UNIT 2SUPPORT TO ENTREPRENEURSHIP

Marketing supportFinancial Support

Consultative support

MARKETING SUPPORT

• The success of marketing depends solely on well established institutional set-ups and timely assistance.

• With a view to assisting small scale industries, the government and other agencies have reserved certain items to be purchased from them. The National Small Industries Corporation and State Small Industries Corporations assist small scale industries in selling their products to the government.

• There are trade centers established to cater to the marketing needs of the SSI sector, the NSIC and STC help this sector to export its products.

Central Government Stores Purchase Programme

• This programme provides outlet for the products of industrial units in the country.

• This programme is headed by the director general supplies and disposals who is responsible for arranging the purchase and delivery of all the stores(items) required by the central government of India.

• Price preference: to products of ssi’s including reservation of certain items to be purchased only from them

• Greater facilities for the registration of cottage and small industries was granted, the main objective was to encourage the production and utilization of industrial products manufactured by the small scale industries.

SPECIAL FACILITIES TO SSI SECTOR

• No registration fee is charged• Free tender forms are supplied• Tenders are accepted without any security

deposits• Purchase preference is given• A suitable and reasonable price preference is

given to products of ssi sector• Application forms for initial registration and

renewal are issued free of charge

SUB CONTRACTING EXCHANGE

• To provide effective support to SSI units in securing sub contracting jobs from large and medium enterprises, the SIDO has established 16 sub contracting exchanges in the country.

• Their functions are as follows• To approach large industries to list out items

manufactured by ssi units• To render technical assistance to small scale units

in creating new capacity for specific processes

GOVERNMENT PURCHASE SCHEMES

• The NSIC National small industries corporation would take prime contracts from the purchasing agencies and get such contracts executed by farming them out to a number of small scale units scattered all over the country

• The corporation also acts as a liaison agency to enable small scale units to secure a larger share of the government business

• NSIC issues certificates of competency to ssi units after verifying the technical competence of these units.

• Further NSIC provides necessary technological inputs in developing and standardising products in the ssi sector

• To establish raw material banks to meet the requirements of the small scale sector

TRADE CENTRES• Trade centres provide an integrated marketing system for small scale

industries, they collect and disemminate information relating to all types of small industries in the region, give full details of products capacities, prices.

• They provide a focal point for buyers and sellers • SSI units cannot organise sales and market promotion activities on

their own, they cannot display their products , cannot spend much on marketing and advertising and market research because their resources are scarce and they do not have good trade contacts

• Buyers in India and abroad are not aware of the quality specifications and range of products manufactured by the small sector

• Trade centres therefore fill the information and communication gaps between small manufacturers, consumers and buyers.

EXPORT INCENTIVES

• NSIC has set up an Export department to encourage the exports of small industries.

• This it has done by setting up export houses.• The government has offered special incentives to encourage

exports of the products of the small industries.• The government has made efforts to educate the small sector

units in the export prospects of different products abroad by collecting information from various buyers abroad and disseminating it.

• Some of the important sources of information is the reports prepared by the Trade Development Authority the Indian institute of foreign trade, the Export promotion councils.

EXPORT PROMOTION COUNCILS

• There are at present eleven Export Promotion Councils in India. The EPC’S perform both advisory and executive functions.

• Indian Institute of Foreign Trade(IIFT)—Training of personnel in modern techniques of international trade, organization of research, area surveys, commodity surveys

• Dissemination of information arising from its activities related to market research.

COMMODITY BOARDS

• There are five Commodity Boards for Rubber, Coffee, Tea, Tobacco and Spices responsible for production development and export.

• Export Inspection Council—The EIC a statutory body is responsible for the enforcement of quality control and pre shipment inspection of various exportable commodities.

• Indian Institute Of Packaging—The main function of IIP are to undertake research into raw materials for the packaging industry, to develop new types of packaging for export products to organize programmes on packaging technology.

EXPORT CREDIT GUARANTEE CORPORATION OF INDIA

• The prime objective of ECGC is to support the country’s export by providing a range of insurance covers to the exporters against the risk of non realization of export proceeds due to political reasons.

• Export Processing Zones—EPZ’s are set up to provide an internationally competitive duty free environment for export production at low cost. This enables the products of the EPZ’s to be competitive both quality wise and price wise in the international market.

EXPORT ORIENTED UNITS

• The EOU scheme is complimentary to the EPZ scheme. It adopts the same production regime but offers a wide option in locations with reference to factors like source of raw materials, ports of exports etc.

• Export Promotion Industrial Park Scheme—EPIP scheme has been introduced in August 1994 with a view of involving the state governments in the creation of infrastructural facilities for export oriented production.

EXPORT HOUSES, TRADING HOUSES, STAR TRADING HOUSES

• The objective of the Scheme of Export Houses, Trading Houses, Star trading houses is to give recognition to established exporters. The registered exporters having a record of export performance over a number of years are granted a status of Export Trading houses, Star Trading Houses, Super star Trading Houses. This scheme allows the registered exporters certain additional benefits.

JUTE CORPORATION OF INDIA

• The jute corporation is a wholly owned limited company of the government of India, its main functions are:

• Export and import of raw jute• Internal marketing of jute• Undertaking measures for export promotion

of jute goods.

STATE TRADING CORPORATIONS (STC)

• It was set up as an autonomous corporation to implement governments policies in regard to the promotion and diversification of foreign trade. Its main objectives are to explore new markets for existing as well as new products.

• To diversify India’s export trade, promote long term export operations and sale of difficult to sell items

• Its major export items are semi processed leather, castor oil, silk fabrics rice, jute goods etc

• The STC provides a package of services like supply of raw materials, warehousing and exporting shipping facilities.

• In addition the STC has set up four subsidies namely• The projects and equipment corporation• Handicrafts and handlooms corporations• The cashew corporation of India ltd• The state chemicals and pharmaceuticals corporation ltd• These subsidiaries assist the STC in achieving the main objectives.

THE MINERALS AND METALS TRADING CORPORATIONS OF INDIA

• The MMTC was established with the primary aim to broaden and enlarge the scope of exports of Indian minerals and ores to arrange for the import of essential raw materials for distribution to industrial units in the country. The items of export handled by the MTC are manganese ore, ferro manganese, coal ferro chrome ferro silicon etc

• The main markets created by MMTC are Japan, Korea, Taiwan, Romania, Poland, Hungary , West Germany and the Netherlands.

The Tea Trading corporation of India

• It was established to create a stable export market for Indian Tea particularly in value added forms like tea bags, instant tea, packet tea etc

• Other activities of the corporation include marketing of tea for domestic consumption management of tea establishments

• The TTCI owns five gardens of tea in various states of India.

The Spices trading corporation of India

• It was set up to carry on domestic and international trade in spices and their products.

• It also carries on operations as dealer or exporter of other agricultural products.

• It has diversifies trading to products such as fertilizers pesticides and sprayers.

• Export market training courses and seminars have been held in different parts of the country to create the necessary awareness and motivation among the ssi units engaged in export business.

PROMOTIONAL ACTIVITIES

• The SIDO through its network provides techno managerial assistance for promotion of exports of these products.

• It also disemminates information on foreign markets to export worthy small scale units provides consultancy services.

• A quarterly Small Industry Export Bulletin which covers important areas of interest to exporters is published by the SIDO. It contains useful information on export marketing, policy announcements and procedures related to small industry exports.

FINANCIAL SUPPORT

• Before setting up the units the small enterprises need to know about their financial requirements very clearly.

• Due to the shortage of entrepreneurs own funds and resources the government of India as a part of its policy of promotion of the ssi sector has set up a host of institutions to meet the financial requirements of the small entrepreneurs.

COMMERCIAL BANKS

• Normally the commercial banks provide assistance for the working capital requirement of the ssi.

• But now they have also started providing ‘term’ finance as indicated by the data compiled by the RBI.

• The Credit Guarantee Scheme was a big step towards the financing of ssi sector, initially this scheme was introduced to 22 districts only later it was extended all over the country.

• Lead Bank Scheme introduced by the RBI in this each district has been allotted to one scheduled commercial bank for intensive development.

OTHER FINANCIAL INSTITUTIONS• Industrial Development Bank of India(IDBI)• The IDBI was established on July 1 1964 as the principal financial

institution in the country.• Initially it was set up as a wholly owned subsidiary of the RBI later it

became an autonomous institution.• The IDBI provides assistance to ssi through its scheme of refinance and

through its bills rediscounting scheme.As it is not possible for IDBI to reach a large no of ssi industries scattered all over the country, it has started refinancing of loans granted by the banks and SFC’s.

• It has set up the small industries development fund, the National Equity Fund Scheme for providing support in nature of equity to the ssi units.

• The IDBI has also set up the VECC Voluntary Executive Corporation cell to utilize the services of the experienced professionals for counselling small units.

IFCI• IFCI the Industrial Finance Corporation of India was set up in July 1948.• The IFCI extends financial assistance to the ssi sector through the rupee and

foreign currency loans and also offers financial assistance through its facilities of equipment procurement , buyers and supplier credit equipment leasing finance to hire purchase companies.

• It also offers merchant banking facilities with its Head office in Delhi and a bureau in Bombay.

• Its own financial resources are constituted in form of share capital, bonds and debentures and other borrowings. The IDBI, scheduled banks, insurance companies are the shareholders of the IFCI.

• In recent years the IFCI has started new promotional schemes like the interest subsidy scheme for the women entrepreneurs, consultancy fee subsidy schemes, encouraging the modernization of tiny and small scale ancillary units.

• The IFCI has shown its growing concern in the development of the backward districts.

THE ICICI• The Industrial Credit and Investment Corporation of India Ltd(ICICI) was set

up in 1955 under the Indian companies act with the primary objective of developing the small and medium industries in the private sector.

• Its issued capital comprises of Indian banks, insurance companies and the British Eastern Exchange.

• It provides assistance by way of rupee and foreign currency loans • It provides financial services by way of deferred credit, leasing credit,

installment sale, asset credit.• It also guarantees loans from other private institutions• The ICICI has recently set up the Merchant Banking Division which is

working creditably. It has also set up the Asset Management Company Ltd, to operate the schemes of the ICICI mutual fund.

• The ICICI assists all sectors that is private sector, joint sector, public sector, cooperative sector.

IRBI• Industrial Reconstruction Bank of India was set up in April 1971 to mainly

look after the special problems of the sick units and provide assistance for their speedy reconstruction and rehabilitation.

• The IRBI functions as the principal all India credit and reconstruction agency for Industrial Revival assisting and promoting industrial development and rehabilitating industrial concerns.

• Formerly the IRBI extended assistance to sick closed industrial units, now it extends assistance to sick small scale units and revives them.

• It also has diversified activities into consultancy services merchant banking and equipment leasing.

• It helps banks to assess the worth of sick units which are seeking assistance for revival.

• Through its merchant banking services IRBI enables units in the process of amalgamation merger and reconstruction.

LIC

• The Life Insurance Corporation of India was established under the LIC act in 1956 as a wholly owned corporation of the govt of India on nationalization of the life insurance business in the country.

• LIC offers a variety of insurance policies to extend social security to various segments of the society.

• It also provides loans for the purposes of housing water supply rural electrification.

• It offers services to the low sector also with a low premium and maximum returns.

• It encourages maximum people to get insured for the purposes of safety to the entire family.

UTI

• The UTI Unit Trust Of India mobilises savings of the small scale sector through sale of units and channelises them into corporate investments.

• Over the years the UTI has come up with various schemes to meet the need of the diverse sections of investors.

• These include open ended schemes like the Grihalaxmi Unit Plan, Retirement benefit plan, Primary Equity Fund.

• Besides this it also indulges into new projects, expansions, diversifications.

SFC’s

• The State Financial Corporations were primarily set up to provide long term finance to the small and medium sized industrial units.

• It also undertakes issue of shares, bonds, debentures, of industrial concerns and to grant loans to industrial concerns repayable within period not extending 20 years.

• It also grants finance to small road transporters, tourism related activities, hospitals and nursing homes.

SIDC’s

• Small Industrial Development Corporation is a wholly owned subsidiary of the State governments to promote Industrial development.

• Besides giving term loans underwriting, direct subscription to shares debentures, guarantees, it also undertakes promotional activities preparation of feasibility reports, conducting industrial potential surveys, EDP programmes and developing industrial estates.

• They also offer a package of services such as technical guidance assistance in plant locations, coordination with other agencies .

SIDBI• Small Industries Development Bank of India as set up as a completely

owned subsidiary of the IDBI. It commenced its operations with its head office in Lucknow

• It initiates steps for technological upgradation, and modernisation of the existing units.

• To expand channels of marketing for the products of the SSI sector in the domestic and international markets.

• To promote employment oriented business specially in semi urban areas to create more employment opportunitites.

• The SIDBI introduced two new schemes equipment finance scheme to provide direct finance to existing well run small scale units.

• The Venture capital fund exclusively for small scale units.• It also provides support to the NSIC for providing leasing hire purchase,

and marketing support to units.

EXIM BANK• The Export Import Bank Of India was set up to take over the operations of the

International finance wing of the IDBI and to provide financial assistance to exporters and importers to promote India’s foreign trade.

• Financing of exports and imports of goods and services both of India and outside India.

• Provides technical and administrative assistance to the parties engaged in foreign trade.

• Offers buyer’s credit and lines of credit to the foreign governments and banks.• Providing advance information and business advisory services to Indian

exporters in respect of multilaterally funded projects overseas.• EXIM bank has introduced 3 schemes • Production equipment finance programme• Export Marketing Finance • Export Vendor Development Finance

CONSULTATIVE SUPPORT

• Only Financial assistance and concessions cannot adequately compensate for the deficiencies of infrastructure such as transport and communication.

• This is one reason why industries have not been developing in the backward areas

• Creation of infrastructural facilities involves huge funds which the small entrepreneurs lack. So various central and state government institutions have come up in this regard to support them.

NSIC• The National Small Industries Corporation was formed to provide a wide range of

services mainly promotional to the ssi sector• To provide machinery on hire purchase basis• To provide equipment leasing facility• To help in export marketing of the products of the ssi• To participate in bulk purchase program of the government• To develop machines and equipments to pass on to ssi • For commercial production• To distribute basic raw materials among small scale industries through raw material

depots• To help in development and upgradation of technology and implementation of

modernisation programmes of ssi• To impart training in various industrial trades• To set up small scale industries in other developing countries on turn key basis.• To undertake the construction of industrial estates.

SMALL INDUSTRIES DEVELOPMENT CORPORATION (SIDO)

• Development Commissioner is the head of SIDO.• The main functions of SIDO are classified into

coordination, industrial development and extension.• Functions relating to Coordination:• To evolve a national policy for the development of

small scale industries• To coordinate the policies and programmes of various

state governments• To maintain a proper liasion with the related Central

Ministries, financial institutions etc

Industrial development functions

• To reserve items for the production by ssi• To collect data on consumer items imported

and then encourage setting up of industrial estates to produce these items

• To render required support for development of ancillary units

• To encourage ssi to participate in government stores purchase program by giving them necessary guidance.

Extension functions

• To make provision of technical services for improving technical process, production planning, appropriate machinery.

• To provide consultancy and training services to strengthen the competitive ability of the ssi.

• To render marketing assistance to ssi to effectively sell their products

• To provide assistance in economic investigation and information to ssi

SMALL SCALE INDUSTRIES BOARD

• SSIB was set up in 1954 to advise on the development of ssi in the country.

• It is an apex advisory body constituted to render advice to the government on all issues pertaining to the development of ssi

• The Industries Minister of the government of India is the chairman of the SSIB. The SSIB comprises of 50 members like state industry minister, some Members of the Parliament etc

STATE SMALL INDUSTRIES DEVELOPMENT CORPORATION SSIDC

• The SSIDC were set up in various states to cater to the primary development needs of the small and tiny village industries in the state.

• The important functions performed are:• To procure and distribute scarce raw materials• To supply machinery on hire purchase basis• To provide assistance for marketing of the products of the ssi• To construct industrial estates providing allied infrastructural

facilities and their maintainence• To extend seed capital assistance on behalf of the State

Government concerned.

SMALL INDUSTRIES SERVICE INSTITUTES (SISI)

• The small industries service institutes are set up to provide consultancy and training to small entrepreneurs both existing and prospective

• The main functions of the SISI are:• To serve as interface between central and state governments• To render technical support services• To conduct EDP Programmes• The SISI also render assistance in Trade and market

informations, project profiles, state industrial potential surveys, modernisation and inplant studies, workshop facilities.

DISTRICT INDUSTRIES CENTRES(DIC)

• The District Industries Centres programme was started on May 8 with a view to provide integrated administrative framework.

• Registration of the ssi is done at the DIC’s • The Industrial Potential Surveys are done keeping in view the availability

of resources in terms of material and human skill, infrastructure, demand for product, etc to prepare techno economic surveys and identify product lines.

• To prepare an action plan to effectively implement the schemes identified.

• To guide entrepreneurs in selecting the most appropriate machinery and equipment sources for procuring imported machinery.

• To conduct Artisan training programme.• To undertake development work appropriate to ssi

INDUSTRIAL ESTATES

• An industrial estate is a “tract of land which is subdivided and developed according to a comprehensive plan for the use of a community of industrial enterprises.”

• The United Nations has defined Industrial estates as a “ Planned clustering of enterprise offering standard factory buildings erected in advance of demand and variety of services and facilities to the occupants.”

Types of industrial estates• On the Basis of Functions : Industrial Estates are broadly classified into two types • General Type– They are also called conventional or composite industrial estates. These

provide accommodation to a wide variety and range of industrial concerns. • Special Type—This type of industrial estates are constructed for a specific industrial

units which are interdependent.• On the Basis of Organisational set-up: On this basis the Industrial Estates are classified

into four types• Government Industrial Estates• Private• Cooperative Industrial estates• Municipal Industrial Estates• On the Basis of other variants: On this basis they are classified into• Ancillary Industrial estates• Functional industrial Estates• The Workshop Bay—These are constructed mainly for very small firms engaged in repair

work.

Objectives of Industrial Estates

• To provide infrastructure and accommodation facilities to the entrepreneurs

• To encourage the development of ssi in the country• To decentralize industries to the rural and backward

areas.• To encourage ancillarisation in surrounding major

industrial units• To promote entrepreneurship by creating a

congenial climate to run the industries in these estates.

LIMITATIONS OF INDUSTRIAL ESTATES

• Lack of essential infrastructure facilities such as roads, power, and water

• Lack of common facilities such as tools room, heat treatment or testing

• Lack of realistic survey prior to establishment of the estate• Lack of a clear idea about the relevance of products to the

area• Lack of local involvement and active participation in the

program • Lack of nucleus of skilled workers.

SPECIALISED INSTITUTIONS

• Central Institute of Hyderabad• Central Tool Room Training centres• Central Institute of Hand tool Jalandhar• Institute for design of Electrical Measuring

Instruments IDEM Mumbai• National Institute of Small Industries Extension

Training Hyderabad NISIET• Other Institutes

TECHNICAL CONSULTANCY ORGANIZATIONS(TCO’S)

• At present there are 17 TCO’s operating in various states • Initially the TCO’s functions were focused on pre investment

studies for small and medium scale enterprises. Later the functions were diversified into the following:

• To prepare project profiles and feasibility profiles• To undertake industrial potential surveys• To undertake market research and surveys for specific products • To supervise export consultancy for export oriented projects

based on modern technology• To conduct EDP programmes• To offer merchant banking services