Role of the Ministry of Micro, Small & Medium Enterprises
The primary responsibility of promotion and development of micro and small enterprises lies with the State Governments. However, the Government of India, in recognition of the potential of these sectors in both creation of wealth and employment and of the need for a countrywide framework of policies and measures for their promotion and development, has always taken active interest in supplementing the efforts of the State governments in several ways. The Government of India set up the Small Industries Development Organization (SIDO) [now Office of the Development Commissioner (Micro, Small & Medium Enterprises)] in 1954, a public sector enterprise called the National Small Industries Corporation Limited (NSIC) in 1955, and enacted the Khadi and Village Industries Commission Act in 1956. Establishment of Khadi and Village Industries Commission (KVIC), Coir Board and Micro, Small & Medium Enterprises-Development Institutes [formerly known as Small Industries Service Institutes (SISIs)] in nearly every State followed.
Over the years, the Central Government has formulated policy packages for the promotion and development of the sector and has been also implementing a large number of schemes and programmes. The policies and programmes implemented by the Ministry span across different areas of operations of MSMEs, covering credit, marketing, technology, skill developement, infrastructure development, fiscal matters and legal/regulatory framework. These programmes are implemented through various organisations under the Ministry, commercial banks, Small Industries Development Bank of India (SIDBI) and the State/UT Government.
Besides, the Ministry runs three training institutes, namely, National Institute for Micro, Small and Medium Enterprises (NIMSME), Hyderabad (successor to the Central Industrial Extension Training
Institute), National Institute for Entrepreneurship and Small Business Development (NIESBUD), NOIDA, and Indian Institute of Entrepreneurship (IIE), Guwahati, with the objective of training and development of human resource relevant to small industries as also entrepreneurship. It has also supported in setting up a large number of entrepreneurship development institutes (EDI) in various States.
Office of the Development Commissioner (Micro, Small & Medium Enterprises)
The Office of the Development Commissioner (Micro, Small & Medium Enterprises) assists the Ministry in formulating, co-ordinating, implementing and monitoring different policies and programmes for the promotion and development of MSMEs in the country. In addition, it provides a comprehensive range of common facilities, technology support services, marketing assistance, etc. through its network of
30 Micro, Small and Medium Enterprises-Development Institutes (MSME-DIs); 28 Branch MSME-DIs; 4 MSME Testing Centres (MSME-TCs); 7 MSME-Testing Stations (MSME-TSs); 2 MSME-Training Institutes (MSME-TIs); and 1 MSME-Technology Development Center-Hand Tools (MSME-TDC-Hand Tools). The O/o DC (MSME) also operates a network of Tool Rooms and Technology Development Centres (including 2 Footwear Training Institutes) which are autonomous bodies registered as Societies under the Societies Act. The Office implements a number of schemes for the MSME sector, the details of which have been duly incorporated in the booklet.
Khadi & Village Industries Commission
The Khadi & Village Industries Commission (KVIC), established under the Khadi and Village Industries Commission Act, 1956 (61 of 1956), is a statutory organization engaged in promoting and developing khadi and village industries for providing employment opportunities in rural areas, thereby strengthening the rural economy. The Commission is headed by full time Chairman and consists of 10 part-time Members. The KVIC has been identified as one of the major organizations in the
decentralized sector for generating sustainable rural non-farm employment opportunities at a low per capita investment. This also helps in checking migration of rural population to urban areas in search of the employment opportunities.
The main functions of the KVIC are to plan, promote, organize and assist in implementation of the programmes/projects/schemes for generation of employment opportunities through development of khadi and village industries. Towards this end, it undertakes activities like skill improvement, transfer of technology, research & development, marketing, etc. KVIC co-ordinates its activities through State KVI boards, registered societies and cooperatives. It has under its aegis
a large number of industry-specific institutions spread in various parts of the country.
Coir Board
The Coir Board is a statutory body established under the Coir Board Industry Act, 1953 (No. 45 of 1953) for promoting overall development of the coir industry and improving the living conditions of the workers engaged in this traditional industry. The Coir Board consists of a full-time Chairman and 39 part-time Members. The activities of the Board for development of coir industries, inter-alia include undertaking scientific, technological and economic research and development activities; collecting statistics relating to exports and internal consumption of coir and coir products; developing new products and designs; organizing publicity for promotion of exports and internal sales; marketing of coir and coir products in India and abroad; preventing unfair competition between producers and exporters; assisting the establishment of units for manufacture of the products; promoting co-operative organization among producers of husks, coir fibre, coir yarn and manufactures of coir products; ensuring remunerative returns to producers and manufacturers, etc.
The Board has promoted two research institutes namely, Central Coir Research Institute (CCRI), Kalavoor, Alleppey, and Central Institute of Coir Technology (CICT), Bengalooru for undertaking research
activities on different aspects of coir industry which is one of the major agro based rural industries in the country. The two major strengths of the coir industry are it being export oriented and generating wealth out of the waste (coconut husk).
National Small Industries Corporation Limited (NSIC)
NSIC, established in 1955, is headed by Chairman-cum-Managing Director and managed by a Board of Directors.
The main function of the Corporation is to promote, aid and foster the growth of micro and small enterprises in the country, generally on commercial basis.
NSIC provides a variety of support services to micro and small enterprises catering to their different requirements in the areas of raw material procurement; product marketing; credit rating; acquisition of technologies; adoption of modern management practices, etc.
NSIC implements its various programmes and projects throughout the country through its 9 Zonal Offices, 39 Branch Offices, 12 Sub Offices, 5 Technical Services Centres, 3 Technical Services Extension Centres, 2 Software Technology Parks, 23 NSIC-Business Development Extension Offices and 1 Foreign Office.
Salient Features of Micro, Small &
Medium Enterprises Development
(MSMED) Act, 2006
Salient features of Micro, Small and Medium Enterprises Development Act, 2006 are as follows:
1. Classification of Enterprises
The earlier concept of ‘Industries’ has been changed to ‘Enterprises’.
Enterprises have been classified broadly into:
(i) Enterprises engaged in the manufacture/production of goods pertaining to any industry; and
(ii) Enterprises engaged in providing/rendering of services.
Manufacturing Enterprises have been defined in terms of investment in plant and machinery (excluding land & buildings) and further classified into:
- Micro Enterprises – investment up to Rs. 25 lakh.
- Small Enterprises – investment above Rs. 25 lakh and up to Rs. 5 crore
- Medium Enterprises – investment above Rs. 5 crore and up to Rs. 10 crore.
Service Enterprises have been defined in terms of their investment in equipment (excluding land & buildings) and further classified into:
- Micro Enterprises – investment up to Rs. 10 lakh.
- Small Enterprises – investment above Rs. 10 lakh and up to Rs. 2 crore.
- Medium Enterprises – investment above Rs. 2 crore and up to Rs. 5 crore.
Process of two-stage registration of Micro and Small Enterprises dispensed with and replaced by filing of memoranda.
Filing of Memorandum optional for all Micro and Small Enterprises.
Filing of Memorandum optional for Service Sector Medium Enterprises.
Filing of memorandum mandatory for Manufacturing Sector Medium Enterprises.
3. Apex Consultative Body with Wide Representation of Stakeholders
Constitution of Board
National Board for Micro, Small and Medium Enterprises (MSME) to be headed by the Central Minister I/c of MSMEs and consisting of 46 members from among
MPs and Representatives of Central Ministries,
State Governments,
UT Administration, RBI, SIDBI, NABARD,
Associations of MSMEs including women,
Persons of Eminence, and
Central Trade Union Organisations,
National Board to be now statutory, as against non-statutory SSI Board,
l Quarterly meetings of National Board made mandatory.
Functions of the National Board
Examine the factors affecting the promotion and development of MSMEs and review the policies and programmes of the Central Government in this regard.
Make recommendations on matters referred to as above or an other matter referred to it by the Central Government.
Advise the Central Government on the use of Fund or Funds constituted under the MSMED Act, 2006.
4. Advisory Committee
Headed by Central Government Secretary I/c of MSMEs and including:
Not more than five officers of the Central Government;
Not more than three representatives of State Governments; and
One representative each of the Associations of micro, small and medium enterprises.
Functions of the Advisory Committee
To examine the matters referred to it by the National Board;
To advise Central Government on matters relating to classification of MSMEs, programmes, guidelines or instructions for the promotion and development and enhancing the competitiveness of MSMEs, policies and practices in respect of credit to the micro, small and medium enterprises, procurement preference policy, funds to be created and administered under MSMED Act, etc.
To advise State Governments on matters specified in the rules related to repeal of, “The Interest on Delayed Payments to Small
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Scale and Ancillary Industrial Undertakings Act, 1993, including anything done or any action taken under the Act so repealed.
5. Promotional and Enabling Provisions
Central Government to notify programmes, guidelines or instructions for facilitating the promotion and development and enhancing the competitiveness of MSMEs.
Central Government to constitute, by notification, one or more Funds.
Central Government to credit to the Fund or Funds, such sums as the Government may provide after due appropriation made by Parliament by law in this behalf.
Central Government to administer the Fund or Funds for purpose mentioned in Section 9 and coordinate and ensure timely utilization and release of sums with such criteria, as may be prescribed.
6. Credit
The policies and practices in respect of credit to the MSMEs shall be progressive and such as may be specified in the guidelines or instructions issued by the Reserve Bank of India, with the aims of:
Ensuring smooth credit flow to the MSMEs,
Minimizing sickness among them, and
Ensuring enhancement of their competitiveness.
7. Procurement Policies
l Central Government or a State Government to notify preference policies in respect of procurement of goods and services, produced and provided by MSEs, by its Ministries, departments or its aided institutions and public sector enterprises (non-statutory till now).
Valid only for Micro and Small Enterprises and not for Medium Enterprises
Services also covered.
8. Provisions to Check Delayed Payments
Provisions related to delayed payments to micro and small enterprises (MSEs) strengthened.
Period of payment of MSEs by the buyers reduced to forty-five days.
Rate of interest on outstanding amount increased to three times the prevailing bank rate or Reserve Bank of India compounded on monthly basis.
Constitution of MSE Facilitation Council(s) mandatory for State Government.
Provision for inclusion of one or more representatives of MSE Associations in the Facilitation Council.
Jurisdiction of the Council in a State to cover wherever the buyer may be located.
MSE Facilitation Council may utilize services of any Institution or Centre for conciliation and alternate dispute resolution services.
Reference made to the Council to be decided within ninety days from the date of reference.
Declaration of payment outstanding to MSE supplier mandatory for buyers in their annual statement of accounts.
Interest (paid or payable to supplier) disallowed for deduction for income tax purposes.
No appeal against order of Facilitation Council to be entertained by any Court without deposit of 75% of the decreed amount payable by buyer.
l Appellate Court may order payment of a part of the deposit to the supplier MSE.
9. Facilitating Closure of Business
l Central Government may (within one year of the commence-ment of the Act) notify a scheme for facilitating closure of business by a micro, small or medium enterprise.
Initiatives of the Ministry of Micro, Small & Medium Enterprises (MSME) in Recent Years
1. Promulgation of MSMED Act, 2006
A significant achievement of the Government is the enactment of the ‘Micro, Small and Medium Enterprises Development Act, 2006’, which aims to facilitate the promotion and development and enhance the competitiveness of MSMEs. The Act has come into force from 2nd October 2006 and it fulfils a long-cherished demand of this sector. Apart from giving legal strength to the definitions of micro, small and medium enterprises, this Act also contains penal provisions relating to the delayed payment to these enterprises.
2. Khadi and Village Industries Commission Act, 1956
The Khadi and Village Industries Commission Act, 1956 has been comprehensively amended in 2006, introducing several new features to facilitate professionalism in the operations of the Commission as well as field-level formal and structured consultations with all segments of stakeholders. A new Commission has also been constituted in July 2006.
3. Prime Minister’s Employment Generation Programme
A national level credit linked subsidy scheme, namely, ‘Prime Minister’s Employment Generation Programme (PMEGP)’was introduced in August 2008 by merging erstwhile PMRY and REGP schemes of this Ministry with a total plan outlay of Rs.4,485 crore towards margin money subsidy for generating an estimated 37.38 lakh additional employment opportunities during the four terminal years of XIth plan (2008-09 to 2011-12). An amount of Rs.250 crore has also been kept towards backward–forward linkages. Under this
programme, financial assistance is provided for setting up of micro enterprises each costing upto Rs.10 lakh in service sector and Rs.25 lakh in manufacturing sector. The assistance is provided in the form of subsidy upto 25 per cent (35 per cent for Special category including weaker sections) of the project cost in rural areas while it is 15 per cent (25 per cent for Special category including weaker sections) for urban areas.
During 2009-10, disbursements were made in 39,335 cases utilising Rs.742.76 crore as margin money subsidy. The estimated employment generation is for 4.42 lakh persons. An amount of Rs.906 crore including Rs.836 crore margin money subsidy has been provided in BE 2010-11 for assisting 60,000 units for creation of around 6 lakh additional employment opportunities.
4. Promotional Package
In March 2007, the Government announced a comprehensive Package for the Promotion of Micro and Small Enterprises, which comprises of several proposals/schemes having direct impact on the promotion and development of the micro and small enterprises, particularly in view of the fast changing economic environment, wherein, to be competitive is the key of success. These, inter-alia, include credit and fiscal support, cluster-based development, infrastructure, technology and marketing support. Capacity building of MSME Associations and support to women entrepreneurs are the other important features of this Package.
5. Task Force on MSMEs
A Task Force under the chairmanship of the Principal Secretary to Prime Minister was constituted to address the issues of MSME sector. The Task Force submitted its Report in record time and has made recommendations in the areas of credit, marketing, labour, rehabilitation and exit policy, infrastructure, technology, skill development, taxation and development of MSMEs in the North-East and Jammu & Kashmir. A large number of recommendations have
been implemented and several other recommendations are at an advanced stage of implementation. A Council on MSMEs under the chairmanship of Hon’ble Prime Minister has been constituted to lay down the broad policy guidelines and review the development of the MSME sector. For ensuring timely/speedy implementation of the recommendations of the Task Force and follow-up on the decisions of the Prime Minister’s Council on MSMEs, a Steering Group under the chairmanship of Principal Secretary to the Prime Minister has also been constituted.
6. 4th All India Census of MSMEs
The Quick results of 4th All India Census of MSMEs (2006-07), which was launched in May 2008, were released during 2009-10. The results reveal that there are 2.61 crore MSMEs in 2006-07, providing employment to about 6 crore persons. Of the total MSMEs, 28% are in the manufacturing segment and 72% in the services segment. This is the first Census after the enactment of the MSMED Act, 2006 and includes, for the first time, medium enterprises.
7. Enhanced Credit Flow to the MSE Sector
For strengthening the delivery of credit to the MSEs, the Government announced a ‘Policy Package for Stepping up Credit to Small and Medium Enterprises (SME)’ in August 2005 for doubling the credit flow to this sector within a period of five years. This has resulted in a significant increase in the credit flow from Public Sector Banks (PSBs) to the micro and small enterprises (MSE) sector—with the outstanding credit of public sector banks increasing from Rs.1,02,550 crore at the end of March 2007 to Rs.2,78,398 crore at the end of March 2010. With constant monitoring and efforts made by the Government, the credit flow from Public Sector Banks (PSBs) to the MSE sector has registered a growth of 47.4%, 26.6% and 45.4% during 2007-08, 2008-09 and 2009-10 respectively—higher than the stipulated 20% in the Policy Package.
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8. Credit Guarantee Scheme
The Government has set up a Credit Guarantee Fund to provide relief to those micro and small entrepreneurs who are unable to pledge collateral security in order to obtain loans for the development of their enterprises. For making the scheme more attractive to both lenders as well as borrowers, several modifications have been undertaken which, inter-alia, include (i) enhancement in the loan limit to Rs.100 lakh, (ii) enhancement of guarantee cover from 75% to 85% for loans up to Rs.5 lakh; (iii) enhancement of guarantee cover from 75% to 80% MSEs owned/operated by women and for loans in the North East Region (NER), (iv) reduction in one-time guarantee fee from 1.5% to 1% and annual service charges from 0.75% to 0.50% for loans up to Rs.5 lakh, (v) reduction in one-time guarantee fee for NER from 1.5% to 0.75%, etc. As a result, the scheme has been able to overcome the initial inhibition of bankers and is steadily gaining acceptance. Further, efforts made to enhance the awareness have led to increasing the coverage from 68,062 proposals (for loans of Rs.1,705 crore) at the end of March 2007 to 4,37,465 proposals (for loans of Rs.18,165 crore) at the end of October 2010. The Government is making concerted efforts to further enhance the awareness of the scheme throughout the country for enhancing the coverage of the Scheme.
9. National Manufacturing Competitiveness Programme
The Government has launched an all-India campaign under the National Manufacturing Competitiveness Programme (NMCP) for the MSMEs, which has ten specific components aimed at improving their processes, designs, technology and market access. These components seek to introduce the best elements of industrial competitiveness in the MSME sector, which has often been unable to afford such practices and techniques. The ten components of the scheme are as under:
(i) Building Awareness on Intellectual Property Rights for MSME;
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(ii) Scheme for Providing Support for Entrepreneurial and Managerial Development of SMEs through Incubators;
(iii) Enabling Manufacturing Sector to be Competitive through Quality Management Standards (QMS) and Quality Technology Tools (QTT);
(iv) Mini Tool Rooms under PPP mode;
(v) Marketing Assistance/Support to MSEs (Bar Code);
(vi) Lean Manufacturing Competitiveness Programme for MSMEs;
(vii) Promotion of Information & Communication Tools (ICT) in Indian MSME sector;
(viii) Design Clinics Scheme for MSMEs;
(ix) Marketing Assistance and Technology Upgradation Scheme for MSMEs; and
(x) Technology and Quality Upgradation Support to MSMEs.
All the ten components have been operationalised and the guidelines of the scheme have been notified. The details of the scheme guidelines are available on the website www.dcmsme.gov.in.
10. MSE-Cluster Development Programme (MSE-CDP)
The Programme is being implemented for holistic and integrated development of micro and small enterprises in clusters through Soft Interventions (such as diagnostic study, capacity building, marketing development, export promotion, skill development, technology upgradation, organizing workshops, seminars, training, study visits, exposure visits, etc.), Hard Interventions (setting up of Common Facility Centres) and Infrastructure Upgradation (create/upgrade infrastructural facilities in the new/existing industrial areas/clusters of MSEs). The guidelines of the MSE-Cluster Development Programme have been comprehensively modified in February 2010 to provide higher support to the MSEs. The scope of the scheme includes:
(i) Preparation of Diagnostic Study Report with Government of India (GoI) grant of maximum Rs.2.50 lakh (Rs.1 lakh for field offices of the Ministry of MSME).
(ii) Soft Interventions like training, exposure, technology upgradation, brand equity, business development, etc. with GoI grant of 75% of the sanctioned amount of the maximum project cost of Rs. 25 lakh per cluster. For NE & Hill States, Clusters with more than 50% (a) micro/ village, (b) women owned, (c) SC/ST units, the GoI grant will be 90%.
(iii) Detailed Project Report (DPR) with GoI grant of maximum Rs. 5 lakh for preparation of a technical feasible and financially viable project report.
(iv) Hard Interventions in the form of tangible assets like Common Facility Centre having machinery and equipment for critical processes, research and development, testing, etc. for all the units of the cluster with GoI grant upto 90% of the cost of project of maximum Rs. 15 crore.
(v) Infrastructure Development with GoI grant of upto 80% of the cost of project of Rs. 10 crore, excluding cost of land.
(vi) Exhibition Centres by Associations of Women Entrepreneurs of women owned micro and small enterprises with GoI assistance @ 40% of the project cost.
Over 460 clusters have been undertaken for various cluster development interventions (i.e., diagnostic study, soft interventions, and hard interventions) and 126 proposals (including 28 for upgradation of existing industrial estates) have been taken up for infrastructure development under the scheme.
11. Credit Linked Capital Subsidy Scheme
To make the Credit Linked Capital Subsidy Scheme (CLCSS) more
attractive, the following amendments were made with effect from September 29, 2005: (a) the ceiling on loans has been raised from Rs.40 lakh to Rs.1 crore; (b) the rate of subsidy has been raised from 12 per cent to 15 per cent; (c) the admissible capital subsidy has now been based on the purchase price of plant and machinery, instead of the term loan disbursed to the beneficiary unit; and (d) the practice of categorisation of MSEs in different slabs on the basis of their present investment for determining the eligible subsidy has been dispensed with. Further, the ambit of Scheme was enlarged in 2009-10 to include 201 new technologies, including 179 technologies relating to Pharmaceutical sector. The coverage under the Scheme has shown considerable increase and up to October 2010, 10,952 MSEs have benefited under the Scheme with the total subsidy sanctioned amounting to Rs.514.13 crore.
12. Entrepreneurship and Skill Development
In line with the overall target set by the Prime Minister’s National Council on Skill Development, the Ministry has taken up skill development as a high priority area. Under the Entrepreneurship/Skill Development Programmes conducted by various organisations of the Ministry of MSME, about 3.5 lakh persons were trained during 2009-10 which is an increase of more than 33% over previous year. To further expand the coverage of training programmes, a new component under the scheme of ‘Assistance to Training Institutions’ has been added to, inter-alia, provide assistance to the training institutions/centres established by Partner Institutions (PIs) of National Level Entrepreneurship Development Institutes (EDIs) and franchisees of National Small Industries Development Corporation (NSIC). Further, the Ministry of MSME provides all such trainings to disadvantaged sections of the society like the trainings for SCs/STs, free of cost. A number of programmes are also being organised for women and other weaker sections of the society free of cost, besides providing a monthly stipend of Rs.500/- per month during the entire period of training.
13. Rajiv Gandhi Udyami Mitra Yojana
The scheme aims to promote and support establishment of new micro and small enterprises through handholding of potential first generation entrepreneurs, who have already successfully completed Entrepreneurship Development Programme (EDP)/Skill Development Programme (SDP)/Entrepreneurship-cum-Skill Development Programme (ESDP) of at least two weeks’ duration, or have undergone vocational training from ITIs. One of the main objectives of handholding is to guide and facilitate the potential entrepreneurs in dealing with various procedural and legal hurdles and completion of various formalities which are required for setting up and running of enterprise successfully and to save them from harassment at the hands of various regulatory agencies for want of required compliances. It will not only increase the proportion of potential entrepreneurs trained under various EDPs/SDPs/ESDPs/Vocational Training (VT) in setting up their enterprises, more importantly, it will also enhance survival/success rate of newly set up enterprises.
As a component of this scheme, the Ministry has recently launched a MSME Call Centre (known as ‘Udyami Helpline’) with a toll-free number 1800-180-6763. The Udyami Helpline, inter-alia, provides basic information on how to set up an enterprise, various schemes being implemented for the promotion of MSMEs, accessing loans from banks and further contacts for obtaining detailed information.
14. Performance and Credit Rating Scheme
To sensitize the MSE sector on the need for credit rating and encourage the MSEs to maintain good financial track record enabling them to earn higher rating for their credit requirements, the Government in April 2005 launched the ‘Performance and Credit Rating Scheme’. The implementation of the scheme is through National Small Industries Corporation Ltd. (NSIC). Reputed Rating Agencies have been empanelled by NSIC from which the MSEs can select the one to be engaged by it for obtaining the rating. The Ministry of
MSME subsidises the cost of rating by sharing 75% of the fee charged by the Rating Agency, subject to a ceiling of Rs.40,000.
15. National Small Industries Corporation Limited
To provide an opportunity for first generation entrepreneurs to acquire skills for enterprise building and to incubate them to become successful small business owners, NSIC has set up 47 Training-cum-Incubator Centres (TICs) under PPP mode. NSIC has also launched a B2B Web portal to provide marketing facilities to national and international MSMEs for business to business relationship. The MSME Info Call Centre of NSIC has been made functional to provide information about the schemes and activities being implemented for the benefits of MSMEs. Further, NSIC has established a Marketing Intelligence Cell in May 2010, which shall provide database and information support to the MSMEs on marketing of their products/ services.
16. Khadi Reform Development Programme (KRDP)
In order to revitalize and reform the traditional khadi sector with enhanced sustainability of khadi, increased artisans welfare, increased incomes and employment opportunities for spinners and weavers with lesser dependence on Government grants, a Khadi Reform Development Programme was formulated by the Ministry of MSME in consultation with Khadi and Village Industries Commission (KVIC), Asian Development Bank (ADB), Department of Economic Affairs (DEA) and Price Waterhouse Coopers (PWC). This programme is proposed to be implemented in 300 selected khadi institutions willing to undertake the identified reforms. The DEA has arranged a sum of US$ 150 million equivalent to Rs.717 crore (approx.) from ADB to be given to KVIC as grant in four tranches over a period of 36 months. After completion of procedural formalities, and signing of necessary agreement and announcement by ADB, the first tranche of Rs.96 crore was released to KVIC in February 2010. The second tranche of Rs.192 crore has been earmarked in BE 2010-11.
17. Market Development Assistance (MDA) Scheme
The scheme has been introduced w.e.f. 01.04.2010 and envisages financial assistance @ 20% on value of production of khadi and polyvastra which will be shared among artisans, producing institutions and selling institutions in the ratio 25:30:45. The scheme has been introduced on the basis of recommendations of several committees constituted during the past few decades and after running several pilot projects in the past. The need had arisen because Khadi production so far was not based on market demand or performance and the rebate system did not benefit the spinners and weavers. Also KVIC was constrained to devote most of its resources for administration of rebate; to the detriment of its remaining responsibilities regarding development of the sector. MDA seeks to rectify this imbalance and provide flexibility/freedom to the khadi institutions to take innovative measures to improve its marketing infrastructure such as renovation of outlets, training sales persons, computerization of sales, design improvement, publicity, discount to customers, improved equipments of production, training of artisans and capacity building so that khadi can attract more customers not just because of discount, but because of its quality design and appeal. Most importantly, for the first time a definite share of 25% of MDA has been earmarked for spinners and weavers which will give them a prominent role in the entire khadi chain of activities. An amount of Rs.345.05 crore has been earmarked to be incurred during 2010-11 and 2011-12 as MDA.
18. Workshed Scheme for Khadi Artisans
Under this scheme, assistance is provided for construction of Worksheds for Khadi artisans for better work environment. Around 38,000 worksheds are targetted to be constructed between 2008-09 and 2011-2012 at a total cost of Rs.127 crore approximately, involving financial assistance of Rs.95 crore as grant to KVIC from Government of India’s budgetary sources. Financial assistance for establishment of workshed has been provided to 5,951 artisans in 2009-10. In BE
2010-11, an amount of Rs.20 crore has been earmarked for assisting
10,000 artisans under this scheme.
19. Scheme for Enhancing Productivity and Competitiveness of Khadi Industry and Artisans
The scheme aims to provide financial assistance to 200 of the ‘A+’ and ‘A’ category khadi institutions of which 50 institutions would be those which are managed exclusively by beneficiaries belonging to Scheduled Castes/Scheduled Tribes to make them competitive with more market driven and profitable production by replacement of obsolete and old machinery and equipment. The total cost of the scheme is Rs.84 crore involving financial assistance of Rs.71.14 crore as grants to KVIC from Government of India’s budgetary sources between 2008-09 and 2011 -2012. 20 khadi institutions were assisted with financial assistance of Rs.2.23 crore under this scheme in 2009-
10. An amount of Rs.21 crore has been earmarked in BE 2010-11 for assisting 60 khadi institutions under this scheme.
20. Scheme for Rejuvenation, Modernisation and Technological Upgradation of Coir Industry
Under the scheme, assistance is provided to spinners and tiny household sector for replacement of outdated ratts/looms and for constructing worksheds so as to increase production and earnings of workers. In 2009-10, 296 spinning units and 410 tiny household units have been assisted under this scheme and a target for assisting 320 spinning units and 880 household units has been fixed for 2010-11 with the budget allocation of Rs.21 crore. During 2010-11 (upto September 2010), Rs. 4.88 crore has been released by the Ministry.
21. Scheme of Fund for Regeneration of Traditional Industries (SFURTI)
This Scheme was launched in 2005 for regeneration of traditional industries, identified clusters in khadi, village industries and coir
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sectors with a view to make these industries more productive and competitive and increase the employment opportunities in rural and semi-urban areas. The objective of the Scheme is to establish a regenerated, holistic, sustainable and replicable model of integrated cluster-based development of traditional industries in khadi, village and coir sectors. So far 105 clusters (Khadi – 29, Village Industries
– 50 and Coir - 26) have been taken up under SFURTI and production has been started in 72 clusters. Cluster interventions will be completed in remaining 33 clusters providing employment to around 16,000 rural artisans in 2010-11.
22. Mahatma Gandhi Institute for Rural Industrialization (MGIRI)
A national level institute named MGIRI has been established at Wardha, Maharashtra as a society under Societies Registration Act, 1860 by revamping Jamnalal Bajaj Central Research Institute in association with IIT, Delhi for strengthening the R&D activities in khadi and village industry sectors. The main objectives of the institute are as under:
To accelerate rural industrialization for sustainable village economy so that KVI sector co-exists with the main stream.
Attract professionals and experts to Gram Swaraj.
Empower traditional artisans.
Innovation through pilot study/field trials.
R&D for alternative technology using local resources.
During 2010-11, it is proposed to initiate action on handholding support to 68 model enterprises in bio-processing, chemical, energy, rural crafts and solar garments sets and 21 machines/processes/services would be improved.
23. National Board for MSMEs
The Government has set up for the first time, a statutory National Board for Micro, Small and Medium Enterprises so as to bring together the representatives of different sub-sectors of MSMEs, along with policy-makers, bankers, trade unions and others in order to move towards cohesive development of the sector. The deliberations and directions of the National Board will go a long way to guide and develop enterprises in this sector to become more competitive and self-reliant.
24. Fiscal Benefits
The Government has worked towards enhancing the level of fiscal incentives available for micro and small enterprises. Under the General Excise Exemption Scheme, exemption limit has been raised from Rs.1 crore to Rs.1.5 crore (in 2007-08 budget) and the turnover eligibility limit to avail the exemption benefits has been enhanced from Rs.3 crore to Rs.4 crore (in 2005-06 budget). Further, with effect from 1st April 2005, small service providers having a turnover of up to Rs.4 lakh has been exempted from service tax. This exemption limit has been gradually raised to Rs.10 lakh in the subsequent budgets. In order to encourage small and medium enterprises to invest and grow, the surcharge on all firms and companies with a taxable income of Rs.1 crore or less has been removed with effect from 1st April 2007. The turnover limit for tax audit and for the purpose of presumptive taxation of small businesses has been enhanced to Rs.60 lakh with effect from 1st April 2010. To ease the cash flow position for small scale manufacturers, they have been permitted to take full credit of Central Excise duty paid on capital goods in a single installment in the year of their receipt. Further, they have also been permitted to pay Central Excise duty on a quarterly basis rather than monthly basis.
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