Project Report

On

Role of Small Scale Industry

IN INDIAN Economy

Punjab Technical University

in partial fulfillment of the requirements for the MIS Project

Master of Business Administration (MBA)

Dep./2010

Submitted to Submitted by:

Mrs. Neeru Gupta RAJESH KUMAR

PROJECT INCHARGE 90492234032

Department of Business Management

Ludhiana College of Engineering & Technology (LCET)

Ludhiana-141002
 SMALL SCALE INDUSTRIES

Small scale industrial units are those engaged in the manufacture,

processing or preservation of goods and whose investment in plant and
machinery (original cost) does not exceed Rs.1 crore. These would, inter
alia, include units engaged in mining or quarrying, servicing and repairing
of machinery. In the case of ancillary units, the investment in plant and
machinery (original cost) should also not exceed Rs. 1 crore to be
classified under small-scale industry.

The investment limit of Rs. 1 crore for classification as SSI has been
enhanced to Rs.5 crore in respect of certain specified items under hosiery,
hand tools, drugs & pharmaceuticals, stationery items and sports goods by
the Government of India.

An industrial undertaking which is engaged or is

proposed to be engaged in the manufacture or production of parts,
components, sub-assemblies, tooling or intermediates, or the rendering of
services and the undertaking supplies or renders or proposes to supply or
render not less than 50 per cent of its production or services, as the case
may be, to one or more other industrial undertakings and whose investment
in fixed assets in plant and machinery whether held on ownership terms or
on lease or on hire-purchase, does not exceed Rs 10 million.

Tiny Enterprises

Investment limit in plant and machinery in respect of tiny enterprises is Rs

2.5 million irrespective of location of the unit.
. OBJECTIVES OF STUDY

• To study the role of small scale industries

on Indian economy.
• To identify the subsidies given by the
government.
 Role played by small scale industries in
India?
India has traditionally always had a very vibrant and competitive SSI. Even
after the industrialization, British producers of textiles found handmade
Indian textiles such a threat that they lobbied hard to have its import
banned, succeeding in the late eighteenth century (Gupta & Sharma,
1996).

During pre-economic liberalization period a wide variety of incentives,

concessions and institutional facilities were extended for the development
of SSIs. But these socialistic promotional policy measures, in many cases
resulted in protection of weak units rather than the independent growth of
units under competitive business environment (Nyati, 1988).

Such situation was continued up to the mid of 1991. Under the regime of
economic liberalization, the focus was shifted from "protection" to
"competitive promotion" (Raja & Rajashekar, 2002).

The public policy in India had been attaching lot of importance to village
and SSI on many grounds such as, SSI being labor-intensive, helped to
increase the volume of employment, particularly in rural areas, it is
estimated that about 2 crore persons are engaged in India in these
industries. The handloom industry alone employs 50 lakh people. They
account for 6% of GDP, 95 % of all industrial units, and 34% of total
exports. Around 39 lakh SSIs in India has emerged versatile producing
over 8000 products, from traditional handicrafts to high-end technical
instruments.

Generalizations are also difficult because though there are firms which are
growing rapidly, there also exists 138,000 sick units within the sector in
India. The contribution of SSI in India to national development was too little
as compared to the contribution of SSI in other countries of the world.
India's SSI shared 95 % of all establishments, 40 % of output, 45% of
employment and 35 % of exports. But Taiwan ranked first with a share of
97% of establishments, 81 % of output, 7% of employment, 48 % of exports
followed by Japan contributing highly with 99 % of establishments, 52 % of
output, 72 % of employment and 13 % of exports (SIDBI Report, 2000).
Production

The small-scale industries sector plays a vital role in the growth of the
country. It contributes almost 40% of the gross industrial value added in the
Indian economy.

It has been estimated that a million Rs. of investment in fixed assets in the
small scale sector produces 4.62 million worth of goods or services with an
approximate value addition of ten percentage points.

The small-scale sector has grown rapidly over the years. The growth rates
during the various plan periods have been very impressive. The number of
small-scale units has increased from an estimated 0.87 million units in the
year 1980-81 to over 3 million in the year 2000.

When the performance of this sector is viewed against the growth in the
manufacturing and the industry sector as a whole, it instills confidence in
the resilience of the small-scale sector.

Year Target Achievement

1991-92 3.0 3.1
1992-93 5.0 5.6
1993-94 7.0 7.1
1994-95 9.1 10.1
1995-96 9.1 11.4
1996-97 9.1 11.3
1997-98 * 8.43
1998-99 * 7.7
1999-00 * 8.16
2000-01 (P) * 8.90
P-Projected (April-December)
* Target not fixed at constant prices
Employment

SSI Sector in India creates largest employment opportunities for the Indian
populace, next only to Agriculture. It has been estimated that 100,000
rupees of investment in fixed assets in the small-scale sector generates
employment for four persons.

Generation of Employment - Industry Group-wise

Food products industry has ranked first in generating employment,

providing employment to 0.48 million persons (13.1%). The next two
industry groups were Non-metallic mineral products with employment of
0.45 million persons (12.2%) and Metal products with 0.37 million persons
(10.2%).

In Chemicals & chemical products, Machinery parts except Electrical parts,

Wood products, Basic Metal Industries, Paper products & printing, Hosiery
& garments, Repair services and Rubber & plastic products, the
contribution ranged from 9% to 5%, the total contribution by these eight
industry groups being 49%.

In all other industries the contribution was less than 5%.

Per unit employment

Per unit employment was the highest (20) in units engaged in beverages,
tobacco & tobacco products mainly due to the high employment potential of
this industry particularly in Maharashtra, Andhra Pradesh, Rajasthan,
Assam and Tamil Nadu.

Next came Cotton textile products (17), Non-metallic mineral products

(14.1), Basic metal industries (13.6) and Electrical machinery and parts
(11.2.) The lowest figure of 2.4 was in Repair services line.

Per unit employment was the highest (10) in metropolitan areas and lowest
(5) in rural areas.
However, in Chemicals & chemical products, Non-metallic mineral products
and Basic metal industries per unit employment was higher in rural areas
as compared to metropolitan areas/urban areas.

In urban areas highest employment per unit was in Beverages, tobacco

products (31 persons) followed by Cotton textile products (18), Basic metal
industries (13) and Non-metallic mineral products (12).

Location-wise Employment Distribution - Rural

Non-metallic products contributed 22.7% to employment generated in rural

areas. Food Products accounted for 21.1%, Wood Products and Chemicals
and chemical products shared between them 17.5%.

Urban

As for urban areas, Food Products and Metal Products almost equally
shared 22.8% of employment. Machinery parts except electrical, Non-
metallic mineral products, and Chemicals & chemical products between
them accounted for 26.2% of employment.

In metropolitan areas the leading industries were Metal products,

Machinery and parts except electrical and Paper products & printing (total
share being 33.6%).

State-wise Employment Distribution

Tamil Nadu (14.5%) made the maximum contribution to employment.

This was followed by Maharashtra (9.7%), Uttar Pradesh (9.5%) and West
Bengal (8.5%) the total share being 27.7%.

Gujarat (7.6%), Andhra Pradesh (7.5%), Karnataka (6.7%) and Punjab

(5.6%) together accounted for another 27.4%.

Per unit employment was high - 17, 16 and 14 respectively - in Nagaland,

Sikkim and Dadra & Nagar Haveli.

It was 12 in Maharashtra, Tripura and Delhi.

Madhya Pradesh had the lowest figure of 2. In all other cases it was around
the average of 6.

Year Target Achievement Growth

(lakhs (lakhs nos.) rate
nos.)
1992- 128.0 134.06 3.28
93
1993- 133.0 139.38 3.28
94
1994- 138.6 146.56 5.15
95
1995- 144.4 152.61 4.13
96
1996- 150.5 160.00 4.88
97
1997- 165 167.20 4.50
98
1998- 170.1 171.58 2.61
99
1999- 175.4 177.3 3.33
00
l

Export

SSI Sector plays a major role in India's present export performance. 45%-
50% of the Indian Exports is contributed by SSI Sector. Direct exports from
the SSI Sector account for nearly 35% of total exports. Besides direct
exports, it is estimated that small-scale industrial units contribute around
15% to exports indirectly. This takes place through merchant exporters,
trading houses and export houses. They may also be in the form of export
orders from large units or the production of parts and components for use
for finished exportable goods.
It would surprise many to know that non-traditional products account for
more than 95% of the SSI exports.

The exports from SSI sector have been clocking excellent growth rates in
this decade. It has been mostly fuelled by the performance of garments,
leather and gems and jewelers units from this sector.

The product groups where the SSI sector dominates in exports, are sports
goods, readymade garments, woolen garments and knitwear, plastic
products, processed food and leather products.

The SSI sector is reorienting its export strategy towards the new trade
regime being ushered in by the WTO.

Year Exports
(Rs. Crores)
(at current
prices)
1994-95 29,068
(14.86)
1995-96 36,470
(25.50)
1996-97 39,249
(7.61)
1997-98 43946
(11.97)
1998-99 48979
(10.2)
1999-00 53975
(P) (10.2)
P-Provisional

Major Export Markets

An evaluation study has been done by M/s A.C. Nielsen on behalf of
Ministry of SSI. As per the findings and recommendations of the said study
the major export markets identified having potential to enhance SSIs
exports are US, EU and Japan. The potential items of SSIs have been
categorized into three broad categories.

Export Destinations
The Export Destinations of SSI products have been identified for 16
product groups. More..

Opportunity

The opportunities in the small-scale sector are enormous due to the

following factors:

• Less Capital Intensive

• Extensive Promotion & Support by Government
• Reservation for Exclusive Manufacture by small scale sector
• Project Profiles
• Funding - Finance & Subsidies
• Machinery Procurement
• Raw Material Procurement
• Manpower Training
• Technical & Managerial skills
• Tooling & Testing support
• Reservation for Exclusive Purchase by Government
• Export Promotion
• Growth in demand in the domestic market size due to overall economic
• growth
• Increasing Export Potential for Indian products
• Growth in Requirements for ancillary units due to the increase in number
• of Greenfield units coming up in the large scale sector. Small industry
sector has performed exceedingly well and enabled our country to
achieve a wide measure of industrial growth and diversification.

By its less capital intensive and high labour absorption nature, SSI sector
has made significant contributions to employment generation and also to
rural industrialization. This sector is ideally suited to build on the strengths
of our traditional skills and knowledge, by infusion of technologies, capital
and innovative marketing practices. This is the opportune time to set up
projects in the small-scale sector. It may be said that the outlook is positive,
indeed promising, given some safeguards. This expectation is based on an
essential feature of the Indian industry and the demand structures. The
diversity in production systems and demand structures will ensure long
term co-existence of many layers of demand for consumer products /
technologies / processes. There will be flourishing and well grounded
markets for the same product/process, differentiated by quality, value
added and sophistication. This characteristic of the Indian economy will
allow complementary existence for various diverse types of units. The
promotional and protective policies of the Govt. have ensured the presence
of this sector in an astonishing range of products, particularly in consumer
goods. However, the bugbear of the sector has been the inadequacies in
capital, technology and marketing. The process of liberalization coupled
with Government support will therefore, attract the infusion of just these
things in the sector.

Small industry sector has performed exceedingly well and enabled our
country to achieve a wide measure of industrial growth and diversification.

By its less capital intensive and high labour absorption nature, SSI sector
has made significant contributions to employment generation and also to
rural industrialization. This sector is ideally suited to build on the strengths
of our traditional skills and knowledge, by infusion of technologies, capital
and innovative marketing practices. So this is the opportune time to set up
projects in the small scale sector. It may be said that the outlook is positive,
indeed promising, given some safeguards. This expectation is based on an
essential feature of the Indian industry and the demand structures. The
diversity in production systems and demand structures will ensure long
term co-existence of many layers of demand for consumer products /
technologies / processes. There will be flourishing and well grounded
markets for the same product/process, differentiated by quality, value
added and sophistication. This characteristic of the Indian economy will
allow complementary existence for various diverse types of units. The
promotional and protective policies of the Govt. have ensured the presence
of this sector in an astonishing range of products, particularly in consumer
goods.
 Subsides Provided By Government of
India and State Government

Government of Andhra Pradesh

In order to improve the qualities of

raw materials and also finished products, the unit holder will be allowed for
testing facilities for their products / raw materials and also to obtain the BIS
Certificate etc. 20 % of the balance 50 % investment subsidy and maximum
of Rs. 2.00 lakhs will be provided on production of respective bills from
Registered/Reputed Testing Laboratories

Industrial Policy and Action Plan 1994

In order to increase export, products manufactured in the State need to be

made more competitive. Assured quality is the key to competitiveness.
Obtaining an ISO 9000 is an important step in this direction. In this context
the State Government will provide assistance by reimbursing up to 50% of
fees paid to a recognized certification institution.

The State Government is keenly aware of the need for environmental

protection along with rapid industrial development in order to encourage
installation of environmental protection equipment; such equipment will be
exempt from commercial taxes.

Government of Kerala

Industrial Policy 2001

Technology Up gradation, Quality Certification, Intellectual Property

Up gradation of and transfer of technology to industry will be priority
strategy for the industrial development of Kerala. The R&D institutions in
the State will be enabled to take up technology development in specific
industrial sectors in the state. Encouragement will be given for getting
accreditation with international quality testing agencies.

Grants will be provided to industrial units for quality certification by

approved institutions/research laboratories at the rate of 50% of the
expenditure subject to a maximum of Rs. 2 lakhs per unit.

Government of Karnataka

Scheme for providing incentive for units obtaining ISI certification for their
products

The State Government would provide a Subsidy of 50% of the fees and
other charges payable to the Bureau of Indian Standards (BIS) or Rs. 5
000/- (Rupees Five Thousand), whichever is less, to the units which obtain
ISI Certification for their products. In addition, the Government would also
provide subsidy to an extent of 25% of the expenses of Rs. 25 000/-
(Rupees Twenty Five Thousand), whichever is less, towards setting up of
testing facilities for getting the prescribed ISI Certification.

Applicants must have applied and received ISI Certification or Certification

of BIS regarding testing equipments on or after the Date of the Order to be
eligible for Subsidy under the scheme and a copy of the grant of such
certification must be submitted along with the application prescribed.

The operational details of the scheme would be as prescribed by the

Directorate of Industries and Commerce from time to time.

Scheme for providing incentive to Units Obtaining

ISO 9000 Series Certification or its equivalent Indian Standard (IS 14000)

The State Government would provide a subsidy to an extent of 50% of the

cost for obtaining the ISO 9000 Series Certification, (cost includes
application fee, assessment fee and the annual license fee for the first year
or Rs. 50 000/- (Rs Fifty Thousand) only whichever is less) to the units
which obtain the ISO 9000 series Certification or its equivalent Indian
Standard (IS 14000 Series). The grant of subsidy shall be subject to the
following conditions.

The scheme shall be applicable only to the SSI units registered and
established in the State of Karnataka.

The unit shall be eligible to get the subsidy only once under the scheme.

The subsidy shall be available to 10 (ten) units each year on first-come-

first-serve basis.

This benefit shall not be available to the units which have availed the
benefit under the GOI scheme.

Applicants must have applied and received the ISO Certification (or its
Indian Equivalent) on or after the date of the order to be eligible for claiming
subsidy under the scheme and a copy of the grant of such certification
must be submitted along with the application prescribed.

The operational details of the scheme would be as prescribed by the

Directorate of Industries and Commerce.

Government of Orissa

Technology Up gradation

The State Government accords priority on up gradation of technology by

industrial units. Encouragement will be given to get accreditation with
International Quality, Testing Agencies so as to make them internationally
competitive. Government of India/SIDBI/Fis schemes on Technology Up
gradation will be actively pursued and promoted. The Technology Cell
(TBIIP) set up in OSFC with the help or UNIDO will be strengthened.
Venture capital fund of SIDBI/OSFC/IPICOL will be available for promotion
of I.T. units.

The State Government Departments and Agencies will have to purchase

their requirements of these items only from local industries with
ISO/ISI/EPM certification for the items, by inviting competitive quotations
from such industries. Efforts will be made to distribute the purchase order
quotably among the participating industries, prepared to accept the lowest
negotiated rate keeping in view their production capacity.

Any local small scale industrial unit having ISO or ISI Certification for its
products will get an additional price preference of 3 % or 2 % respectively.

Government of Rajasthan

Industrial Policy 1998

Technology Up gradation and Quality Improvement

The State Government will institute Quality Awards to accord recognition to

entrepreneurs achieving excellence in the field of quality.

Preference will be given to ISI/ISO marked products in procurement by the

State Government and its Public Sector Enterprises.

Government of Jharkhand

Jharkhand Industrial Policy 2001

Incentives for Quality Certification

Small Scale / Ancillary Industries would be encouraged to seek ISI / ISO

certification. The State Government shall facilitate for reimbursement of
charges for acquiring ISO 9000 ( or its equivalent) certification to the extent
of 75% of the cost subject to a maximum of Rs. 75000/- in each case from
the Central Government.

Purchase of ISO/ISI certified products will be given preference.

Government of Punjab

Industrial Policy and Incentives Code-1996

Modernization and Technology Up gradation Incentive

The Modernization and Technology Up gradation Incentives shall be

granted to the existing small scale Industrial Units for obtaining ISO
standards and purchase of testing equipment on obtaining ISO standard
with financial assistance from SIDBI, NSIC, PFC or commercial Banks
through their specialized branches or any other branch of a scheduled
bank.

With the objective of promoting Quality Management Systems in the small

and medium industrial sector and for strengthening their products
marketing and exports, the Society shall give away incentives to SMEs for
acquiring ISO 9000. The Govt. of India has formulated a policy of giving
away incentives to industrial units acquiring ISO 9000 certification. A sum
of Rs. 75 000/- is given as subsidy to the SSI unit who is awarded ISO
9000 certification. To supplement Govt. of India policy, SMERFH shall give
Rs. 50 000/- or 50 % of the expenditure, whichever is less, incurred in
acquiring ISO 9000/equivalent certification if the unit has not availed the
incentives of Government of India. If the unit has availed the incentives
granted by Govt. of India then no subsidy will be reimbursed to the unit by
SMERFH.

ELIGIBILITY

1. Small and Medium industrial units with fixed capital investment upto
Rs. 500 laks shall be eligible for grant of incentives.

2. Submission of copy of ISO 9000 or equivalent certification to the SME

industrial unit.
3. Documents showing payment of charges (invoices & receipts) made
to the certification agency, counsel and purchase of machinery

4. The application should reach the Department for examining the case
within 9 months from the date of issue of ISO 9000 or equivalent
certification by the certification agency.

5. An affidavit from the unit that they have not received any subsidy
from Govt. of India.

Application forms can be obtained from the office of concerned General

Manager, District Industries Centre. Application forms should be submitted
in the Office of General Manager, District Industries Centre.

HARYANA

Haryana has been front runner in attracting FDI projects. Since August
1991, 812 FDI / Foreign Technical Collaboration (FC) approvals have been
accorded by the Govt. of India envisaging FDI of Rs.5170 cores. Projects
with FDI of Rs.2625 crores approx. have already been set up in the State
since liberalization and projects with FDI of Rs.348 crores are at advance
stage of implementation. Haryana ranks 7th largest on all India bases in
terms of FDI/FC approvals.

The prominent foreign companies which have come to Haryana in the

recent years are Honda Motors, Smith line Beecham Consumer
Healthcare, Johnson Mathey, Polaris Holdings, Napino Auto, Baxter India
and Mitsubishi Electric India etc. In addition to above, Denso Haryana,
Manesar, YKK India Ltd., Bawal, Krishna Maruti, Gurgaon, Jamna NHK,
Gurgaon, Carrier Aircon, Gurgaon, Asahi India Safety Glass Ltd., Gurgaon,
Duracell India Ltd., Gurgaon Alcatel Network Systems Ltd., Gurgaon have
undertaken major expansion programme.

Incentives and Concessions are being offered for attracting

Foreign and Domestic Investment by Haryana State

Customized package of incentives and concessions

Customized package of incentives and concessions is provided to

prestigious projects having an investment of Rs. 30 crores and above. A
High Powered Committee has been constituted under the Chairmanship of
High Powered Committee has been constituted under the Chairmanship of
the honourable Chief Minister to decide the package in individual cases.

Electricity duty exemption

Electricity duty exemption is provided to all new industrial units except

those in negative list of industries for a period of 5 years throughout the
State.

Reservation of Plots for NRIs, EOUs and Foreign Investment Projects

10%f of plots in the nearly developed Industrial Estates, Growth Centres

and IIDCs have been reserved for NRIs and 10% have been reserved for
EOUS with at least 33% export orders and units having a minimum foreign
equity of 33%.

Rebate on land cost

Rebate equivalent to 20% of the land cost is given if the industrial unit
starts commercial production within 3 years of offer of possession of
industrial plots.

Time schedule for sanctions/approvals:

A time schedule will be fixed for various departments for giving necessary
sanctions/approvals to reduce time frames for project completion.

State Government has being laying emphasis on attracting IT Industry in

the State and Gurgaon has become hub of IT Industry in the country.
Exports from the State were Rs.8000 crores during the year 2001-2002 out
of which share of IT industry was Rs.3200 crores. State Government has
formulated a separate Information Technology Policy, 2000 and following
package of incentives has been announced for foreign as well as domestic
IT Industries:-
Preferential allotment of land for IT industry:

The State Government has been giving preferential treatment for allotment
of land to the IT industry’s on an ongoing basis in all industrial areas
developed by State agencies.

Continuous-uninterrupted power supply for IT industry:

The State Government has been endeavoring to provide continuous and

uninterrupted power supply for IT industries and shall exempt them from
schedule power cuts. Encouragement to captive power generation in IT
Parks/IT locations shall be given.

Facilities on Generator Sets:

Captive power generation sets installed by the information Technology

Industry are eligible for total exemption from payment of electricity duty
without any time limit.

Liberal change of existing industry to IT:

The State Government are permitting setting up of IT Software units in

urban areas and change of existing industry to IT.

Change of land use:

No charges for change of land use (CLU) are being levied for the IT
industry/IT Parks for 3 years i.e., up to 31.03.2003. Permission for
sale/leasing/subleasing in constructed buildings and open spaces shall be
permitted for optimum utilization of infrastructure. Licenses for setting up
STPs are being given liberally and on easy payment terms.

Floor Area Regulation (FAR):

Relaxation in FAR is permitted up to 100% in areas specifically notified by

the State Government for IT Units and in all IT Parks.

Clearances and Support:

Escort services and Single Desk Clearance for obtaining easy clearances
and approval of various Government Departments is being facilitated for
the IT Industries. On-line Clearance & Support Network (OCSN) will be
established linking all the related Departments/Organizations. The
Secretariat for IT shall coordinate approvals and facilitation.

Registration and Stamp Duty:

Rebate on registration and transfer of property charges and exemption

from stamp duty on a tapering scale is being given for state/lease of built-
up space to the IT Industry establishing facilities in private
STPs/Government STPs/IT Parks as under:

(i) For facilities established and sold/leased before 1.6.2001, 90% Rebate

For facilities established and sold/leased before 1.6.2003, 75% rebate

For facilities established and sold/leased before 1.6.2003, 60% rebate

For facilities established and sold/leased before 1.6.2004, 45% rebate

The rebate is applicable on the combined levy of registration fee, stamp

duty and transfer of property duty and no total exemption of stamp duty
would be extended. This concession would be available only for the first
transaction, when the first sale by the infrastructure company is made to an
IT industry

Applicable rate of Sales Tax:

IT software Industry will be totally exempted from payment of sales tax. The
applicable rate of sales tax on computers and computer peripherals shall
be reduced to 0.25%.

IT as priority sector for lending:

IT Software and IT Services is considered as a priority sector by the State

Level Financial Institutions for lending assistance.

Exemption from Pollution Control:

IT Software industry is exempted from the purview of the Haryana Pollution
Control Act, except in respect of power generation sets of more than 10
KVA Capacity.

Awards of excellence:

The State will declare awards of excellence for outstanding performance in

exports/domestic segment/employment generation.

Strengthening telecom and communication infrastructure:

The State shall pursue with DOT for establishing reliable, adequate and
efficient telecom and communication infrastructure including Internet Nodes
in all districts of Haryana.

Haryana being a pioneering Green Revolution State, Haryana has

progressed rapidly and the welfare of its people has increased many folds.
In the process it has been one of the largest contributors of the food to the
country. This strength lies in its agrarian economy. The continued uplift of
its citizens and obligations to the country both present and future can only
be met through a change in paradigm from the Green to the Ever-Green
Revolution, which in turn can only be sustained with the help of
biotechnology.

Therefore, to boost the Biotechnology industry in the State, special

incentives are provided to foreign as well as domestic biotech industries
and are detailed below:-

Preferential allotment of land:

The State Government is giving preferential treatment for allotment of land

to the Biotech industry on an ongoing basis in all industrial areas developed
by State agencies.

Continuous – uninterrupted power supply:

The State Government is endeavoring to provide continuous and

uninterrupted power supply for Biotech industry to exempt them from
scheduled power cuts. Encouragement shall be given to captive power
generation in Biotech Parks/Biotech locations.
Captive Generation:

Captive generation sets installed by biotech industry are eligible for

exemption of Electricity Duty for five years.

Venture Capital:

Govt. is encouraging setting up of venture capital funds with private

participation to provide active monetary support to biotech industry.

Registration charges and Stamp Duty:

Rebate on registration and transfer of property charges and exemption

from stamp duty on a tapering scale is being given for sale/lease of built up
space to the Biotech industry.

- From the date of notification to 31.12.2003, 90%

- First January 2004 and up to 30th June 2005, 75%

- First July 2005 and up to 31st December 2006, 60%

- First January 2007 and up to 30th June 2008, 45%

The rebate is applicable on the combined levy of registration fee, stamp

duty and transfer of property duty and no total exemption of stamp duty
would be extended. This concession would be available only for the first
transaction, when the first sale by the infrastructure company is made to
Biotech industry.

Exemption in Labour Laws:

Labour Laws are being amended so that the Biotech industrial units shall
be able to operate in night shift also.

Clearances and Support:

Single Desk Clearance for obtaining easy clearances and approval of

various Government Departments shall be facilitated for Biotech industries.
On-line clearances and Support Network will be established linking all the
related Departments/Organizations. The Industrial Assistance Group shall
coordinate approvals and facilitation.
Besides, State Government has constituted the Foreign Investment
Promotion Board, Haryana under the Chairmanship of Chief Minister,
Haryana. The Board apart from playing aggressive promotional role will
also give technical support to appraise foreign investment proposals. It will
be empowered to take decisions regarding allotment of land, sanction of
term loan etc. and will act as a Single Window Agency for FDI proposals.

HIMACHAL PRADESH

The units set up by Non Resident Indians in the state except breweries,
distilleries; non-fruit/vegetable wineries & bottling (both for country liquor &
Indian made foreign liquor) have been listed in priority sector by the State
Government.

PACKAGE OF CONCESSION, INCENTIVES & FACILITIES TO PRIORITY

SECTOR AND LOCATED IN INDUSTRIALLY BACKWARD
AREAS (EXCEPT FRUIT, VEGETABLE & MAIZE BASED UNITS
CONSUMING LOCAL PRODDUCE)

Sr. No. Concessions, Incentives & Facilities Period

GST exemption for new village industries with 8 years

investment up to Rs.10 laks and wholly
assisted by HPKVIB/KVIC. For other new
village industries and new tiny units, GST @
25% of the applicable rate. GST deferment to
other new industrial unit(s).

GST @ 1% on raw material processing and Up to 31-

packaging material except timber, shale and 03-2009
limestone.

CST @ 1% both for new and existing units. Up to 31-

 03-2009

Exemption from payment of Electricity Duty. 8 years

Industrially backward areas Industrially
developing areas

Exemption from Electricity Duty on captive 5 years

power generated from D.G. set/hydel plant.

Interest subsidy to tiny/SSI units in industrially 6 years

backward areas.

Price preference of up to 15% to Tiny/SSI

sector and

Up to 3% to Medium & Large sector

Out of turn allotment of land/shed.

Subsidized land/shed in industrially backward

areas.

Capital investment subsidy to tiny units in

industrially backward areas.

Subsidy on the cost of preparation of feasibility

report

to tiny and SSI units.

Exemption from payment of State taxes and 10 years

duties (excluding levies in the shape of fees,
royalties etc.)
 in tax free zone.

TRIPURA

Incentives for Industries

The state Government offers a package of incentives for setting up of

industrial units, which is comparable to other states. Besides, the special
incentive package announced by the Govt. of India for the North East
Region is available to the industrial units. Brief Particulars of the incentives
are as follows:

A. State Package of Industries:

• Capital Investment Subsidy @ 30% on Fixed Capital Investment,

subject to a ceiling of Rs.30 lakhs per unit. Additional subsidy @ 5%
to thrust sector/EOUs.
• Reimbursement of State Sales Tax, for 5 years, subject to a specified
ceiling.
• Price Preference @ 10% on purchases by the Government.
• 4% Interest Subsidy on term loans, for 5 years, subject to a ceiling of
Rs.30,000 per year per unit.
• Standard Certification Charges Reimbursement up to Rs.50,000 per
unit.
• Special incentives to IT industry in the form of 50% concession in the
floor space rentals and reimbursement of standard certification
charges up to Rs.2 lakhs.

B. Incentives Offered by Central Government:

• 100% reimbursement of Excise Duty for 10 years from the date of

commercial production.
• Central Transport Subsidy @ 90% of transport costs of raw
materials/finished goods calculated between Siliguri & factory site
and @ 50% of transport costs of finished goods movement within the
Region.
• Income Tax Benefit @ 100% profits from industrial undertakings
located in Growth Centres/ IIDCs, to be excluded from the Total
Income.
 • Capital Investment Subsidy @ 15% of investment in plant &
machinery, subject to a ceiling of Rs.30 lakhs.
• Interest Subsidy of 3% on working capital loans.
• Comprehensive Insurance Scheme for insurance coverage for 10
years from the date of commercial production.

C. Other benefits/strengths

• 75% subsidy on Air Freight from Agartala to Guwahati/Kolkata, on

transport of fruits/fruit products for export.
• Tripura Industrial Development Agency (TIDA), as Single Window for
facilitation of necessary clearances and other assistance to
entrepreneurs.
• Prompt and regular clearance of incentives and subsidy claims – both
State and Central; State up-to-date in payment/reimbursement of
incentives and subsidies
• State Level Committees for identification and facilitation of Food
Processing, Natural Gas, Information Technology and Export-
oriented Projects.
• Transparent, efficient and responsive administration.

EST BENGAL INCENTIVE SCHEME, 2000

(as amended up to 12th December 2001)

Commerce & Industries Department and Cottage & Small Scale Industries
Department

West Bengal Incentive Scheme 1999 Scheme had an attractive provision of

Sales Tax related by way of "remission" or "deferment". But in pursuance of
the National Policy, the State Govt. had to discontinue the Sales Tax
related Incentives from 1st January 2000. However, as there is a strong
need for fiscal support for the promotion of industry in the State, the State
Govt. decided to introduce the West Bengal incentive Scheme, 2000, with
different and new features, quite attractive for industries in large, medium,
small scale and tourism sectors.

For the purpose of the incentives, districts have been grouped as 'A'
(Calcutta Municipal Corporation), 'B' (Howrah, Hooghly, North 24-
Parganas, South 24-Parganas, Burdwan, Nadia & Midnapore districts) and
'C' (Murshidabad, Birbhum, Purulia, Bankura, Malda, Cooch Behar, North
Dinajpur, South Dinajpur, Jalpaiguri and Darjeeling districts).

SPECIAL FEATURES OF WBIS 2000 SCHEME

• CAPITAL INVESTMENT SUBSIDY FOR ALL CATEGOREES OF

UNITS : Industrial units to get State Capital Investment Subsidy on
the investment made in the fixed capital depending on the location:

Group B - @ 15% to the limit of Rs.150 lakhs

Group C - @ 25% to the limit of Rs.250 lakhs

• INTEREST SUBSIDY: @50% of interest liability to the limit of Rs.100

lakhs/year for:

Group B: 5 years
Group C: 7 years

• EMPLOYMENT GENERATION SUBSIDY : Subsidy on contribution

made towards ESI and EPF for

Large and medium Scale Units - @ 50%

Small Scale Units - @ 75%

• REMISSION OF STAMP DUTY AND REGISTRATION FEE:

Remission @ 50% of Stamp Duty and Registration Fee for purchase/
acquisition of land and buildings.

• INCENTIVE FOR LEATHER UNITS ON RELOCATION TO

KOLKATA

LEATHER COMPLEX: Emphasis is given on modernisation of Leather

Units on their relocation to C.L.C. Such units in large & medium and small-
scale sector will be eligible to incentive @ 15% and 25% respectively
subject to limit of Rs.150 lakhs.

• ADDITIONAL INCENTIVES FOR IT, ELECTRONICS, AGRO &

FOOD PROCESSING AND HPL DOWNSTREAM PROJECTS :
Special benefits for industries in such thrust areas will be

a) Additional Interest Subsidy @ IO% for 2 years.

 1. b) Full Exemption from Stamp Duty and Registration Fees.

Such units in Group A shall be eligible to all incentives admissible to a unit

in Group B area.

• Additional incentives for units in the area of Biotechnology, Jute

diversification, Agricultural implements, Tourism and hosiery w.e.f. 1.
7. 2001.

In addition to the existing benefits, any eligible industrial unit in these

specific fields (in the large, medium and small scale sector) with direct
employment generation of 200 or more will be entitled to get additional
incentives in terms of 10% of the Additional Interest Subsidy per annum for
the eligible period and also be entitled to get exemption from Stamp Duty
and Registration Fee. With effect from 1.1.2002 incentives have also been
extended to service related activities in Food Processing Sectors and
development of Post Harvest Infrastructure.

• Industrial complexes and centres set up with infrastructural facilities

will also be entitled to remission of 50% of Stamp Duty and
registration Fee for the first sale in relation to such complexes and
centres.

• The minimum investment qualifying for Special Package of benefits

(as Mega Projects) has been reduced to Rs. 25 crores from Rs. 250
crores.

• Waiver of Electricity Duty on electric consumption for

production/operation for 5 years.

Apart from the above, benefits, incentives shall also be provided for
conversion for use of piped gas and for quality up gradation in SSI sector.
FINDINGS

1. Small scale industries having IMPACT ON :

(A) Employment: 0.48 million persons (13.1%).Non-metallic
mineral products with employment million persons (12.2%)

Metal products with 0.37 million persons (10.2%).

(B) Export :45%-50% of the Indian Exports is contributed by SSI

Sector. Direct exports 15%

Funding - Finance & Subsidies

Machinery Procurement

Raw Material Procurement

Manpower Training

Technical & Managerial skills

Tooling & Testing support

Reservation for Exclusive Purchase by Government

Export Promotion

(D)PRODUCTION:

Year Target Achievement

1991-92 3.0 3.1

1992-93 5.0 5.6

1993-94 7.0 7.1

1994-95 9.1 10.1

1995-96 9.1 11.4

1996-97 9.1 11.3

1997-98 * 8.43

1998-99 * 7.7

1999-00 * 8.16
GOVERNMENT SUBSIDES AND
BANEFITS

HARIYANA

Electricity duty exemption

Customised package of incentives and concessions

Reservation of Plots for NRIs, EOUs and Foreign Investment Projects

Rebate on land cost

Time schedule for sanctions/approvals:

Preferential allotment of land for IT industry:

Continuous-uninterrupted power supply for IT industry:

Liberal change of existing industry to IT:

Change of land use, clearances and support registration

For facilities established and sold/leased before 1.6.2001, 90%

 HIMACHAL PRADESH

Units 32666

Turnover: over 975 cr.

Employment: 146663

BANIFITS:

no state tax

sale tax rebate

allotment of land at concessional rates

electricity exempt

less fees royalty for 10 years

excise duty exempted: 10 years

capital investment subsidy 15% up to one lakhs per unit

transport subsidy 75%@ raw material for 5 year

PUNJAB
State Capital Investment Subsidy

Sales Tax concessions

Exemption from stamp duty and local taxes

Rebate in electricity charges and water charges

Interest Subsidy

State Transport Subsidy

Subsidy for technical know-how

Marketing Support

Special facilities for export oriented un4ts

Air Freight Subsidy

Incentives to Non-Resident Indians (NRI)

Special incentives for Women

CONCLUSION:
Small Scale Industries may sound small but
actually plays a very important part in the overall growth of an economy. Small
Scale Industries can be characterized by the unique feature of labor
intensiveness. The total number of people employed in this industry has been
calculated to be near about one crore and ninety lakhs in India, the main
proponents of Small scale industries.