15 Institution Support for Small Business
P.G. Padma Gowri
Introduction:
The Small Scale business in all over the world performs a strong role in national development. This is attributed to the massive employment and it provides to the people of the country where it exists. This study explored the roles of these micro finance banks and institutions on small and medium enterprises.
Many entrepreneurs and especially those in small –scale sectors have technology related knowledge to take care of production and quality aspects of the products. They require guidance and support in the beginning stage and production stage of the industry in various projects and business related activities. The entrepreneurs should be able to consider the advantages of various government subsidies and assistance given for backward areas.
Objectives:
- To understand the need and various types of supporting institutions for small business
- To know the Schemes of that institutions
- Knowledge about Industrial Es00tates
Need of Institution Support for Small Business
Small businesses contribute tremendously to the economy of the nation and are often termed as engines of job creation. They account for a huge chunk of the workforce in India. It becomes imperative for the government to support and provide the necessary resources to help them grow and sustain themselves. With this perspective, the government of India provides various opportunities through its ministries, bodies and programmes.
Few of these are listed below.
Public Sector Banks: Banks are the most accessible source for financial support for Small and medium-sized enterprises (SME s).
Types of Institution:
In order to accelerate the small scale industries development ,Government at the central and state levels have set up a number of development agencies or institutions such as District Industries center (DICs) small industries services institution (SISI) and small industries develop an organization, etc.,
All Indian financial institution- IDBI, IFCI,ICICI – have promoted a number of technical consultancy organization (TCOs) to assist small entrepreneurs in different ways. In 1986, the small industries development fund was set up in IDBI in order in to assist small, scale, village cottage industries and tiny sectors units in the rural areas.
Recently, the small industries development bank to India (SIDBI) has been established to help small scale units. In addition to these institution there are agencies like National science and technology entrepreneurship board, MSME, khadi and village industries commission , commercial banks , EXIM bank(Export-Import Bank of India.) and co –operative banks who undertake promotion activities aiming at facilitating industries development.
MSME -Ministry of Micro, Small & Medium Enterprises
This sector has emerged as a highly vibrant and dynamic sector of the Indian economy over the last six decades. MSMEs play an important role in providing large employment opportunities at comparatively lower capital cost than large industries but also help in industrialization of rural & backward areas. It also helps to reducing regional imbalances, assuring more equitable distribution of national income and wealth.
MSMEs are complementary to large industries as ancillary units and this sector contributes enormously to the socio-economic development of the country. Ministry of Micro, Small & Medium Enterprises (M/o MSME) has a vibrant MSME sector by promoting growth and development of the MSME Sector, including Khadi, Village and Coir Industries, in cooperation with concerned Ministries & Departments. State Governments and other Stakeholders of MSME providing support to existing enterprises and encouraging creation of new enterprises.
Micro & Small Enterprises – Cluster Development Programme (MSE-CDP)
Micro, Small and Medium Enterprises (MSME) Scheme, Government of India adopted the cluster development approach as a key strategy for enhancing the productivity and competitiveness as well as capacity building for Micro and Small Enterprises (MSEs) and their collectives in the country.
Objectives of the Scheme:
(i)To support the sustainability and growth of MSEs by addressing common issues such as improvement of technology, skills and quality, market access etc.
(ii)To build capacity of MSEs for common supportive action through formation of self-help groups, up gradation of associations, etc.
(iii)To create infrastructural facilities in the new industrial areas of MSEs.
(iv)To set up common facility centers (for testing, training center, raw material depot, effluent treatment, complementing production processes, etc.).
Scope of the scheme:
(i) Diagnostic Study
(ii) Soft Intervention
(iii) Setting up of Common Facility Centers (CFCs)
(iv) Infrastructure Development (Up gradation / New)
National Institute for Micro, Small & Medium Enterprises
NI-MSME was initially set up as Central Industrial Extension Training Institute (CIETI) in New Delhi in 1960 under Ministry of Industry and Commerce, Government of India.NI-MSME was decided to keep it free from the tardy and impeding administrative controls and procedures, so that the Institute can play a pivotal role in the promotion of small enterprise. In the year 1962, it was renamed as Small Industry Extension Training (SIET) Institute.
District Industries Centers (DICs)
Government –both central and state, have in the past taken a number of measures for the development of small and village industries. In addition, multiplicity involved in small industries development and complicated systems and procedures made the job of promoting the industrial units an uphill task for small entrepreneurs.
Hence, it was felt necessary to establish a development agency which could provide all services and facilities to village and small industries under one roof. Accordingly, the DICs were established in May 1978 in order to cater to the needs of small units.
Functions of DIC:
Identification of entrepreneur’s .DIC develops new entrepreneurs by conducting entrepreneurial motivation programmes throughout the district especially in panchayat union headquarters and small towns.
Selection of project .DIC offers technical advice to new entrepreneurs for the selection of projects suitable to them.
Provisional registration under SSI .After the selection of project, entrepreneurs are issued with provisional SSI registration which is essential for obtaining assistance from the financial institutions.
Purchase of fixed asset. DIC sponsors the loan application to TTIC, SIDCO and banks for the purchase of land and building and sanction margin money under rural industries project loan scheme payable to other financial agencies for the purchase of plant and machinery. Get clearances from various departments. It takes the initiative to get clearances from various departments and take follow up measures to get speedy power connection. Get assistance to raw material supplies. It makes necessary recommendation to the concerned raw material suppliers and issues the required certificates for the import of raw material and machinery wherever necessary.
Assistance to village artisans and handicrafts.DIC arranges for the financial assistance with the lead bank or nationalized banks of the respective areas. Interest – free sales tax loan. SSI units set up in rural areas can get IFST loan up to a maximum limit of 8% of the total fixed assets from SIDCO .But the sanction order from the same is been issued b DIC .The DIC also recommends the SSI units for registration for government purchase programme.
Subsidy schemes DIC assists SSI units and rural artisans to get subsidies such as power subsidy, interest subsidy for engineers , subsidy under IRDP, etc…. from various institution
Training Programmes. DIC gives training to rural entrepreneur and also assists other units giving training to small entrepreneurs.
This scheme was introduced in 1983-84 for youth between 18 to 25 years with SSLC to provide self-employment for unemployed educated youth. Technocrats and women are given preference District industries centers are supposed to provide pre- investment, investment and post investment assistance to entrepreneur under one roof.
Industrial Estates:
Developing countries require institutional arrangements for their rapid industrialization and balance growth .An industrial estate has been defined as a method of “Organizing, Housing and servicing industry, a planned clustering of industrial enterprises offering slandered factory buildings erected in advance of demand and a verity of services facilitates to the occupants”.
The main features of an industrial estate are as follows:
- It is a tract of land sub divided and developed into factory plots or sheds
- It provides several common facilities or infrastructural amenities such as water, power, transportation tool room, post office to the occupants.
- It is a planned clustering of industrial units.
- It is designed as a tool of industrialization and balanced regional development
- It may be developed in rural urban semi – urban areas
- It may be small or medium or large
- It may be set up the government or by cooperatives or by private agencies
Types of Industrial Estates
Industrial estates may be classified in to the following categories:
- General purpose or composite industrial estates: Such an industrial estate provides accommodation to all types of small scale industries.
- Special purpose industrial estates: This type of industrial estate is particularly Constructed for specified groups of entrepreneurs e.g., technically qualified persons , craftsmen or artisans ,etc., for example ,industrial estates for artisans and technical personnel have been set up Hyderabad.
- Ancillary industrial estates: Such an industrial estate houses manufacturing units, which produce ,parts and components for a large industrial unit .
- Function industrial estates: This type of industrial estate consists of industrial units manufacturing the same product .such estates have been set up for leather goods electronics ,sport goods , food preservation , ceramics, etc..,
- High-Rise Buildings: These are multistorey building constructed in big cities, to provided space to industrial units manufacturing light weight goods with the help of simple machine tools.
Advantages of Industrial Estate
- Economics of scale: Location of many medium are small plants within a large area offers several economics
- Economics of agglomeration: In an industrial estate, several industrial units are clustered together.
- Low investment: A small scale entrepreneur can obtain an industrial plot or shed on rent or higher purchase basis
- Less risk: Industrial estate serve as risk –absorbing division because of low capital investment and profession of common facilities and services
- Saving of time and effect: An individual entrepreneur is relevant of the trouble of the searching for a suitable place
- Nursery for new entrepreneur : Industrial estate reduce risk and increase profitability through internal external economics
- Mutual cooperation: Industrial estate promote the spirit of operation and joint effects
- Balance regional development: By developing a state in relatively backward regions, the government can insure the balanced industrialization of different parts of the country.
Role of science and Technology entrepreneur Parks (STEP):
First generation entrepreneurs are emerging as an important group in the country. A major problem faced by them is the lack of appropriate testing facilities. One mechanism for bridging gap between technical research and industry is the science and technology entrepreneur park.
Example:
A conventional science and technology park was set up by the Birla institute of Scientific Research (BISR) in Ranchi. It was called as Small Industries Research and Development Organization (SIRDO).
Small Industries Development Organization (SIDO):
SIDO is a policy –making, coordinating and monitoring agency for the development of small scale entrepreneurs. It maintains a close liaison with government, financial institutions and other agencies which are involved in the promotion and development of Small Industries. It provides a comprehensive range of consultancy services and technical, managerial, economic and marketing assistance to SSI units.
National Small Industries Corporation limited(NISE):
NSIC was established in the year 1955, is headed by Chairman-cum-Managing Director and managed by a Board of Directors. The main function of the Corporation is to promote aid and foster the growth of micro and small enterprises in the country
NISE was set up with the objectives of supplying machinery and equipment to small enterprises on a hire-purchase basis and assisting them in producing government orders for various stores. The main functions of NISE are:
- To develop small scale units as ancillary units to large –industries
- To provide SSIs with machines on hire-purchase.
- To assist small industries with marketing facilities.
- To distribute basic raw materials through their depots.
Directorates of industries of the state governments:
The small scale industries are a state subject and the development and implementation of the schemes of the assistance of state government. Directorates of industries of the state governments run various training programmes , production schemes and common facilities schemes.
Small Scale Industries Corporations:
The state government set up Small Scale Industries Corporations, in order to undertake many commercial activities. The most important of these activities are distribution of scarce raw materials, supply of machines on hire- purchase basic etc. for Small industries.
Micro/ Small manufacturing enterprises/ Small & Micro exporters (SSI-MDA) – Market Development Assistance Scheme
This scheme offers funding for:
- Participation by manufacturing Small & Micro Enterprises in International and Exhibitions under MSME India stall.
- Provides supports for Sector specific market studies by Industry Associations/ Export Promotion Councils/ Federation of Indian Export Organization.
- Initiating anti‐dumping products by SSI Associations and Reimbursement of 75% of one time registration fee (Under MDA Scheme) and 75% of annual fees (Under NMCP Scheme) paid to GSI by Small & Micro units for the first three years for bar code.
Objective of this scheme:
- Encourage Small & Micro exporters to their efforts for tapping and developing overseas markets.
- To increase participation of representatives of small/ micro enterprises under MSME India stall at International Exhibitions/ Trade Fairs
- To enhance export from the small manufacturing enterprises.
- Use the Bar Coding on a large scale production and marketing.
Startup India campaign:
Is based on an action plan aimed at promoting bank financing for start-up ventures to boost entrepreneurship and encourage startups with jobs creation. It was organized by Department of Industrial Policy and Promotion (DIPP).
The Standup India initiative is also aimed at promoting entrepreneurship among SCs/STs, women communities. Rural India’s version of Startup India was named as”DeenDayalUpadhyaySwaniyojanYojana”.
Small Industry Extension Training Institute (SIETI)
SIETI -institute entered in the field of consultancy an ad hoc basis to support training activities of state government and development corporations. SIETI’S consultancy services become board –based in terms of assignments was undertaken.
The past assignments of SIETI are,
- Identification of industrial opportunities
- Identification of growth centers.
- Preparation of regional development plans
- Industrial profile
- Feasibilities study.
- Organizational development
- Designing information system
- Entrepreneurial development training
- Management counseling for sick industrial units
- Training of trainers and consultants for Entrepreneurial development etc.
National Productivity Council (NPC)
The three stages NPC services are:
- Train young and prospective Entrepreneurs
- Undertake market surveys in the states for identifying investment opportunities consumption patterns for the prospective Entrepreneurs
- Post- investment service consultancy and follow-up.
National Reach Development Corporation Of India (NRDCI)
National Research Development Corporation (NRDC) was established in 1953 by the Government of India.
The primary objective to promote, develop and commercialize the technologies / inventions / patents / processes from various national R&D institutions / Universities and is presently working under the administrative control of the Dept. of Scientific & Industrial Research, Ministry of Science & Technology.
NRDCI makes available processes which have been developed various laboratories in the country. NRDC is recognized, particularly in the developing countries, as the source of reliable appropriate technology, machines and services, which are typically suitable for these countries
Conclusion:
A small business promote the development of an national economy, it has not been given adequate recognition that corresponds with intensity of its contribution. It is significant to state that both financial and non-financial services provided by the banks and institutions have greatly assisted small businesses in India and have enhanced the distribution of business skills and the sharing of innovative ideas.
The financing sectors and institutions significantly promote businesses by reducing the resource gap for small businesses. The above Institutions have a huge potential for increasing the performance of small businesses through the frequent contributions in technical supports, financial support, guidance and services.
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