Institutional Support for Small Entrepreneurs

1. Subject Name: Management and Entrepreneurship Subject Code: 10AL51 Prepared By: PUNITHA S Department: Aeronautical Eng.. Date: 10th Sep 2014 Unit - 7

2. Unit-7 Institutional Support

3. NEED FOR INSTITUTIONAL SUPPORT Finance is the life blood of any business. In other words finance is the nerve centre of a business. Every kind of business requires adequate amount of finance for its start. ENTREPRENEUR NEEDS FINANCE :- * To start an Industry. * For acquiring Fixed Assets. * Developing Product. * Developing Men and Machine at Work. * Encourage Management to make Progress. Finance is important but not the only condition to run an Enterprise. Any economic activity requires prior built-up Infrastructural facilities for its start. But creation of infrastructural facilities requires huge funds which small entrepreneurs can not afford or are always found short of. Finance is required by large, medium as well as small business Enterprises.

4. Central and State Governments provides various kinds of supports and facilities to help the small entrepreneurs which helps them :- • To establish their industry In market & Grow Bigger • A separate ministry of Small Scale Industries was created on October 14,1999 to focus attention of SSI (Small Scale Industries) sector. (Now renamed as the Ministry of Micro, Small and Medium Enterprises (M/OMSME) for all matters relating to Micro, Small and Medium Enterprises). • Before 1999, the same Ministry was known by name of Small Scale Industries and Agro & Rural industries (SSI & RRI). • Work of Ministry of SSI - * Initiates various • i) Policy measures • ii) Programmes & • Schemes • for the Promotion of SSIs (Small Scale Industries)

5. MATRIX of Institutional Support Structure SSI support Agencies and Specialized Services Support Agencies SSIs

6. Providers of Finance & Specialized Support Services SSIs

7. Services offered by Ministry of SSIs Consultancy in various aspects like $ Management $ Training $ Testing Facilities $ Marketing assistance through various institutions set up by Govt.

8. CENTRAL GOVERNMENT SUPPORT NETWORK 1.Small Scale Industries Board (SSIB) Constituted in 1954, to advice the government in various policy matters concerning the Promotion & Development of SSIs. Minister of SSIs of the government of India is the Chairperson of SSIB. Members of SSIB * Central Ministers * Chairman of Parliamentary Committes concerned with SSIs * Secretaries of various departments of Central Government, Financial * Institutions, Public Sector Undertakings, State Level Ministry Industries, * Prominent Industry Associations, & Eminent experts from the related fields.

9. 2. Small Industry Development Organization (SIDO) The Office of Development Commissioner Small Scale Industries (DC(SSI)) is also known as the small Industry Development Organization (SIDO). Established in 1954, Apex Body which Assists the Government in Formulation & Overseeing the Implementation of its Policies & Programmes/Projects/Schemes . The SIDO is Headed by The Additional Secretary & Development Commissioner (SSI). SIDO Provides comprehensive range of facilities, technology support etc., through its network of 30 Small Industries Service Institutes SISIs, 28 Branch SISIs, 4 Regional Testing Centre's (RTCs),7 Field Testing Stations (FTSs), 2 Small Entrepreneur Promotion Centre. The SIDO also has a network of Tool Rooms and Process- cum – Product Development Centers (PPDCs) to provide technology and Training support. These Institutions are run as Autonomous Bodies, Registered as Societies under the Societies Act.

10. (SISIs) Small Industry Service Institutes • At the heart of all agencies dealing with Development of small industry is Small Industries Development Organization (SIDO). • It was originally known as Central Small Industries Organizations (CSIO) • Attached, to the ministry of Industry, SIDO administers 43 Small Industries Service Institutes (SISIs). • Functions of SISIs • To assist existing and prospective entrepreneurs through technical and managerial counselling. • Conducting EDPSs all over the country. • To advise the central and state governments on policy matters relating to small industry development. • To provide technical advise to small scale entrepreneurs. • To assist in testing of raw - materials and products of SISIs, their inspection and quality control. • To supply market information to SSIs.

11. To recommend SSIs for financial assistance from banks. • To enlist entrepreneurs for participation in Government stores purchase Programme. • Conduct economic and technical surveys and prepare techno – economic reports for selected areas and industries. • Identify the potential for ancillary development through sub – contract exchanges. • Organize seminars, workshops and industry clinics for the benefit of entrepreneurs. • Proces Cum Product Development Centres (PPDCs) • Six PPDCS established across the country provides the following services :- • Product Design and Innovation. • R & D Support. • Technical Support. • Manpower Development & Training.

12. STATE GOVERNMENT AGENCIES • The network of institutional support at the state level for the development of industries are as under :- • Directorate of Industries. • The Directorate of Industries is the executive agency for the • Promotion & Development of the village and small industries sector. • It acts under the overall guidance of SIDOs. • It’s functions are of both Regulatory & Developmental in nature. The directorate of industries has a network of district industrial centre's (DICs) at the - • District Level, Industrial Officers at the Sub – Divisional Level & Extension Officers at the Block Level functioning under its Control.

13. District Industries Centres (DICS) • District Industries Centres have emerged since, 1978 as the nodal agency for the development of the village and small industries to provide - • * All the support service needed for such development. • The DICs were established with a view to provide – • Integrated administrative framework at the District Level for industrial promotion. DICs were established at district level with qualified personnel in technology, marketing, credit economic investigation, raw materials, so that DICs would be the ‘single window’ through which all assistance would be channeled to the small scale sector. • Up to 1991, about 422 DICs were serving the country almost one for each district throughout the country and 431 districts were in operation. These DICs have assisted more than 1.5 lakh units generating employment for more than 10.3lakh persons. The four Metropolitan cities Mumbai, Chennai, Delhi, Kolkata have been kept outside the purview of DICs.

14. 2. State Financial Corporations (SFCs) • SFCs established under the SFCs Act 1951, play an important role in the development of small and medium enterprises. • The main objective of SFCs are as follows :- • To finance and promote small and medium enterprise in their • respective states for achieving a balanced regional growth. • To Catalyze investment. • To Generate employment. • To Widen the ownership base of the industry. • 3. State Industrial Development Corporation/State Industrial • Investment Corporation (SIDC/SIICS) • Established in 1956 as a wholly owned subsidiary of State Governments, act as catalysts to Industrial Growth. SIDC provides :- • Infrastructure facilities like roads, water supply, electricity etc. to the industries. Give assistance by way of - term loans, subscription to equity, under writing etc. They have also diversified by entering into areas like -merchant banking, venture capital and mutual funds.

15. 2. State Financial Corporations (SFCs) • SFCsestablished under the SFCs Act 1951, play an important role in the development of small and medium enterprises. • The main objective of SFCs are as follows :- • To finance and promote small and medium enterprise in their • respective states for achieving a balanced regional growth. • To Catalyze investment. • To Generate employment. • To Widen the ownership base of the industry. • 3. State Industrial Development Corporation/State Industrial • Investment Corporation (SIDC/SIICS) • Established in 1956 as a wholly owned subsidiary of State Governments, act as catalysts to Industrial Growth. SIDC provides :- • Infrastructure facilities like roads, water supply, electricity etc. to the industries. Give assistance by way of - term loans, subscription to equity, under writing etc. They have also diversified by entering into areas like -merchant banking, venture capital and mutual funds.

16. 4. State Small Industries Development Corporation (SSIDC) • SSIDC cater to the needs of the small, tiny, & village industries in the state\union • territories concerned. • Various Activities Undertaken By them:- • Supply of machinery • Raw material procurement & distribution • Marketing assistance • Seed capital assistance • Construction of Industrial estates. • IV. OTHER AGENCIES • Housing & Urban Development Corporation (HUDCO) • Established in 1980, HUDCOprovides assistance in creating infrastructures for the SSI sector. HUDCO also undertakes research and promotes the building material industry.

17. 2. Institute for Design of Electrical Measuring Instruments (IDEMI) • Set up with assistance of UNDP & UNIDO in the year 1969, IDEMI renders services to instrument industry in general and SSI in particular. • Services Provided by IDEMI • Training and consultancy on the area of instrumentation. • Design & Development of new electronic instruments. • Testing & Calibration of instruments. • Tool Design & Tool Making. • 3. Technical Consultancy Organizations (TCO) • TCOs set up by the financial instruments such as IDBI, SIDBI, etc; mainly cater to the consultancy needs of new entrepreneurs, SMIs, banks, government representatives, & other institutions. They offer consultancy in the areas of industrial development and financing.

18. V. FINANCIAL INSTITUTIONS • Small Industries Development Bank of India (SIDBI) • It is an apex institution functioning from 2nd April 1990 for the promotion, development and financing of the small scale, tiny and cottage industries in the country. SIDBI also coordinates the institutions engaged in similar activities. The banks lending operations are the institutions with developmental activities so, as to facilitate the entry of new entrepreneurs and the strengthening of the SSI sector. • 2. Commercial Banks • 27 Commercial Banks through their country wide network of more than 68000branches cater to the working capital requirements of SSIs. They have offered about 17.5% of net bank credit to the SSI sector. Besides the short term assistance, SSI sector, enjoys the status of ‘priority sector’ in terms of financing. Specialized branches are opened in selected industrial estates and cities to exclusively cater to the requirements of the small – scale entrepreneur.

19. Karnataka State Small Industries Development Corporation Ltd. - (KSSIDC) • KSSIDC – Government of Karnataka Undertaking – was established for providing basic infrastructural facilities for the upliftment of small scale industries in the state of Karnataka. • KSSIDC has constructed over 5523 industrial sheds for SSI entrepreneurs all over the state. These sheds have been designed to provide entrepreneurs the space they require, on a need – based manner. The corporation gives preference to those entrepreneurs who deal in high technology, export – oriented and import substitution products. • The sheds include • Factory accommodation • Toilet facilities • Storage space • open area outside the shed. • It also provides good natural ventilation lighting, security and easy accessibility.

20. Industrial sheds are allotted during the year at a uniform price which is • Fixed. • However, the cost of sheds is based on the following factors:- • Type of Shed, • Land Cost, • Actual Construction Cost • Cost of Infrastructure, • Supervision Charges, • Interest during construction. • In case of old sheds and sheds that are being re – allotted, the cost of the shed will be decided, based on the current cost less 2% depreciation per annum. • KSSIDC has a competent team of engineers with vast experience in construction activity.

21. CONCLUSION Government has made conscious effort to promote the growth of SSIs by facilitating the flow of not only finance (through institutional credit) but also other facilities also. Not only finance but Infrastructural facilities, like transport, communication are also required. Central & State Governments have come forward to provide these facilities which otherwise are beyond the capacity of a small entrepreneur to build up. Various institutions have been coming up since independence which provide support to SSIs in many ways. Institutions like SISIs, DICs, NRDC, NIESBUD, NSIC, EDII, TCOs, SIDOs, NISIET etc, have been set up which provide timely assistance to SSIs.