the responsibility of industrial estates was
transferred to State Governments.s
concession, water and power subsidies, transport subsidies, sales tax exemption,
were set up at the central, state and district level to deal with different activities
resolution. The main thrust of the New Industrial Policy was on effective
promotion of cottage and small-scale industries widely dispersed in rural areas
130
The Industrial Policy resolution 1977 had given the big push to the
growth of the de-centralized sector. Thus e.g. the list of items reserved for this
sector was expanded to cover 504 items from the earlier list of 108 items (Since
then the list has been further expanded to cover in all 836 items.). The statement
Within the small-scale sector a sub-sector of tiny units was created for the
first time in the Industrial Policy Resolution lW. This sub-sector was expected
proposed in the statement to enact special legislation for protecting the interest
Industries. It was decided to establish an agency in each district called the DIC,
mainly to provide and arrange a package of assistance and facilities for credit
guidance, raw material, training, marketing etc. including the necessary help to
initiated on May l, 1979. At present, 422 DICs are operating in the country
covering 431 districts except Mumbai, Kolkata, Delhi, and Chennai. The
development of a core unit around which a nucleus of small unit can grow in
t3l
A separate wing was crealed in the IDBI for small-scale industries to
provide effective financial support to this sector. Finally, special efforts were
envisaged for modernizing khadi and village industries and for promoting
12
appropriate technologies all around.
without, at the same time, preventing the growth of medium and large scale
sector. The policy statement of 1980 made it clear that, the existing support
sector will continue. This policy laid guidelines for strengthening the existing
economy, separate New Industrial Policy was announced for promoting and
strengthening small, tiny and village industries on 6fr August 1991 for the frst
time. Till then, policy measures for small-scale industries formed a part and
parcel of the general industrial policy of the country. Further, all earlier
r32
industrial policies emphasized on protection as much as on development. The
New Industrial Policy l99l marked a departure from the past as the thnrst was
2) Equity participation in SSI for large (domestic and foreign) industries was
upgradation.
These units were to get support on continuing basis whereas the small-
small enterprises.
small-scale industries.
r33
e) Setting up of an Export Development Centre in the SIDO.
11) The small and tiny sector was to be accorded priority in allocation of
12) The tiny sector was to be accorded priority in the govemment purchase
programme.
13) The scope of the National Equity Fund (NEF) scheme and Single
r4) Permission was granted to private industry to set up industrial estates and
15) More important feature was the introduction of a new legal form of
provision.
This policy reserved 836 items for exclusive manufacture in the Small-
17
Scale Sector.
governing its structure and functioning. The focus of the policy reforms has been
134
the new policy has therefore been to inject new sources of competition in order
The phase that started in 1991 (1991 to 1997) reforms could be termed as
policy for SSI development was announced in 1991 whose primary objectiv.e
was to impart greater vitality and growth to this sector focus rrcved from cheap
industries in December 1995, under the chairmanship of Shri. Abid Hussain was
to address the need for reforms in the existing policies and design new policies
which would facilitate the growth of viable and efficient small-scale industries to
135
make them globally competitive. The expert committee in its report laid
emphasis on removing protection, abolishing reservation, enhancement of SSI
inveshent limit and restructuing supportive, specialized, and financial
enhanced the investment ceiling from Rs. 60 lakh to Rs. 300 lakh on December
oriented unit. The Government has also decided to enhance the investment
ceiling of tiny units from Rs. 5 lakh to Rs. 25 lakh inespective of location of the
unit.
strengthen SSI truly in the country. The decisions like formation of a Group of
them.
136
* Some of the important initiatives taken in the policy were -
a) SSI exemption limit for excise duty rose from Rs. 50lakhs to Rs.l crore.
c) Providing credit linked capital subsidy of 12% against loans for technology
scale enterprise for obtaining ISO 9000 certification by the end of Tenth
Plan.
s) The limit of composite loans under the Credit Guarantee Scheme enhanced
h) Raising the family income eligibility limit of Rs. 24,(X)0 to Rs. 40,000 per
annum, under the Prime Minister's Rozgar Yojana that finances to micro
enterprises.
laboratories.
Scheme to progressively cover all areas in the country with SOVo reservation
t37
l) In the National Equity Fund Scheme, the project cost limit was revised from
As stated earlier, the Third Census of SSIs (covering both registered and
unregistered units) was conducted during the year 2001-02. This has provided
18
valuable information regarding the SSI sector.
1) While the investment limit for SSI sector continues to be Rs.l crore the
investment limit for specific list of hi-tech and export-oriented units raised to
2) The excise exemption for SSIs was enhanced from Rs. 50lakh to Rs. 1 crore.
laktr. Such loans are provided by commercial banks, selected well performing
RRBs and other Financial Institutions without any collateral including third
party guarantee. A credit Guarantee Trust Fund was created to implement the
scheme.
138
Industries Corporation (NSIC), to small-scale industries for technology
upgradation.
s) In the past few years, the government was following the policy of de-
reservation. It was believed that this would help the SSI units to upgrade their
policy, the number of items reserved for the SSI sector came down from 836
cover the entire country with 50 percent reservation for rural areas.
the credit limit from Rs. 2 lakh to Rs. 10 lal*r, for borrowers having a
iii) The limit of collateral free loans was raised from Rs. 5 lakh to Rs. 15 lakh
and up to Rs. 25 lakh in case of SSI units with a good track record;
iv) The small and Medium Enterprises (SME) fund of Rs. 10,000 crore was
operationalised by the SIDBI since April zO0/. Eighty per cenr of the
lending from this fund will be for SSI units, at interest rate of 2 per cent
Te
below the prevailing PLR (Prime Lending Rate) of the SIDBI.
r39
5.2.7 180 De-reserved Items Notified. -
With the latest announcement, the list of items reserved for production in
the small-scale industry has come down to about 300, compared to neady 800 in
installed capacity.
higher investment limits for select product lines in the reserved list. This step
140
exports and dispersal in rural areas (1990) and then to small tiny and village
industries.
No doubt, in the past five and half decade some adjustments were made in
this policy to meet the changing needs of the overall economy but the basic
ranks frst amongst rhajor states in terms of private investment). It accounts for
which accounts for 15 per cent of National Income2l. Per capita income of Rs.
23,U91-, more than 60 percent higher than the national average. Maharashtra
The state accounts for 3O per cent of softrrare export. Matrarashtra ranked 3d in
the 2l Indian States ranked by HDI, next only to Goa and Delhiz. It has always
been trying hard to develop, sustaining industrial growth; facilitale speedier flow
and sustaining and diverse industrial base. This was possible because
development has been the result of a series of planned efforts in the form of
r4l
policy decision, economic plans, and special assistance programme undertaken
by the Government.
were set up. The MIDC was assigned the important task of location of industrial
small-scale industries.
conducive for the rapid growth of SSIs. The creation of pleasant environment
having adequate infrastructure, power, peaceful and productive labour force and
enterprising people of the state have been attracting the Indian as well as MNCs
small-scale industries in order to use the local resources and create employment
opportunities in rural and small towns. As such the industrial policies of the
r42
Government of Matrarashtra have been evolving on the principle objective of
facilities from finance and raw material to quality testing and marketing of
product of SSIs.23
of procedures and rationalization of nrles and the Industry, Trade and Commerce
Policy 1995 aimed at emlnwering people at all levels with special focus on
new indusrial units in the state in the form of 'package scheme of Incentives'.
the state, Government has been giving a package of incentives to new/ extension
unit set up in the developing region of the state since 1964 under a scheme
r43
5.3.1 Package Scheme of Incentives 1993 -
from time to time. The last amended scheme, commonly known, as the 1993
scheme was operative from The l*t October 1993 to 31't March 2001 (See Table
No.21).
For the purpose of the 1993 scheme, the classification of the talukas of
the Raigad district in the Konkan Division is shown in the following Table No.
Table No.5.1
Classifrcation of Talukas
Raigad District (Konkan Division)
Khalapur. @ Mangaon.
Panvel. $
I4
Table No. 5.2
Package Scheme of Incentives 1993 for Small-Scale Industries
145
5.3.2 Package Scheme of Incentives 2001 -
The Government of Matrarashtra recognnized the need to address the
developed areas, and to facilitate exports from the state. In the wake of the
national consensus for abolishing the sales tan based incentives, the further
rationalization of incentives, their scale, and mode of release was under the
scheme and bring into force a new scheme, namely the 'Package Scheme of
employment opportunities.
Jt Area Classification. -
Matrarashtra State has been classified into A, B, C, D, and D+
t46
4a
E
- - UJ
b1
rJ
rvl lll
-Er =rt
4 L
o
Fr 4
o
4.
-3
FI
B.
*l
Ch {
ts
4.
T
ID
s
U]
FF
6
- .E
E
4 c
r-'l =
-FHF
Et
Er'l=
- {i\ f rr'-rE\
1.,, = li., \
Ui '"-'*! JI_
g
If
dlrr U -r
=
*{
Eul
rrD
E
,,ft
I
itl
I
machinery not exceeding Rs. 30 millions). The detailed taluka wise
classification of the areas of the state made accordingly has been indicated in
24.
Annenue
Implementing agencies for Small Scale projects are the District Industry
years. In other parts of the state, 100 percent Export Oriented Units (EOUs),
period of 10 years.
Registration fees up to 31st March 2006. All new industrial units (including IT
and BT units) and expansion were exempted from payment of Stamp Duty and
District(s). However, 50 percent of the Stamp Duty and Registration Fees were
waived for IT units set p in other IT parks in Talukas / areas in the state in 'A'
148
* Octroi Refund. -
The Scheme of refund of octroi provided under the Package Scheme up
to 31st March 2006 on the same pattern where account based cess or other levy
was charged instead of or in lieu of octroi, such charge was also eligible for
Table No.53
Scleme of Refund of Octroi under PSI
Ceiling as percentage
Taluka/Area Monetary ceiling
of Fixed Capital (Rs. in lacs)
classifrcation
Investment
A
c 10 20
D 20 30
D+ 25 35
No Industry District N 35
Existing SSI and Small Scale IT and BT units were eligible for 75 percent of the
or more priority for the disbursement of the incentives was given to sick units
and 10O per cent Expert Oriented Units. The reference of incentives to an
eligible unit, which has turned sick during the eligibility period was considered
on priority only if and was a scheme for rehabilitation has been approved and
implemented under the BIFR provisions or which the approval of the Directorate
149
of Industries respectively for SSI units.
'* Interest Subsidy to new textile, hosiery, and knitwear SSI units. -
New textile, hosiery and knitwear SSIs setting up in different parts of the
state were also eligible for interest subsidy on the interest actually paid to the
financial institutions / bank on the term loan for creating fixed capital assets,
equals to the interest payable at 5 percent per annum as started applicable for the
C 10 4
D 20 5
D+ 25 6
No Industry District 35 7
Khadi and Village industries were exempted from Sales Tax up to Rs. 24
lakh per annum available to ft*radi and village industry units registered with and
150
Table No. 5.5
Sales Tax Incentives for Small Scale Units
Group SSI Units Vo of Fixed No. of years earlier if
Capital Investment the ceilings is reacled
A 100 6
c 110 8
D t20 10
D+ 130 t2
has strengthened both domestically and globally. Thus the achievements of SSI
are primarily due to the active policy support and comprehensive programme of
'Special Capital Subsidy' is made available to SSIs. For this purpose talukas in
available to the entitled educated unemployed boys and girls in the district.
l5l
To sum up, for planning and dispersal of industries, the development of
of the above policy measures the Small Scale Sector has grown "leaps and
bounds" during the last five and half decades and that it has shown its worth and
--___{r__-__
t52
References: -
Asian Countries, Light and Life hrblisher, New Delhi, 1979, p.ll .
p.7.
Bombay, 1963,p.13.
9. J. C. Sandesara, Opcit,1992,p.8.
153
13. Laghu udyog, A Journal of small Scale Industries, Development
commissioner (sSf, Ministry of Small scale Industry, Govt. of India,
15. R. c. umat, The New Industrial and Investment Policy, Yojana, July 16-31,
1991, p.8.
p.190.
r54