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Entrepreneurship Development in SME Sector (1) Entrepreneurship There is no universally accepted definition of entrepreneurship.

The concept of entrepreneurship is elusive, difficult to d efine, measure and therefore, promote. The concept of entrepreneurship may be applied broadly or in a narrow, focused way dependin g on the context. Enterprise and entrepreneurship can have a range of meanings in different contexts denoting a mindset or type of behaviour (entrepreneurial behaviour) in the broadest sense or equated with a small business undertaking in the narrow sense. Entrepreneurship has typically been referred to as an action, process, or activity, in which innovation plays a significant role. The recent Green Paper on Entrepreneurship in Europe by the European Commission (2003b, p.6) defines it as follows: Entrepreneur ship is the mindset and process to create and develop economic activity by building risk-taking, creativity and/or innovation with sound management, within a new or an existing organisation. Encyclopedia Britannica defines entrepreneur as An individual who bea rs the risk of operating a business in the face of uncertainity about the future conditions. According to ILO Entr epreneurs are the people who have the ability to see and evaluate business opportunities; together with the necessary resources to take advantages of them; and to intimate appropriate action to ensure success. (2) Role of Entrepreneurship Despite the definitional differences, it is commonly agreed that entrepreneurship is a driving force behind SMEs. Available evidence suggests that entrepreneurship can contribute significantly to achieving key policy objectives. Entrepreneurship is an effective means of achieving certain policy objectives, but not all, and at least in the short term, there are trade offs which have to be recognised. Entrepreneurs are the driving force behind SMEs, and SMEs play an important structural and dynamic role in all economies. The main areas where increased levels of entrepreneurial activity can contribute significantly to specific policy outcomes are: i) Create opportunities -Job creation, careers, new products/services ii) Economic growth, productivity improvement, and innovation. iii) Poverty alleviation and social opportunities. iv) Create new customers and open up new markets. Over the last two decades, there has been a shift toward encouraging greater "social entrepreneurship" as a means of poverty alleviation, increasing employment opportunities and empowerment of disadvantaged or under-represented groups, particularly in rural areas. Awareness of the potential which entrepreneurship may offer for promoting social inclusion is growing worldwide. Much of this emphasis placed by governments is focused on assisting target groups to start up micro enterprises, usually by means of the provision of low cost micro finance. These policies implemented in many developing economies have been shown to be remarkably effective by some criteria, and are well illustrated by the success of the Grameen Bank. Micro enterprises are important in their own right, for two closely interrelated reasons:

In the longer term, they can provide a seed bed for entrepreneurship, and for the corporate growth and economic renewal needed to maintain international competitiveness. Almost all SMEs start as a micro enterprise, in that they start as a concept developed by a single person or a few people. In the immediate term, they can provide an alternative to unemployment, and they can provide a means of alleviating poverty and social disparities. Most micro enterprises are non-employing, but they create a job (even if it is only part time) for the entrepreneur.

(3) Education and Training in Entrepreneurship Education and training have been recognised in this context as the single most important means for achieving the objective of fostering entrepreneurship in societies. Education and training in entrepreneurship can have two types of effects. First, they can have considerable impact on the performance of entrepreneurs, especially with regard to assisting entrepreneurs increase their fir ms chances of survival, and to a lesser extent, to help make the resulting business more profitable. Education in entrepreneurship increases the chances for start-ups and self-employment and enhances the economic reward and satisfaction of entrepreneurial individuals. Second, although extremely difficult to measure, education in entrepreneurship is also supposed to have some longer term impacts on the degree of entrepreneurial spirit and attitudes which are fundamental for an entrepreneurial population and society. Although national governments as well as international fora, such as the EU, the APEC, and the OECD, are giving increasing emphasis to the importance of education and training in entrepreneurship, and many initiatives have been launched in practically all

countries, entrepreneurship education and training are still characterised by a number of problems and shortcomings that need to be addressed urgently. These include:

- Entrepreneurship is not integrated into the curriculum, nor is it part of a coherent framework, but is more likely to be taught as a separate subject, or treated as an extra-curricular activity, resulting in a narrow impact on limited numbers of students. - A lack of public resources for the academic discipline of entrepreneurship has resulted in limited teaching and research capability on this and related subjects, creating a major bottleneck in expanding education in entrepreneurial subjects at all levels of formal education and vocational training, as well as leading to an underdeveloped academic infrastructure in these subjects. - A need to improve co-ordination among government agencies in designing and implementing policies for promoting entrepreneurship through co-coordinated actions, and among different government programmes and initiatives. - Fostering entrepreneurship through training and education is not yet well integrated as part of national long term economic strategy and planning; - A low degree of acceptance (among all stakeholders) of the broader concept of education for entrepreneurial attitude and spirit as opposed to education and training for entrepreneurial skills (business skills for SMEs). - Development of indicators and quantitative data, and evaluation of measures undertaken, are still very limited and undertaken only occasionally.

In light of the above, issues in the area of education and training in entrepreneurship that require special government attention may include:

- Integration of entrepreneurial subjects in the formal education systems, in a coherent and systematic way, not only for the purpose of teaching entrepreneurial skills, but also for fostering an entrepreneurial population, throughout all levels of education, and an entrepreneurial society more broadly. - Promoting various forms of public and private partnership, from internship arrangements to private financing, between public educational and research institutions and the private sector, especially SMEs. - Increasing public funding devoted to education and research in entrepreneurship, especially for improving capacity in teacher training, and for developing curricula and programmes in entrepreneurship. - Improving co-ordination between different government bodies involved in promoting entrepreneurship through education and training and through other initiatives. - Developing indicators, compiling quantitative data and evaluating the measures undertaken.

(4) Factors affecting Entrepreneurship:


Examples, evidence Attitudes to wealth, elders, youth, xperimentation, risk, work, professions, achievers, success etc. Family, extended family, collective ownership vs. individual,Treatment of women, castes, classes, minorities, etc. Religion and ethical attitudes to business Tangible, intangible, telecommunications, transport, distribution, health, public safety, law and courts, education system, etc. Demographic profile (e.g. ageing population reduces entrepreneurship and start up rates) Immigration and migration patterns Caste and class rigidities Social homogeneity



Growth opportunities, domestically and across borders Cyclical opportunities and threats (unemployment may lead to entrepreneurship)

Taxation treatment of capital gains, start up expenses, intangible asset expenditure, stock options, etc. LEGAL AND REGULATORY Administrative burden imposed on smaller firms and start ups Regulatory barriers (licenses, etc.) Property rights (tangible, intangible) can be protected and marketed Right to incorporate, and costs of incorporation Costs of defending or enforcing agreements or rights Penalties imposed for "failure", treatment of bankrupts Specific regulations and laws relating to specific markets or activities Access to information about opportunities, technology, partners, laws and regulations etc. Freedom of press and ability to advertise or disseminate information ( e.g. about new products) Accessibility of information in different languages Discrimination in finance (e.g. age, gender, class discrimination) Sophistication and development of markets ( e.g. microfinance, start up and seed finance, angles, equity, religion [e.g. Muslim finance], Venture Capital, second board and OTC markets, mezzanine, etc.) Continuity in finance markets (i.e. are the gaps in the markets, or can an entrepreneur expand smoothly from seed to IPO) Competition in financial markets (e.g. competitive finance markets reduce the margin above cost of finance to lenders, and increase range of services) Ability to use property rights as security (enables entrepreneurs to secure finance) Access to large firms or universities and research labs for technology transfer Access to supply chains Access to incubators and technology support Levels of literacy, numeracy Computer and ICT literacy -- Specific education in entrepreneurship at school, university - Access to training programs, mentoring, advice, nanyangs Monopolistic behaviour, predatory pricing by large firms Networks, clusters Flexibility in labour markets Industry or market specific incentives and subsidies Individual personality and motivation traits e.g. locus of control, risk taking, innovativeness Individual experience and knowledge (5) Major Entrepreneurial Competencies:






Earlier there was a myth that those persons with business family background could become successful entrepreneur. Subsequently people started believing that individuals need technical know-how , as a major requirement for being successful in launching all industrial ventures. To understand that what actually is requires to be a successful entrepreneur, Entrepreneurship Development Institute conducted a research and found out that following major competiencies are required to be a successful entrepreneur:

Initiative: All entrepreneur takes action that go beyond job requirements or the demand of the situation. o Does things before being asked or forced by the events. o Acts to extend the business into new areas, products; or services. Sees and Acts on Opportunities: Looks for and takes action on opportunities. o Sees and acts on opportunities (business, educational or personal growth). o Seizes unusual opportunities to obtain financing, equipment, land, workspace or assistance. Persistence: Takes repeated action to overcome obstacle that get in the way of reaching goals. o Takes repeated or different actions to overcome obstacles: o Takes action in the face of a significant' obstacle. Information Seeking: Takes action on own to get information to help reach objectives or clarify problems. o Does personal research on how to provide a product or service. o Consults experts for business or technical advice. o Seeks information or asks questions to clarify what is wanted or needed. Personally undertakes research, analysis, or investigation. o Uses contacts or information networks to obtain useful information. Concern for High Quality of Work: Acts to do things that meet or beat existing standards of excellence. o States a desire to produce work of high quality. o Compares own work or own company's work favourably to that of others, Commitment to Work Contract: Places the highest priority on getting a job completed. o Makes a personal sacrifice or expends extraordinary effort to complete a job. o Accepts full responsibility for problems in completing a job for others. o Pitches in with workers or works in their place to get the job done. o Expresses a concern for satisfying the customer. Efficiency Orientation: Finds ways to do things faster or with fewer resources or at a lower cost. o Looks for or finds ways to do things faster or at less cost. o Uses information or business tools in improve efficiency o Expresses concern about costs vs. benefits of some improvement, change, or course of action. Systematic Planning: Develops and uses logical, step-by-step plans to reach goals. o Plans by breaking a large task down into sub-tasks. o Develops plans that anticipate obstacles. Evaluates alternatives. o Takes a logical and systematic approach to activities. Problem Solving: Identifies new and potentially unique ideas to reach goals. o Switches to an alternative strategy to reach a goal. o Generates new ideas or innovative solutions. Self-Confidence: Has a strong belief in self and own abilities. o Expresses confidence in own ability to complete a task or meet a challenge. o Sticks with own judgment in the face or opposition or early lack of success. o Does something that he says is risky. Assertiveness: Confronts problems and issues with others directly. o Confronts problems with others directly. o Tells others what they have to do. o Reprimands or disciplines those failing to perform as expected.

Persuasion: Successfully persuades others. o Convinces someone to buy a product or service. o Convinces' someone to provide financing. o Convinces someone to do something else that he would like that person to do. o Asserts own competence, reliability, or other personal or company qualities. o Asserts strong confidence in own company's or organisation's products or services. Use of Influence Strategies: Uses of variety of strategies to affect others. o Acts to develop business contacts. o Uses influential people as agents to accomplish own objectives. o Selectively limits the information given to others. Monitoring: o Develops or uses procedures to ensure that work is completed or that work gets standards or quality. o Personally supervises all aspects of a project. Concern for Employee Welfare: o Takes action to improve the welfare of employees. o Takes positive action in response to employees' personal concerns. o Expresses concern about the welfare of employees.

(6) Institutional Support for Entrepreneurship Development Generally bankers and Government agencies believe that the borrower must be possessing requisite entrepreneurial competencies. Fact is that this subject is never seriously included in any school/college curricula. That is why we observe almost all the graduates (even engineering graduates) running to search a job after completion of their education and hesitate to set up a n enterprise. In fact, not only new entrepreneurs but also existing entrepreneurs need continuous education/ training to enhance their entrepreneurial competencies and skills. Recognizing this need, the Central Government and several State Governments have setup various training institutes which are engaged in providing entrepreneurship development trainings, in addition to technical training and other rendering other services. Given below is a list of such institutes. The bankers should make all efforts to ensure that their borrowers are made aware of these facilities and get training from time to time. Name of Institute National Institute of Small Industry Extension and Training (NISIET) Indian Institute of Entrepreneurship National Institute of Entrepreneurship and Small Business Development (NIESBUD) Integrated Training Centre (Industries) Institute for Design of Electrical Measuring Instruments (IDEMI) Central Institute of Hand Tools Hand Tool Design Development and Training Centre Central Tool Room Central Tool Room and Training Centre Place Hyderabad Guwahati New Delhi Activities Training, research and consultancy services Training, research and consultancy services Coordinating and overseeing activities of various institutes /agencies engaged in entrepreneurship development Conducts EDP course Render services to the instrumentation industry Aims at rapid growth of the hand tool sector Assistance for improvement in productivity, betterment in quality, high value addition Provides services in the area of consultancy, tool design and manufacture and technical training Training, design and manufacture of complicated precision tools for the telecom industry and other common facility services Training, CAD/CAM centre to train post-graduate trainees, automatic process control unit, and so on Training, process and product development of sports goods, R & D Modernise and upgrade technology status for the essential oils and perfumery industry Provide better technology to small-scale foundry and forging units, process and product development, and provision of design for melting equipment, testing facilities

Nilokheri Mumbai Jalandhar Nagaur Ludhiana Kolkata

Central Institute of Tool Design (CITD)


Product-cum-Process Development Centre for Sports Meerut Goods Product-cum-Process Development Centre for Kannauj Essential Oils Product-cum-Process Development Centre Agra

Electronic Service and Training Centre Centre for the improvement of Glass industry National Small Industries Corporation

Ramnagar Firozabad New Delhi

Training, technical and consultancy services Development and adoption of new technologies and products Supply of machinery, marketing assistance, training

Some other organizations engaged in training and Development of SME Entrepreneurs are:

Indo-German Tool Room at Ahmedabad, Aurangabad and Indore Indo-Danish Tool Room at Jamshedpur Hand Tool Design , Development and Training Centre, Nagore, Rajasthan Central Machine Tool Institute at Bangalore Central Institute of Plastic s Engineering and Tools at Chennai & Ahmedabad National Institute of Foundry and Forge Technology at Ranchi DICs at District levelSmall Industries Development Corporations set up by various State Governments.

A brief of important institutes engaged in entrepreneurial development training is given below: (i) The National Institute for Entrepreneurship and small Business Development (NIESBUD) : NIESBUD was established in 1983 by the Ministry of Industry (now Ministry of Small Scale Industries), Govt. of India, as an apex body for coordinating and overseeing the activities of various institutions/ agencies engaged in Entrepreneurship Development particularly in the area of small industry and small business. The Institute which is registered as a society under Govt. of India Societies Act (XXI of 1860) started functioning from 6th July, 1983. Its website can be accessed through Major activities of the Institute are: Evolving effective training strategies and methodology Standardising model syllabi for training various target groups Formulating scientific selection procedure Developing training aids, manuals and tools Facilitating and supporting Central / State/ Other agencies in organising entrepreneurship development Conducting training programmes for promoters, trainers and entrepreneurs.


Undertaking research and exchange experiences globally in development and growth of actively involved in creating a climate conducive to emergence of entrepreneurship.

entrepreneurship. The Institute is

The trainings conducted by the Institute include:

Training of Trainers/ promoters Accreditation Programme for Entrepreneurial Motivation Trainers. Trainers' Training Programme for Enterprise Launching & Management. Trainers/Promoters Programme for support organisations such as SISIs, DICs, Development Corporations etc. Small Business Promotion Programme. Entrepreneurship Orientation Programme for HoDs and Senior Executives. Evolves Standardized Material and Research Publications

(ii) National Institute of Small Industry Extension Training (NISIET): NISIET since its inception in 1960 by the Government of India, has taken gigantic strides to become the premier institution for the promotion, development and modernization of the SME sector. An autonomous arm of the Ministry of Small Scale Industries ( SSI ), the Institute strives to achieve its avowed objectives through a gamut of operations ranging from training, consultancy, research and education, to extension and information services. It has been renamed as National Institute of Micro Small and Medium Enterprises (NIMSME) ( from April 2007. The primary objective of the Institute was to be the trainer of trainers. Today, with the technological development and ever-changing market scenario, their involvement has undergone changes too. From being merely trainers they have widened their scope of activities to consultancy, research, extension and information services. Its website can be accessed through (iii) Indian Institute of Entrepreneurship (IIE): With an aim to undertake training, research and consultancy activities in the small industry sector focusing on entrepreneurship development, the Indian Institute of Entrepreneurship (IIE) was established in the year 1993 at Guwahati by the erstwhile Ministry of Industry (now Ministry of Small Scale Industry) , Government of India as an autonomous

national institute. The institute started its operations from April 1994 with North East Council (NEC) , Govt. of Assam, Arunachal Pradesh and Nagaland and SIDBI as other stakeholders. The activities of the Institute include identification of training needs, designing and organizing programmers both for devel opment functionaries and entrepreneurs; evolving effective training strategies and methodologies for different target groups and locations; organize seminars, workshops and conferences for providing fora for interaction and exchange of views by various agencies and entrepreneurs; undertaking research on entrepreneurship development, documenting and disseminating information needed for policy formulation and implementation on self-employment and entrepreneurship. The Institute acts as a catalyst for entrepreneurship development by creating an environment for entrepreneurship in the support system, developing new entrepreneurship, helping in the growth of existing entrepreneurs and propagation of entrepreneurial education. Its website can be accessed through (iv) Entrepreneurship Development Institute of India (EDII): The Entrepreneurship Development Institute of India (EDI), an autonomous body and not-for-profit institution, set up in 1983, is sponsored by apex financial institutions, namely the Industrial Development Bank of India (IDBI), IFCI Ltd. ICICI and State Bank of India (SBI). The Institute is registered under the Societies Registration Act 1860 and the Public Trust Act 1950. An acknowledged national resource institution, EDI is committed to entrepreneurship education, training and research. The institute strives to provide innovative training techniques, competent faculty support, consultancy and quality teaching & training material.EDI has been spearheading entrepreneurship movement throughout the nation with a belief that entrepreneurs need not necessarily be born, but can be developed through well-conceived and well-directed activities. Its website can be accessed through (v) The Institute of Small Enterprises and Development (ISED): The Institute of Small Enterprises and Development (ISED) stand for Sustainable development through enterprise. It is a multi -faceted Center for advanced learning and practice in the area of development. For the past decade, the Institute for Small Enterprises and Development has focused on research, education, innovative program design and entrepreneurship development initiatives, advocacy and networking dedicated towards sustainable development through enterprise creation. Among the similar institutions ISEDs le ading-edge is the identification of methodologies and processes that empower one to break out of existing mental models in order to identify new opportunities, while exploiting the emerging niche. ISED's interest in linking research, policy, and action is realized through the programmes of its Activity Centers. The integration of the outcomes takes place at the Centre for Policy Integration. In realizing its vision and fulfilling its mission, the Institute also collaborates with like-minded institutions and individuals. Its website can be accessed through

7.1 NATIONAL SMALL INDUSTRIES CORPORATION (NSIC) The National Small Industries Corporation (NSIC), an enterprise under the union ministry of industries was set up in 1955 in New Delhi to promote aid and facilitate the growth of small scale industries in the country. NSIC offers a package of assistance for the benefit of smallscale enterprises. 1. Single point registration: Registration under this scheme for participating in government and public sector undertaking tenders. 2. Information service: NSIC continuously gets updated with the latest specific information on business leads, technology and policy issues. 3. Raw material assistance: NSIC fulfils raw material requirements of small-scale industries and provides raw material on convenient and flexible terms. 4. Meeting credit needs of SSI: NSIC facilitate sanctions of term loan and working capital credit limit of small enterprise from banks. 5. Performance and credit rating: NSIC gives credit rating by international agencies subsidized for small enterprises up to 75% to get better credit terms from banks and export orders from foreign buyers. 6. Marketing assistance programme: NSIC participates in government tenders on behalf of small enterprises to procure orders for them. 7.2 SMALL INDUSTRIES DEVELOPMENT ORGANIZATION (SIDO) SIDO is created for development of various small scale units in different areas. SIDO is a subordinate office of department of SSI and ARI. It is a nodal agency for identifying the needs of SSI units coordinating and monitoring the policies and programmes for promotion of the small industries. It undertakes various programmes of training, consultancy, evaluation for needs of SSI and development of industrial estates. All these functions are taken care with 27 offices, 31 SISI (Small Industries Service Institute) 31 ex t e n s i o n c e n t e r s o f S I S I a n d 7 c e n t e r s r e l a t e d t o p r o d u c t i o n a n d p ro c e s s development. The activities of SIDO are divided into three categories as follows: (a) Coordination activities of SIDO: (1) To coordinate various programmes and policies of various state governments pertaining to small industries. (2) To maintain relation with central industry ministry, planning commission, state level industries ministry and financial institutions. (3) Implement and coordinate in the development of industrial estates. (b) Industrial development activities of SIDO:

(1) Develop import substitutions for components and products based on the data available for various volumeswise and value-wise imports. (2) To give essential support and guidance for the development of ancillary units. (3) To provide guidance to SSI units in terms of costing market competition and to encourage them to participate in the government stores and purchase tenders. (4) To recommend the central government for reserving certain items to produce at SSI level only. (c) Management activities of SIDO: (1) To provide training, development and consultancy services to SSI to develop their competitive strength. (2) To provide marketing assistance to various SSI units. (3) To assist SSI units in selection of plant and machinery, location, layout design and appropriate process. (4) To help them get updated in various information related to the small-scale industries activities. 7.3 SMALL INDUSTRIES SERVICE INSTITUTES (SISI) The small industries service institutes have been set up in state capitals and other places all over the country to provide consultancy and training to small entrepreneurs both existing and prospective. The main functions of SISI include: (1) To serve as interface between central and state government. (2) To render technical support services. (3) To conduct entrepreneurship development programmes. (4) To initiate promotional programmes. The SISIs also render assistance in the following areas: (1) Economic consultancy/information/EDP consultancy. (2) Trade and market information. (3) Project profiles. (4) State industrial potential surveys. (5) District industrial potential surveys. (6) Modernization and in plant studies. (7) Workshop facilities.

(8) Training in various trade/activities. 7.4 SMALL SCALE INDUSTRIES BOARD (SSIB) The government of India constituted a board, namely, Small Scale Industries Board (SSIB) in 1954 to advice on development of small scale industries in the country. The SSIB is also known as central small industries board. The range of development work in small scale industries involves several departments / ministries and several organs of the central/state governments. Hence, to facilitate co-ordination and inter-institutional linkages, the small scale industries board has been constituted. It is an apex advisory body constituted to render advice to the government on all issues pertaining to the development of small-scale industries. The industries minister of the government of India is the chairman of the SSIB. The SSIB comprises of 50 members including state industry minister, some members of parliament, and secretaries of various departments of government of India, financial institutions, public sector undertakings, industry associations and eminent experts in the field. 7.5 STATE SMALL INDUSTRIES DEVELOPMENT CORPORATIONS (SSIDC) State Small Industries Development Corporations (SSIDC) were sets up in various states under the companies act 1956, as state government undertakings to cater to the primary developmental needs of the small tiny and village industries in the state/ union territories under their jurisdiction. Incorporation under the companies act has provided SSIDCs with greater operational flexibility and wider scope for undertaking a variety of activities for the benefit of the small sector. The important functions performed by the SSIDCs include: To procure and distribute scarce raw materials. To supply machinery on hire purchase system. To provide assistance for marketing of the products of small-scale industries. To construct industrial estates/sheds, providing allied infrastructure facilities and their maintenance. To extend seed capital assistance on behalf of the state government concerned provide management assistance to production units. 7.6 DISTRICT INDUSTRIES CENTERS (DIC) The District Industries Centers (DICs) programme was started in 1978 with a view to provide integrated administrative framework at the district level for promotion of small scale industries in rural areas. The DICs are envisaged as a single window interacting agency at the district level providing service and support to small entrepreneurs under a single roof. DICs are the implementing arm of the central and state governments of the various schemes and programmes. Registration of small industries is done at the district industries centre and PMRY (Pradhan Mantri Rojgar Yojana) is also implemented by DIC. The organizational structure of DICS consists of General Manager, Functional Managers and Project Managers to provide technical services in the areas relevant to the needs of the district concerned. Management of DIC is done by the state government.

The main functions of DIC are: (1) To prepare and keep model project profiles for reference of the entrepreneurs. (2) To prepare action plan to implement the schemes effectively already identified. (3) To undertake industrial potential survey and to identify the types of feasible ventures which can be taken up in ISB sector, i.e., industrial sector, service sector and business sector. (4) To guide entrepreneurs in matters relating to selecting the most appropriate machinery and equipment, sources of it supply and procedure for importing machineries. (5) To provide guidance for appropriate loan amount and documentation. (6) To assist entrepreneurs for availing land and shed equipment and tools, furniture and fixtures.Institutional Support (7) To appra i s e the wor thne s s of the proj e c t -propos a l s re c e ived f rom ent re -preneurs. (8) To help the entrepreneurs in obtaining required licenses/permits/clearance. (9) To a s s i s t t h e e n t re p r e n e u r s i n ma r ke t i n g t h e i r p ro d u c t s a n d a s s e s s t h e possibilities of ancillarization. (10) To conduct product development work appropriate to small industry. (11) To help the entrepreneurs in clarifying their doubts about the matters of operation of bank accounts, submission of monthly, quarterly and annual returns to government departments. (12) To conduct artisan training programme. (13) To act as the nodal agency for the district for implementing PMRY (Prime Minister Rojgar Yojana). (14) To function as the technical consultant of DRDA in administering IRDP and TRYSEM programme. (15) To help the specialized training organizations to conduct Entrepreneur development programmes. In fine DICs function as the torch-bearer to the beneficiaries/entrepreneurs in setting up and running the business enterprise right from the concept to commissioning. So the role of DICs in enterprise building and developing small scale sectoris of much significance

Regulatory agencies The principal regulatory agencies are: The Secretariat of Industrial Approvals (SIA), Ministry of Commerce, Government of India The Reserve Bank of India, Directorate General of Foreign Trade, The Company Law Board, The Securities and Exchange Board of India,and The Stock Exchange authorities.

b) Compulsory legislations Prevention of Food Adulteration Act, 1954: The Act is the basic statute intended to protect the common consumer against supply of adulterated food and specifies different standards on various articles of food. The standards are of minimum quality level intended for ensuring safety in the consumption of these food items and for safeguarding against harmful impurities, adulteration etc. The Central Committee for Food Standards under the Directorate General of Health Services, Ministry of Health and Family Welfare is responsible for operation of this Act. Provisions of the Act are mandatory and contravention of the Rules can lead to both fine and imprisonment. Essential Commodities Act, 1954: A number of Control Orders have been formulated under the provisions of this Act, main objectives of which are to regulate manufacture, commerce and distribution of essential commodities including food Schedules. The Directorate also regulates the price of vanaspati under the Order. B2(c) Meat Products Control order, 1973. This Order regulates manufacture, quality and sale of all meat products and is operated by the Directorage of Marketing and Inspection. B2(d) Milk and Milk Product Order, 1992 .This Order provides for setting up an advisory board to advise the Government on the production, sale, purchase and distribution of milk powder. Units with an installed capacity for handling milk of over 10,000 litres per day or milk products containing milk solids excess of 500 tonnes per year are required to obtain registration under this order from the Department of Animal Husbandry. Standards o n Weights and Measures (Packaged Commodities) Rules, 1977 These Rules lay down certain obligatory conditions for all commodities in the packed form with respect to their quantity declaration. These Rules are operated by the Directorate of Weights and Measures under the Ministry of Food and Civil Supplies. Expor t (Quality Cont rol a n d Inspection) Act, 1963: The Export Inspection Council is responsible for operation of this Act under which a large number of exportable commodities have been notified for compulsory pre-shipment inspection. The quality control and inspection of various export products is administered through a network of more than fifty offices located around the important production centers

and ports of shipment. In addition, organizations may be recognized as agencies for inspection a n d o r quality control. Recently Government have exempted agriculture and food products, fruit products, fish and fishery products from compulsory pre-shipment inspection, provided the exporter iids a firm letter from the overseas buyer stating that the overseas buyer does not want pre-shipment inspection from any official Indian Inspection Agencies. Voluntary s t a n d a r d s organizations There are two organizations dealing with the voluntary standardization and certification systems in food. Bureau of Indian St anda rds looks after standardization of processed foods and standardization of raw agricultural produce falls under the Directorate of Marketing and Inspection.

Bureau of Indian Standards (BIS): The activities of BIS are two fold; formulation of Indian Standards in the processed food sector and their impl ement a t ion by promot ion a n d through voluntary and thi rd party certification system. BIS have on record, standards for most of the processed foods. These standards in general cover raw materials permitted and their quality parameters, hygienic conditions under which the product is manufactured and packaging and labelting requirements. Manufacturers complying with the standards laid down by BIS can obtain an 'ISI' mark which can be exhibited on their product packages. BIS has identified certain items like food coloursl additives, vanaspati and containers for their packing, mi l k powder and condensed milk for compulsory certification. Directorate of Marketing and Inspection (DMI): The DM1 enforces the Agricultural Produce (Grading and Marking) Act 1937. Under this Act, Grade Standards are prescribed for agricultural and allied commodities which are known as 'Agmark' Standards. Grading under the provisions of this Act i s voluntary. Manufactures who comply with standards laid down by DM1 are allowed to put 'Agmark' labels on their products. (Source: Ministry of Food Processing).

The small scale industry sector output contributes almost 40% of the gross Industrial value-added 45% of the total exports from India (direct as well as indirect exports) and is the second largest employer of human resources after agriculture. The development of Small Scale Sector has therefore been assigned an important role in India's national plans. In order to protect, support and promote small enterprises as also to help them become self-supporting, a number of protective and promotional measures have been undertaken by the Government. The promotional measures cover - industrial extension services - institutional support in respect of credit facilities, - provision of developed sites for construction of sheds, - provision of training facilities, - supply of machinery on hire-purchase terms, - assistance for domestic marketing as well as exports, - special incentive for setting up enterprises in backward areas etc. - technical consultancy & financial assistance for technological upgradation. While most of the institutional support services and some incentives are provided by the Central Government, others are offered by the state governments in varying degrees to attract investments and promote small industries in varying degrees to attract investments and promote small industries with a view to enhance industrial production and to generate employment in their respective States.

Legal Framework
A representative list of Acts and Laws applicable to Small Scale Industries:

I. Registration related Laws


Industrial Development Regulation Act

II. Labour related Laws

1. Apprentices Act, 1961 2. The Bidi and Cigar Workers (Conditions of Employment) Act, 1966 3. Bonded Labour System (Abolition) Act, 1976 4. Child Labour (Prohibition & Regulation) Act, 1986 5. The Children (Pledging of Labour) Act, 1933 6. The Contract Labour (Regulation & Abolition) Act, 1970 7. Delayed Payment Act 8. The Employees Provident Funds and Misc. Provisions Act, 1952 9. Employees State Insurance Act, 1948 10. Employers Liability Act, 1938 11. Employment Exchange (Compulsory Notification of Vacancies) Act, 1959 12. Equal Remuneration Act, 1976 13. The Factories Act, 1948 14. The Industrial Disputes Act 15. The Industrial Employment (Standing Orders) Act,1946 16. The Inter-state Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979 17. Labour Laws (Exemption from Furnishing Returns & Maintaining Registers by Certain establishments) Act, 1988 18. Maternity Benefit Act, 1961 19. The Minimum Wages Act, 1948 20. The Payment of Bonus Act, 1965 21. The Payment of Gratuity Act, 1972

22. 23. 24. 25. 26. 27. 28. 29. 30. 31.


The Payment of Wages Act, 1936 The Sales Promotion Employees (Conditions of Service) Act, 1976 The Shops and Establishments Act, 1953 The Trade Union Act, 1926 Workmens Compensation Act, 1923 The Weekly Holidays Act, 1942 The Industrial Establishment Act Employees Stock Option Act Employees' State Insurance (General) Regulation The Plantations Labour Act, 1951 Environment Protection Act, 1998

III. Enviornment related Laws

1. 2. 3. The Air (Prevention and Control of Pollution) Act, 1981 The Air and Water Pollution Act The Environment (Protection) Act, 1986 The Water (Prevention and Control of Pollution) Act, 1974


IV. Tax related Laws

1. 2. 3. Income Tax Act Central Excise and Salt Act, 1944 Central Sales Tax Act/State Sales Tax Act Professional Tax


V. Local & Other Municipal Laws

1. 2. 3. Town Areas Act Urban Land Development Act Municipality Act/Municipal Corporation Act Notified Areas Land Regulation and Land Use Act


VI. Product & Process

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Bureau of Indian Standards Act, 1986 Drugs and Cosmetics Act, 1940 Essential Commodities Act, 1954 Packaged Commodities Regulation Order, 1975 Pharmacy Act, 1948 Standards of Weight & Measures Act, 1976 Trade & Merchantile Marks Act, 1958 The Insecticides Act, 1968 The Prevention of Food Adulteration Act, 1954 Indian Bodies Act, 1923 Indian Explosive Act, 1884


VII. Other Central Acts

1. 2. Collection of Statistics Act, 1953 Indian Electricity Act, 1910

To promote industrial development several steps had been taken in the State. These include simplification of rules and procedures at the State and District Levels, Clearances, etc.

Functions of DIC:
Updating Data Bank Credit: Sources to be identified and information to be passed on to the entrepreneurs Licensing, giving clearances etc. Registration should be done as quickly as possible. To co ordinate all facilities, programs, institutions that are established for SSIs with the units.

The following fall within the purview of Single Window Scheme.

Rajasthan Industrial Development Corporation. Rajasthan State Electricity Board.(RSEB) Environment Board. Rajasthan State Pollution Control Board.(RSPCB) Factories and Boilers Division.

Board of Infra structure and Investment Promotion has been formed under Chairmen Ship of the Chief Minister of Rajasthan.(with effect from 26/10/1999.)

The main steps involve in setting up a Micro, Small & Medium Enterprise are as below :(a) Project Selection (b) Technology and Machinery (c) Arranging Finance (d) Unit Development (e) Filing of Entrepreneurs Memorandum (f) Approvals (g) Clearances (h) Quality Certification

MARKETING ASSISTANCE SCHEME OBJECTIVES: The broad objectives of the scheme, inter-alia, include: 3.1 To enhance marketing capabilities & competitiveness of the MSMEs. 3.2 To showcase the competencies of MSMEs. 3.3 To update MSMEs about the prevalent market scenario and its impact on their activities. 3.4 To facilitate the formation of consortia of MSMEs for marketing of their products and services. 3.5 To provide platform to MSMEs for interaction with large institutional buyers. 3.6 To disseminate/ propagate various programmes of the Government. 3.7 To enrich the marketing skills of the micro, small & medium entrepreneurs.