Entrepreneurship Development and Start-ups

CHAPTER 4
The role of various institutions set up specially to promote the growth of small-
scale enterprises is quite unique.
The registration of MSMEs shown in the following table bears testimony to this.
In this chapter, an attempt has been made to discuss the role of industrial
institutions in the promotion of small-scale enterprises in India and the assistance
that the small entrepreneur can take from different institutions for varied
purposes.

Financial and Extension Infrastructure

There is a wide network of institutional infrastructure for financing and extension
service support to small-scale enterprises in the country. This network consists of
State Financial Corporations (SFCs), Commercial, Co-operative and Regional
Rural Banks (RRBs), National Small Industries Corporation (NSIC), Small-Scale
Industries Development Corporations (SSIDCs), Khadi and Village Industries
Commission (KVIC), District Industries Centers (DICs), agencies meant for
entrepreneurship development and consultancy support, National Bank for
Agriculture and Rural Development (NABARD) and Small Industries
Development Bank of India (SIDBI). While other agencies are serving the
smallscale sector at the grass root level, NABARD has its focus on rural areas
through linkages with the banking system. SIDBI has been setup as the principal
financial institution for promotion and financing of small-scale sector and has
functional linkages with the banking and institutional structure by providing
refinance and other forms of resource support, besides organizing extension
services and co-coordinating their activities.

The institutions aiding small and micro enterprises, may be broadly classified into
three categories: (i) Advisory bodies; (ii) Government institutions; (iii) Corporate
institutions.In the first category, we have the Development Commissioner,
MSMEs; the State Small Industries Board; Directorate of Industries; Export
Promotion Council; and the Small-scale Industries Association.
In the second category, the following are included: Commodity Boards, National
Small Industries Corporation, Small Industries Service Institutes, etc.,
In the third group, the following corporate bodies are discussed: the State Trading
Corporation, the MMTC, the ISI, the Central Institute of Tool Design and IDBI.
The institutional set-up for the accelerated growth of the MSMEs sector has been
broad-based during the last two decades. An attempt has been made to cover the
wide spectrum of institutions in the following order.
Development Commissioner, MSME, the Small Industries Development
Organisation; Small-scale Industries of State Governments; State Small-scale
Industries Corporations; Small Industries Extension Training Institute; Small-
Scale Industries Board; the Indian Investment Center; Export Promotion
Councils; Commodity Boards; Export Houses, Indian Institute of Packaging;
Export Council; Indian Council of Arbitration; State Trading Corporation of
India; MMTC; IDBI; Central Institute of Tool Design.

Institutional Support
The scale and scope of operation of entrepreneurs and the far-reaching
developments in the economic climate have brought to the fore the importance of
institutional assistance at various levels. In fact, the success of entrepreneurship
depends solely on the well established institutional set-up.
These institutions provide a variety of financial products and services to fulfil the
varied needs of micro, small and medium enterprises. Government of India, in
order to supply credit to various sectors of the economy, including MSMEs, has
evolved a well developed structure of financial institutions.
The institutions may be broadly classified as (i) All India institutions and (ii) State
level institutions. National level institutions mainly provide finance to large
industries and they also extend financial facilities to MSMEs. As the development
of MSMEs is the main concern of State Governments, institutional finance is
coming manly from State Level Institutions.

1- National Level Institutions

Three categories may be noticed under National level institutions
1. All India Development Banks. These development banks provide institutional
credit to both large industries and MSMEs. Following are the institutions which
provide credit at national level to MSMEs.
(i) Industrial Development Bank of India - IDBI. This bank was established in
1964 mainly to finance variety of loans to major industries. IDBI, to start with,
had the support of many government specialised agencies and financial
institutions of the country (SEBI, NSE, SCIL, Exim Bank, SIDBI,
Entrepreneurial Development Institute - EDI and Credit Analysis and Research
Ltd.) In September 2004, IDBI was converted into commercial bank (HQ at
Satara). In 2006, IDBI entered into a loan agreement with Kfw Germany, through
its DIFC branch in Dubai, to raise a loan of USD 340 million, having a maturity
period of 10 years. This loan was availed mainly to finance MSMEs sector,
directly or indirectly through Micro Finance Institutions (MFI's) and Non-
banking Financial Companies (NBFCs). Bank is committed to provide financial
support to the MSMEs, which is one of the thrust areas of the bank. The
development of small enterprises to provide goods and services to meet local
demand and create employment at local level, are the main objectives of the bank.

(ii) Industrial Finance Corporation of India Ltd. (IFCI Ltd) This was the first
development finance institution setup in 1948 under IFCI Act., to provide long
and medium-term finance to large and medium size industries. The institution
provided wide variety of financial services, besides providing loan. In 1993, IFCI
became public limited company under companies Act, 1956, and became the
Government of India company under Companies Act, 2013, after securing
51.04% shareholding. Amongst various loan schemes and financial services, IFCI
ltd. provides soft loan assistance to small and medium sector enterprises for
developing technology through in-house research and development.
In association with Entrepreneurship Development of India (EDI), IFCI provides
financial support to entrepreneurship development programmes conducted by
several agencies all-over India. IFCI, besides taking measures to promote
industrial development in backward areas through a scheme of concessional
finance, provides subsidised consultancy for (i) Small enterprises to meet the cost
of project, (ii) promoting ancillary industries, (iii) conducting market research for
MSEs, (iv) reviving sick units, (v) assistance to implement modernization
schemes of MSEs (vi) Interest subsidy schemes for women entrepreneurs and
other financial services to MSEs.
(iii) Small Industries Development Bank of India - (SIDBI). This was setup in
1990, as a wholly owned subsidiary of IDBI. SIDBI is the principal financial
institution for promotion, financing and development of SSIS and now MSMEs
of the country. It provides every type of financial assistance to empower the
Micro, Small and Medium Enterprises sector, with the objectives of contributing
to the process of economic growth, employment generation, balanced regional
development and export of MSE products. SIDBI was ranked 25th (both in terms
of capital and assets) by The Banker London amongst 30 top Development Bank
of the world.
SIDBI adopts a "Credit Plus" approach. Besides offering different types of loans
to MSMEs, it provides grant support for the Promotion and Development (P&D)
of the sector to empower them. MSMEs are becoming strong, vibrant and
competitive with the variety of financial and other support services.
Cumulative disbursements of SIDBI to MSME sector in March 2014 crossed
Î(Euro) 40.75 trillion benefiting more than 32 million persons in this sector.

Range of Services from SIDBI

SIDBI Directly Finances

MSEs for new/expansion/diversification/modernisation projects.

Institutional Assistance for Entrepreneurship - I (Financial Institutions)
● Marketing development projects which expand the domestic and international
marketability of MSE products.
● Existing well-run MSEs and ancillaries/sub-contracting units/ vendor units for
modernisation and technology upgradation.
Infrastructure development agencies for developing industrial areas.
Leasing and hire purchase companies for offering leasing/hire purchase facilities
to MSME units.
Existing export-oriented units to enable them to acquire ISO-9000 Series
Certification.

SIDBI PROVIDES FOREIGN CURRENCY LOANS TO:

● Import equipment by existing export-oriented MSMEs and new units having
definite plans for entering export markets.
● Execute confirmed export orders by way of pre-shipment credit/letter of credit
and provides post-shipment facilities.
SIDBI's VENTURE CAPITAL FUND PROVIDES ASSISTANCE TO:
Small-scale entrepreneurs using innovative indigenous technology and expertise.
SIDBI Refinances
Loans granted by PLIs for new MSE projects and for expansion, technology
upgradation, modernisation, quality promotion
● Loans sanctioned by PLIs to small road transport operators, qualified
professionals for self-employment, small hospitals and nursing homes and to
promote hotels and tourism-related activities.
Micro-Finance Initiatives of SIDBI: In order to build and strengthen new set of
intermediaries for Micro Enterprise Loans, the Bank has formulated new scheme
for Micro Enterprise Loans. Institutions/MFIs with minimum fund requirement
of 25 lakh p.a. and having considerable experience in financial
intermediation/facilitating or setting up of enterprises/providing escort services
to MSEs/networking or active interface with MSES etc. and having professional
expertise and capability to handle on-lending transactions shall be eligible under
the scheme. The institutions would be selected based on their relevant experience,
potential to expand, professional management, transparency in operations and
well laid-out systems besides qualified/trained manpower. Lending to be based
strictly on an intensive in-house appraisal supplemented with the credit rating by
an independent professional agency. Relaxed security norms more or less on line
with micro credit dispensation to be adopted to reduce procedural bottlenecks as
well as to facilitate easy disbursements. (Contact SIDBI to know about various
schemes to MSMEs).
SIDBI has other following organs for related activities
1. Credit Guarantee Fund Trust for Micro and Small Enterprises (CGFT for
MSES) to extend guarantees to banks for collateral free loans extended to SMEs.
2. SME Rating Agency of India Ltd (SMERA) to provide composite ratings to
3. India SME Asset Reconstruction Company (ISARC) in 2009 as specialised
agency to resolve NPA issues of SME.
4. India Aspiration Fund (IAF): The Fund is launched by SIDBI in August 2015
to boost startup activities of India. 2000 crores car marked for the purpose. The
fund would invest in various venture capital funds for meetings the equity
requirement of MSME startups.
5. SIDBI Make in India Loan for Small Enterprises (SMILE): This scheme
involving 10000 crore has also been launched to catalyse tens of thousands of
crores of equity investment in startups and MSMEs. SMILE will provide soft
loans in the nature of quasi-equity and term loans to MSMEs to meet the required
debtequity ratio norm. 25 sectors under the "Make in India" programme will be
the focus area of SMILE. Emphasis is on financing smaller enterprises of MSME
sector.

SIDBI functions as Nodal/Implementing agency to various Ministries of Gol

including Ministry of MSME.
Micro Units Development & Refinance Agency - MUDRA, The latest initiative
of Gol, under Pradhan Mantri MUDRA yojana scheme, is administered by
SIDBI.
MUDRA scheme will provide services to micro and small entrepreneurs who will
not come under the purview of regular banks. About 5.7 crore (57.7 million) small
businesses (Entrepreneurs) have been identified as target-clients as per the
information provided by National Sample Survey Office (NSSO), Wing of
National Statics Office (NSO) of Ministry of Statistics and Programme
Implementation of GoI. NSSO reveals that only 4% of 5.7 crore MSEs get finance
from regular banks.
Mudra scheme is converted into MUDRA - (SIDBI) Bank as a wholly-owned
subsidiary of SIDBI in 2015 to undertake re-finance operations and provide
support services with focus on portal management, data analysis etc. of MSES.
Gol may entrust any other activity to this Bank in future. Credit Guarantee Fund
for MUDRA loans is created to guarantee loans of MSEs identified under NSSO
(5.7 crore units). The Guarantee covers more than One lakh crores worth of loans
of MSES.
National Credit Guarantee Trustee Company Ltd, (NCGTC Ltd.) is incorporated
under Companies Act 2013, as a wholly-owned company of Gol to manage and
operate various credit gurantee funds earmarked for MSES.
On the basis of the stages of growth of micro units, loans will be available in three
stages called (i) Shishu, (ii) Kishore and (iii) Tarun. Shishu stage micro units get
loan upto 50,000, Kishore units get loan upto 5 lakhs, and Tarun level units can
avail loan upto 10 lakhs.
MUDRA Bank will get refinance corpus of 20,000 crores from RBI and RBI has
released 5000 crores as a first tranche of re-finance. Credit Guarantee Fund-CGF
will have 3000 crores as corpus fund.
Gol has decided to provide additional fund of US$ 16 billion to the market of
MSEs, which will be provided to the identified stages. Accordingly, Shishu gets
40%, Kishore gets 35% and Tarun gets 25%. Micro units eligible for loan are
(i) Small manufacturing units
(ii) Shop keepers, Fruit and vegetable vendors and artisans.
SIDBI, has undertaken schemes under
(i) Direct Assistance scheme,
(ii) Indirect Assistance scheme,
(iii) Promotional and Developmental activities,
(iv) National Equity Fund Scheme
(v) Single window scheme,
(vi) Mahila Udyam Nidhi (MUN) scheme,
(vii) Scheme and Equipment Finance Scheme
(viii) Integrated Development of Leather Sector Scheme (IDLSS) and
(ix) Scheme for food processing Industries (FPTUFS), to facilitate the
smooth running of MSES.
(v) Industrial Investment Bank of India (IIDI). This was setup in 1985, to
reconstruct sick units, under Industrial Reconstruction Bank of India Act. This
was converted into IIBI on March 17, 1997, as a full-fledged development
financial institution. Its focus was mainly on medium and large industries
providing wide ranging products and services for rehabilitation. However, the
bank has extended support to Small industries units for rehabilitation and
reconstruction, which is very meagre.

2. Specialised Financial Institutions

These are the institutions established to provide additional finance in the
segments of venture capital, credit rating and leasing activities related to
manufacturing of products.
(i) IFCI Venture Capital Funds Ltd: This was originally started as a subsidiary of
IFCI Ltd, in the name of Risk Capital & Technology Corporation Ltd (RCTC).
The Objective was to broader the entrepreneural base. This organisation provided
soft loans, to start with, to promoters under its "Risk Capital Scheme". Finance
was also provided under "Technology Finance and Development Scheme" to
projects for commercialisation of indigenous technology for new processes,
products, markets and services. Over the years, it is advancing to technology
oriented projects.
(ii) ICICI Venture Funds Ltd: This was founded in 1988 as a joint Trust of India.
Afterwards, it became a fully-owned subsidiary of ICICI. This is a technology
venture finance company, which provides finance to new technology ventures,
serving the entrepreneurs in the filed of drugs, diagnostics and vaccines, bio-
technology, environmental engineering etc.
(iii) Toursim Finance Corporation of India Ltd (TFCI). This is a special financial
institution for the promotion and growth of tourism in the country. Besides
providing finance to entrepreneurs engaged in tourism business, the Corporation
finances non conventional activities of tourism such as amusement parks, car
rental services, ropeways, ferries for inland water transport and such tourism
related approved activities.

3. Investment Institutions (SFIs)

These financial institutions serve the increasing financial needs of industry and
trade collecting money from small savers and investors. These institutions deploy
their funds largely in marketable securities. However they indirectly support the
cause of MSEs. But negligible. Following are the institutions, which serve as
financial intermediaries.
(i) Life Insurance Corporation of India. This came it being in 1956 through a
special Act of parliament. The institution sells life insurance. The focus was more
in rural areas. Funds collected will be invested in housing schemes, for the
development of infrastructure of the country, water supply, sewerage and so on.
In its sixty and odd years of service, it has supported the financial institutions
through the subscription to the shares and bonds floated by them. LIC of India
has business abroad and has its office in Maritius, Fiji and UK. The corporation
has established overseas subsidiaries in Baharian, Nepal and Sri Lanka. Although
the data is not available, LIC has extended financial support to Small and Medium
enterprises of the country.
(ii) Unit Trust of India (UTI). This was established as a body corporate in 1963
under UTI Act to encourage savings and investment. Funds are mobilised from
small investors by selling units. The collected funds will be channelised into
secondary capital market. The basic objective of the Trust is to stimulate and pool
the savings to share the benefits of rapidly growing industrialisation of the
country. This means that UTI has indirectly extended financial support to SMEs.
UTI was bifurcated into two entities viz. UTI-I and UTI-II in 2003 to extend
financial services to different sectors of the country.
(iii) General Insurance Corporation of India GIC, was started in 1972 to
nationalise general insurance business. National Insurance Company Ltd, The
New India Assurance Company Ltd, The Oriental Insurance Company Ltd and
United India Insurance Company Itd. Were the four subsidiary branches of GIC.
These branches were delinked from GIC in 2002 to form "General Insurance
Public Sector Association - GIPSA". Funds collected will be invested in securities
of various types and will also make advances to approval sectors. SMEs may have
some slice in investments and loans of GIC.
Besides these three categories of institutions, other financial institutions that
extend financial support to MSMEs are
(i) Commercial banks,
(ii) Mutual Funds,
(iii) Leasing Companies,
(iv) NBARD,
(v) KVIC,
(vi) Stock exchange,
(vii) Housing Development Finance Corporation,
(viii) The Shipping Credit and Investment Bank and
(ix) Infrastructure and Leasing Finance Corporation.

II STATE LEVEL INSTITUTIONS

MSEs normally function under the direction of State Governments. These need
credit support not only from the Central Government, but also from State
Governments. The activities such as business promotion, operation, expansion,
modernization/upgradation of facilities, capacity building etc demand credit.
Because entrepreneurs, particularly small businessmen, cannot mobilise funds on
their own and hence need the financial support of any form, from respective state
Governments in which they establish and run the business. Most of the time,
MSEs operate on tight budgets, often financed through owner's own contribution,
loans from friends and relatives. Meager credit facility will be availed by banks.
(It is estimated that 4 percent of entrepreneurs were availing credit from external
sources).
In this backdrop to overcome the financial hurdles of MSMEs, Gol has allowed
State Governments to establish financial institutions to extend various types of
credit support to MSES. Under the provisions of State Financial Corporations
Act, 1951, State Financial Corporations have been established in almost all States
of India and Union Territories. Besides SFC, State Industrial Development
Corporations are established under Companies Act, 1956. (Now 2013).

1. State Financial Corporations (SFCs)

State Financial Corporations were set up in various states of India to provide
medium and long-term credit to finance medium and small enterprises, which
was not normally financed by commercial banks or other financial institutions
(like Industrial Finance Corporation of India - IFCI) of the country.
SFCs are established (Now 19), to fulfill the financial needs of MSMEs. As per
SFC Act, loans and other types of financial assistance are extended to MSMEs
which are engaged in manufacturing, food processing, mining, hotel activities,
repairs and in transport services. IT industry is a new addition to the micro and
small enterprises segment. Various types of trading activities are also there in the
list of MSMEs, which avail finance from SFCs.

Functions of SFCS
Following are the general functions of SFCs.
(a) Financial assistance to small enterprise: SFCs provide long-term SMEs, which
are formed as public or private limited companies, partnership firm and micro
units run by individuals. Term loans sanctioned to these units may be repaid
within 20 years.
(b) Guaranteeing loans: Loans raised by MSEs with commercial financial
institutions are guaranteed by SFCs. This is an indirect financial support activity
of SFs to MSMEs.
(c) Subscription and Underwriting: SFCs also subscribe to shares and debentures
of industrial enterprises. They also underwrite the capital issues of industrial
establishments.
(d) Guarantee for deferred payments: The deferred payment of MSEs towards
purchase of plant and machinery are guaranteed by SFCs.
(e) Serve as agents of Central and State Governments or some industrial financing
institutions, for sanctioning and disbursing loans to MSMEs.
The share capital of SFC is fixed by the concerned State Government. This ranges
between 50 laksh (minimum) to 5 crores (maximum). The share capital is
subscribed by RBI, State Government, Commercial banks co-operative banks,
other financial institutions and public.
SFC Services to MSMEs
Financial services - providing every type of term loan
Financial support for development of infrastructure of MSES.
Interest subsidy schemes to MSEs for construction of warehouses and cold
storages. Interest subsidy schemes for first generation enterprises.
Interest subsidy schemes for SC/ST entrepreneurs.
Loan and subsidy schemes for women entrepreneurs.
Evaluation
1. SFCs have a mixed operations, supporting some financial services to industrial
sector and not extending full financial support to MSEs. They have concentrated
on sanctioning loans and advances to large enterprises. Their lending policy has
to be restructured with a full orientation towards MSES.
2. When SFCs were established, it was expected that these institutions bring about
a regional balanced industrial growth. This is not achieved with the financing of
SFCs.
3. SFCs are biased towards large industrial units. The growth of MSEs are not
fully considered by MSFCs.
4. SFCs are charging higher rates of interest on advances. This has prevented
MSES to reach SFCs for financial support. Even today (2014) 85 to 90 percent
of MSES are run under self-financing of entrepreneurs.
5. Overdues of SFCs are on the higher side. The overdues of SFCs are
continuously increasing. This is caused by the delay in implementation of projects
approved by SFCs. Cost over run is causing heavy overdues.
6. SFCs are unable to mobilise efficient technical staff to evaluate the projects
seeking financial assistance from these institutions. Evaluation of projects by
inefficient officers has caused the over sanction of loans leading to heavy
overdues.
7. Because of operational inefficiency, SFCs are unable to attract soft financial
resources required to run their activities. Resource crunch is a major problem of
SFCs. SFCs lack in self-sufficient organisational set up.
8. With the deficiencies existing in SFCs, most of the SFCs are functioning well
to reach their primary objective of funding industrial undertakings. The reach of
MSEs to SFCs is not convincing.
In the service industry sector, units engaged in the activities like hotels, tourism
services, stone crushing, chicken and meat production, salt manufacturing, video
recording studios, repair and maintenance of air-conditioners, computer services
etc. SFCs are not visible. This means they are not supporting fully the cause of
these units.
2. Karnataka State Financial Corporation
KSFC has evolved loan schemes for extending financial assistance to suit almost
all kinds of industrialists, entrepreneurs, and technocrats. KSFC has also evolved
loan schemes for extending financial assistance to service sectors like hotel and
tourism related industry, industrial estates, hospitals, nursing homes etc.
KSFC gives financial assistance to set up tiny, small, medium and large scale
industrial units in the Karnataka State. The Corporation extends term loans to new
and existing units upto 500 lakhs for corporate bodies and registered co-operative
societies. Term loans upto 200 lakhs are sanctioned to proprietary, partnership
and joint Hindu undivided ₹ family concerns. KSFC extends lease financial
assistance and hire purchase assistance for acquisition of
machinery/equipment/transport vehicles. KSFC has a merchant banking
department and is approved as a category I merchant banker by SEBI. Under this
activity it does management of public issues, underwriting of shares, project
report preparation, deferred payment guarantee, syndication of loans, bill
discounting etc. The fund-based activities like subscription to non-convertible
debentures, factoring services are also considered.

Few Schemes of KSFC to MSME Sector:

Loan Scheme for Commercial Complexes
Loan Scheme for Development of Industrial Estates
Loan Scheme to acquire Electro-medical Equipment
Loan Scheme to acquire Generators/Mobile Generators
Loan Scheme for Hospitals, Nursing Homes and Medical Store
Loan Scheme for Acquiring Imported Second Hand Machinery
Loan Scheme for Maintenance and Construction of Roads
Loan Scheme for Marketing Related Activities-AMARA Scheme
Loan Scheme for Mobile Canteens/Hotel Industry
National Equity Fund Scheme
Loan Scheme for Training Institutes
Loan Scheme for Private Software Technology Parks/Bio-technology Parks
Software Development
Loan Scheme for Qualified Professionals
Ready Built Office/Construction of New Office Buildings
Single Window Loan Scheme-Term Loan + Working Capital
Loan Scheme for
Acquisition of Land/Buildings/Commercial Space
Construction of Go downs and Warehouses
Loan Scheme For Technology Development and Modernisation of MSES
Acquisition of ISO-9000 Series Certification by MSES Loan Scheme for Tourism
Related Facilities Loan Scheme for Transport Industry O O ● Corporate Loan
Scheme Rental Discounting Scheme Loan Scheme for Financing Existing Assets
and Enterprises
"KSFC is one of the leading SFCs of the country. It is a fast track financial
institution of Karnataka. Ever since its inception, KSFC has extended financial
support of various types to over 1,70,355 units (including MSMEs), amounting
to over 14,600 crores. It is a professionally managed organisation moving with
the current stream of development of the country." (Annual Report - 2016)
KSFC assists entrepreneurs to set up new industries; and to expand, diversify or
modernise existing ones - anywhere in Karnataka. Borrowers can be Proprietary
Concerns, Partnership Firms, Private Limited Companies, Limited Companies
Hindu Undivided Families, Trusts or Co-operative Societies. KSFC give special
assistance to micro and small enterprises and less developed parts of the state.
KSFC offer additional incentives for SC/ ST entrepreneurs, women, disabled
people. KSFC also offer special financial schemes and services through Leasing
Finance, Hire Purchase, Merchant Banking Divisions and Rental discounting &
Corporate loans.

2. State Industrial Development Corporations (SIDCs)

These are established at state level under the Companies Act. They will be wholly
owned state undertakings. These are established to promote industrial
development in respective states and providing financial assistance to small
entrepreneurs. SIDCs, besides providing finance to large and medium enterprises,
are engaged in setting up of medium and large industrial projects in the joint
sector/assisted sector in collaboration with private entrepreneurs. Besides
launching industrial projects, promotional activities such as preparation of
feasibility reports, conducting industrial potential surveys, entrepreneurship
training and development programmes, developing industrial areas/estates are
also taken up by SIDCs. In Karnataka, Karnataka State Small Industries
Development Corporation - KSSIDC is functioning to render service to MSES.

Karnataka State-Small Industries Development Corporation (KSSIDC)

KSSIDC (previous Mysore Small Industries Corporation) is rendering services to

the small sector in the State for more than 40 years. Until around 1960, the State
Government's efforts to encourage the development of small-scale industries
were being pursued by the Department of Industries and Commerce as a part of
the Department's overall strategy for a comprehensive industrial development.
From 1960, KSSIDC, took over the activities relating to the management and
setting up of industrial estates and distribution of raw materials and started to give
a new orientation to this aspect of development. The corporation started with an
initial share capital of 10 lakhs, which were gradually stepped The State
Government's contribution to the equity of the Corporation during the first 10
years was 20 lakhs. The paid up equity capital of the Company for the year ended
31st March 2004 is 2466.66 lakhs. up.
The Corporation started with the following as its Main Services:
 • Establishment and Management of Industrial Estates.
• Procurement and distribution of raw materials.
• Assistance towards marketing.
• Dissemination of information by participating in the internal and
international exhibitions. Supply of machinery under Hire Purchase
Scheme.
• Providing Guidance to SSI Entrepreneurs.
• Providing Technical Library facilities.
• SIDC is mainly providing finance to large and medium industries. MSEs
are also availing finance.

Financial Assistance from Commercial Banks

The MSE sector confronts several problems despite its strategic importance in
any industrialisation strategy and its immense potential for employment
generation. The problem which continues to be a big hurdle for the development
of the sector is lack of access to timely and adequate credit.
Government of India recognised the need for a focused credit policy for MSEs in
the early days of promotion of this sector. This in turn led to a credit policy with
the following components:
Priority Sector Lending: Credit to the small scale sector was ensured as part of
the priority sector lending by banks. Banks were required to compulsory ensure
that defined percentage of their overall lending is made to priority sectors as
classified by Government. These sectors include agriculture, small industries,
export etc. The inclusion of small industries in this list makes them eligible for
this earmarked credit.
Institutional Arrangement: Small Industries Development Bank of India (SIDBI)
was set up as the apex refinance bank. Term loans are provided by State Financial
Corporations (SFCs) and Scheduled Banks. Credit lending in direct/indirect
forms is also undertaken to some extent by NABARD, NSIC etc.
With the liberalisation of the Indian economy, greater emphasis was placed on
meeting the credit needs of MSEs. This was manifested through the following
initiatives:
1. Earmarking of credit for tiny sector within overall lending to small industries.
2. Opening of specialised SSI bank branches.
3. Establishment of National Equity Fund for venture capital support.
4. Technology Development & Modernisation Fund through SIDBI.
5. Enhancement of turnover limit for assessing aggregate working capital
requirement.
6. Entrepreneurship Development and Startups
7. Enhancement of limit of composite loan.
8. No collateral security for loans upto 5 lakhs.
The Comprehensive Policy Package was announced on 30th August 2000 to
fulfill the above said needs.

Commercial Banks Assistance to MSEs

State Bank of India and other major commercial banks extended loans to many
schemes for MSE sector. Few of them are
General Purpose Term Loans
Banks grant term loans to small scale industries for meeting general commercial
purposes like substitution of high cost debt, research and development, shoring
up net worth and funding business expansion. The tenor of the loan was normally
is 3 years, and the pricing is fine-tuned to suit the risk profile of the borrower.
The repayment was structured in monthly or quarterly installments, according to
the cash generation cycle.
Liberalised Credit for MSES
Banks extended production-linked credit facilities to small-scale industries,
ancillary industrial units and village and cottage industrial units on liberal terms
and conditions. Under this scheme, the quantum of advances is not linked to the
security furnished, but the genuine requirements of the unit. The pricing of the
loan is based on credit assessment, and the units with strong ratings may be given
finer rates. No collateral security is required for loans up to 5 lakh. Composite
term loans can be sanctioned up to 25 lakh combining term loan and working
capital.
Entrepreneur Scheme
SBI and leading banks grant financial assistance to technically qualified, trained
and experienced entrepreneurs for setting up new viable industrial projects. Loans
are extended to technocrats who are unable to meet the normal margin
requirements under the liberalized schemes. To avail this scheme the borrower
has to be a technically qualified person (a degree/diploma holder in engineering
or technology), a craftsman with adequate experience or training or a person
possessing a degree in business or industrial management, a chartered accountant
or a cost accountant with relevant experience.

The bank provides:

term loans, working capital and
equity fund finance
Equity Fund Scheme
Under the Equity Fund scheme, the SBI grants financial assistance to
entrepreneurs who are not able to meet their share of equity fully, by way of
interest-free loans repayable over a long period.
This type of assistance fills in the gap between the margin requirements in the
project and the capital contributed by the promoter. The Equity Fund assistance
can be normally repaid over 5 to 7 years after the moratorium period.
Stree Shakti Package
The Stree Shakti Package is a unique scheme run by the SBI, aimed at supporting
entrepreneurship among women by providing certain concessions. An enterprise
should have more than 50% of its share capital owned by women to qualify for
the scheme.
State Bank of India is the major bank of the country with largest branches. It has
several schemes to finance MSMEs including manufacturing, trade and services.
All commercial banks of the country are financing MSEs as per the approved
schems of their Management or Boards. Gol has made it mandatory to finance to
MSEs under priority sector. Export/import finance is also provided by banks
including EXIM bank. EXPORT FINANCE SCHEMES
Banks offer the following Export Finance facilities to MSMEs units who
undertake or desirous of undertaking export business.
1. Pre shipment Finance (a) Packing Credit (PC) (b) Clean Packing Credit (CPC)
2. Pre-shipment Credit in Foreign Currency (PCFC) Post shipment Financea. (a)
FDB (b) FBE/BRD
3. Foreign Bank Guarantees (FBG) including Deferred Payment Guarantees in
Foreign Currency for import of capital goods (subject to FEMA and RBI
guidelines).
4. Foreign Letters of Credit (FLC) both for import of raw materials, capital goods,
etc, (subject to FEMA and RBI guidelines).

IV PRIVATE AGENCIES
Angel investors and venture capital and Seed Funds (VCSF) also extend financial
assistance the formation stage of MSMEs. But they provide financial assistance
only to genuine partnership or private Ltd. MSMEs. Even trusted individual
MSEs also get initial capital from these agencies.
Angel investors: Angels are generally high net worth individuals (HNWIS),
successful serial entrepreneurs or senior professionals. Such angels operate either
individually or through formal or informal networks. They not only provide
capital but they also act as great scouts of emerging ideas, helping them scale at
a stage where institutional seed and venture funds would typically not invest.
Source: Report of The Committee on Angel Investment & Early Stage Venture
Capital, June 2012 on Venture Capital and Seed Funds: These are institutional
investors which invest capital in firms with a proven business model and need
capital to scale the business up. Such investors typically follow incubation or
angel investments. A VC Fund is a pooled investment vehicle where institutional
and high net-worth individual investors pool their money which is then managed
by an asset management company (AMC). The AMC typically comprises of a
small group of professionals with entrepreneurial/operational experience and/or
financial/investment experience. The Fund typically pays the AMC a fee of 2.0
to 3.0% of the total corpus on an annual basis (depending on the size of the fund)
and 20% of the upside, subject to a hurdle rate. There is a private placement
memorandum which defines the contract between the investors and the fund
managers, outlining the areas in which investments will be made, size and number
of investments, etc. Institutional investors in a Fund normally are banks, pension
funds, insurance companies, university endowments, corporates, family offices
and government
Source: Report of The Committee on Angel Investment & Early Stage Venture
Capital, June 2012.
Types of Financial assistance to MSMEs
The Governments both Central and State have setup several institutions and
centres to support MSEs. These institutions are providing variety of financial
support for their development. Financial assistances and tax concessions
extended to MSMEs are listed below. (This may not be complete as full data of
facilities are not available)

1. CREDIT GUARANTEE SCHEME

Launched on 30 August 2000
Operated by the Credit Guarantee Fund Trust for MSES (CGTMSE) ● ● Provides
guarantees to Member Lending Institutions for loan sanctioned without collateral
Maximum up to 85% of sanctioned loan guaranteed
Collateral free loan up to 100 lakhs per borrowing unit covered under the Scheme.
● Corpus size: 2295.30 crore
● A composite all-in Annual Guarantee Fee of 1% per annum of the credit facility
sanctioned (0.75% for credit facility up to 75 lakh and 0.85% for above 5 lakh
and up to ₹100 lakh for Women, Micro Enterprises and Units in NER including
Sikkim)
2. ● Credit approved in 2015-16. Number of proposals 513987 and amount
sanctioned 19949.39 crores. Total sanctioned upto Dec-2016. 56,000 crores.
Credit Linked Capital Subsidy Scheme CLCSS)
Launched in October 2000 to facilitate technology upgradation of MSEs SIDBI
and NABARD act as the Nodal Agencies and operate through Primary Lending
Institutions.
Additional Nodal Banks/Agencies - SBI, Canara Bank, BOB, PNB, BOI, Andhra
bank, SBBJ & TIICL operate directly.
Provide 15% capital subsidy on eligible institutional loan up to 100 lakh.
Coverage: 51 Products/Sub-sectors.
Performance and Credit Rating Scheme
The rating under the scheme serves as a trusted Third Party Opinion on the
capability and credit worthiness of Micro and Small Enterprises.
Under this scheme, rating fee payable by Micro and Small Enterprises is
subsidised for the first year upto 75% of the fee
Prime Minister's Employment Generation Programme (PMEGP)
A credit linked subsidy scheme of the Ministry, implemented through and State
KVI Boards with KVIC as the Nodal Agency at the national level. Any individual
above 18 years of age is eligible.
KVIC, DICs cost
With an attractive quantum of subsidy (up to a maximum of 35% of project for
special category in rural areas, including weaker sections), the scheme has
become very popular.
● The maximum cost of the project is ₹ 25 lakh in the manufacturing sector and
10 lakh in the service sector. and 15%
Margin money subsidy of 25% of the project cost is given in rural areas in urban
areas for general category people. weaker
Lower beneficiary's contribution of 5% for special category including section of
the society and women, as against 10% general category. In 2015-16 1020.06
crores are released.
Number of projects sanctioned in 2015-16 - 44340.
Employment generated in 2015-16. No. 323362.
MSE Cluster Development Programme
Study Reports (DSRs): To map the business processes in the cluster
Diagnostic and propose remedial measures, with a validated action plan. Gol
grant of maximum 2.50 lakh will be provided for preparation of DSR for one
cluster. For the field organizations of the Ministry of MSME, this financial
support will be 1.00 lakh.
Soft Interventions (Sis): Technical assistance, capacity building, exposure
building, exposure visits, market development, trust building, etc. for the cluster
units. Maximum limit for project cost would be *25.00 lakh cluster. per Gol grant
for the soft interventions will be 75% of the sanctioned amount of the project cost.
For NE & Hill States, Clusters with more than 50% (a) micro/village (b) women
owned (c) SC/ST units, the Gol grant will be 90%.
Hard Intervention/ Common Facility Centres (CFCs): Creation of tangible
"assets" like Testing facility, Design Centre, Effluent Treatment Plant, Training
Centre, R&D Centre, Raw material Bank/Sales Depot, product Display Centre,
Information Centre, any other need based facility.
The Gol grant will be restricted to 70% of the cost of project of maximum 15.00
crore. Gol grant will be 90% for CFCs in NE & Hill States, Clusters with more
than 50% (a) micro/village (b) women owned (c) SC/ST units.
Infrastructure Development (ID): Development of land, provision of water
supply, drainage power distribution, non-conventional sources of Energy for
common captive use, construction of roads, common facilities such as First Aid
Centre, Canteen, other need based infrastructural facilities in new industrial
(multi-product) areas/estates or existing industrial areas/estates/clusters. The Gol
grant will be restricted to 60% of the cost of project of 10.00 crore. Gol grant will
be 80% for projects in NE & Hill States, industrial areas/estates with more than
50% (a) micro/village (b) women owned (c) SC/ST units.

6. Marketing Development Assistance Scheme

(A) BAR code installation
The basic objective of granting financial assistance to the MSES is to enhance
their competitiveness by motivating and encouraging them to use Global
Standards in Bar Coding The objective is to be achieved through use of Barcoding
by maximum number of MSEs and getting benefits like inventory control, wide
acceptability of products in the domestic and world markets, higher efficiencies,
lower costs, better quality assurance and greater acceptance of their products by
local as well as international buyers.
● To promote adoption of Bar Code by MSES, 75% of annual recurring fee to
MSES for first three years w.e.f. 01.06.2007 is reimbursed as subsidy. This is in
addition to reimbursement of 75% of the onetime registration fee for Bar Coding
w.e.f. 1st January, 2002. Motivating and encouraging MSEs for use of bar codes
through conducting seminars on Bar Code, etc.
(B) International Trade fair/exhibitions
● To encourage Small & Micro exporters in their efforts at tapping and
developing overseas markets.
Reimbursement of 75% of air fare by economy class and 50% space rental
charges for Micro & Small manufacturing enterprises of General category
entrepreneurs.
For women/SC/ST/NER Entrepreneurs, Govt. of India will reimburse 100% of
space rent and economy class air fare.
The total subsidy on air fare & space rental charges will be restricted to ₹ 1.25
lakh per unit.
National Manufacturing Competitiveness Programme (NMCP)
The National Manufacturing Competitiveness Programme (NMCP) is the nodal
programme of the Government to develop global competitiveness among Indian
MSMEs. The Programme was initiated in 2007-08.
Following are the components under the NMCP targeted at enhancing the entire
value chain of the MSME sector.
(i) Lean Manufacturing Competitiveness Scheme for MSMES
Under the Lean Manufacturing Competitiveness Scheme, MSMEs are being
assisted in reducing their manufacturing costs, through proper personnel
management, better space utilization, scientific inventory management, improved
process flows, reduced engineering time and so on.
The scheme is initially approved for 100 mini clusters, up-scaled and approved
for 500 mini clusters after successful implementation of Pilot Phase.
(iii) Promotion of Information & Communication Tools (ICT) in MSME
sector
The main objective of the scheme is to encourage and assist potential MSME
clusters to adopt ICT tools and applications in their production & business
processes, with a view to improve their productivity and competitiveness in
national and international markets.
(iii) Technology and Quality Upgradation (TEQUP) Support to MSMEs
The objective of this component of NMCP is to sensitize MSMEs about the
benefits that could accrue from usage of energy efficient technologies, reduction
in emissions of Green House Gases, improve the acceptance of their products by
product quality certification, thereby making them globally competitive. through
(iv) Support for Entrepreneurial and Managerial Development of SMEs
Incubators
● This component aims at nurturing innovative business ideas technology,
process, products, procedures, etc.) which could be commercialized in a year.
Design Clinics scheme for MSMEs new/ingenious
● The activities under the scheme are; organizing seminars, clusters including
design projects of MSME units.
(vi) Enabling Manufacturing Sector to be Competitive through Quality Standards
(QMS) and Quality Technology Tools (QTT) workshops in MSME Management
The scheme, "Enabling Manufacturing Sector be Competitive through Quality
Management Standards (QMS) and Quality Technology Tools (QTT)" is aimed
to improve the quality of the products in the MSME sector and inculcate the
quality consciousness in enterprises in this sector.
The major activities are (i) Introduction of Appropriate Modules for Technical
Institutions; (ii) Organizing Awareness Campaigns for MSEs; (iii) Organizing
Competition-Watch (C-Watch); (iv) Implementation of Quality Management
Standards and Quality Technology Tools in selected MSMEs; (v) Monitoring
International Study Missions.
(vii) Marketing Assistance and Technology Up-gradation in MSMEs Scheme:
Marketing Assistance and Technology Up-gradation in MSMEs is a strategic
initiative for adoption of Modern Marketing techniques by MSMEs consistent
with the requirement of global market.
It involves eight sub components for which Government of India funding
assistance will be available through Technology Upgradation in Packaging, Skill
Upgradation/ Development for modern marketing techniques, Competition
studies, Special component for North Eastern Region, New markets through
State/ District level local exhibitions/Trade fairs, Corporate Governance
practices, Marketing Hubs & Reimbursement to ISO 18000/22000/27000
certification.
(viii) Building Awareness on Intellectural Property Rights for the Micro Small &
Medium Enterprises (MSME) - IP Facilitation Centre
The scheme has been launched to enable Indian MSMEs to attend global
leadership and to empower them in using affective the tools of IPR of innovative
projects.
Promotion of Information & Communication Tools (ICT) in MSME sector
The main objective of the scheme is to encourage and assist potential MSME
clusters to adopt ICT tools and applications in their production & business
processes, with a view to improve their productivity and competitiveness in
national and international markets.
Technology and Quality Upgradation (TEQUP) Support to MSMEs
The objective of this component of NMCP is to sensitize MSMEs about the
benefits that could accrue from usage of energy efficient technologies, reduction
in emissions of Green House Gases, improve the acceptance of their products by
product quality certification, thereby making them globally competitive.
Support for Entrepreneurial and Managerial Development of SMEs through
Incubators
This component aims at nurturing innovative business ideas (new/ingenious
technology, process, products, procedures, etc.) which could be commercialized
in a year.
Design Clinics scheme for MSMEs
The activities under the scheme are; organizing seminars, workshops in MSME
clusters including design projects of MSME units.
Enabling Manufacturing Sector to be Competitive through Quality Management
Standards (QMS) and Quality Technology Tools (QTT)
The scheme,"Enabling Manufacturing Sector be Competitive through Quality
Management Standards (QMS) and Quality Technology Tools (QTT)" is aimed
to improve the quality of the products in the MSME sector and inculcate the
quality consciousness in enterprises in this sector.
The major activities are (i) Introduction of Appropriate Modules for Technical
Institutions; (ii) Organizing Awareness Campaigns for MSEs; (iii) Organizing
Competition-Watch (C-Watch); (iv) Implementation of Quality Management
Standards and Quality Technology Tools in selected MSMEs; (v) Monitoring
International Study Missions.
(vii) Marketing Assistance and Technology Up-gradation in MSMEs Scheme:
Marketing Assistance and Technology Up-gradation in MSMEs is a strategic
initiative for adoption of Modern Marketing techniques by MSMEs consistent
with the requirement of global market.
It involves eight sub components for which Government of India funding
assistance will be available through Technology Upgradation in Packaging, Skill
Upgradation/ Development for modern marketing techniques, Competition
studies, Special component for North Eastern Region, New markets through
State/ District level local exhibitions/Trade fairs, Corporate Governance
practices, Marketing Hubs & Reimbursement to ISO 18000/22000/27000
certification.
(viii) Building Awareness on Intellectural Property Rights for the Micro Small &
Medium Enterprises (MSME) - IP Facilitation Centre
● The scheme has been launched to enable Indian MSMEs to attend global
leadership and to empower them in using affective the tools of IPR of innovative
projects.
The major activities under the scheme are Awareness/Sensitization Programmes
on IPR, Pilot Studies for Selected Clusters/Groups of Industries, Interactive
Seminars/Workshops, Assistance for Grant on Patent/GI Registration, Setting up
of 'IP Facilitation Centre for MSME, interaction with International Agencies. The
initiatives
(xi) ZED Certification are taken on a PPP mode
The scheme was launched on 18th October 2016, zero Defect zero effect (ZED)
scheme plans to assess 22000 units. The ratings will be in five categories viz.,
Bronze, Silver, Gold, Diamond and Platinum. The rated SMEs will get better
business opportunities.
(x) Entrepreneurial and Managerial Development through Incubators. Under this
scheme, financial assistance will be extended to establish "Business Incubators".
Incubators:
Incubators are institutions which help entrepreneurs to develop their ideas to a
point where investors can see the viability of the business model. Incubators
usually provide hard infrastructure (for example, plug and play office space) and
services such as mentoring, advisory, access to technology experts and potentially
seed funding. Incubators could be run by government, private sector and
educational institutions. Incubators usually charge a small fee from the
entrepreneur and could take a stake in the venture.
Following schemes are also launched to develop SMEs.
Vendor Development Programme for Ancillarisation.
MSME Testing Centres/MSME Testing Stations.
Announcing Framework for Revival and Rehabilitation of MSMEs. Establishing
MSME Internet Grievance Monitoring System.
Technology Centre Systems Programme to upgrade and expand the network of
MSME Technology centres of the country has been implemented.
My MSME Web-based (converted into mobile app) application module is
launched by Development Commissioner (MSME). This facilitates entrepreneurs
to take benefit of various schemes of Mo MSME.
Skill Mapping of around 600 districts of the country has taken place to understand
the type of SMEs that can be developed in these districts and to know the types
of skills required for the purpose.
Establishing MSME Databank Portal to make it compulsory for all MSMEs of
the country to give information on this Databank regarding their
products/services. Until May 2019, more than 6.1 lakh MSMEs registered in the
databank.
Entered into MoU with NSIC for provision of services for MSMEs
● Establishment of National Scheduled Caste/Scheduled Tribe Hub. This Hub
provide the following facilities SC/ST MSMEs.
Subsidy of Single Point Registration Scheme (SSPRS) for SC\ST enterprises for
participation in Government purchases. A nominal fee of 100 per unit of SC\ST
enterprises will be charged under the scheme,
• Special Marketing Scheme (SMAS) to provide marketing support to SC\ST
owned MSMES. Under the scheme SC\ST units will get double the rate of
country specified daily allowance as per MEA guidelines including expenses for
accommodation, transport etc. The transport cost for participation in vendor
development programmes will be reimbursed to SC\ST units.
● Subsidy for performance and credit rating scheme for SC\ST enterprises.
Renewal subsidy to be given only to the SC\ST units having the rating up to 5
and additional subsidy for SC\ST units to be 15%.
● To provide reliable measures and set benchmark to boost and strength the
MSME sector in India, Trans Union CIBIL, in partnership with the Ministry of
Statistics & Programme Implementation (MOSPI), launched the MSME Credit
Health Index on November 2, 2020.
● In October 2020, the Ministry of MSME in a major initiative onboarded the
latest IT tools of Artificial Intelligence (AI) and Machine Learning (ML) for
providing assistance and solutions to the Micro, Small and Medium Enterprises
(MSMEs). The ministry has implemented AI & ML on its robust Single Window
System 'Champions', which was launched by the Prime Minister Mr. Narendra
Modi on June 1, 2020.
In September 2020, the Government of India constituted five ministerial task
forces to make India's MSMEs future-ready and formulate a concrete strategy
towards making the country a leading exporter.
MSME Sampark: Launched in 2018, the MSME Sampark portal is a digital
platform wherein jobseekers and recruiters can register themselves for mutual
beneficial interactions.
● Digital Payment: As part of the Digital India initiative, the Ministry of MSME
has taken numerous initiatives to digitally enable the entire MSME ecosystem all
MSME offices have been digitally empowered, efforts have been taken to spread
awareness on the benefits of digital mode of payment such as BHIM, UPI and
Bharat QR Code.
To encourage local production, the government is working on policies to increase
MSME exports and lower imports. In addition, 200 crore (RS$ 28.4 million)
scheme has been sanctioned to set up 12 technology centres, which are expected
to be completed by 2021.
● E-Governance initiatives/Digital Initiatives, such as Digitisation of Ministry of
MSME, making websites of Mo MSME and DC (MSME) mobile friendly and
establishing E-Office to achieve paperless office are introduced.
Udyog Aadhar Memorandum UAM has been introduced to facilitate
entrepreneurs to apply in a simplified one page web application for registration.
The information sought is on a self-certification basis and no supporting
documents are required at the time of online registration.
● SME Exchange: Another far reaching development that has taken place
regarding the finance to MSME sector is that of establishing "SME Exchange".
This is a new exciting platform for small and medium sized companies with high
growth potential. The Indian Companies Act, 2013, has made provision to
promote "one person" company. This facilitates micro and small manufacturing
and trade enterprises to take benefit under corporate garb. SME Exchange is
dedicated for trading the shares/securities of SMEs having a paid-up capital upto
* 25 crores. If the paid-up capital exceeds 25 crores, they have to shift to main
Board (Exchange). This Exchange nurtures early-stage ventures through their
growth stages through mentorship programmes.
Small and medium enterprises have capacity to provide superior return for
investor. Those investors who have capacity and superior knowledge of assessing
the risk of SMEs can also invest in securities of SME Exchange. Risk factor for
investors is high in this Exchange. But the securities can give great returns.
Another aspect to be considered is the liquidity factor. Liquidity in SME
Exchange is low compared to main exchange.
Whatever may be the restrictions regarding listing in this exchange, this channel
can also provide finance to MSMEs.
Tax Concessions
Several types of tax benefits are extended to MSMEs
1. New small industries are exempted from paying income-tax on their profits
upto 6% from the total income of the units from the year of its establishment. This
tax holiday is available for 5 years.
2. Depreciation allowance for plant and machinery MSMEs is allowed on
reducing balance method at prescribed rates.
3. In addition to depreciation, "Development Rebate" in respect of new palnt or
machinery is allowed at prescribed rates
4. "Rehabilitation allowance" is allowed to MSMEs whose business is distributed
by Roits, Floods, Typhoons, hurricanes, cyclones, earthquakes or other natural
disasters, accidental fire or explosion and action by an enemy at prescribed rates.
5. Investment allowance was introduced in 1976 in place of depreciation
allowance. As per the provision investment allowance reserve has to be created.
P&L A/c has to be debited every year with prescribed rate from the date of
acquisition of new plant and machinery. Reserve can be used only for acquisition
of new plant & machinery.
6. Income tax rate, which was 30% previously for MSMEs has been reduced to
25% from 2017 onwards. With this reduction for the MSME sector, India's
MSMEs are greatly benefitted.
7. Presumptive taxation scheme under Income Act is available for SMEs (non
corporate businesses) with turnover or gross receipts not exceeding one crore
rupees. From 2017 onwards turnover limit is increased to two crores. With this
increase about 33 lakh small business people will be freed from the burden of
maintaining detailed books of account and getting auditing done.
8. Goods and service tax - GST is introduced from July 1st, 2017.51 million
MSMEs have to migrate to GST regime and go digital. Operations of MSMEs
become transparent and their credit worthiness improves.
Financial institutions are supporting MSMEs to act as drivers of socio-economic
development of the country. Still this sector is suffering from finance crunch.
Innumerable

CHAPTER 13 -
INSTITUTIONAL ASSISTANCE FOR ENTREPRENEURSHIP-II (NON-
FINANCIAL ASSISTANCE)

[District Industries Centre (DIC) - MSME-Development Institute (Previously

SISI) - Entrepreneurship Development Institute of India (EDII) - MSME
Development Organisation (Previously SIDO) - National Small Industries
Corporation (NSIC) - National Institute for MSMES (NI for MSMEs) -
Association of Women Entrepreneurs of Karnataka (AWAKE) - Trade Related
Entrepreneurship Development Assistance Scheme (TREAD) - Technical
Consultance Organisation (TCO) - Technical Consultancy Services Organisation
of Karnataka (TECKSOK) - National Skill Development Mission (NSDM)]

In the early stages of development of entrepreneurship, entrepreneurs were

designing and developing their units on their own with little assistance from the
governments and financial institutions. This has caused the failure of many small
business units in their infant stages. After independence, many schemes were
implemented under five year plans to develop entrepreneurship. After enacting
MSME Act in 2006, entrepreneurship development took place in a big way. The
institutions in India, which are extending nonfinancial assistancefor the
development of entrepreneurship are discussed in this chapter.

1. District Industries Centre (DIC)

To set off and accelerate industrial development in all parts of the country,
Government of India has established District Industries Centre (DIC) programme
in 1978, in every district of the county. Directorate of Industries monitors the
activities of DIC's. District Industries Centres are the focal point at the district
level to facilitate industrial development in coordination with the other
departments/agencies of the Government. The plan schemes and the activities
under various policies of the State Government are implemented by the District
Industries Centres. The powers to implement the Schemes are completely
decentralization and are vested with the District Industries Centres for effective
delivery mechanism at district level. Besides, the DICs are the first link of the
Industry-Government interface for resolving various issues of industry for its all-
round and healthy growth.
[12:08, 1/7/2023] Kalpana: District Industries Centre focuses on Industrialization
process in the district Encourage entrepreneurs through various schemes Educate
and train people in entrepreneurship Financial assistance through credit schemes
Marketing assistance Raw material and technical assistance Special attention to
tiny and cottage industries.
The objectives of District Industries Centre is to:
• Accelerate the industrialisation process in the district through education,
training and support.
• Encourage the spread of industries to rural areas through supporting to
cottage industries.
• Decentralise the industrialisation process so that regional economic
imbalances are minimized.
• Implement various support schemes of government in the respective
districts, thus encourage new entrepreneurs.
• Act as a single window to minimize the time required to obtain various
statutory permissions like licenses, registrations, subsidies, financial
assistance, etc.
Role of District Industries Centre:
• DIC acts as a nodal agency to spread the process of industrialisation in the
respective region.
• Prepares the profile of the industry located in the district
• Collects the statistical data of various kinds of industries located in the
district.
• Based on the local resources and the needs of the society, DIC prepares list
of products and services which can be produced in the district.
 • Assists the entrepreneurs in accessing various infrastructure facilities like
quality testing, transport, raw material, packaging technology, prototype
development, warehousing etc.
• Organize entrepreneurship awareness programmes and entrepreneurship
development programmes through training on various issues.
• Offers marketing support through other government agencies, updates the
entrepreneurs about various tenders by government and other
organisations.
• Helps the entrepreneur in exporting their products and importing required
machineries and raw materials.
Services of DICs to MSMEs
• Identification of new entrepreneurs by conducting entrepreneurial
motivation programmes throughout the district. Entrepreneurial
development is also conducted in association with MSMEs of the district
and TCOs.
• DICS provide provisional registration certificates to avail initial bank loans
• Provide permanent registration to MSMEs after completing all formalities
required to commence production.
• DICS recommend loan applications of prospective entrepreneurs to various
concemed frandal and developmental institutions, for the purchase of fixed
assets.
• Takes initiative to get clearances from various departments, which are
essential to start a micro or small unit. (Such as electricity board, water
boards etc.)
• Helps SMEs to get subsidies from various schemes of the government-both
State and Central Assists MSMEs to avail interest free (up to 8%) sales tax
loan from MSME-Development Organisation
• Assists MSMEs to get benefits concerning import and export of specific
goods & services.
• Extends facilities to MSMEs to participate in various fairs and exhibitions
conducted by GO! to give publicity of industrial products.
• DICS provide free space to MSMEs in such Fairs
• DIC organises training programmes to rural entrepreneurs and assists other
institutions imparting training to MSMEs.
• DIC has launched the scheme to assist educated unemployed youth of the
district to take up self employment. Technocrats and women are given
preference.
 • Registers the industrial units under SSI, Tiny and Cottage industries
category.
• Advices entrepreneurs on various investment opportunities, production
opportunities and marketing opportunities.
• Acts as a link between entrepreneur and the lead banks, credit cooperative
societies, rural banks, agricultural banks etc, depending on the nature of
business.
Thus DIC provides wide variety of services to including latest developments in
MSME sector regarding management training, marketing management, quality
control and enhancing productivity of the entrepreneurs.

MSME units of the concerned district.

• MSME-Development Institue (MSME-DI) [Previously SISI
MSME-DI (former Small Industries Service Instime-SIST) is established by
Government of India to help the MSME sector on various issues. Every state has
MSME and functions under the guidance of Director.
There are 30 MSME-DIs and 28 Branch MSME-Dis set up at various State
capitals and other industrial cities all over the country. The main activities of these
institutions are
• Assistance/Consultancy to Prospective Entrepreneurs
MSME-DI assists and guides the prospective entrepreneurs on various issues like,
various opportunities existing in the market, how to go about starting a business,
what and how to produce, where to market, where to raise the required capital,
etc. Prospective entrepreneurs will benefit a lot from this kind of information.
• Rendered to Existing Units Assistance/Consultancy
Existing units require the guidance and assistance from time to time on various
issues like, raw material procurement, technology adoption, quality issues,
marketing issues, etc. MSME-DI offer consultancy services on such pressing
issues.
• Preparation of State Economic and Industrial Profiles
MSME-DI in each state collects and publishes various information pertaining to
economic and industrial activities of the state. This information is spread to the
entrepreneurs through books, seminars and training programmes.
• Preparation/Updation of District Industrial Potential Surveys
The Institute periodically conducts surveys to identify emerging business
opportunities. This information helps upcoming entrepreneurs to take up potential
business opportunities.
• Project Profiles
Prepares profiles on various projects. These project profiles explains various
issues like the extent demand for the product/service, production issues,
marketing issues, financial issues, and expected growth in the demand etc. These
profiles are compiled after well research and analysis. Prospective entrepreneur
can go through these project profiles, and they can decide about their options.
Entrepreneurship Development Programmes (EDP)
EDP can convert ordinary persons into risk takers, innovators, employers, leaders
and visionaries. MSME-DI periodically conducts various programmes to bring
awareness, to motivate, and build skills among people to take up businesses of
their own.
• Production Index
The production index measures the monthly/yearly performance of various
industries in the country. Due to its periodicity, and detailed breakdown by
branches of economic activity, it is the central and up-to-date indicator of the
development of business activity. MSME-DI collects data from industries about
the production of various goods and services and publishes for the benefit of
entrepreneurs.
• Quality Control and Upgradation
In today's competitive world any product or a service will not survive if it is not
of a good quality. MSME-DI conducts various training programmes, workshops,
and seminars to bring awareness about the quality aspects in business operations.
MSME-DI helps to deploy appropriate quality systems and processes in the SME
sector.
• Export Promotion
Small business sector is contributing in a big way to country's exports. To assist
entrepreneurs in exporting their goods, Institute works with other institutions so
that entrepreneur will not have any problems in exporting his goods. MSME-DI
also offers export documentation assistance to entrepreneurs. In association with
various chambers of commerce and industries, Institute updates entrepreneurs
about visits of foreign delegations and trade visits, so that entrepreneurs get a
chance to meet prospective buyers.
• Ancillary Development
Ancillary industrial unit is one which supplies 50% or more of its production to
one or more industrial undertakings. Along with development of small
enterprises, MSME-DI also focuses on setting up of ancillary industries. This
accelerates the process of industrialisation.
• Common Facility Workshop/Lab.
MSME-DI offers common facility services like general engineering works,
electrical and electronics, product designing etc. It is difficult and expensive to
set up such kind of facilities in every small-scale unit. Hence the Institute has
created such facilities and these facilities can be used by small-scale units.
• Preparation of Directory of Specific Industry
MSME-DI prepares directories for specific industries, viz., directory on
manufacturers of automobile spare parts, Agricultural implements, electrical
equipments etc. These kind of directories helps to promote a particular industry
in terms of creating awareness, bridging the gap between buyers and sellers etc.
• Intensive Technical Assistance
MSME-DI offer technical assistance in terms of choosing right kind of
technology, purchase of machineries from domestic and international markets,
quality improvement techniques, product improvement etc. Small-scale units
avail these technical assistance to enhance their productivity.
• Coordination with DICS
MSME-DI provides extensive back up support to DIC's in the State in promoting
industrial development by providing technical and economical information,
project profiles on industries, participating in EDPs and seminars organised by
DICS, conducting industrial potential surveys, attending Task Force committee
meetings, assisting DICs in capacity assessment of raw materials, conducting
mobile van demonstrations, processing applications for allotment of sheds,
training programmes under PMRY scheme etc.
Linkage with State Government Functionaries
MSME-DI acts as a central point of contact and coordinates with various
government functionaries like various ministries, committees, financial
institutions, commodity boards, commercial banks, training institutes, etc.

In coordination with various government agencies MSME-DI regularly conducts

market surveys on various products and services. This helps to understand the
market trend, and entrepreneurs can align their business accordingly. This also
acts as a guide to potential entrepreneurs.
Other Action Plan
Activities Assigned by Headquarters Apart from regular services each MSME-
DI takes up other activities assigned by the central body on various issues.
3. 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), the
Industrial Finance Corporation of India (IFCI), the Industrial Credit and
Investment Corporation of India (ICICI) and State Bank of India (SBI).
EDII 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. In consonance with this
belief, EDII aims at:
• creating a multiplier effect on opportunities for self-employment,
• augmenting the supply of competent entrepreneurs through training,
• augmenting the supply of entrepreneur trainer-motivators,
• participating in institution building efforts,
• inculcating the spirit of 'Entrepreneurship' in youth,
• promoting micro enterprises at rural level,
• developing and disseminating new knowledge and insights in
entrepreneurial theory and practice through research,
• facilitating corporate excellence through creating intrapreneurs
(entrepreneurial managers),
• improving managerial capabilities of small enterprises,
• sensitising the support system to facilitate potential and existing
entrepreneurs establish and manage their enterprises, collaborating with
 similar organisations in India and other developing countries to accomplish
the above objectives.
Functions of EDII
• Promoting micro enterprises in rural areas.
• Participation in institutional building efforts.
• Inculcating spirit of Entrepreneurship in youth.
• Developing new knowledge and insights on entrepreneurship aspects.
• Improving managerial capabilities
• Collaborating with other institutes and organisations regarding
entrepreneurship development.

EDII has set up Centre for Research in Entrepreneurship Education and

Development (CREED) to act as a crucial link between theory and practice in the
field of entrepreneurship with special focus on applied research backed by sound
theoretical underpinnings. Through this centre EDII supports in-house research
in the areas of major concerns in entrepreneurship,
● catalyses the process of networking researchers and institutions in the sphere
of entrepreneurship,
● encourages young researches to make use of intellectual and other resources at
the Centre so as to make valuable contributions to the knowledge on
entrepreneurship.
● promotes collaborative research endeavours with institutions and individuals
outside the Centre,
• disseminates and shares various research findings among planners, policy-
makers and academicians and
• Offers two year post-graduate Diploma in management for entreprenurs
organises seminars, workshops and colloquies.

Over the period of time, EDII activities have grown leaps and bounds. Amongst
these Businesss developments, Business Development Services for MSMEs
under MSME - Development Centre is one of the core activities. Considering the
emerging needs of MSMEs, there has been a major shift in the strategy regarding
conceiving, designing and implementing various activities. Varieties of training
programmes are designed and implemented for different target groups on thrust
areas.
Small, Medium Enterprises & Business Development Services Centre of the
Institute has come a long way in promoting and strengthening entrepreneurship
at both national and international levels. EDII-pioneered Entrepreneurship
Development Model has acquired the face of a revolution today. The Institute has
been acknowledged as a world leader in creating first-generation entrepreneurs
as also honing skills of existing ones, and it shares its expertise with several
developing countries. In order to replicate the success story of promoting first-
generation entrepreneurs through training and counseling interventions, the
institute has successfully established EDII-like Entrepreneurship Development
Centres (EDCs) in Lao PDR, Cambodia, Vietnam and Myanmar under the aegis
of Ministry of External Affairs (MEA), Government of India. In the same bid to
create a sound economic structure in African continent, EDII is also setting up
EDCs in five selected countries of Africa and Uzbekistan under the sponsorship
of MEA. In addition to this, activities related to new enterprise creation,
enterprise upgradation and investment promotion are also getting a thrust in
Mozambique, Sudan, Yemen and Lao PDR. To share its expertise with
developing countries in specialised areas of entrepreneurship, Small, Medium
Enterprises & Business Development Services Centre has also been organising
large number of international training programmes, sponsored by the ITEC
division of the MEA. - S. B. Sareen, Centre Coordinator, MSME-DI
The centre is mainly focusing on Northeast region. But in almost all the states,
the functions of EDII is visible. Since inception, EDII has played the role of
promoter and monitor of entrepreneurship movement of the country, and it has
successfully created a national network of about 15 state level entrepreneurship
organisations. EDII's training model is well tested and can be adapted for new
enterprise creation. This model popularly known as EDII-EDP model is adapted
in 100 developing countries.
MSME-Development Organisation (MSME-DO) [Former SIDO]
MSME-DO (Former SIDO) is functioning under Ministry of MSME,
Government of India. The main functions of this organisation are as follows.
• Evolves an all India policy with different state and Central Ministries, NITI
Ayog, RBI and financial institutions.
• Framing policies pertaining to MSME sector of the country.
• Coordination with different bodies/agencies in the MSME sector.
• Dissemination of economic information to MSME sector
• Assisting MSME units in technological upgradation by providing quality
too (facility)
 • Increasing efficiency of MSME units by providing consultancy services
and common service facilities.
• Helps in preparation of projects of MSMEs.
• Provides facilities for skill development and management training of
entrepreneurs of MSMEs.
• Monitoring policy implementation of MSMEs.
• Providing assistance to develop markets of MSMEs.
• Providing international exposure to MSME products.
• Some of the services of MSME-DO are briefly explained in the following
paragraphs.
Market Development Assistance for MSME Exporters
A Market Development Assistance Scheme is provided by the MSME-DO with
a view to encouraging exporters (including MSME exporters) to access and
develop overseas markets. The scheme offers funding for participation in
international fairs, study tours abroad, trade delegations, publicity, etc. Direct
assistance under MDA for small-scale units is given for individual sales-cum-
study tours, participation in fairs/exhibitions and publicity.
The Office of DC(MSME) has an existing scheme for fairs, whereby
MSMEentrepreneurs are encouraged to display their products at international
exhibitions abroad.
(i) MSME-DO provides exhibition space and shipment of exhibits
exMumbai free of cost for this purpose.
(ii) International Exposure to MSME Products participation in international
(iii) With a view to rendering assistance to Small enterprises market
potential, export promotion and exhibitional publicity, the following
schemes are being implemented:
(iv) Participation in International Fairs/Exhibitions in the field of exploring
With a view to ensuring that exporters from small-scale sector exhibit their
products in the International Exhibitions, required assistance & support is
provided. Expenditure on account of space rent, handling and clearing charges,
insurance and shipment charges etc. are met by the office of the Development
Commissioner (MSMEs) under one of the plan schemes.
Packaging for Export
With a view to acquainting MSME Exporters of the latest Packaging standards,
techniques etc. training programmes on packaging for exports are organised
regularly by MSME-DO in various parts of the country. These programmes are
organised in association with Indian Institute of Packaging.
(iii) Consultancy Services
Technical & Managerial Consultancy Services
Technical & Managerial Consultancy Services to the MSME manufacturers/
exporters is provided through a network of field offices of this office so as to
ensure higher level of production and generation of higher exports.
National Awards for Quality Products
• With a view to encouraging the small-scale units for producing Quality
goods, National Awards for Quality Products are given to the outstanding
small-scale units, who have made significant contribution for improving
quality of their products. The scheme is being operated since 1986.
Winners of National Awards get a Trophy, a Certificate and a Cash Prize.
National Awards encourage Smallscale Industries units to produce quality
goods which further enables them to enter into export market.
(iv) Testing Services from MSME-DO
Regional Testing Centres (RTC) - RTC located at Delhi, Calcutta, Mumbai and
Chennai are extending their testing facilities for raw materials, semi-finished
products and end products primarily manufactured in the small-scale sector.
These centres are equipped with the basic testing facilities in the disciplines of
chemical, Mechanical, Electrical, Metallurgy and Meteorology. With the help of
these basic facilities a large number of products falling under different disciplines
are tested conforming to the relevant Specifications.
(v) Technical Services by MSME-DO
Tool Rooms/Tool Design Institutes - Tool Room is the heart of Engineering
Industry. MSME-DO has set up Tool Rooms in the country to assist MSME units
in their technical upgradation by providing good quality toolings to meet the
growing needs and to assist MSME units with the assistance of countries such as
Denmark and Federal Republic of Germany which have provided the
sophisticated machines with latest technology. Some of the Tool Rooms have also
been set up with the assistance of UNIDO/ILO.
(vi) Extension Services
Modernisation/In-plant Studies These are undertaken in units located in dense
industry clusters. Programmes for modernisation are prepared and implemented.
-
Sub-Contract Exchanges (SCXs) for Ancillary Development - There is a good
scope for sub contracting/ancillarisation in different industry group in the
country. In order to give marketing support and also to facilitate ancillary
industries in their efforts to supply to public sector undertakings, Sub-contracting
Exchanges (SCXS) are functioning in MSMIDI and branches of MSMI-DI in the
country.
(vii) Technology Trends and Trade Reports
MSME-DO and MSME-DI are involved in activities to build databases and
Reports on Technology trends and Trade reports.
The activities encompass: ● ❤ Production Index ● ● Preparation of State
Industrial Profiles Preparation/Updation of District Industrial Potential Surveys
Project Profiles Energy Conservation Pollution Control Quality Control Papers
on Emerging Trends Export Promotion Preparation of Directory of Specific
Industry Market Surveys

National Small Industries Corporation (NSIC)

NSIC, an ISO 9000 certified company, was established in 1955. This corporation
has been working to fulfill its mission of promoting, aiding and fostering the
growth of micro and small industries and industry related small-scale services
and businesses. Started by Government of India, NSIC is now a fully owned
government corporation. This institution operates through country wide network
of offices and Technical Centres. This is a profit making, dividend paying
corporation functioning under ministry of MSME.
Functions
NSIC performs three distinct categories of activities in order to fulfill its mission.
It runs a number of schemes, and also an implementing partner for a number of
schemes of the Ministry of MSME. These schemes/activities include: 1.
(i) Marketing Assistance
(ii) Bank Credit Facilitation
(iii) Performance & Credit Ratings
(iv) Raw Material Assistance
(v) Single Point Registration
(vi) Infomediary Services
(vii) NSIC Consortia and Tender Marketing Scheme
 (viii) Marketing Intelligence
(ix) Bill Discounting
(x) Infrastructure

National Schedule Caste and Schedule Tribe Hub

NSIC provides technical support to MSMEs through 'NSIC Technical Services
Centres (NTSCs) and a number of TICs & LBIs spread across the country. The
range of technical services provided through these centres includes skill
development in Hi-Tech as well as conventional trades, material and product
testing.
One of the programmes being implemented by NSIC is to create self-employment
opportunities by imparting training in entrepreneurship building to the
unemployed people who want to set up new small business enterprises in any of
the manufacturing/ services sectors or seek employment opportunities. For this
purpose, NSIC has started a new initiative by entering into franchisee
arrangements with private partners interested for setting up of Training-cum-
Incubation Centres (NSIC-TIC) at various locations across the country under
Public-Private Partnership (PPP) mode.
Major Activities
Major activities of NSIC cover credit support, marketing support, other support
services, entrepreneurship orientation programme and international corporation.
• Credit Support: NSIC has entered into agreements with various banks to
extend credit facilities to the MSME sector. This corporation finances for
procurement of raw material required by MSMEs. It purchases raw
material in bulk from suppliers making payment to them and supplys to
MSMEs at a reasonable price.
• Besides raw material procurement, NSIC has initiated Online Finance
Facilitation Centre (FFC) to provide finance to MSMEs through web
linkages between NSIC portal and Bank's portal. All services upto availing
loans by MSMEs will be rendered to them by NSIC.
• Marketing support: NSIC has devised several a number of schemes to
support enterprises in their marketing effort, both in domestic and foreign
markets. The activities are as follows.
(i) Raw materials such as iron and steel, aluminium, coal, polymer products are
purchased from manufacturers through government of India at concessional rates
all over the country and distribute them to MSMEs at concessional rates through
its distributing centres which are 37 in number, in 2018.
(ii) Consortia and Tender Marketing: MSMEs find it difficult in their individual
capacity to procure and execute large orders. To overcome this problem NSIC
forms consortia of small units manufacturing identical products and pool the
products in the consortia. The Corporation applies for tenders on behalf of
consortia of MSEs and secures orders for bulk quantities. These orders are then
distributed amongst MSEs in tune with their production capacity. Under the
Tender Marketing Scheme, NSIC facilitates the MSE(s) in every stage of tender
activity right from the participation in tenders till execution of tenders.
(iii) Exhibitions: To showcase the competencies of Indian MSMEs, NSIC
facilitates MSMEs' participations in National & International Exhibitions, Fairs,
Buyer-Seller meets, Intensive campaigns and marketing promotion events etc. on
concessional terms under the Marketing Assistance Scheme of the Ministry of
MSME. Participation in these exposes MSMEs to international practices and
enhances their business prowess. Through participation in these events, MSMEs
are also facilitated to capture new markets making them globally competitive.
(iv) Buyer-Seller meets: NSIC also arranges Buyer-seller meets/VDPs with the
purpose of facilitating MSMEs to become vendors of large buyers.

Other Support Services: NSIC extends various support services to MSMEs.

Following are the major support services rendered.
(i) Single Point Registration for Government Purchase (SPRS): NSIC operates
single point registration for Government purchase to build the capacities of MSES
for participation in Government tenders and contribute in Government Public
Procurement processes. MSMEs are also empowered to participate in tenders of
Government departments / institutions through consortia and tender marketing
scheme. Total number of SMEs registered with NSIC upto December 2017 for
SPRS were 21922.
(ii) E-Marketing - MSME Global Mart Web Portal - (MSMEGMWT): This is a
B2B web portal started by NSIC to extend support to MSME units. (See
www.msmemart.com). This marketing portal provides e-marketing platform to
MSME units across the country to expand their business. This portal provides a
vast data base of MSE units of the country with the details of products or services
of each unit and these are looking for business opportunities in terms of
sustainable partnership, sub-contracting and participation in public procurements.
Around 12,000 units were registered upto 31st December 2017 with NSIC for
emarketing purpose.
(iii) Skill development and IT support: NSIC provides skill development and
information technology support to MSE units by offering training according to
requirements of industries by linking them to on-going training programmes
through updated knowledge from industries through its Technical Service Centres
located across the country. Training covers the fields of Mechanical, Design,
Electrical and Electronics, Information Technology and Mechantronics
(Acronym of Mechanical and Electronics) specific training support extended by
NSIC include Robotics.
PLC & SCADA, Embedded Technology, Solar Energy, Turner, Fitter, Machinist,
Welder, Electrician, Draughtsman (Mech.), Refrigeration & Air Conditioning,
HVAC, Tool Design & Manufacturing, Revit MEP, CAD/CAM-Creo,
Unigraphics, CATIA, Solid Works, CNC Programming & Operation, Revit
Architecture, Interior Design, 0 Level Advance Software, Web Technology,
Graphics, Multimedia, Computer Hardware & Networking. These technical
centres also conduct testing through NABL Accredited laboratories in the areas
like Electrical Cable & Conductor Testing, Engine Testing, Pump Testing,
Building materials, Plastics, Electrical appliances, Calibration etc. NSIC has 8
Technical centres offering service in different trades.
(iv) Incubation Centres: NSIC, through rapid incubation centres, provides support
to the prospective entrepreneurs and start-up companies to start product hands-on
training manufacturing. These Incubation Centers provide facilities on working
projects and also covering the theoretical aspects of business such as preparing
project reports, business development etc. As on 31st December 2017, NISC had
six Livelihood Business Incubators under ASPIRE of Ministry of MSME.
(v) Entrepreneurship Orientation Programme (EOP): This is a support
programme of NSIC focusing on fresh graduates rolling out of universities. EOP's
objective is to create awareness among students and fresh graduates to set up new
enterprises after completing their studies. This awareness instills in them to
become entrepreneurs instead of searching for jobs. EOP makes participants
familiar with MSME programmes and various types of financial support extended
by governments.
(vi) International Cooperation: The focus of activities at the enterprise level is on
the entrepreneurs and the objective is to initiate long term and sustainable
enterprise cooperation between Indian small enterprises and enterprises in target
countries. This is achieved by exchanging business delegations and organizing
one-on-one business meetings among the enterprises of both the countries.
Main features of International Cooperation include, exchange of
business/technology missions with various countries; facilitating enterprise to
enterprise cooperation, technology transfers & other forms of sustainable
collaboration; explore new markets & areas of cooperation; identification of new
export markets by participating in exhibitions abroad; sharing of Indian
experiences with other developing countries.
Thus, NSIC provides facilities and support systems for all-sided development of
MSE units. The Institute is also providing revenue to Gol in the form of dividend.
It paid ₹ 31.26 crore after tax as dividend for the period ending 31-3-2018.
6. National Institute for MSMEs (NIMSME)
NIMSME was originally set up as Central Industrial Extension Training Institute
(CIETI) in New Delhi in 1960 under the then Ministry of Industry and
Commerce, Government of India. The Institute was shifted to Hyderabad in 1962
as a registered society in the name of Small Industry Extension Training Institute
(SIET). After the enactment of MSMED Act, 2006, the Institute expanded focus
of its objectives and re-designed its organization structure. In line with the new
Act, the Institute was rechristened as National Institute for Micro, Small and
Medium Enterprises (NIMSME). It is currently an organization under the aegis
of the Ministry of Micro, Small and Medium Enterprises (formerly Ministry of
SSI & ARI), Government of India.
Objectives
1. The primary objective of NIMSME was to be the trainer of trainers. Today,
with the technological development and ever-changing market scenario, the
organisation's involvement has undergone changes too. From being merely
trainers, NIMSME has widened its scope of activities to consultancy, research,
extension and information services.
2. In line with the national objective of economic development through
industrialization, and based on the expertise that is available, the Institute has
identified thrust areas that need emphasis and exploration. These are:
Entrepreneurship Development, Technology Up-gradation & Transfer, Policy
Issues, NGO Networking, Environment Concerns, Cluster Development,
Management Consultancy, Quality Management Services, Financial Services,
and Information Services.
NIMSME's long-term'mission is to excel at the following:
• Turning new corners in Information Technology.
• Spotlighting of topical issues through conferences, seminars, etc.
• Greater attention to need based programmes.
• Shift towards client driven approach and innovative interventions.
Programme evaluation.
• Emphasis on research publications.

Functions
• Enterprise promotion and entrepreneurship development being the central
focus of NIMSME's functions, the Institute's competencies converge on the
following aspects:
• Enabling enterprise creation;
• Capacity building for enterprise growth and sustainability;
• Creation, development and dissemination of enterprise knowledge;
Diagnostic and development studies for policy formulation; and
Empowering the under-privileged through enterprise creation.
Organisation
The apex body of the Institute is the Governing Council, headed by the Minister
of State for MSME (I/C).
Activities of the Institute are organized through its four Schools of Excellence
(Enterprise Development; Enterprise Management; Entrepreneurship and
Extension; and Enterprise Information and Communication), with each School
consisting of theme-focused centres and cells. The Academic Council is the
nucleus coordinating body which formulates academic activities and programmes
with quantitative and qualitative benchmarks by providing a framework for
assessment and evaluation addressing contextual variations.
Major achievements
The Institute has conducted over 2300 programmes (upto 2018) on
entrepreneurship development, national and international seminars and
workshops and consultancy & research. It has trained over 80,000 people of
MSEs upto Dec. 2018 and brought out publications on various topics.
7. Association of Women Entrepreneurs of Karnataka (AWAKE)
AWAKE - Association of Women Entrepreneurs of Karnataka is today one of
India's premier institutions totally devoted to Entrepreneurship Development
among women. Established in 1983, AWAKE's success has been recognised
worldwide. AWAKE aims to empower women through entrepreneur
development to improve their economic condition, enhance their social status and
develop a spirit of individuality and creativity.
AWAKE helps women entrepreneurs in Karnataka for the growth of small-scale
units.
AWAKE in addition to supporting potential women entrepreneurs also
contributes in promoting mid-stream enterprises of women entrepreneurs to
ensure the sustained growth of their enterprises.
Any woman who is an entrepreneur can join AWAKE as a member for a nominal
fee. What sets AWAKE apart from most organisations is that it is run by women
entrepreneurs, volunteering their time to support potential women entrepreneurs
in setting up their enterprises through business counselling, entrepreneurship
development programmes and others. At present, statistics show that 10% of the
MSMEs are owned by women. AWAKE sees a lot of potential for growth of
women owned business enterprises.
AWAKE organises conventions/seminars. The seminars will emphasise the
imperative need for growth of women owned enterprises in the changing
economic scenario. Some of the topics in the seminars will be: building and
nurturing networks, international trade, growth management, business
opportunities in IT and Biotechnology, developing win-win relationships,
ensuring economic security for micro, small and medium enterprises, how to
source and adopt best business practices-their relevance in the new era and more.
The objectives of such seminars and conventions are:
• To provide an international platform focusing on economic empowerment
of women and international trade.
• To provide an opportunity for interaction between entrepreneurs to learn
about the best business practices.
• Business to Business trade meets.
• Networking of Business Associations.
• To evolve pro-women entrepreneur policies.
• Exposure to new ideas of marketing access to
finance/technology/innovation.
• Exploring business opportunities.
AWAKE, in mid 2002, conducted a 4 day long Asia Pacific Convention of
Entrepreneurial women, based on the theme 'Expanding Business Horizons
and/or Exponential Growth' attended by dignitaries from India and other Asia
Pacific countries. The convention offered opportunities for women entrepreneurs
to interact on a common platform. The changing global scenario had created the
need for global perspective among women entrepreneurs. The convention
provided an international platform in focusing on economic empowerment of
women and international trade.
Recent Developments of AWAKE
Awake is a two-faced organisation. It is an industrial association, participating in
all the policy-making bodies of both the Central and State Governments. On the
other, it is a rural development organisation focusing on the creation of women
entrepreneurs. Recent developments of awake are as follows.
The association has helped to create more than one lakh employment directly and
indirectly ever since its creation. AWAKE has counseled more than 40 lakhs
women through business counseling and awareness programs; created market
linkages through exhibitions, buyer seller meets for over 75,000 women
entrepreneurs; created a network with over 200 organizations, institutions of
regional, national and international level and has reached out to over 50 lakh
women in rural and urban areas across the state.
The organization's reach can be understood with the following facts:
It has set Business Counselling centers in 20 districts (10 centers have been
equipped with technology to conduct video counseling through webinar and
Skype)
Set up incubators - food processing at Bijapur, Common Facility center at
Malavalli, Technology Incubator and computer learning Centre at Bangalore,
Computer labs in 5 districts - Bijapur, Gulbarga, Malavalli-Mandya, Koppla and
Belgaum)
Started conducting/facilitating the entrepreneurs to participate in various
Exhibitions and Buyers seller Meet at Taluka, District, Regional, National and
International level.
Started AWAKE BAZZAR (weekly bazaar) to support entrepreneurs from rural
areas to sell their wares.
Started Sub-contract exchange (linking entrepreneurs with wholesalers, retailers,
multinational corporations and public sector undertakings and many more)
Ventured into Vocational Training for youth especially school dropouts for
employable skill across Karnataka.
8. Trade Related Entrepreneurship Development Assistance Scheme (TREAD)
Women have been among the most disadvantaged and oppressed section of our
country with regard to access to and control over resources. Problems faced by
them continue to be grave particularly for illiterate & semi literate women of rural
and urban entitled "
In order to alleviate their problems, Govt. of India launched a scheme
Trade Related Entrepreneurship Assistance and Development" (TREAD) during
the 9th plan period which has slightly been modified and is now put in operation.
The scheme envisages economic empowerment of such women through trade
related training, information and counseling extension activities related to trades,
products, services etc.
Objectives
Experience has revealed that apart from counseling and training, delivery of
credit poses the most serious problem for the poor women. There is also dearth
of information with regard to existing status of women and their common needs
for providing necessary support. Since such women are not able to have an easy
access to credit, it has been envisaged that the credit will be made available to
women applicants through NGOs who would be capable of handling funds in an
appropriate manner. These NGOs will not only handle the disbursement of such
loans needed by women but would also provide them adequate counseling,
training and assistance in developing markets.

Salient features
• Credit
Under the scheme, there is a provision for Government of India grant up to 30%
of the loan/ credit maximum up to 30.00 lakh as appraised by lending
institutions/banks. The appraising lending institutions would finance the
remaining 70% as loan assistance to applicant women, who have no easy access
to credit from banks due to their cumbersome procedures and the inability of poor
and usually illiterate/semi-literate women to provide adequate security demanded
by banks in the form of collaterals.
● GOI Grant and the loan portion from the lending agencies to assist such women
shall be routed through eligible NGOs engaged in assisting poor women through
any kind of income generating activities in non farm sector. For example if an
NGO submits project(s) for a number of individual or group(s) women say for?
50,000 each for a group of 50 women, then the loan amount required by 50
women would be * 25 lakhs. To it would be added the expenditure that the NGO
will make in training/counseling of staff, part expenses on operationalising a
management and monitoring system, vehicles, charges for legal documentation,
training of loaners, auditors fees charged. Say duly approved by lending
institutes, it works out to be 15 lakhs. Then the total project cost would be * 25 +
15 = 40 lakhs. The GOI grant would be maximum up to 12 lakhs (30% of ₹40
lakhs).
• Training and Counseling
Training organizations viz. Micro, Small and Medium Enterprises (MSMEs),
Entrepreneurship Development Institutes (EDIS), NISIET and the NGOs
conducting training programmes for empowerment of women beneficiaries
identified under the scheme would be provided a grant upto maximum limit of ₹
5.00 lakh per programme provided such institutions also bring their share to the
extent of minimum 25% (10% in case of NER) of the Government grant. The
batch size for such a training activity will be at least 20 participants. Duration of
the training programme will be minimum one month. For example, if an
institution or eligible NGO wants to conduct a pre or post project training
programme for a group of women then the maximum GOI grant can be * 5.0 lakh
provided the NGO also raises 25% of the requested grant i.e. the total expenditure
of the training expenditure can be up to 6.75 lakhs for availing full assistance of
GOI grant.
The non-farming activities taken up by women (under TREAD) are Tailoring,
Handicrafts, Embroidery, Toy making, Readymade garments, Candle making,
Agarbatti making, papef cup and place making, Masala power making, Saree
weaving, Coir mat making, Pickles making, Readymade garments, basketry and
brooms making, Jute bag making etc.
The focus of the scheme is to promote self-employment and income generation
activities for women mostly from SHG groups in non-farm sector.
9. Technical Consultancy Organisations (TCO)
 • To cater to the consultancy needs of small and medium enterprises,
Technical Consultancy Organisations were established by many financial
institutions like ICICI, IFCI, SIDC, IDBI, SFC etc. in collaboration with
state level financial institutions and commercial banks. Functions of TCO
are to:
• Advice SMEs about technical aspects of business.
• Prepare project profiles and feasibility reports.
• Institutional Assistance for Entrepreneurship-II (Non-Financial
Assistance)
• Technical collaboration and transfer of technology.
• Encourage, assist and offer technical consultancy to new entrepreneurs.
• Undertake financial potential survey.
• Advice on industrial management.
• Undertake market research and survey for specific product.
• Conduct survey on behalf of central and state governments on various
issues like power needs, modernization of plant, rehabilitation of sick
industries etc.
• Provide consultancy services to the new entrepreneurs.
• Offer merchant banking facilities.
• Opportunity scanning and product selection.
• Market survey, Project launching, expansion of units etc.
• Conduct entrepreneurship development programmes.

Technical Consultancy Services Organisation of Karnataka

(TECKSOK)
• TECSOK is a Government of Karnataka Organisation specialised in
providing following range of services to the entrepreneurs.
• Identification of project ideas and selection of investment opportunities.
• Selection of suitable locations for setting up industrial units.
• Conducting market surveys, industrial potential surveys.
• Preparation of detailed techno-economic feasibility report/detailed project
reports.
• Turnkey assistance

• Assistance in obtaining necessary licences and clearances.

• Energy Audit and Conservation.
 • Modernisation studies.
• Dissemination of information on industrial policies and procedures of
Central as well as State Governments.
• Coordinating and conducting Management Development Programmes.
• Identification and development of ancillary industries.
• Consutancy for agro-based industries as a Nodal Agency of Gol.
• Assistance to Government in providing information about new policies,
programmes and schemes.

TECSOK provides ideas of viable projects to suit the entrepreneur’s background.

It selects the right product, location for entrepreneur. Its office is situated in
Nrupatunga Road, Bangalore. It is a wing of the Department of Industries and
Commerce promoted during 1976. It assists the entrepreneurs in the preparation
of feasibility reports at a subsidised cost.
• In order to assist the entrepreneurs towards preparation of various reports,
TECSOK has been recognised as a special agency by All India Financial
Institutions like IDBI, IFCI, ICICI etc. Some of the schemes of IFCI
operated through TECSOK are:
• Subsidy to small entrepreneurs in rural, cottage, and small-scale sectors for
meeting the cost of feasibility studies.
• Subsidy for consultancy to industries relating to animal husbandry, dairy
farming, poultry farming and fishing.
• Subsidy for consultancy to industries based on or relating to agriculture,
horticulture, sericulture and pisciculture.
• Subsidy for control of pollution in small and medium scale industrial units.
• Subsidy to new entrepreneurs for meeting the cost of market
research/surveys. Subsidy for promotion of ancillary and MSMEs
• Subsidy for consultancy on sue of non-conventional sources of energy and
energy conservation measures.
• Separate women cell is established by TECSOK to formulate the projects
which oriented towards progress and development of women. This cell
assists rural women selfemployment and in gainful ventures and has its
operations in all districts.
Special Schemes
1. Atal Innovation Mission (AIM): A programme run by NITI Ayog of Gol to
provide an "Innovation Promotion Platform" to promote a network of world class
innovation hubs and grand challenges for Indian entrepreneurs. This mission
consists of entrepreneurs, academicians, and researchers. Main objective,
amongst other objectives, is to promote a culture of entrepreneurship and
innovation in India.
2. Self Employment and Talent Utilisation (SETU): This is a techno-financial,
incubation and financial activity to support every aspect of startup business and
other self-employment activities, more specifically of technology-driven
activities of NITI Ayog, has identified major activities to create a vibrant
entrepreneurial eco system. The scheme has a corpus of 1000 crores operated by
NITI Ayog and is yet to be fully take off. The activities to be taken up by SETU
are (i) framing catalytic government policy and regulatory framework, (ii)
providing ways for easy access to equity capital and debt to entrepreneurs, (iii) to
consider businesses as entrepreneurial hubs, (iv) to drive culture and institutions
which encourage entrepreneurship over careerism and (v) develop adequate and
effective collaboration forums.
Besides the institutions explained in this chapter, several other specialised
institutions and organisations at central and state level such as State Finance
Corporations, Electronic Development Corporations, State Departments of
Industries and Commerce, State Khadi & Village Industries Boards, consultancy
organisations etc., are helping to develop entrepreneurs.
11. National Skill Development Mission - (NSDM)
National Skill Development Mission (NSDM) was set up on July 15, 2015, by
the Ministry of Skill Development and Entrepreneurship to empower the younger
generation. The mission was mainly developed to ensure employment
opportunities by providing training in skill development and enable them to
become self-employed entrepreneurs. Under this Mission, there are various sub-
mission proposed initially to achieve the vision of skilled India.
Mission Statement
"To rapidly scale up skill development efforts in India, by creating an end-to-end,
outcome-focused implementation framework, which aligns demands of the
employers for a well-trained skilled workforce with aspirations of Indian citizens
for sustainable livelihoods.
Mission Objectives
The Mission seeks to:
1. Create an end-to-end implementation framework for skill development, which
provides opportunities for life-long learning. This includes: incorporation of
skilling in the school curriculum, providing opportunities for quality long and
short-term skill training, by providing gainful employment and ensuring career
progression that meets the aspirations of trainees.
2. Align employer/industry demand and workforce productivity with trainees'
aspirations for sustainable livelihoods, by creating a framework for outcome
focused training.
3. Establish and enforce cross-sectoral, nationally and internationally acceptable
standards for skill training in the country by creating a sound quality assurance
framework for skilling, applicable to all Ministries, States and private training
providers.
4. Build capacity for skill development in critical un-organised sectors (such as
the construction sector, where there few opportunities for skill training) and
provide pathways for re-skilling and up-skilling workers in these identified
sectors, to enable them to transition into formal sector employment.
5. Ensure sufficient, high quality options for long-term skilling, bench marked to
internationally acceptable qualification standards, which will ultimately
contribute to the creation of a highly skilled workforce.
6. Develop a network of quality instructors/trainers in the skill development
ecosystem by establishing high quality teacher training institutions.
7. Leverage existing public infrastructure and industry facilities for scaling up
skill training and capacity building efforts.
8. Offer a passage for overseas employment through specific programmes
mapped to global job requirements and bench marked to international standards.
9. Enable pathways for transitioning between the vocational training system and
the formal education system, through a credit transfer system.
10. Promote convergence and co-ordination between skill development efforts of
all Central Ministries/Departments/States/implementing agencies.
11. Support weaker and disadvantaged sections of society through focused
outreach programmes and targeted skill development activities.
12. Propagate aspirational value of skilling among youth, by creating social
awareness on value of skill training.
13. Maintain a national database, known as the Labour Market Information
System (LMIS), which will act as a portal for matching the demand and supply
of skilled workforce in the country. The LMIS, will on the one hand provide
citizens with vital information on skilling initiatives across the country. On the
other, it will also serve as a platform for monitoring the performance of existing
skill development programmes, running in every Indian state.
National Skill Development Mission will initially consist of seven sub-missions
under its purview. Each sub-mission will act as a building block for achieving the
overall objectives of the Mission. Key focus areas of the sub-mission include:
• addressing the long-term and short-term skilling needs through revamp of
existing institutional training framework and establishing new institutions
• undertake sector specific skill training initiatives
• ensure convergence of existing skill development programmes
• leverage existing public infrastructure for skilling
• focus on training of trainers
• facilitate overseas employment, and
• promote sustainable livelihoods.

Sub-missions involved under NSDM are as follows

Institutional Training
Infrastructure
CHAPTER 14 -
SPECIALISED INSTITUTIONS SUPPORTING ENTREPRENEURS
Introduction - Khadi and Village Industries Corporation (KVIC) - Mahatma
Gandhi Institute for Rural Industrialisation (MGIRI) - Coir Board - National
Small Industries Corporation Limited (NSIC) - National Institute for MSMEs
(NIMSME) - Special Schemes SFURTI, Stand up India.
background Information
With the enactment of MSME Act in 2006, all the activities of micro, small
enterprises of India are governed by the Mo MSME. MSME Board is the top
advisory body that advises to the government on all issues related to MSME
sector. The office of Development Commissioner - DC, (MSME) is the apex
executing body of Mo MSME. All issues of MSME will be implemented and
controlled by this nodal development agency of Mo MSME. All statutory bodies
of MSME (KVIC, MGIRI, Coir Board, NIMSME, NSIC) are governed by Mo
MSME. Brief overview of these institutions is given in the following paragraphs.
and medium
1. Khadi and Village Industries Corporation (KVIC)
As per the provisions of a Special Parliamentary Act 1956, the Government has
established Khadi and Village Industries Commission. Being a statutory
organisation under Mo MSME, KVIC is recognised as a vital entity in the
decentralised sector, for providing sustainable non-farm employment opportunity
in rural areas, at a low per capita investment.
2. Cottage Industry - The Concept
A Cottage industry is a small-scale business unit often operated out of a home,
rather than out of a factory. Cls are defined by the amount of investment required
to start, as well as the number of people employed. They often focus on the
production of labour-intensive goods.
1. To preserve the traditional arts and crafts in India
2. To equip the artisans and craftsmen to take up the challenges of the modern
market
3. To promote the handicrafts, khadi, village and cottage industry by facilitating
them with the necessary inputs like raw materials, equipments, capital, etc.
4. To develop a market for these products
5. To introduce the products even in the international market

To achieve these objectives, the following schemes are provided by KVIC:

(a) Financial assistance for purchase of land, building, workshop, shed,
machinery and equipment at low rate of interest and to provide working capital
to purchase raw material etc.
(b) Marketing avenues and selling centres for the products of artisans and
craftsmen
(c) Subsidies for the registered societies of artisans and craftsmen belonging to
scheduled castes, scheduled tribes, ex-service men, women, etc.
Functions of KVIC
Functions as prescribed under the KVIC Act, 1956, and Rules made there under
as follows.
(i) to plan and organise training of persons employed or desirous of seeking
employment in khadi and village industries;
(ii) to build up directly or through specified agencies reserves of raw materials
and implements and supply them or arrange supply of raw materials and
implements to persons engaged or likely to be engaged in production of handspun
yarn or khadi or village industries at such rates as the Commission may decide;
(iii) to encourage and assist in the creation of common service facilities for the
processing of raw materials or semi-finished goods and otherwise facilitate
production and marketing of khadi or products of village industries;
(iv) to promote the sale and marketing of khadi or products of village industries
or handicrafts and for this purpose forge links with established marketing
agencies wherever necessary and feasible;
(v) to encourage and promote research in the technology used in khadi and village
industries, including the use of non-conventional energy and electric power with
a view to increasing productivity, eliminating drudgery and otherwise enhancing
their competitive capacity and to arrange for dissemination of salient results
obtained from such research;
(vi) to undertake directly or through other agencies, studies of the problems of
khadi or village industries;
(vii) to provide financial assistance directly or through specified agencies to
institutions or persons engaged in the development and operation of khadi or
village industries and guide them through supply of designs, prototypes and other
technical information, for the purpose of producing goods and services for which
there is effective demand in the opinion of the Commission;
(viii) to undertake directly or through specified agencies, experiments or pilot
projects which in the opinion of the Commission, are necessary for the
development of khadi and village industries;
(ix) to establish and maintain separate organizations for the purpose any or all of
the above matters; of carrying out
(x) to promote and encourage cooperative efforts among or persons engaged in
village industries;
(xi) to ensure genuineness and to set up standards of quality and of khadi and
village industries do conform to the said standards, including issue of certificates
or letters of recognition to the concerned persons; and
(xii) to carry out any other activity incidental to the the manufacturers of khadi
ensure that products
KVIC provides various facilities for cottage industry like integrated village
development programme, special beneficiary schemes, silk industry development
scheme interest subsidy scheme, artisans employment guarantees etc. The
government has defined " (village industry) concept by fixing following
parameters.
"Gramodyog.
Population of the village should not be more than 10 thousand
Investment in the place of products, machines and equipment should not exceed
fifteen thousand
Manufacturing can be done either with power or without power.
It has approved nearly 96 industries under the preview of the KVIC. These
industries are under the following categories:
1. Material based industries
2. Industries based on products from forests
3. Agro-based industries
4. Polymer and other chemical based industries
5. Rural engineering & Bio-Technology Industry
6. Service and Textile industry
7. Hand made paper and Fibre industry.
In order to popularise the schemes of the KVIC and to promote the products of
the khadi and village industry, KVIC organises exhibitions of these products. It
arranges special shows on TV and radio. It also publishes a magazine called
"Gramodyog". It organises conferences and get- together of artisans and
craftsmen. Thus, KVIC plays a significant role in the promotion and development
of the khadi and village industry.
It Has provided jobs for more than 14 million rural and urban population. These
people include mainly spinners, weavers and other artisans spread across the
country.
● Marketing facilities extended by KVIC include the following (1) designing and
marketing of products targeting the youth including Khadi Denim and Khadi T-
shirts, (1) adapted franchise system to expand outlets throughout the country, (iii)
existing khadi institutions are modernised, adapting information technology
solutions (computerisation) to increase sales, (iv) giving "Khadi Mark"
certification to leading textile goods manufacturers such as Raymond's, Aravind
Mills, Peter England etc. to increase the sale of Khadi, (v) Working with reputed
fashion designers to make khadi products more appealing to youth, introducing
unique designs and style, and (vi) launching khadi gift coupon and khadi gift
hampers.

Some schemes of MSME ministry are implemented by KVIC or it acts as Nodal

agency. Such schemes are as follows.
(1) For Prime Minister's Employment Generation Programme - PMGEP, KVIC
acts as Nodal agency.
Awareness camps and exhibitions are conducted by KVIC at zonal, state and
district levels to promote khadi products.
(iii) Conducts review meetings with KVIC implementing agencies and associated
banks to review the progress of implementation of khadi schemes.
(iv) Information about "Handmade Paper" and production of "Khadi Cloth and
garment" is loaded to website.
(v) Conducts "Entrepreneurship Development Programme - EDP" training in
association with RUDSETI (Rural Development and Self-employment Training
Institute)
(vi) Workshed scheme is launched to extend financial assistance to construct
khadi sheds by khadi artisan
(vii) Financial assistance is extended to existing sick and weak khadi institutions
to strengthen their positions and thereby restore normalcy and to support creation
of marketing infrastructure in other identified outlets.
(viii) Availed financial aid from Asian Development Bank (ADB) through
Department of Economic Affairs, Ministry of Finance amounting to US $ 105
million for implementing Khadi Reform and Development Programme (KRDP)
(ix) Interest Subsidy Eligibility Certificate (ISEC) scheme which was introduced
in 1977 is continued to mobilize funds from banking institutions to khadi dealers
at concessional interest rate of 4%. The remaining interest will be borne by KVIC.
(x) Aam Admi Bima Yojana is extended to KVIC workers.

2. Mahatma Gandhi Institute for Rural Industrialisation - (MGIRI)

Mahatma Gandhiji started All India Village Industries Association (AIVIA) in
Mahila Ashram at Wardha on 14-12-1934. Dr. J.C. Kumarappa was to lead this
movement as per the wishes of Bapu. Sri. Krishnadas Raju became its first
president. AIVIA had a Board of 18 advisors consisting of distinguished leaders
in public life and scientists like Rabindranath Tagore, G.D. Birla, Dr. C.V.
Raman, J.C. Bose, Sathish Chandra Das Gupta and others. It was shifted soon to
Maganawadi, a spacious orchard belonging to Seth Jamanlal Bajaj.
AIVIA became a hub of rural industrial activity and a centre focusing on research,
production, training, extension, organisation, propaganda and publication. Paddy
husking, oil processing, bee keeping, palmgur making, paper making, soap
making, village pottery, paints and ink making were the production activities
taken up by KIVIA. It also struggled to transform villagers by adapting good
sanitation methods, improved diet, indigenous healthcare and local resource
based employment.
These programme were carried upto 1956 by KIVIA. This organisation became
as Jamanlal Bajaj Central Research Institute (JBCRI) in 1956, to continue the
activities of R & D work of KIVIA and to introduce latest innovative methods,
tools and techniques to address the problems of village industries.
Ramakrishnaiah Committee Report (1987) suggested several changes to revamp
JBCRI. Implementation of the recommendations of the committee needed variety
of materials, manufacturing processes and consumer oriented designs. "Hub and
spokes" model was adopted to implement the suggestion. JBCRI was revamped
in 2001 to establish Mahatma Gandhi Institute of Rural Industrialisation (MGIRI)
to continue the vision of Mahatma Gandhi of developing sustainable and self-
reliant village economy. Thus, MGIRI became a "Hub" of rural industries and
became an autonomous body in 2016 under the Indian Societies Registration Act,
continuing in the same premises at Wardha, Maharashtra.
The entire project of establishing and trail-run of MGIRI, with the collaborative
effort of KVIC with IIT Delhi, took 8 long years (2001 to 2008). With enactment
of MSME Act in 2006, MGIRI became one of the organs of Mo MSME in 2008.
Mahatma Gandhi Institute for Rural Industrialisation (MGIRI) as a hub has
established a two-way linkage between itself and the rural industrialists and
technical experts in professional institutes like IIT and IIM. This linkage
facilitated quick availability of modern science, technology and management
inputs for rural industrialisation
Objectives
As per the Memorandum of Association of the Institute, Objectives are as
follows:
To accelerate rural industrialization for sustainable village economy so that KVI
sector co-exists with the main stream.
Attract professionals and experts to Gram Swara
Empower traditional artisans
Innovation through pilot study\field trials
R&D for alternative technology using local resources
Functions
The Institute has six divisions. Each division has different function to discharge.
(i) Khadi and Textiles industries division: This division supported by KVIC
works on research and development for promotion of khadi. The activities include
establishment of design centre for khadi garments, development of e-chakra,
quality assurance procedure of khadi, low cost hank dyeing machine, improved
technology for dyeing and soft finish of khadi fabric and any other R&D activity
concerning rural entrepreneurs.
(ii) Chemical Industries Division: The main focus of this division is to promote
quality consciousness and consistency in the area of food processing, organic
foods and other products of rural chemical industries. It also provides a
comprehensive quality testing support and is working towards developing field
worthy kits, techniques and technologies to facilitate the cottage and small scale
units in this area.
(iii) Bio-processing and Herbal Division: This division prepares technology
packages and simple quality assurance methods to facilitate production and
utilization of organic manures, bio-fertilizers and bio-pesticides to promote rural
entrepreneurs.
(iv) Rural Energy and Infrastructure Division: This division has been mandated
to develop user-friendly and cost-effective technologies utilizing commonly
available renewable resources of energy to facilitate rural industries and also to
carry out audit of traditional rural industries so as to make them energy efficient.
(v) Rural Crafts and Engineering Division: This Division is to help upgrade the
skills, creativity and productivity of rural artisans and encourage value-addition
and improve the quality of their products.
(vi) Management & Systems Division: This division provides information and
communication technology based solutions for rural industries with a view to
enhance their global competitiveness
Achievements
MGIRI employees have participated in national and international seminars,
workshops and conferences for the presentation research work and knowledge
sharing among the scientific community.

● The Institute has participated in national and regional level exhibitions, Expos
and IITF 2016 with the objective of creating awareness about its technologies,
products and services.
• It has also published research papers in national and international journals.
• MGIRI has released improved machines/products/processes/services for
rural industries sector.
• Upto this date (Dec. 2018), MGIRI has come up with number of vital
technologies for the benefit of rural industries and more ones are in solar
based energy.
● MGIRI imparted training to various aspirant and existing" entrepreneurs,
representatives of NGOs, field agencies, artisans, students, farmers, SHGs etc.
from all over the country for dissemination of technologies, products, processes,
designs etc. for enterprise development and skill up gradation.
● MGIRI has provided (quality testing and guidance services various agencies
such as KVI institutions, entrepreneurs, students, farmers etc. for different
product samples to improve and maintain the quality of the products as per Indian
standards.
Community Radio (90.4 FM) popularly known as Radio MGIRI has been
conducting several programmes to sensitise people such as Yuva Vishwa (for
various competitive exams), MajhGaonMajhShivar (based on village problems
and Government Schemes/ projects for rural sector), Hello Doctor (health related
information), Krushijagar (Agriculture related information etc). Gol, through
Ministry of MSME, is providing reasonable funds to carry out the programmes
of MGIRI.
Amongst the various types of technologies developed by the Institute for the
benefit of MSMEs, Home scale Blunger, Solar potter's wheel suitable for small
terracotta articles, Heavy duty efficient potter's wheel, Energy efficient AC power
driven potter's wheel, Plant Growth promoter (Amino acids) based on cow urine
and waste human hair, Ambadi and palas based health drink, poly herbal
shampoo, pro biotic honey based Lactobacillus coagulance, are notable
inventions. Various other solar based, low cost instruments, concentrates and
drink granules are developed by the institute, which can be used for commercial
production by MSMEs.
● MGIRI has also created number of garment & woven designs khadi sector
artisans and entrepreneurs.
The institute is also offering various types of training programmes on the
adaptation of products and services created by six functional divisions, to MSME
entrepreneurs.
3. COIR BOARD and MSME sector
Coir Board was established in 1953, under Coir Industry Act, 1953. The purpose
of establishing the Board was to develop coir industry, which is considered as a
major entrepreneural activity. The coir sector in India is diverse in its feature,
involving household, co-operatives, NGOs, manufactures and exporters. India
produces more than 80 per cent of the total world production of coir fibre. Over
7 lakh people are employed in this sector. Most of them are rural workers
representing weaker section of the society. Another interesting feature is that 80%
of coir workers are women and are engaged in fibre extraction and spinning
activities. Coir Board has the responsibility of promoting and assisting the coir
industry for its all sided development and also has the task of improving living
conditions of workers of coir industry.

Functions
• Main functions laid down in Section 10 of the Coir Industry Act, are as
follows.
• Promoting exports of coir yarn and coir products and carrying on
propaganda for that purpose.
 • Regulating under the supervision of the Central Government the
production of husks, coir yarn and coir products by registering coir spindles
and looms for manufacturing coir products as also manufacturers of coir
products.
• Undertaking, assisting or encouraging scientific, technological and
economic research and maintaining and assisting in the maintenance of one
or more research institutes;
• Collecting statistics from manufacturers of and dealers in, coir products
and from other persons as may be prescribed, on any matter relating to the
coir industry, the publication of statistics so collected.
• Fixing grade standards are arranging when necessary for inspection of
fibre, coir yarn and coir products.
• Improving the marketing of coconut husk, coir fibre, coir yarn and coir
products in India and elsewhere and preventing unfair competitions.
• Setting up or assisting in the set up of factories for the producers of coir
products with the aid of power.
• Promoting co-operative organization among producers of husks, coir fibre
and coir yarn and manufactures of coir products.
• Ensuring remunerative return to producers of husks coir fibre and coir yarn
and manufacturers of coir products.
• Advising on all matters relating to the development of the coir industry.
• Licencing of retting places and warehouses and otherwise regulating the
stocking and sale of coir fibre and coir yarn and coir products both for
internal market and exports.
• Such other matters as may be prescribed.
• The Coir Board is located in Kochi, Kerala.

Contribution of Coir Board

Coir industry has become self-employment activity for enthusiastic entrepreneurs
in co-conut growing states of India. Kerala, in particular, is a leading state in coir
industry. The production of coir fibre and products are steadily increasing year
by year. Being an agrobased rural industry, it has created jobs for rural youth,
particularly the womenfolk. Micro production units are established by many
young entrepreneurs to produce coir products, using the coir fibre as the base
material.
Total number of registration of coir units under the Coir Industry (Registration)
Rules 2008 upto 31-3-2016 is shown in the following table.

Wide variety of activities are taken up by the coir board to promote coir industry
of the country. Some activities are listed here

● Surveys and studies such as survey on coir industries in India, Techno

Economic Feasibility study to set up coir industries etc, are conducted to provide
more authentic information about the coir industry.
Coir Trade Information Centre is established at Kochi, Kerala to provide
necessary trade related statistics.
Information technology initiatives such as development of software for
monitoring and submission of applications online under Board's schemes,
implementation of AADHAR based Biometric Attendance system, E-office
maintenance and upgradation, implementation and maintenance of NIC network,
Internet learned line, video conferencing, procurement and upkeeping computers
and other electronic gadgets and various other general IT activities, are
implemented.
Officials and employees of the Board are regularly trained in various activities.
Main schemes implemented by the Board are as follows.
(i) Coir Udyami Vojana - This is a credit linked central sector scheme whose
objectives are modernisation of the Coir Industry and enhancement of utilization
of coconut husk and to provide more employment for women in rural areas.
(ii) Coir Vikas Yojana - This scheme aims at all round sustainable development
of coir industry through enhanced raw material utilisation, development of skills
and employment of rural people, especially women, and marketing the coir
products within the country and abroad.
(iii) Mahila Coir Yojana - The Mahila Coir Yojana is the first women oriented
selfemployment Scheme in the coir industry which provides self-employment
opportunities to the rural women artisans in regions producing coir fibre. One
artisan per household is eligible to receive assistance under the Scheme. The
women spinners are trained for two months in spinning coir yarn on motorised
ratt at the Board's Training Centres. They receive motorized ratts\motorized
traditional ratts and other coir processing equipment at subsidised rate which can
be operated by themselves. Besides these initiatives, coir board promotes and
assists coir units in exporting fibre and coir products. Coir pith is in great demand
and is exported to some extent.
4. National Small Industries Corporation Limited (NSIC)
NSIC is a registered company under the Indian Companies Act. The corporation
is functioning to promote MSMEs. Founded in 1955 and a ISO certified public
sector under taking, NSIC works under Ministry of MSME. It is the nodal office
for several schemes of MSMEs. Today it is a fully owned company of
Government of India.
Objectives
NISC was established to promote small and upcoming entrepreneurs. Major
functions of the corporation are as follows.
Providing integrated support services encompassing marketing, finance,
technology and other services.
Establishing training centres to train people engaged in MSM enterprises.
Providing assistance in modernising the small industries of the country.
● Assisting MSM enterprises in getting cheap loans from government owned
institutions.
Functions and Operations
NSIC discharges wide variety of functions to assist small enterprises, which are
as follows.
Marketing Support: This includes (i) Consortia and Tender marketing (pooling of
products of SMEs producing identical products to ease out marketing of these
units), (ii) single point registration for Government purchase, (iii) B2B web portal
for marketing, (iv) marketing intelligence services (maintaining data base of
various programmes and schemes of MSMEs and continuous feeding information
on both national and international marketing), (v) Conducting Exhibitions and
Technology Fairs to enhance the business powers of MSMEs and arranging
buyerseller meets aiming at vendor development from MSMEs for the bulk
manufactures.
● Financial Support: This support covers (i) financing for procurement of raw
materials (short-term), under Raw Material Assistance Scheme, (ii) Financing for
marketing activities (short-term), and (iii) Providing finance through syndication
with banks.
Technology Support: This function of NISC facilitates small enterprises and
implement a technology strategy, which integrates MSMEs' operations with their
environment, customers and suppliers. Technical Service Centres are opened in
the places shown in the following chart.
Informediary Services: With the advent of information application in an
unimaginable way in industry, trade and service sectors of the country, MSMEs
are prompted to have an easy access to the information concerned with their
operations. In this direction NSIC offers "Infomediary Services which is a one-
stop, one-window bouquet of aids that will provide information on business,
technology and finance". It also exhibits the core competence of Indian SMEs.
● Performance and Credit Rating Scheme: NSIC is assisting small enterprises to
ascertain their strengths and weaknesses in their operations and to correct their
deficiencies. Agencies like CARE, ONICRA, ICRA, CRISIL, INDIA RATINGS,
BRICKWORK RATINGS are associated with NISC to rate MSMEs. Small
enterprises can select any of these agencies for their performance appraisal paying
the prescribed fee as per their policies. NSIC reimburses 75% of the fee paid to
agencies by small enterprises. The maximum reimbursement is also fixed as per
the annual turnover of these enterprises.

Membership benefits: Wide variety of membership benefits are also provided to

small enterprises who become members of NSIC.
Functions such as Incubation of unemployment youth for setting up of new Micro
and Small enterprises, establishing technology parks, facilitating sustainable
international partnerships for MSEs, offering consultancy services for other
developing countries (in the areas of capacity building, policy and institutional
framework, entrepreneurship development and business development services)
and helping micro and small enterprises to insure their export credit with Export
Credit Guarantee Corporation of India Ltd, are also discharged by NISC. Thus,
NSIC helps small enterprises with specially tailored schemes.
NSIC is a profit making organisation of Government of India. Its assets are valued
more than 20,000 crores in 2015-16. Following table shows the financial
performance between 2013 and 2017
5. National Institute for MSMES-NIMSME
Originally established at New Delhi as Central Industrial Extension Training
Institute (CIETI) in 1960 under the Ministry of Industry and Commerce, Gol, was
shifted to Hyderabad in 1962 with changed name - Small Industry Extension
Training Institute - SIET. The institute was renamed as NIMSME after the
enactment of MSME Act in 2006. The Institute is governed by Mo MSME.
Objectives
Primary objective is to develop trainers to train trainers of MSMEs in the areas
of research, consultancy and extension programmers.
Exploring thrust areas for MSME development such as, entrepreneurship
development, technology upgradation and transfer, policy issues, NGO
networking, environment concerns, cluster development, Management
Consultancy, quality management services, financial services and information
services.
Functions
• The Institute mainly focuses on entrepreneurship development and
enterprise promotion. However, following functions are also discharged.
• Helping entrepreneurs to create enterprises.
• Assisting entrepreneurs in developing capabilities for enterprise growth
and sustainability. ●
• Providing knowledge about enterprise development to entrepreneurs.
• Assisting entrepreneurs in framing policies through research and training.
Strengthen the weaker entrepreneurs through enterprise creation.

Achievements
The Institute organises enterprise management and development programmes for
MSMEs, through its four schools of excellence. Each school is specific theme-
focused and headed and managed by the Director. Themes for these schools are
(i) Enterprise development (ii) Enterprise management, (iii) Entrepreneurship
and Extension and (iv) Enterprise Information and Communication. Each school
has adapted one theme and offers programmes to entrepreneurs in the selected
area. International programmes on terms of trade on non-tariff barriers and non-
tariff measures, environment in SAARC etc. are also conducted by NIMSME for
the benefit of entrepreneurs.

Financial support of the Institute is provided by the Ministry of MSME.

Scheme of Fund for Regeneration of Traditional Industries - SFURTI
This is a scheme taken up by the Government of India, through KVIC and Coir
Board. This is a cluster-based scheme. Khadi, village industry and coir clusters
are developed under SFURTI. The clusters of these three segments are provided
with improved equipment, common facility centres, business development
services, training capacity building and design and marketing support.

SFURTI was restructured in 12th Plan period and three types of clusters viz., (i)
Heritage clusters (ii) Major clusters and (iii) Mini clusters to help artisans, build
up innovated and traditional skills, improved technologies, advanced processes,
marketing intelligence and new models of public-private partnerships to
strengthen the cluster governance systems. The scheme covered three types of
interventions namely (i) soft interventions, (ii) Hard interventions and (iii)
thematic interventions. SFURTI scheme is slowly progressing.

MOMSME provides overall policy, coordinates the clusters and extends

management support to the scheme. Scheme Steering Committee (SSC)
constituted by MSME will manage SFURTI, through Nodal agencies, project
screening committee, Technical Agency and Implementing Agency
Besides specialised institutions at the central level, state level organisations
voluntary bodies such as CII, Chambers of Commerce at state level and
Associations with oreign collaborations (ex: Indo-German Chamber of
Commerce) also contribute directly indirectly for the development of MSME,
other industries and service sectors.

Stand up India Scheme

The scheme was launched on 5th April 2016 to help and develop entrepreneurship
amongst SC/ST and women enterprises for green field projects. IDBI launched
this scheme on 14th April 2016 on a Pan India basis.
Summary
1. Khadi and Village Industries Corporation (KVIC), established by the Special
Act of Parliament, 1956 to preserve traditional arts and crafts of India. KVIC
extends financial assistance for purchase of land, building, equipment,
infrastructure to traditional small manufacturing units. It provides equity and
working capital at low rate of interest (4%), facilitates marketing avenues and
selling centres for traditional arts and crafts and promotes the inborn skills of
artisans and craftsmen of rural and urban India.
2. Mahatma Gandhi Institute for Rural Industrialisation - MGIRI, is a national
institute established to accelerate rural industrialisation for sustainable village
economy, by empowering traditional artisans. The Institute has six divisions to
develop Khadi and textiles, chemical industries, bioprocessing and herbal
technology, rural energy and infrastructure, rural crafts and engineering, and
management and systems to provide communication technology to rural industry.
3. Coir Board was established in 1953 to develop coir products. Coir Board
promotes and develops enthusiastic entrepreneurs in coconut growing States of
India. Besides providing jobs to millions in coconut growing areas by promoting
coir units, the Board assists financially and technologically the coir units to
produce coir fibre, yarn, rope, curled coir and coir products.