UNIT – 4 Entrepreneurship development institutions in India

UNIT – 4

Entrepreneurship development institutions in India: NAYE, SIPCOT, TIDCO, SISI, DIC -

MSME – Definition – Registration - Agencies supporting MSME – Government Assistance:
Concession and subsidies.

1. Small Industries Service Institutes (SISIS)

The Small Industries Services Institutes (SISIs) are set up to provide consultancy and
training to small entrepreneurs — both existing and prospective. The activities of SISIs are
coordinated by the Industrial management Training Division of the DCSSI’s office. 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 interface between Central and State Governments.

(ii) To render technical support services.

(iii) To conduct Entrepreneurship Development Programmes.

(iv) To initiate promotional programmes.

The SISIs also render assistance in the following areas:

(i) Economic Consultancy/Information/EDP Consultancy.

(ii) Trade and market information.

(iii) Project profiles.

(iv) State industrial potential survey.

(v) District industrial potential surveys.

(vi) Modernisation and implant studies.

(vii) Workshop facilities.

(vii) Training in various trade/activities.

2. District Industries Centers (DICS):

The District Industries Centers programme was launched in 1978 for effective promotion
of cottage and small-scale industries widely dispersed in rural areas and small towns. These
centers are the focal points providing under one roof all the services and support required by
small scale and village entrepreneurs. These serve as an integrated administrative framework at
the district level for industrial development.

Structure:

A DIC consists of one General Manager, four Functional Managers and three Project
Managers having technical background. Functional Managers are concerned with economic
investigation, credit, village industries and raw materials/marketing/training, etc. Project
Managers provide technical service in the area relevant to the needs of the district concerned.

District Industries Centers maintain close linkages and coordination with various Central
and State level organisations concerned with promotion and development of cottage, rural and
small-scale industries. Government has delegated necessary powers to these centers. Monitoring
and coordination Committees have been set up to review the functioning of these centers.

Functions and Role:

The main functions of DICs are as follows:

(i) Surveys:

A DIC conducts surveys to assess industrial potential of a district keeping in view the
availability of raw materials, human skills, infrastructure, demand, etc. It prepares techno-
economic feasibility studies, identifies product lines and work out costs. On the basis of such
investigation, it provides investment advice to entrepreneurs.

(ii) Action Plans:

On the basis of endowments and possibilities in the district, a DIC prepares an action plan
for industrial development. This plan is coordinated with District Credit plan of the lead bank.

(iii) Appraisal:

A DIC appraises the various investment proposals received from entrepreneurs. Then it
helps worthy entrepreneurs in obtaining credit by explaining various credit schemes, preparing
application forms, helping in assessing the applications, keeping liaison with banks and financial
institutions and monitoring flow of industrial credit in the district.

(iv) Guidance:

A DIC guides and assists entrepreneurs in identifying appropriate machinery and

equipment, ascertaining sources of machinery and equipment, helping in planning orders,
helping in importing machinery, etc. It also ascertains raw material requirements and their
sources, arranges bulk purchase of raw materials and interacts with various authorities for the
supply of scarce and critical raw materials.

(v) Marketing Assistance:

Under this function, a DIC collects marketing information, organises marketing outlets,
keeps liaison with Government procurement agencies, assess the possibilities of ancillarisation
and exports, and suggests appropriate marketing strategies to entrepreneurs.

(vi) Contact with R&D Institutions:

A DIC maintains links with research, and development institutions for up gradation of
technology, quality improvement, industrial training, etc.

(vii) Training:

A DIC conducts artisans training programmes. It also serves as the technical arm of
DRDA in the administration of IRD and TRYSTM programmers, and identifying opportunities
and projects for the trainees.

(viii) Special Schemes:

DICs have been assigned operational responsibility for special schemes to provide self-
employment to educated unemployed youth.

Progress:

DICs have played a vital role in providing assistance to entrepreneurs in rural and
backward areas. They have attracted and encouraged new entrepreneurs. These centers have also
been instrumental in setting up SSI units and rural artisan industries.

3. SIPCOT (State Industries Promotion Corporation of Tamilnadu Ltd)

 SIPCOT was established in 1971 and has been acting as catalyst in the development of
Medium and Large Scale Industries in Tamil Nadu. Working in line with the State Government’s
Progressive Industrial policies, SIPCOT helps faster industrial development in backward and
underdeveloped areas. SIPCOT as totally committed to assist the entrepreneurs provides
institutional finance with refinance assistance from Industrial Development Bank of India and
Small Industries Development Bank of India for meeting fixed capital investment in Industries. It
also provides financial services like, Lease Finance Scheme for Capital Goods, Term Loan
assistance for Industrial projects. SIPCOT is also involved in formation and managing of
Industrial complexes/Parks and allotment of developed plots for location of industries

Objectives of SIPCOT

SIPCOT transformed numerous backward and under developed areas to become

important industrial hubs of the State.

The agency has developed over 6400 acres of industrial land in different parts of the state
to cater to the growing demands of investors, with another 2150 acres under development. Plans
have been drawn up for developing 20,000 acres in new sites. The agency also draws up plans
and implements schemes to improve the infrastructure requirements of industrial areas to ensure
higher levels of competitiveness.

Apart from providing an entrepreneur with the complete infrastructure for growth and
development, SIPCOT also extends financial assistance under Industrial Development Bank of
India (IDBI) and Small Industries Development Bank of India (SIDBI) line of credit scheme.
SIPCOT's wide-ranging assistance to entrepreneurs includes features like :

* Setting-up of industrial complexes to function as growth centres.

* Providing financial assistance to medium and large scale sectors.

* Channelizing incentives for industries from State Government. 185

* Monitoring of Letter of Intent and providing Escort Services to medium and large scale
industries

4. Tamilnadu Industrial Development Corporation Limited (TIDCO)

 Tamil Nadu Industrial Development Corporation Limited is a premier industrial
development agency of the Government of Tamil Nadu, established in 1965. In order to identify
and promote the establishment of large and medium scale industries within the State of Tamil
Nadu in association with the private sector. TIDCO has been specified as Public Financial
Institution within the meaning of Section 4A of the Companies Act, 1956.
TIDCO’s association with private sector enterprises may be separated into four categories
viz. Joint Sector, Associate Sector, Escort Sector and Escort Services. Equity participation by
TIDCO in the Joint Sector projects ranges from 11 to 26 % and in the associate Sector ranges 2
to 11% equity. The Escort Sector includes ventures with 1% equity from TIDCO. TIDCO
provides facilitation services for all investors and these include multi-national and overseas
investors who wish to launch new ventures in Tamil Nadu. In cases where TIDCO does not take
up equity participation, these projects are categorized as Escort Service projects.
TIDCO’s project cover a wide range of activities such as Iron & Steel, Fertilizers,
Chemicals, Petrochemicals, Engineering, Automobiles, Agro and Food Processing, Leather,
Textiles, Pharmaceuticals, Floriculture, Horticulture, Electronics & Communication,
Infrastructure / Industrial parks includes Agri Export Zones (AEZs) and Special Economic Zones
(SEZs).

5. National Alliance of Young Enterprises: NAYE

NAYE was established in the year August 1972 under the sponsored programme of
Entrepreneur Development Scheme, with Bank of India. The main objectives of the scheme is to
help young entrepreneurs in identifying investment and self-improvement opportunities; securing
property arrangements or their training including developing their manufacturing capabilities;
providing necessary financial assistance on the basis of properly prepared reports; securing
package of consultancy services on appropriate terms and arranging for all possible assistance,
facilities and incentives being extended to young entrepreneurs by Government and other
institutions. Apart from looking into the interests of young entrepreneurs, the organization takes
special care of the interests of women entrepreneurs Some of the major achievements of NAYE
may be mentioned as follows:
a. Establishing its credibility in both governmental, and nongovernmental circles as a highly
professional, competent, effective and efficient non-governmental organization representing
small and medium enterprises;

b. establishing its affective presence in the area of international co-operation in small and
medium enterprise sector; and c. creating and nurturing a new class of women entrepreneurs and
enabling them to acquire their rightful place in the Indian economy.

NAVE'S Activities:

After accomplishing the above mentioned task, the dynamic organization, the National
Alliance of Young Entrepreneurs is moving towards newer areas of activities which will meet
the needs of young entrepreneurs. Some of such areas are:

(1) Developing technical computerized information service for guiding, advising and counselling
members on matters, relating to investment markets and technologies;

(2) establishment of technology trade centre for transfer of technologies upgradation of schemes
and supply of equipments and services to the third world countries who are looking increasingly
to India for meeting their requirements for accelerated industrial growth;

(3) Creation of a system for induction of new technologies from industrialised countries for
adaptation and assimilation by Indian small and medium enterprises, and to promote technology
missions to meet identified needs and requirements of individual members;

(4) Bringing out series of research and publications on small and medium enterprise;

(5) Establishing institutional cooperation between NAYE and its counterpart bodies in both
industrialized and world countries in mutuality of interest; and

(6) Organizing appropriate institutional system for prompting marketing the products of member
units in the world market as well as in domestic market.

MSME (Micro, Small and Medium Enterprise)

What are Micro, Small and Medium Enterprise?

The Government of India has introduced MSME or Micro, Small, and Medium
Enterprises in agreement with Micro, Small and Medium Enterprises Development (MSMED)
Act of 2006. These enterprises primarily engaged in the production, manufacturing, processing,
or preservation of goods and commodities.

The existing MSME classification was based on the criteria of investment in plant and
machinery or equipment. So, to enjoy the MSME benefits, the MSMEs have to limit their
investment to a lower limit, as mentioned below:

Existing MSME Classification

Sector Criteria Micro Small Medium

Manufacturing Investment < Rs.25 lakh < Rs.5 crore < Rs.10 crore

Services Investment < Rs.10 lakh < Rs.2 crore < Rs.5 crore

These lower limits are killing the urge to grow as they are unable to scale their businesses
further. Also, there has been a long-pending demand for the revision of MSME classification so
that they can further expand their operations while continuing to avail the MSME benefits. Now,
under the Aatmanirbhar Bharat Abhiyan (ABA), the government revised the MSME
classification* by inserting composite criteria of both investment and annual turnover. Also, the
distinction between the manufacturing and the services sectors under the MSME definition has
been removed. This removal will create parity between the sectors. The following is the revised
MSME classification*, where the investment and annual turnover, both are to be considered for
deciding an MSME.

Revised MSME Classification

Criteria Micro Small Medium*

Investment & Annual < Rs.1 crore & < < Rs.10 crore & < < Rs.50 crore & <
Turnover Rs.5 crore Rs.50 crore Rs.250 crore
MSME Registration Process

MSME registration is to be done in the government portal of udyamregistration.gov.in.

The registration of MSMEs can be done under the following two categories in the portal –

For New Entrepreneurs who are not Registered yet as MSME and

For those having registration as EM-II or UAM and For those having registration as EM-
II or UAM through Assisted filing

For New Entrepreneurs who are not registered yet as MSME

New entrepreneurs need to click the button “For New Entrepreneurs who are not
Registered yet as MSME” shown on the home page for registering MSME. New registration of
MSME is done by entering the Aadhaar card number in the following two ways-

Registration with PAN Card or

Registration without PAN Card

Registration with PAN Card:

When clicked on the “For New Entrepreneurs who are not Registered yet as MSME”
button on the homepage of the government portal, it opens the page for registration and asks to
enter the Aadhaar number and the name of the entrepreneur. After entering these details,
“Validate and Generate OTP Button” is to be clicked. Once, this button is clicked and OTP is
received and entered, the PAN Verification page opens. If the entrepreneur has a PAN Card, the
portal gets the PAN details from the government databases and automatically fills details on the
page. The ITR details are to be filled by the entrepreneur.

Incentives to Micro Small & Medium Enterprises

The Micro, Small and Medium Enterprises sector accounts for the major share in number
of industrial units, output in manufacturing sector and exports in the State besides being a major
employment provider next only to agriculture, the need for vitalising this sector assumes greater
importance. Taking cognizance of the above factor and in order to give special impetus to
MSMEs, the Tamil Nadu Government is extending the following incentives to Micro, Small and
Medium Enterprises established in the State:-

1. Subsidy schemes for micro manufacturing enterprises

 ✓ 25%Capital Subsidy on the value of eligible plant and machinery.

✓ 20% low tension power tariff subsidy for the first 36 months from the date of
commencement of commercial production or from the date of power connection,
whichever is later.

✓ Stamp duty exemption on mortgaged and pledged documents.

2. Subsidy schemes for Industrially Backward Blocks and Agro Based Enterprises

Micro, Small and Medium Manufacturing Enterprises established in 251 industrially backward
blocks, all industrial estates promoted by the Government and Government Agencies like
SIPCOT, SIDCO, etc., (excluding Industrial Estates located within a radius of 50 Kms from
Chennai city centre) and agro based enterprises set up in all the 385 Blocks in the State are
eligible for the following package of incentives:

✓ 25% capital subsidy on the value of eligible plant and machinery subject to a maximum
of Rs.50 lakhs.

✓ 5% additional employment intensive subsidy on the value of eligible plant and machinery
for providing employment to 25 workers for 3 years within the first 5 years from the date
of commencement of commercial production, subject to a maximum of Rs.5 lakh.

✓ 5% additional capital subsidy on the value of eligible plant and Machinery for
enterprises set up by women, SC/ST, differently abled and transgender entrepreneurs
subject to a maximum of Rs.2 lakh.

✓ 25% additional capital subsidy on the value of eligible plant and machinery installed to
promote cleaner and environment friendly technologies subject to a maximum of Rs.3
lakh, if certified by the Tamil Nadu Pollution Control Board.

✓ 20% low tension power tariff subsidy for the first 36 months from the date of
commencement of commercial production or from the date of power connection
whichever is later.

3. Special Capital Subsidy for Thrust Sector Enterprises

A Special Capital Subsidy of 25% on the eligible plant and machinery subject to a
maximum of Rs.50 lakhs is extended to 13 thrust sector enterprises setup anywhere in the State
viz., Electrical and Electronic Industry, Leather and Leather goods, Auto parts and components,
Drugs and Pharmaceuticals, Solar Energy Equipment, Gold and Diamond Jewellery for exports,
Pollution Control equipments, Sports Goods and Accessories, Cost effective building materials,
Readymade Garments, Food Processing, Plastic and Rubber Industries.

4. Generator Subsidy

The Micro, Small and Medium manufacturing enterprises anywhere in the State, which
purchase Generator sets up to 320 KVA capacity are eligible for a Generator Subsidy at 25% of
the cost of the generator set, subject to a maximum of Rs.5 lakh.
5. Back-ended Interest Subsidy

Back-ended interest subsidy at the rate of 5%, subject to a maximum of Rs.10.00 lakh for
a period of 5 years is being provided to Micro, Small and Medium Manufacturing Enterprises for
term loans up to Rs.1 crore obtained for Technology up-gradation / modernization and Credit
Guarantee Fund Trust Scheme (CGFTS).