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2/14/2013 Mr. SUBRAMANYA A.P. 1

Davanagere UniversityDepartment of Commerce,

Shivagangotri, Davangere.

EL 3.4-Promotion and Management ofSmall Business Enterprises.

Present by:

Mr. A.P. SUBRAMANYANM.A.F., (M Phil).,Faculty Member and Research Scholar,

Department of commerce,Davanagere University.

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4.1Policies initiatives for entrepreneurial growth.

4.2 Schemes of incentives in operation.

4.3 Incentives under the licensing regulations.

4.4 Incentives for development of backward areas.

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1. Identification of backward areas and announcement

of a number of concessions and incentives for theentrepreneurs to start their ventures in such areas;

2. Changes in the attitudes of both Central and StateGovernments towards private enterprises in general

and promotion of small scale industries inparticular.

3. Liberalization of Industrial Licensing Policy andannouncement of special incentives for NRI

investments and exporting industrial units.

4. Promoting coordinated development of largeand small industries by-

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Continues.

Reserving further expansion either exclusively orpartly for the small sector in certain industries.

Developing small industries more vigorously as

ancillaries to large industries.

Encouraging the participation of small industries in

the export drive.

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Small Scale Industrial Policy

Separate small scale industries policy in August 1991.- For small scale industries the investment limit

(investment in plant and machinery) is raised to Rs.75 lakhs for both ancillary and export oriented units

and Rs. 60 lakhs to SSI units.- The investment limit for the tiny sector was raised to

Rs. 5 lakhs from Rs. 2 lakhs.

- Irrespective of their location would be recognized as

small scale industries.- The Small Industries Development Organization

(SIDO) has been recognized as the nodal agency tosupport the small scale industries export promotion

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Continues.

- An export development centre would be set up in SIDOto serve the small scale units through its network offield officers to further augment export activities of thesector.

- A technology development cell will be set up in SIDOwhich could provide technology inputs to improvequality and competitiveness of production of smallscale sector.

- The National Small Industries Corporation (NSIC)

would concentrated on marketing of mass consumptionitems under common brand name and organization linksbetween NSIC and SSIDCs would be established.

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Continues.

- The scope of the national equity fund scheme will bewidened to cover projects up to Rs. 10 lakhs forEquity Support (up to 15%).

- The single window loan scheme has also been

enlarged to cover projects up to Rs. 20 lakhs withworking capital margin up to Rs. 10 lakhs.

- Small Scale Units can have equity support to theextent of 24% of the total investment from the

medium and large scale industries, publicundertakings and NRIs or foreign investment.

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Meaning of Incentives and Subsidies

incentive means concessions, subsidies

and bounties.

subsidies denotes a single lump sum

which is given by a government to an

industry.

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Advantages and Disadvantages

Advantages:

They act as a motivational force which makesthe prospective entrepreneurs to enter into

manufacturing line. They encourage the entrepreneurs to start

industries in backward areas.

By providing subsidies and incentives the

Government can- Bring industries development uniformly in all

regions

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Continues.

Develop more new entrepreneurs which leadsto entrepreneurial development

Increase the ability of entrepreneurs to facecompetition successfully

Reduce the overall problems of small scaleentrepreneurs.

Disadvantages:

1.The antagonists argue that the incentive

schemes may deteriorate into useless tax-giveaway schemes if they are not implementedproperly.

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Continues.

2. Empirical studies reveals that the incentive

schemes are being highly misused rather than

properly used. Some of the units are located in

backward areas with a view to mainly avail thesubsidies and concessions. The real objective of

providing incentives is hardly achieved.

3. Favoritism and corruption have crept into the

administrative machinery which has causedmuch financial strain on the exchequer.

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4.2 Schemes of incentives in operation.

Export/Import subsidies and bounties

Interest free loans

Subsidy for R&D works

Capital investment subsidy

Transport subsidy

Interest subsidy

Subsidy for power generation

Exemption from property tax

Subsidies to artisans and traditional industries

including handlooms

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Continues. Incentives to non-resident Indians

Special incentives to women entrepreneurs

Exemption from income tax

Interest free sales tax loans

Sales tax exemptions

Subsidy for buying test equipment

Subsidy for industrial housing

Land and building at concessional rates

Price preference to SSI units Subsidy/assistance for technical consultancy

Exemption from stamp duty

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Continues.

Concessional water

Provisions for seed capital

Allotment of developed/constructed shedsAllotment of controlled or subsidized raw

material

Subsidizing the cost of marketstudies/feasibility studies or reports

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1. Concessional finance

2. Central investment subsidy

3. Tax holiday to new industrialundertakings set up in backward states

and union territory

Tax holiday for the power sector

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Thank you

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