UNIT I

Entrepreneurship definition Growth of small scale industries in developing countries and their positions vis-a-vis large industries; role of
small scale industries in the national economy; characteristics and types of small scale industries; demand based and resources based
ancillaries and sub-control types. Government policy for small scale industry; stages in starting a small scale industry

Meaning of Entrepreneur: An Entrepreneur is a person who perceives a need and then brings together manpower,
material and capital required to meet that need. In other words an entrepreneur is an individual or team that identifies the
opportunity, gathers the necessary resources, creates and ultimately responsible for the performance of the organization.
An entrepreneur is a person who is able to express and execute the urge, skill, motivation and innovative ability to establish
a business or industry of his own, either alone or in collaboration with his friends. His motive is to earn profit through th e
production or distribution of goods or services. Adventurisms, willingness to face risks, innovative urge and creative power
are the in born qualities of entrepreneurship. Entrepreneurship can also be explained as a process of executing a work in a
new and better way.

Definition of Entrepreneur:
According to Harbison "An entrepreneur is not an innovation but an organization builder or one who has the skill to
build an organization and who must be able to harness the new ideas of different innovators to the best of the organization."

Peter F. Drucker defines an entrepreneur as one who always searches for change, responds to it and exploits it as an
opportunity. Innovation is the specific tool of entrepreneurs, the means by which they exploit change as an opportunity for a
different business or service.

Characteristics of an Entrepreneur:

1. Vision: An entrepreneur has a dream and he visualizes the ways and means to achieve dream. In doing so he
visualizes:
A. Market Demands
B. Socio-Economic
C. Technological Environment

2. Knowledge: An entrepreneur has full knowledge about all the technicalities of his business are it technological,
operational, and financial or market dynamic.

3. Desire to succeed: An entrepreneur has a strong desire to succeed in life. Their dreams are not just limited to
achieving one single goal but they constantly work to achieve higher goals.

4. Independence: An entrepreneur needs independence in work and decision-making. They don't follow the rules of
thumb but make their own rules and destiny.

5. Optimism: Entrepreneurs are highly optimistic about achieving their vision.

6. Value Addition: Entrepreneurs do not follow the conventional rules of thumb. They have a constant desire to
introduce something new to the existing business. They create, innovate or even add value to the existing
products/services.
 7. Leadership: An entrepreneur exhibits the qualities of leader. They are good planner, organizers, have good
communication skill, good decision0makers, take initiative to implement plans and are result-oriented.

8. Hardworking: At times they are called workaholics. Work is worship for then. They put in continuous efforts to
achieve success and know that there is no substitute for hark work.

9. Risk-Taking Ability: Risk is an inherent and inseparable element of entrepreneurship. He assumes the
uncertainty of future. An entrepreneur guarantees rent to the landlord, wages to employees and interest to the
investor in the hope of earning more than the expenses.

Meaning of Entrepreneurship: Entrepreneurship refers to a process of action an entrepreneur undertakes to establish

his enterprise. It is a creative and innovative response to the environment. In other words entrepreneurship can be defined
as an ability to discover, create or invent opportunities and exploit them to the benefit of the society, which in turn brings
prosperity to the innovator and his organization.

Definition: B. Higgins, in his book "The economic Development" has said. "Entrepreneurship is meant the function of
seeking investment and production opportunity, organizing an enterprise to undertake a new production process, raising
capital, hiring labor, arranging the supply of raw materials, finding site, introducing a new technique and commodities,
discovering new sources of raw materials and selecting top managers of day to day operations of the enterprise."

Concept of Entrepreneurship: Concept of entrepreneurship can be explained with the help of following diagram
 Entrepreneurship Traits: A successful entrepreneur must possess the following traits:

1. Mental Ability: Mental ability consists of intelligence and creative thinking. An entrepreneur should be intelligent
and must have an analytical mine. He should have the capacity to analyze the problem and able to study the various
situations under which decision have to be made.

2. Clear Objectives: An entrepreneur should have a clear objective. Without objective an entrepreneur cannot
success. So a successful entrepreneur must have the objective to establish his product in the market, make profit and
also render social service.

3. Business Secrecy: An entrepreneur must be able to guard business secrets. Leakage of business secrets to trade
competitors is a serious matter. So the entrepreneur should be able to make a proper selection of his subordinates.

4. Human Relations Ability: An entrepreneur must have good relations with his customers to earn profit and win
their confidence in his product. He must also maintain good relation with his employees

5. Effective Communication: Good communication also means that the entrepreneur has the ability to put his
point effectively and with clarity. Communication ability is the secret of the success of most entrepreneurs.

6. Technical Knowledge: The entrepreneurs are dealing with situations where sophisticated technology is involved.
The entrepreneur must have a reasonable level of technical knowledge.

7. Decision-Making: Running a business requires taking a number of decisions. Hence an entrepreneur should have
the capacity to analyze the various aspects of the business for arriving at a decision.

8. Risk-Bearing: 'No risk, no business' or 'no risk, no gains'. Risk is an inherent and inseparable element of
entrepreneurship. He assumes the uncertainty of future.

9. Self-Confidence: Entrepreneurs must have the mental capacity to face any situation. They should also have the
ability to inspire other. They must have the confidence in themselves and the determination to achieve their goals.

Qualities of an Entrepreneur: An entrepreneur is a person who takes risk of setting up his own venture for perceived
reward. He is a person who initiates the idea, formulates the plan, organizes resources and puts the plan into action to
achieve his goals. The entrepreneur must have following qualities:-

1. Planner: Entrepreneur has a strong desire to achieve a higher goal and make their dreams come true. So the
entrepreneur must have these quality to achieve the target an entrepreneur cannot achieve the target.

2. Technician: An entrepreneur must have the technical knowledge. He should know that how to use the resources
and achieve the target.

3. Risk Bearing Ability: Risk is very important element. An entrepreneur must have capacity to bearing risk an
entrepreneur cannot success.

4. Decision Maker: Decision making is the process of choosing best alternative among various alternatives. An
entrepreneur must have these qualities because decision making affect the profitability and reputation of the
enterprise.

5. Ability to Find and Explore Opportunities: Entrepreneurial persons are quick to see and seize opportunities.
They show an innovative turn of mind and convert difficulties into opportunities.

6. Motivator: An entrepreneur must have a motivator. He inspires the employees to achieving the target. Without
motivation an entrepreneur cannot achieve the target. So motivation is very necessary for achieving the target.

7. Future Oriented: Entrepreneur shows a high level of future orientation. They do not allow the past to obsess
them. They are oriented towards present and future.

8. Interpersonal Skills: An entrepreneur is a person who during the course of his activities he should be a person
who likes working with people and who has skills of dealing with people.
 9. Facing Uncertainty: An entrepreneur is a person who faces uncertainty. The future is uncertain. So the decision
of entrepreneur affects the profitability and reputation of the enterprise.

10. Coordination: An entrepreneur must have a coordinator. He allocates the resources and utilizes the resources for
achieving the target. Without coordination an entrepreneur cannot achieve the target.

Functions of Entrepreneur: An entrepreneur has to perform the following function:

1. Risk taking and Uncertainty Bearing: The future is unpredictable. The entrepreneur has to take risks in these
circumstances. If the venture succeeds, the entrepreneur profits; if it doe not, losses occur. Thus, taking risks forms
an important entrepreneurial function.

2. Taking Business Decisions: All concerning business decision taken by the entrepreneur. He has to formulate an
action plan regarding the product and quality of the product to be produced. He has to evolve the best possible
method of production which would earn him a sizeable profit.

3. Managerial Functions: The entrepreneur performs various managerial functions. The entrepreneur arranges
finance, purchase raw materials, provides the necessary infrastructure for production. The entrepreneur has a
multiphase personality when he undertakes managerial functions.

4. Innovation: The most important function of an entrepreneur is innovation. He introduces far-reaching

improvements in the quantity and quality of production line. He considers the economic viability and technical
feasibility of an invention.

5. Coordination: The entrepreneur coordinates the other factors of production. Coordination involves selection of
the right type of factors, employment of each factor in the right quantity, use of the best technical devices, division of
labor, reduction of waste etc.

6. Planning: Planning is the first function of the management. Planning is deciding in advance what is to be done,
how is to be done, which is to be done, by whom is to be done. It is very necessary function of entrepreneur. Without
planning an entrepreneur cannot achieve the target.

7. Maintain Good-Relations: An entrepreneur must have good relations with his customer to earn profit and win
their confidence in his product. He must also maintain good relations with his employees.

8. Utilizes the Resources: An entrepreneur allocates the resources and utilizes the resources. An entrepreneur must
utilize the resources for the achievement of the objectives. If the entrepreneur doe not utilizes the resources he
cannot become a successful entrepreneur.

The role of entrepreneur in economic growth

The position of the entrepreneur in modern production is like that of the director of a play. Modern economic development
is closely linked with production. Modern production is higher complex. The entrepreneur directs
Production and he must do whatever is necessary for its success. His role in modern economic development has at least
three aspects:

(1) The entrepreneur co-ordinates the other factors of production. This involves not only assembling the factors, but
also to see that the best combination of factors is made available for the production process.

(2) The entrepreneur takes risks. This is the important function of the entrepreneur and the quantum of profit he
receives is directly proportionate to the risks he takes. Risks are generally based on the anticipation of demand.

(3) Finally the entrepreneur innovates. Innovation is different from invention. Invention is the work of scientists.
Innovation implies the commercial application of an invention. As an innovator the entrepreneur assumes the role
of a pioneer and an industrial leader. The entrepreneur can undertake anyone type of the following five categories of
innovation:
  The introduction of a new good or a new quality of a good
 The introduction of a new method of production
 The opening of a new market
 The conquest of a new source of supply of raw materials
 The carrying out of a new organization of any industry.

Every country tries to achieve maximum economic development. The economic development of a country to a large extent
depends on human resources. But human resource alone will not produce economic development-there must be dynamic
entrepreneurs. Importances of entrepreneurs in economic development are:

1. Employment Generation: Growing unemployment particularly educated unemployment is an acute problem of

the nation. If a hundred persons become entrepreneur they not only create a hundred jobs for themselves but also
provide employment to many more. These enterprises grow providing direct and indirect employment to many
more. Thus entrepreneurship is the best way to fight the evil of unemployment.

2. National Income: National Income consists of goods & services produced in the country and those imported. The
goods & services produced are for consumption within the country as well as to meet the demand of exports. The
domestic demand increases with ever increasing population and standard of living. The export demand also
increases to meet the needs of growing import due to various reasons. An increasing number of entrepreneurs are
required to meet this increasing demand for goods and services. Thus entrepreneurship increases the national
income.

3. Dispersal of Economic Power: When a society produces a small number of entrepreneurs the enterprise due to
lack of competition grow into a few big business houses. This results in concentration of wealth in a few families.
This can have a serious social and national implication. When the number of entrepreneurs increases, a large
amount of national wealth is also shared by a large number of entrepreneurs, thus dispersing wealth. This dispersal
of wealth promotes the real socialism and makes the economy healthy.

4. Economic Independence: Entrepreneurship is essential for national self-reliance. Businessman export goods
and services on a large scale and earn the scarce foreign exchange for the country. Such import substitution and
export promotion help to ensure the economic independence of the country.

5. Improvement in Living Standards: Entrepreneurs set up industries which remove scarcity of essential
commodities and introduce new products. Production of goods on mass scale and manufacture handicrafts etc. in
the small scale sector help to improve the standard of life of a common man. These offer goods at lower costs and
increase variety in consumption.

6. Innovations in Enterprises: Business enterprises need to be innovative for their survival and better
performance. Entrepreneurship developments programmed are aimed at accelerating the pace of small firms'
growth in India. Increased number of small firms is expected to result in more innovations and make the Indian
industry compete in international market.

Small scale industries Definition:-

Small Scale Industry is defined as a unit in which investment in original value of plant and machinery should not exceed Rs.
1.5 crore. However, to facilitate technology up gradation and enhance competitiveness, the investment limit has been raised
to Rs. 5 crore in respect of 71 high tech export oriented items in drugs, pharmaceuticals, hand – tools and knitwear sectors,
etc.

The Role and Importance of Small Scale Industry in India: In a developing country like India, the role and
importance of small-scale industries is very significant towards poverty eradication, employment generation, rural
development and creating regional balance in promotion and growth of various development activities. It is estimated that
this sector has been contributing about 40% of the gross value of output produced in the manufacturing sector and the
generation of employment by the small-scale sector is more than five times to that of the large-scale sector. This clearly
shows the importance of small-scale industries in the economic development of the country. The small-scale industries have
been playing an important role in the growth process of Indian economy since independence in spite of stiff competition
from the large sector and not very encouraging support from the government.
The following are some of the important role played by small- scale industries in India.

1. Employment generation: The basic problem that is confronting the Indian economy is increasing pressure of
population on the land and the need to create massive employment opportunities. This problem is solved to larger
extent by small-scale industries because small- scale industries are labor intensive in character. They generate huge
number of employment opportunities. Employment generation by this sector has shown a phenomenal growth. It is
a powerful tool of job creation.

2. Mobilizations of resources and entrepreneurial skill: Small-scale industries can mobilize a good amount of
savings and entrepreneurial skill from rural and semi-urban areas remain untouched from the clutches of large
industries and put them into productive use by investing in small-scale units. Small entrepreneurs also improve
social welfare of a country by harnessing dormant, previously overlooked talent.

3. Equitable distribution of income: Small entrepreneurs stimulate a redistribution of wealth, income and
political power within societies in ways that are economically positive and without being politically disruptive. Thus
small-scale industries ensure equitable distribution of income and wealth in the Indian society which is largely
characterized by more concentration of income and wealth in the organized section keeping unorganized sector
undeveloped. This is mainly due to the fact that small industries are widespread as compared to large industries and
are having large employment potential.

4. Regional dispersal of industries: There has been massive concentration of industries m a few large cities of
different states of Indian union. People migrate from rural and semi urban areas to these highly developed centers
in search of employment and sometimes to earn a better living which ultimately leads to many evil consequences of
over-crowding, pollution, creation of slums, etc. This problem of Indian economy is better solved by small- scale
industries which utilize local resources and brings about dispersion of industries in the various parts of the country
thus promotes balanced regional development.

5. Provides opportunities for development of technology: Small-scale industries have tremendous capacity to
generate or absorb innovations. They provide ample opportunities for the development of technology and
technology in return, creates an environment conducive to the development of small units. The entrepreneurs of
small units play a strategic role in commercializing new inventions and products. It also facilitates the transfer of
technology from one to the other. As a result, the economy reaps the benefit of improved technology.

6. Indigenization: Small-scale industries make better use of indigenous organizational and management capabilities
by drawing on a pool of entrepreneurial talent that is limited in the early stages of economic development. They
provide productive outlets for the enterprising independent people. They also provide a seed bed for entrepreneurial
talent and a testing round for new ventures.

7. Promotes exports: Small-scale industries have registered a phenomenal growth in export over the years. The
value of exports of products of small-scale industries has increased to Rs. 393 crores in 1973-74 to Rs. 71, 244 crores
in 2002-03. This contributes about 35% India's total export. Thus they help in increasing the country's foreign
exchange reserves thereby reduces the pressure on country's balance of payment.

8. Supports the growth of large industries: The small-scale industries play an important role in assisting bigger
industries and projects so that the planned activity of development work is timely attended. They support the
growth of large industries by providing, components, accessories and semi finished goods required by them. In fact,
small industries can breathe vitality into the life of large industries.

9. Better industrial relations: Better industrial relations between the employer and employees helps in increasing
the efficiency of employees and reducing the frequency of industrial disputes. The loss of production and man-days
are comparatively less in small- scale industries. There is hardly any strikes and lock out in these industries due to
good employee-employer relationship. Of course, increase in number of units, production, employment and exports
 of small- scale industries over the years are considered essential for the economic growth and development of the
country. It is encouraging to mention that the small-scale enterprises accounts for 35% of the gross value of the
output in the manufacturing sector, about 80% of the total industrial employment and about 40% of total export of
the country.

The characteristics of small-scale industries

1. Labor intensive: Small-scale industries are fairly labor-intensive. They provide an economic solution by creating
employment opportunities in urban and rural areas at a relatively low cost of capital investment.

2. Flexibility: Small-scale industries are flexible in their operation. They adopt quickly to various factors that play a large
part in daily management. Their flexibility makes them best suited to constantly changing environment.

3. One-man show: A small-scale unit is generally a one-man show. It is mostly set up by individuals. Even some small
units are run by partnership firm or company; the activities are mainly carried out by one of the partners or directors.
Therefore,' they provide an outlet for expression of the entrepreneurial spirit. As they are their own boss, the decision
making process is fast and at times more innovative.

4. Use of indigenous raw materials: Small-scale industries use indigenous raw materials and promote intermediate
and capital goods. They contribute to faster balance economic growth in a transitional economy through decentralization
and dispersal of industries in the local areas.

5. Localized operation: Small-scale industries generally restrict their operation to local areas in order to meet the local
and regional demands of the people. They cannot enlarge their business activities due to limited resources.

6. Lesser gestation period: Gestation period is the period after which the return on investment starts. It is the time
period between setting the units and beginning of production. Small-scale industries usually have a lesser gestation period
than large industries. This helps the entrepreneur to earn after a short period of time. Capital will not be blocked for a longer
period.

7. Educational level: The educational level of the employees of small industries is normally low or moderate. Hardly there
is any need of specialized knowledge and skill to operate and manage the SSI.

8. Profit motive: The owners of small industries are too much profit conscious. They always try to keep high margins in
their pricing. This is one of the reason for which the unit may lead to closure.

Types of small scale industries

All types of small-scale industries found in India whether in manufacturing sector or service sector are divided into five
types:

1. Manufacturing Industries: Those units which are producing complete articles for direct consumption and also for
processing industries are called as manufacturing industries. For example: Power looms, engineering industries, coin
industries, khadi industries, food processing industries etc.

2. Ancillary Industries: The industries which are producing parts and components and rendering services to large
industries are called as ancillary industries.

3. Service Industries: Service industries are those which are covering light repair shops necessary to maintain
mechanical equipments. These industries are essentially machine- based.

4. Feeder Industries: Feeder industries are those which are specializing in certain types of products and services, e.g.
casting, electro-plating, welding, etc.

5. Mining or Quarries. The Mining sector comprises establishments that extract naturally occurring mineral solids, such
as coal and ores; liquid minerals, such as crude petroleum; and gases, such as natural gas. The term mining is used in the
broad sense to include quarrying, well operations, beneficiating (e.g., crushing, screening, washing, and flotation), and other
preparation customarily performed at the mine site, or as a part of mining activity.
PROBLEMS FACED BY SMALL SCALE INDUSTRIES
Small-scale industries in India could not progress satisfactorily due to various problems that they are confronted with while
running enterprises. In spite of having huge potentialities, the major problems, small industries face are given below.

1. Problem of skilled manpower:

The success of a small enterprise revolves around the entrepreneur and its employees, provided the employees are skilled and
efficient. Because inefficient human factor and unskilled manpower create innumerable problems for the survival of small
industries Non-availability of adequate skilled manpower in the rural sector poses problem to small-scale industries.

2. Inadequate credit assistance:

Adequate and timely supply of credit facilities is an important problem faced by small-scale industries. This is partly due to scarcity
of capital and partly due to weak creditworthiness of the small units in the country.

3. Irregular supply of raw material:

Small units face severe problems in procuring the raw materials whether they use locally available raw materials or imported raw
materials. The problems arise due to faulty and irregular supply of raw materials. Non-availability of sufficient quantity of raw
materials, sometimes poor quality of raw materials, and increased cost of raw materials, foreign exchange crisis and above all lack
of knowledge of entrepreneurs regarding government policy are other few hindrances for small-scale sector.

4. Absence of organized marketing:

Another important problem faced by small-scale units is the absence of organized marketing system. In the absence of organized
marketing, their products compare unfavorably with the quality of the product of large- scale units. They also fail to get adequate
information about consumer's choice, taste and preferences of the type of product. The above problems do not allow them to stay
in the market.

5. Lack of machinery and equipment:

Small-scale units are striving hard to employ modern machineries and equipment in their process of production in order to
compete with large industries. Most of the small units employ outdated and traditional technology and equipment. Lack of
appropriate technology and equipment create a major stumbling block for the growth of small-scale industries.

6. Absence of adequate infrastructure:

Indian economy is characterized by inadequate infrastructure which is a major problem for small units to grow. Most of the small
units and industrial estates found in towns and cities are having one or more problems like lack of power supply, water and
drainage problem, poor roads, raw materials and marketing problem. Thus absence of adequate infrastructure adversely affects the
quality, quantity and production schedule of the enterprises which ultimately results in under-utilization of capacity.

7. Competition from large-scale units and imported articles:

Small-scale units find it very difficult to compete with the product of large-scale units and imported articles which are
comparatively very cheap and of better quality than small units’ product.

8. Other problems:
Besides the above problems, small-scale units have been of constrained by a number of other problems also. They include poor
project planning, managerial inadequacies, old and orthodox designs, high degree of obsolescence and huge number of bogus
concerns. Due to all these problems the development of small-scale industries could not reach a prestigious stage.
Government policy for small scale industry After attaining independence in 1947 India adopted mixed economic
planning as a method to achieve economic development. Along with the Large Scale sector the thrust was on the Small Scale
sector because of its decentralized, its small size, use of mainly indigenous technology, employment intensity and its
suitability for rural areas with limited techno-economic structure.

Industrial policies over the years have focused to promote SSIs through various incentives related to financial, fiscal and
infrastructure measures; along with a heavy industrial base.

INDUSTRIAL POLICY RESOLUTION 1948:

The government stressed the role of SSIs for balanced industrial growth. It was stated that SSIs are particularly suited for
the utilization of local resources and creation of employment opportunities. The primary responsibility for developing small
industries by creating infrastructure has been provided to state governments. Central government frames the broad policies
and coordinates the efforts of State Governments for the development of SSIs.

INDUSTRIAL POLICY RESOLUTION 1956

It stated that besides continuing the policy support to cottage, village and small industries by differential taxation or direct-
subsidies, the aim of state policy would be that the development of this sector is integrated with that of large scale industry.
The focus was to improve the competitive strength of SSIs. To achieve these 128 items were exclusively reserved for
production in SSIs, and 166 items were reserved for exclusive purchase by government from this sector.

INDUSTRIAL POLICY RESOLUTION 1977

It emphasize that whatever can be produced by SSIs must only be so produced. The main thrust of policy was effective
promotion of cottage, village and small industries widely dispersed in rural areas and small towns. This thinking specified
the following things:

a) 504 items were reserved for exclusive production in the small-scale industries.

b) The concept of District Industries Centers (DICs) was introduced so that in each district a single agency could meet
all the requirements of SSIs under one roof.

c) Technological up gradation was emphasized in traditional sector.

d) Special marketing arrangements through the provision of services, such as, product standardization, quality
control, market survey, were laid down.

INDUSTRIAL POLICY RESOLUTION 1980

The policy focused on the need of promoting SSIs through integrated industrial development between large and small
sectors. Industrially backward districts were identified for faster growth of existing network of SSIs. Following measures
were specified in the policy

INDUSTRIAL POLICY RESOLUTION 1990

Main features of this Resolution are as follows:

a. It raised the investment ceiling in plant and machinery for SSIs.

b. It created central investment subsidy for this sector in rural and backward areas. Also, assistance was granted to
women entrepreneurs for widening the entrepreneurial base.

c. Reservation of items to be produced by SSIs was increased to 836.

d. Small Industries Development Bank of India was established to ensure adequate flow of credit to SSIs.

e. Stress was reiterated to upgrade technology to improve competitiveness.

f. Special emphasis was laid on training of women and youth under Entrepreneurial Development Programme.

g. Activities of Kadhi and Village Industries Commission and Khadi and Village Industries Board were to expand.
INDUSTRIAL POLICY ON SSIS 2003-04
The following are the highlights of this endeavor:

a) 73 items reserved for exclusive manufacture in the SSI sector were de-reserved in June 2003. These consist of chemical
and their products, leather and leather products, laboratory reagents etc.

b) Selective enhancement of investment in plant and machinery from Rs one crore to Rs 5 crore. It was for 13 items in
stationary sector and 10 items of drugs and pharmaceuticals sector, from June 2003.

c) Banks were directed to provide credit to SSI sector within an interest rate band of 2 percent above and below their Prime
Lending Rates (PLR).

d) The composite loan limit for SSI was raised from Rs 25 lakhs to Rs 50 lakhs.

e) The limit of dispensation of collateral requirement was raised from Rs 15 lakhs to Rs 25 lakhs on the basis of good track
record and financial position of the unit.

f) The lower limit of Rs 5 lakhs on loans covered under the Credit Guarantee Scheme was removed. All loans up to Rs 25
lakhs were made eligible for guarantee cover under the Credit Guarantee Scheme.

g) 417 specialized bank branches were made operational for SSIs.

h) Third all India census for SSI was conducted through out the country and its final results were released on January 17,
2004.

i) 60 clusters were identified in July 2003 for focused development.

j) Small and Medium Enterprise (SME) fund of Rs 10000 crore was set up under SIDBI to solve the problem of inadequate
finance for SSIs.

k) Laghu Udyami Credit Card Scheme was liberalized. Under this scheme, the credit limit was increased to Rs 10 lakhs from
Rs 2 lakhs. But, it was only for borrowers with satisfactory track record.

POLICY INITIATIVES ON SSI 2004-05

Policy initiatives for this year are as follows:

a) The national commission on Enterprises in the Un-organized/Informal Sector was set up in September 2004. It suggested
measures considered necessary for improvement in the productivity of these enterprises, generation of large scale
employment opportunities, linkage of the sector to institutional framework in areas like credit, raw material supply, and
infrastructure, technology up gradation, marketing facilities and skill development by training.

b) 85 items were de-reserved in October 2004.

c) The investment limit in plant and machinery was raised from Rs one crore to Rs 5 crore in October 2004, in respect of
seven items of sports goods to help to upgrade the technology and enhance competitiveness.

d) The Small and Medium Enterprise (SME) fund of Rs 10000 crore was started by SIDBI since April 2004, with 80% of the
lending for SSI units. The interest rate was 2% below the prevailing Prime Lending Rate (PLR) of the SIDBI.

e) The reserve Bank of India raised the composite loan limit from Rs 50 lakhs to Rs one crore.

f) Promotional Package for small enterprises was initiated.