Presenter : Manpreet

Singh
Btech CSE 4th Sem
13ETSCS014
SIET
Government Policies for
Entrepreneurs
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Government Support
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
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country.

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
(MSME-DO)

and

Medium

Enterprises

Development

Organization

Coir Board
National Small Industries Corporation Ltd (NSIC)
Khadi and Village Industries Commission (KVIC)

 Micro, Small and Medium Enterprises Development Organization

(MSME-DO) :- the Office of the Development Commissioner (Micro,
Small and Medium Enterprises) [earlier known as the O/o the DC (SSI)] 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
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 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
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and village industries for providing employment opportunities in the rural

The other important policies for the

sector relate to:
I.

Excise duty

II. Foreign direct investment approval

III. Labour laws

Rate of duty in respect of Clearances of Specified goods

Excise duty
Rate of duty in respect of Clearances of
Excisable Goods

Value of Clearance
(Rs.)
Upto 100 Lakhs
100-300 Lakhs

Rate of duty

Remarks

Nil
Normal rate of duty

Not to avail Cenvat

Can avail Cenvat

Rate of duty in respect of Clearances of

Specified goods
Value of Clearance
(Rs.)

Rate of duty

Upto 100 Lakhs

60% of normal rate

100-300 Lakhs

Normal rate of duty

Remarks
Cenvat credit is of duty
available from the
beginning itself
Can avail Cenvat

Foreign direct investment approval

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).
Applications for setting up a 100% Export Oriented Unit are also required to be filed
with the SIA.
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For setting up a unit in an Export Processing Zone (EPZ), application has to be filed

Labour laws
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

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
Workmens Compensation Act, 1923
The Weekly Holidays Act, 1942
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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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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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Composite Loan Scheme

Debt-equity Ratio
Promoter's Contribution
Margin for Term Loan
Rate of Interest : (Effective)
Repayment
Security
Terms and Conditions
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Scheme of Interest Subsidy Eligibility

Certification (ISEC)
The Interest Subsidy Eligibility Certificate (ISEC) Scheme is the major source of funding
for the khadi programme. It was introduced in May 1977 to mobilize funds from banking
institutions to fill the gap in the actual fund requirement and its availability from
budgetary sources. Under the ISEC Scheme, credit at the concessional rate of
interest of 4 per cent per annum for capital expenditure as well as working
capital is given as per the requirement of the institutions.
The extent of credit flow to the institutions under the scheme during 2002-03 to 2005-06
was Rs. 329.73 crore, Rs. 362.70 crore, Rs. 278.74 crore and Rs. 233.23 crore and
subsidy provided by the Government through KVIC were Rs. 21.99, Rs. 18.77 crore, Rs.
26.09 crore and Rs. 22.38 crore respectively. Interest Subsidy Eligibility Certificates
worth Rs.392.63 crore have been issued up to December 2006 to meet part of the
working capital requirement of the institutions during 2006-07, against which loans
actually availed by the institutions was around Rs. 260 crore compared to Rs. 356.94
crore sanctioned and Rs. 174.92 crore availed by the institutions as on 31 December
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National Small Industries Corporation Ltd (NSIC)

schemes for small scale industries relate to: Bill Financing
Working Capital Finance
Export Development Finance
Equipment Leasing Scheme
Raw Materials Procurement Support
Marketing Assistance Programme and Exports Assistance;
Stores Purchase Programme
Single Point Registration Scheme and other services.
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THANK YOU ALL

FOR YOUR
ATTENTION

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