PROMOTIONAL ROLE OF GOVERNMENT OF INDIA

Entrepreneurship was potential to support economic growth and social cohesion, it is the policy goal of many governments to develop a culture of entrepreneurial thinking. This can be done in a number of ways: by integrating entrepreneurship into education systems, legislating to encourage risk-taking, and national campaigns

FINANCIAL ASSISTANCE
Financial assistance is available from institutions such as Nationalised Banks, Small Industries Development Bank of India, Regional Rural Banks, National Small Industries Corporation, State Financial Corporations etc. Financial assistance has two components. Loan for fixed capital is used to acquire Plant and Machinery, land and building. Working capital loan is used to meet day to day operational cost of the production. State Financial Corporation and National Small Industries Corporation generally provide working capital. However under a package assistance, State Financial Corporations also provide a composite loan covering plant and machinery and working capital.

The general conditions for getting financial assistance are:

Eligibility criteria Technical /Economic viability Promoters contribution Capacity to repay loan Collateral securities/guarantee

THE ROLE OF GOVERNMENT IN SUPPORTING ENTREPRENEURSHIP

Small and Medium-sized Enterprises (SMEs) in market economies are the engine of economic development. Owing to their private ownership, entrepreneurial spirit, their flexibility and adaptability as well as their potential to react to challenges and changing environments, SMEs contribute to sustainable growth and employment generation in a significant manner.

SMEs have strategic importance for each national economy due a wide range of reasons. Logically, the government shows such an interest in supporting entrepreneurship and SMEs. There is no simpler way to create new job positions, increasing GDP and rising standard of population than supporting entrepreneurship and encouraging and supporting people who dare to start their own business. Every surviving and successful business means new jobs and growth of GDP.

Therefore, designing a comprehensive, coherent and consistent approach of Council of Ministers and entity governments to entrepreneurship and SMEs in the form of government support strategy to entrepreneurship and SMEs is an absolute priority. A comprehensive government approach to entrepreneurship and SMEs would provide for a full coordination of activities of numerous governmental institutions (chambers of commerce, employment bureaus, etc.) and NGOs dealing with entrepreneurship and SMEs. With no pretension of defining the role of government in supporting entrepreneurship and SMEs, we believe that apart from designing a comprehensive entrepreneurship and SMEs strategy, the development of national SME support institutions and networks is one of key condition for success. There are no doubts that governments should create different types of support institutions:

i) To provide information on regulations, standards, taxation, customs duties, marketing issues; ii) assurance; To advise on business planning, marketing and accountancy, quality control and

iii) To create incubator units providing the space and infrastructure for business beginners and innovative companies, and helping them to solve technological problems, and to search for know-how and promote innovation; and iv) To help in looking for partners. In order to stimulate entrepreneurship and improve the business environment for small enterprises.

Training
Basic training differs from product to product but will necessary involve sharpening of entrepreneurial skills. Need based technical training is provided by the Govt. & State Govt. technical Institutions.

There are a number of Government organisations as well as NGOs who conduct EDPs and MDPs. These EDPs and MDPs and are conducted by MSME's, NIESBUD, NSIC, IIE, NISIET, Entrepreneurship Development Institutes and other state government developmental agencies.

Marketing Assistance: There are Governmental and non-governmental specialised

agencies which provide marketing assistance. Besides promotion of MSME products through exhibitions, NSIC directly market the MSME produce in the domestic and overseas market. NSIC also manages a single point registration scheme for manufacturers for Govt. purchase. Units registered under this scheme get the benefits of free tender documents and exemption from earnest money deposit and performance guarantee.

Promotional Schemes
Government accords the highest preference to development of MSME by framing and implementing suitable policies and promotional schemes. Besides providing developed land and sheds to the entrepreneurs on actual cost basis with appropriate infrastructure, special schemes have been designed for specific purposes like quality upgradation, common facilities, entrepreneurship development and consultancy services at nominal charges.

Government of India has been executing the incentive scheme for providing reimbursement of charges for acquiring ISO 9000 certification to the extent of 75% of the cost subject to a maximum of Rs. 75,000/- in each case. ISO 9000 is a mechanism to facilitate adoption of consistent management practices and production technique as decided by the entrepreneur himself. This facilitates achievement of desired level of quality while keeping check on production process and management of the enterprise.

Concession on Excise Duty

MSME units with a turnover of Rs. 1 crore or less per year have been exempted from payment of Excise Duty. Moreover there is a general scheme of excise exemption for MSME brought out by the Ministry of Finance which covers most of the items. Under this, units having turnover of less than Rs. 3 crores are eligible for concessional rate of Excise Duty. Moreover, there is an exemption from Excise Duty for MSME units producing branded goods in rural areas

Credit Facility To MSME

Credit to micro, small and medium scale sector has been covered under priority sector lending by banks. Small Industries Development Bank of India (SIDBI) has been established as the apex institution for financing the MSME. Specific schemes have been designed for implementation through SIDBI, SFCs, Scheduled Banks, SIDCs and NSIC etc. Loans upto Rs. 5 lakhs are made available by the banks without insisting on collaterals. Further Credit Guarantee Fund for micro, small and medium enterprises has been set up to provide guarantee for loans to MSME up to Rs. 25 lakhs extended by Commercial Banks and some Regional Rural Bank.

Foreign Direct Investment-Policy & Procedures

Government of India recognizes the key role of Foreign Direct Investment (FDI) in economic development not only as an addition to domestic capital but also as an important source of technology and global best practices. The Government of India has put in place a liberal and transparent FDI policy. FDI up to 100% is allowed under the automatic route in most sectors/activities. FDI policy in India is reckoned to be among the most liberal in emerging economies. The Government of India reviews the FDI policy on an ongoing basis. Important Policy initiatives taken in the recent past include raising FDI equity limit in domestic airlines sector to 49% and placing it under the automatic route; allowing FDI up to 100% under the automatic route for the development of townships, housing, builtup infrastructure and construction development projects; procedural simplification for approval of proposals for new joint ventures, technology collaborations with existing joint ventures, technology transfer/trade marks agreement in India and transfer of shares from existing Indian companies.

Science and Technology Policy 2001

Science and technology have been an integral part of Indian civilization and culture. Indias traditions in science and technology stretch over several millennia and have been founded on the principle of universal harmony and respect for all creation. In the half century since independence, India and its people have been committed to the task of promoting the spread of science and have recognized the key role of technology as one of the most important elements of national development. The Scientific Policy Resolution of 1958 and the Technology Policy Statement of 1983 enunciated the principles on which the growth of science and technology

in India has been based over the past several decades and continue to inspire our endeavours even today. These policies have emphasized self-reliance and sustainable and equitable development. We stand today on the threshold of a new century, at a time when the advance of science is both tumultuous and spectacular. We live in a world where political, social and economic equations have been dramatically transformed in the last decade. It is therefore necessary for the Government and people of India to reaffirm their commitment to the growth of science and technology, which in turn must spark and fuel the march of Policy and facilitation

framework for SMEs: mission for the millennium

Policy: national development. Create a sound policy environment to help the sector cope with the emerging challenges of globalization. Measures to include: _ Constitution of state level advisory boards _ Separate policy for tiny and micro enterprises _ Higher investment limit for ancillary units _ Special dispensation for sectors with high export potential _ Special thrust on modernization and technology upgradation of existing units _ Focus of reservation policy on enhancement of competitiveness _ Special package for promotion and development of small and village enterprises in northeastern and hill regions

(a) Foreign direct investment:

Encourage FDI as a means to infuse additional resources, technology and modern management practices with a view to making the sector internationally competitive. Measures to include: _ Enhancement in the limit of foreign equity participation, subject to management control vesting with Indian shareholders; _ Placement of FDI in small-scale industry sector, under automatic route within the enhanced equity cap.

(b) Industrial legislation:

Simplify immediate measures to include: _ High-powered Committee for recommending single comprehensive legislation for SSI units; _ Simplification of inspection procedures based on self-declaration and post audit; _ Review Choir-Board Act and Khadi and Village Industries Commission (KVIC) Act in the context of emerging challenges. (c) Administrative set-up: Redefine the role of the existing machinery to make it more responsive. Measures to include:

_ High-powered Committee to recommend the most appropriate organizational structure for SIDO and SSIs; _ Mechanism for participation of SSI associations and NGOs in the small and village enterprises development programmes.

(d) Credit:
Strengthen credit delivery system through: _ Credit guarantee scheme _ Earmarking flow of bank credit to micro, tiny and small enterprises _ Scheme for credit rating of small-scale units _ Exploring possibilities of securitization of guaranteed loans _ Exploring possibilities of strengthening viable state financial corporations _ Promoting venture capital funds and factoring services, exclusively for small-scale sector (e) Delayed payments: Facilitate timely payment through: _ Mandatory schedule in audited balance sheets for reflecting interest accrued under Delayed Payments Act; _ Special mechanism, including Industry Facilitation Councils at state level, for settlement of disputes regarding delayed payments.

(f) Rehabilitation of sick units:

Put in place an appropriate policy framework for addressing the problem of industrial sickness through: _ Strengthening of State Level Inter-Institutional Committee (SLIC) for timely identification and rehabilitation of sick units; _ Exploring the possibility of introducing statutory provision for the revival of viable sick units; _ Exploring the possibility of setting up of Debt Recovery Tribunals for facilitating recovery of SSI dues of commercial banks and financial institutions.

(g) Technology development:

Modernize small-scale enterprises through a multipronged approach including: _ National modernization plans for select sectors having high export potential _ National plan for technology exchanges _ High-powered committee to recommend linkages between R&D institutions, training institutions, technology banks and user groups _ Expand the scope and coverage of technology development and modernisation scheme _ Introduce standards for testing _ Efforts to introduce utility patent protection for small innovations

(h) Marketing:
Extend comprehensive marketing support through: _ Project subcontracting promotion policy _ Vendor development programme for linkages between small, medium and large industry

_ Thrust on rural marketing _ Comprehensive policy for investment marketing brand promotion and overseas market access

(i) Fiscal regime:

Create an appropriate fiscal environment through: _ Rationalization of taxes and tariffs for small-scale industries _ Rationalization of subsidies to make them WTO compatible _ Organize WTO sensitization programmes for small-scale industries

(j) Village industries:

Focus through: _ Strengthening Prime Ministers Rozgar Yojna and Rural Employment Generation Programme; _ Strengthening National Rural Industries Programme; _ Strengthening rural artisan complexes; _ Modernization and capacity building in village industries; _ Special thrust on small agro-industries.

(k) Infrastructure:
Bridge critical infrastructure gaps through: _ Strengthening National Cluster Development Programme, including identification of critical infrastructure gaps on cluster basis; _ Functional industrial parks.

(l) Entrepreneurship development:

Strengthening National Entrepreneurship Development Board: _ Comprehensive plan for promotion of rural entrepreneurship _ Close linkages with premier institutions, engaged in management and entrepreneurial training _ Adoption of turn-key concept for entrepreneurship training

(m) International cooperation:

Strengthen bilateral and international cooperation through: _ Separate cell in the Ministry for International Cooperation and joint ventures _ Sector specific development programmes with the assistance of UNIDO and UNDP

(n) Information technology:

Strengthen IT support: _ Master web site on small industries comprising information on policies and procedures, technology, products, etc. with hyperlinks to states and countries; _ Comprehensive plan for preparing small-scale industries for e-commerce, with appropriate electronic infrastructure support._ SME partenariat with various international and multilateral organizations

4. Industry promotion policies (a) Policies classified according to specific promotional activities or focus area:
_ EXIM policy (Central) _ Civil aviation policy (Draft) (Central) _ Entrepreneurship development (States) _ Awards to meritorious entrepreneurs (States)

_ Consultancy services (States) _ Environment and pollution control (States) _ Export promotion policy (States) _ FDI and NRI (Central and States) _ Financial infrastructure and services (States) _ Foreign investment policy (Central) _ Human resource development (States) _ Industrial parks, complexes, estates, development (States) _ Infrastructure policy (States) _ Industrial policy (Central and States) _ Information technology policy (Central and States) _ Land allotment (States) _ Labour laws and policy (States) _ Monetary and credit policy, 2002-2003 (Central) _ Natural resources and conservation (States) _ Port policy (States) _ Power policy (Central and States) _ Procedure and clearance to set up units (States) _ Public sector undertakings (States) _ R&D improvement in productivity and quality upgradation (States) _ Raw materials (States) _ Small-scale, rural and cottage industries (Central and States) _ Sick industries (Central and States) _ Simplification and streamlining of rules and procedures and administration (States) _ Single window (States) _ Special economic zones (States) _ Taxes (States) _ Technology upgradation _ Thrust areas (I) _ Transport (Central and States) _ Telecommunication (Central and States)

(b) Policies classified according to sector or industry:

_ National health policy (Central) _ National water policy (Central) _ Agro and food processing policy (States) _ Biotechnology policy (States) _ Education policy (Central and States) _ Electronic policy (States) _ Forest-based industries (States) _ Film policy (States) _ Gas and downstream industries (States) _ Handloom and handicraft and cottage industry sectors (States) _ Hydropower policy (Central) _ Housing and urban policy (Central and States) _ Liquid fuel policy (Central)

_ Medical and medical college policy (States) _ Development of mineral and mineral-based industry (States) _ Mining (States) _ National housing and habitat policy (Central) _ Pharmaceutical policy 2002 (Central) _ Rice export policy (States) _ Road policy (States) _ Rural non-farm sector (States) _ Sericulture (States) _ Slum policy (Central) _ Tea policy (States) _ Telecommunication (Central and States) _ Tourism policy (States) _ Textile (Central and States) _ Web policy (States) (c) Incentive schemes: _ Airfreight subsidy (States) _ Backward area (States) _ Contribution to feasibility study, project report preparation cost (States) _ Drawal of power line and generating sets (States) _ Capital/State investment subsidy (Central and States) _ Electricity charges and water charges rebate (States) _ Employment generation (States) _ Exemption in central excise tariff (Central) _ Export promotion (States) _ Human resources and training (States) _ Marketing support (States) _ Margin money/seed money for SSI/tiny units (States) _ Modernization/expansion subsidy (States) _ Non-resident Indians and foreign investments (States) _ General incentives (States) _ Incentive scheme for modernization of jute industry (Central)/infrastructure (States) _ Information technology (States) _ Interest subsidy (Central and States) _ Land allotment (States) _ Non-conventional energy sources (States) _ Premier, pioneer, large industries and mega projects (States) 166 _ Port (States) _ Price preference (States) _ Power (States) _ For quality, productivity and technology upgradation and pollution control devices (States) _ Research and development and patent _ Road (States) _ Sales tax concessions (States) _ Sick units (States)

_ Small-scale, cottage and tiny industries (States) _ Stamp duty, octroi, and local taxes exemptions (States) _ Subsidy scheme for technology upgradation in SSI sector (Central) _ Subsidy on drawal of power line and generating sets (States) _ Subsidy on registration fee of promotion council, Indian standards institution, commodity board, Chamber of Commerce (States) _ Technical know-how subsidy (States) _ Transport subsidy (Central and States) _ Special incentives for women (States) _ Weaker sections and physically handicapped (States)

(d) Industrial infrastructure facilities:

_ Industrial area, estates _ Integrated infrastructure development centre _ Growth centres and industrial townships _ Export promotion industrial park and zones _ Special economic zone _ Software technology park _ Hardware technology park _ Notified areas _ Sector specific park _ Science and technology entrepreneur park