Post on 04-Apr-2018
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2/14/2013 Mr. SUBRAMANYA A.P. 1
Davanagere UniversityDepartment of Commerce,
Shivagangotri, Davangere.
EL 3.4-Promotion and Management ofSmall Business Enterprises.
Present by:
Mr. A.P. SUBRAMANYANM.A.F., (M Phil).,Faculty Member and Research Scholar,
Department of commerce,Davanagere University.
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4.1Policies initiatives for entrepreneurial growth.
4.2 Schemes of incentives in operation.
4.3 Incentives under the licensing regulations.
4.4 Incentives for development of backward areas.
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1. Identification of backward areas and announcement
of a number of concessions and incentives for theentrepreneurs to start their ventures in such areas;
2. Changes in the attitudes of both Central and StateGovernments towards private enterprises in general
and promotion of small scale industries inparticular.
3. Liberalization of Industrial Licensing Policy andannouncement of special incentives for NRI
investments and exporting industrial units.
4. Promoting coordinated development of largeand small industries by-
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Continues.
Reserving further expansion either exclusively orpartly for the small sector in certain industries.
Developing small industries more vigorously as
ancillaries to large industries.
Encouraging the participation of small industries in
the export drive.
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2/14/2013 Mr. SUBRAMANYA A.P. 5
Small Scale Industrial Policy
Separate small scale industries policy in August 1991.- For small scale industries the investment limit
(investment in plant and machinery) is raised to Rs.75 lakhs for both ancillary and export oriented units
and Rs. 60 lakhs to SSI units.- The investment limit for the tiny sector was raised to
Rs. 5 lakhs from Rs. 2 lakhs.
- Irrespective of their location would be recognized as
small scale industries.- The Small Industries Development Organization
(SIDO) has been recognized as the nodal agency tosupport the small scale industries export promotion
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Continues.
- An export development centre would be set up in SIDOto serve the small scale units through its network offield officers to further augment export activities of thesector.
- A technology development cell will be set up in SIDOwhich could provide technology inputs to improvequality and competitiveness of production of smallscale sector.
- The National Small Industries Corporation (NSIC)
would concentrated on marketing of mass consumptionitems under common brand name and organization linksbetween NSIC and SSIDCs would be established.
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Continues.
- The scope of the national equity fund scheme will bewidened to cover projects up to Rs. 10 lakhs forEquity Support (up to 15%).
- The single window loan scheme has also been
enlarged to cover projects up to Rs. 20 lakhs withworking capital margin up to Rs. 10 lakhs.
- Small Scale Units can have equity support to theextent of 24% of the total investment from the
medium and large scale industries, publicundertakings and NRIs or foreign investment.
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Meaning of Incentives and Subsidies
incentive means concessions, subsidies
and bounties.
subsidies denotes a single lump sum
which is given by a government to an
industry.
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2/14/2013 Mr. SUBRAMANYA A.P. 9
Advantages and Disadvantages
Advantages:
They act as a motivational force which makesthe prospective entrepreneurs to enter into
manufacturing line. They encourage the entrepreneurs to start
industries in backward areas.
By providing subsidies and incentives the
Government can- Bring industries development uniformly in all
regions
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Continues.
Develop more new entrepreneurs which leadsto entrepreneurial development
Increase the ability of entrepreneurs to facecompetition successfully
Reduce the overall problems of small scaleentrepreneurs.
Disadvantages:
1.The antagonists argue that the incentive
schemes may deteriorate into useless tax-giveaway schemes if they are not implementedproperly.
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Continues.
2. Empirical studies reveals that the incentive
schemes are being highly misused rather than
properly used. Some of the units are located in
backward areas with a view to mainly avail thesubsidies and concessions. The real objective of
providing incentives is hardly achieved.
3. Favoritism and corruption have crept into the
administrative machinery which has causedmuch financial strain on the exchequer.
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4.2 Schemes of incentives in operation.
Export/Import subsidies and bounties
Interest free loans
Subsidy for R&D works
Capital investment subsidy
Transport subsidy
Interest subsidy
Subsidy for power generation
Exemption from property tax
Subsidies to artisans and traditional industries
including handlooms
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Continues. Incentives to non-resident Indians
Special incentives to women entrepreneurs
Exemption from income tax
Interest free sales tax loans
Sales tax exemptions
Subsidy for buying test equipment
Subsidy for industrial housing
Land and building at concessional rates
Price preference to SSI units Subsidy/assistance for technical consultancy
Exemption from stamp duty
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Continues.
Concessional water
Provisions for seed capital
Allotment of developed/constructed shedsAllotment of controlled or subsidized raw
material
Subsidizing the cost of marketstudies/feasibility studies or reports
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1. Concessional finance
2. Central investment subsidy
3. Tax holiday to new industrialundertakings set up in backward states
and union territory
Tax holiday for the power sector
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Thank you