10 Promotional Package of Micro and Small Scale Enterprises

In fulfillment of the assurance in the NCMP, the following Promotional Package has been announced by the government for the development of MSMEs in the country.

1. Legislation:

(a) With a view to facilitating the promotion and development and enhancing the competitiveness of micro, small and medium enterprises, the Micro, Small and Medium Enterprises Development Bill, 2006 has already been passed. The Government will make effective and expeditious implementation of this legislation in close collaboration with all stakeholders.

(b) The Government will also soon enact a law on Limited Liability Partnerships covering, among others, micro, small and medium enterprises, with a view, inter alia, to facilitating infusion of equity and venture capital funding in these enterprises.

2. Credit Support:

(a) In line with the Policy Package for Stepping up Credit to Small and Medium Enterprises (SME), the Reserve Bank of India (RBI) has already issued guidelines to the public sector banks to ensure 20 per cent year-on-year growth in credit to the MSME. Action has also been initiated to operationalise other elements of the said Policy Package. Implementation of these measures will be closely monitored by both the RBI and the Government.

(b) The Small Industries Development Bank of India (SIDBI) will scale up and strengthen its credit operations for micro enterprises. Government will provide grant to SIDBI to augment SIDBI’s Portfolio Risk Fund (PRF) for this purpose.

(c) Government will also provide grant to SIDBI to enable it to create a Risk Capital Fund (as a pilot scheme in 2006-07) so as to provide, directly or through intermediaries, demand-based small loans to micro enterprises.

(d) SIDBI’s direct lending operations will be expanded by increasing the number of branches from 56 to 100 in two years beginning 2006-07, with a view to catering to the credit needs of more clusters of micro and small enterprises (MSEs).

(e) The Fund will continue to be maintained with and managed by the Credit Guarantee Fund Trust for Small Industries (CGTSI). The Trust will be renamed as “Credit Guarantee Fund Trust for Micro and Small Enterprises” (CGFTMSE).

3. Fiscal Support:

Taking into consideration all the relevant factors, including the new definition of small manufacturing enterprises, under the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, the Government will examine the feasibility of:

a. Increase in the General Excise Exemption (GEE) limit and the existing eligibility limit for GEE;

b. Extending the time limit for payment of excise duty by micro and small enterprises; and

c. Extending the GEE benefits to small enterprises on their graduation to medium enterprises for a limited period.

4. Support for Cluster Based Development:

For comprehensive and speedier development of clusters of micro and small enterprises, the existing guidelines of the Small Industries Cluster Development Programme (SICDP) to be renamed as “Micro and Small Enterprises Cluster Development Programme” (MSECDP) will be reviewed during 2006-07 to accelerate holistic development of clusters, including provision of Common Facility Centres (CFC), developed sites for new enterprises, up-gradation of existing industrial infrastructure and provision of Exhibition Grounds/Halls and also for creation and management of infrastructure-related assets in the public-private partnership mode. The ceiling on project cost will be raised to Rs. 10 crore.

5. Technologies and Quality Up-gradation Support:

a. Four Training-cum-Product Development Centers (TPDCs) for Agro & Food Processing industries would be set up at identified existing Small Industries Service Institutes (SISIs) to facilitate promotion and development of micro and small enterprises in the food processing sector.

b. The two existing Central Footwear Training Institutes (CFTIs) (at Chennai and Agra) will be further strengthened to expand their outreach and assist the MSE in upgrading their technology.

c. Vertical Shaft Brick Kiln (VSBK) Technology would be promoted for adoption by MSEs engaged in manufacturing bricks to make them energy efficient and eco-friendly. For this, one-time capital subsidy (limited to 30 per cent of the cost or Rs. 2 lakh, whichever is less) will be provided to micro and small brick manufacturing enterprises.

d. With a view to promoting energy efficiency in electrical pumps and motors manufactured by MSEs, a special programme of assistance will be launched after a detailed technical study.

e. The existing scheme of assisting the attainment of ISO 9000 and 14001 standards will be operated as a continuing scheme during the 11th Five Year Plan.

f. The scope of the above-mentioned scheme will be expanded to cover “Hazard Analysis and Critical Control Points” (HACCP) Certification obtained by MSE.

g. A Technology Mission will be established with a view to assisting micro, small and medium enterprises (MSMEs) in technology up-gradation, energy conservation and pollution mitigation.

6. Marketing Support:

The National Manufacturing Competitiveness Programme (NMCP) announced in the Budget Speech of 2006-07 will include components relating to marketing support to MSE. Implementation of the NMCP will be taken up soon.

7. Supports for Entrepreneurial and Managerial Development:

a. 20 per cent of the entrepreneurship development programmes (EDP) will be organised for SC/ST, women and physically challenged persons with a stipend of Rs. 500 per capita per month for the duration of the training.

b. 50,000 entrepreneurs will be trained in information technology, catering, agro and food processing, pharmaceuticals, biotechnology, etc., through specialised courses rim by SISIs, over the period co-terminus with the XI Plan.

c. A new scheme will be formulated to provide financial assistance to select management/business schools and technical institutes, to conduct tailor- made courses for new as well as existing micro and small entrepreneurs.

d. A new scheme will also be formulated to provide financial assistance to 5 select universities/colleges to run 1200 entrepreneurial clubs.

e. A new scheme will be launched for capacity building, strengthening of database and advocacy by Industry/Enterprise Associations, after consultation with the Associations and States.

f. A comprehensive study will be conducted to assess the needs and scope of Government intervention required for enhancing the competitiveness of micro and small enterprises in the service/business sector.

8. Empowerment of Women Owned Enterprises:

a. Under the Credit Guarantee Fund Scheme, 80 per cent guarantee cover will be provided to micro and small enterprises operated and/or owned by women.

b. Under the SICDP/MSECDP financial assistance of up to 90 per cent of the cost, subject to ceiling of Rs. 9 crore, will be provided for clusters developed exclusively for micro and small enterprises operated and/or owned by women. Associations of women entrepreneurs will be assisted under the SICDP/MSECDP in establishing exhibition centers at central places for display and sale of products of women- owned micro and small enterprises.

c. To encourage entrepreneurship among women, 50 per cent concession in fees would be given to women candidates in entrepreneurship/ management development programmes conducted by SISIs.

d. To facilitate export by women entrepreneurs, the National Small Industries Corporation Ltd. (NSIC) will assist them to participate in 25 exhibitions over the period co-terminus with the XI Plan.

9. Strengthening of Prime Minister’s Rozgar Yojana (PMRY):

(a) The Prime Minister’s Rozgar Yojana (PMRY), introduced in 1993, has been one of the important credit-linked subsidy schemes to generate self- employment opportunities for the educated youth by assisting them in setting up viable micro enterprises.

By the end of 2005-06, it is estimated to have provided self-employment opportunities to 38.09 lakh persons. A recent review has, however, established the need to improve its effectiveness as a measure for self-employment through this route.

(b) The design parameters of the PMRY, in terms of family income limits for eligibility, project cost ceilings, corresponding ceilings of subsidy, rates of assistance to States towards training of beneficiaries before and after selection, etc., will be improved with effect from 2007-08, keeping in view the findings of the review.

10. Strengthening of data Base for MSME Sector:

a. To strengthen the data base for the MSME sector, statistics and information will be collected in respect of number of units, employment, rate of growth, share of GDP, value of production, extent of sickness/closure and all other relevant parameters of micro, small and medium enterprises, including khadi and village industry units set up under Rural Employment Generation Programme (REGP) and Prime Minister’s Rozgar Yojana as well as coir units, through annual sample surveys and quinquennial census.

b. The quinquennial census and annual sample surveys of MSMEs will also collect data on women-owned and/or managed enterprises.

c. A scheme will also be formulated and implemented to regularly collect data on exports of products/services manufactured/provided by micro, small and medium enterprises, including khadi and village industries.

Submitted by : Dr. Christian, Category : Enterprises, Tag : Enterprises