Guide Small and Medium-Scale Enterprises (SME). Small-scale enterprises have been given an important place in the framework of Indian planning for both ideological and economic reasons. The development of small scale industries has struggled with a multiplicity of objectives. And you need to know these government rules. Regardless of whether you are an entrepreneur or not, you have to look at it.
Table of Contents
Small and Medium-Scale Enterprises (SME) Definition
The generation of an immediate employment opportunity with relatively low investment The promotion of more equitable distribution of national income Effective mobilization of untapped capital and human skills Dispersal of manufacturing activities all over the country, leading to the growth of villages. Small towns and faring economically lagging regions So, the government of India has started various programs for the development of small scale sector in India.
The government’s objectives and intentions towards industry including SSI were announced through industrial policy resolutions (IPR). Government Policy for Small Scale Enterprise Nation is said to be far well to do if it has much industry as it has an industrial policy.
Government Policies – IPR 1948
The IPR 1948 for the first time, accepted the importance of small scale industries in the overall industrial development in the country. It was well realized that small scale industries are utilized most of the local resources and create employment opportunities.
Moreover, they have to face problems with raw materials, capital, skilled labor, marketing, etc. for a long period of time.
Therefore, the emphasis was laid in the IPR 1948 that these problems of small scale enterprises should be solved by the central government with the cooperation of the state governments. In nutshell, the main thrust of IPR 1948 as far as possible small scale enterprises were concerned was ‘Protection’.
Government Policies – IPR 1956
The IPR 1948 set in the nature and pattern of industrial developments taken place in the country. For example, planning has proceeded in an organized manner and the first-year plan 1951 – 1956 has been completed. Industries Development and Regulation Act (IDR Act), 1951 was also introduced to regulate and control industries in the country.
The Parliament had also accepted ‘the socialist pattern of society’ as the basic aim of social and economic policy during this period. It was this background that the declaration of a new industrial policy resolution seemed essential.
This came in the form of IPR 1956. The IPR 1956 provided that along with continuing policy support to the small sector, it also aimed to ensure that the decentralized sector acquires sufficient vitality to self-supporting and its development is integrated with that of large scale industry.
To mention, some 128 items were reserved for exclusive production in the small sector. Besides the SSIB constituted a working group in 1959 to examine and formulate a development plan for small scale industries during the third one year plan 1961- 1966. In the third one year plan period, specie development like.
‘Rural industrial Projects’ and ‘Industrial Estates Projects’ were started to strengthen the small sector. Thus to the earlier emphasis of protection was added to development. The IPR 1956 for small scale industries aimed at ‘Protection + Development’. The IPR 1956 initiated the modern SSI in India.
Government Policies – IPR 1977
The IPR 1977 Classic Aid Small Sector has Three categories.
- Cottage and household industries provide self-employment on a large scale.
- Tiny sector incorporating investment in an industrial unit in plant machinery up to Rs.1 lakh and situated in towns with a population of less than 50,000 according to 1971 census.
- Small Scale Industries comprising of the industrial unit with an investment of up to Rs.10 lakhs and in case of ancillary units with an investment of up to Rs.15 lakhs. From the small scale sector was thus, to be ‘protected, developed and promoted’.
Government Policies – IPR 1980
The government of India adopted a new industrial policy resolution (IPR) on July 23, 1980. The main objectives of IPR 1980 were de need as facilitating an increase of industrial production through optimum utilization of installed capacity and expansion of industries.
- Let us look at the following Two aspects given below.
- Introduction of the concept of nucleus plants to replace the earlier scheme of the district industry center (DIC), in each industrial background district to promote the maximum small scale industries there.
- Promotion of village and rural industries to generate economic viability in the villages well compatible with the environment.
- Thus the IPR 1980 re-emphasized the spirit of 1956. The small scale sector still remained the best sector for generating wage and self-employment based opportunities in the country.
Government Policies – IPR 1990
The IPR 1990 was announced in June 1990. As a small sector, this resolution continued to give importance to small scale industries for the purpose of employment generation. Important elements included in the resolution to promote the development of the small scale sector were as follows. Let’s have a little more look.
- The investment ceiling in plant and machinery for small scale industries was ( fixed in 1985) raised from Rs.35 lakhs to Rs.60 lakhs and correspondingly for ancillary units from Rs.45 lakhs to Rs.75 lakhs.
- The investment ceiling for tiny units has been increased from Rs.2 lakhs to Rs.5 lakhs provided the unit is located in the area having a population of 50,000 as per 1981 causes.
- As many as 836 items were reserved for exclusive manufacture in the small scale sector.
- A new scheme of initial investment subsidy exclusively for the small scale sector in rural and backward areas capable of generating more employment at a lower cost of capital had been mooted and implemented.
- A new scheme of initial investment, with a vireo to improve the competitiveness of the products manufactured in the small scale sector, programs of technology up-gradation will be implemented under the umbrella of an apex Technology development center in small industries development organization (SIDO).
- Greater emphasis on training of women and youth under the EDP (entrepreneurship development program) and to establish a special call-in SIDO for the purpose. New Small Enterprise Policy 1991.
- The government of India, for the first time, tabulated the new small enterprise policy titled ‘Policy measures for promoting and strengthening small, tiny and village enterprises’ in the parliament on August 6, 1991.
The important plan proposal (1992-1999)
The main function of the eighth ve year plan has been employment generation as the motive for economic growth to fuel ll these objectives, small and village industries have been assigned for an extremely important role. The important plan proposal in the year 1992-1997 are;
The plan has reiterated that timely and adequate availability of credit is of more importance than concessional credit. So with the establishment of SIDBI, the sanction of composite loans under the ‘Single Window Concept’ concessional loan to state corporations for infrastructure development and provision of factory services have been introduced.
It proposes to establish appropriate tool rooms and training institutions to upgrade technology.
The growth center approach has been established to measure industrial disputes and is under implementation. In the years 1992-1997, growth centers are developed and completed.
An integrated center approach has been established in the eighth plan.
New policy initiative in 1997-2000 for the small scale sector
- Announcement of a new credit insurance scheme in the year (1999-2000), particularly exported oriented & tiny units.
- The working capital limit for the SSI unit is determined by the bank on the basis of 20 percent of their annual turnover.
- Exemption from excise duty, as given to SSI units, will be extended to goods bearing a brand name of another manufacturer in rural areas.
- A national program for rural industrialization has been announced, with a mission to set up 100 rural clusters per year, to give a boost to rural industrialization.
- The cotton yarn has been introduced in the general exercise exemption scheme for SSIs.
- The investment limit for small scale and ancillary undertakings has been reduced from Rs.3 Crores to Rs.1 Crore.
- Small job workers, engaged in the printing of glazed titles, have been exempted from excise duty.
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Business management expert and Leadership Consultant and Business Coach, who writes her blog, Jay’s Trends, focused on helping small business owners understand trends in Business management. Other posts by Jayprakash Prajapati»