Module II

Institutional Support and Incentives to Entrepreneurs

Entrepreneurs need some support from outside agencies supporting project preparation and
evaluation. Similarly support is needed for technological upgradation of the entrepreneurial
venture. Entrepreneurs need money for initial investment in their business. After doing
business for few years, entrepreneurs will try to expand their business or diversify their
business. Expansion or diversification needs substantial investment. Investment support
facilities must be made available to them for expansion and diversification of their business.
Hence, financial support system is needed to the entrepreneurs. Entrepreneurs in the normal
situation do not aware of the management techniques. They need managerial support to run
their business efficiently and successfully. Entrepreneurship Development Institute,
Management Institute, Financial Institutions and Academic Institutions provide managerial
support to the small scale industries. Marketing is the nucleus of any business enterprise.
Large scale enterprises have enough money to spend for advertisement and sales promotional
activities for marketing their products and to increase their market share in the days to come.
They have brand value also. Whereas, SSIs are not in a position to compete with them and
hence they require market support system. Thus, Financial, Marketing, Managerial and
technological support are needed to SSIs not only for industrial development but also overall
economic development of our country. In order to accelerate the small industries
development, Government at the Central and State levels have set up a number of
development agencies/ institutions. All India Financial Institutions - IDBI, IFCI, ICICI - have
promoted / sponsored a number of technical Consultancy Organisations (TCOs) to assist
small entrepreneurs in different ways. Recently, the small Industries Development Bank of
India (SIDBI) has been established to help small scale units. In addition to these institutions
there are agencies like National Science and Technology Entrepreneurship Board, Khadi and
Village Industries Commission, Commercial Banks, Exim Bank and Co-operative Banks who
undertake Promotional activities aiming at facilitating industrial development. A brief
description about various institutions which are rendering support for promoting
entrepreneurship is given below.
Institutional Support

To strengthen the marketing efforts of SSIs. Government has ex-tended various types of
assistances such as market research survey studies, dissemination of information relating to
market and various marketing aspects, sub contracts exchange, quality marketing scheme,
ancillary pro-motion, publicity, exhibitions, trade fairs, displays, training programmes,
seminars, open house discussions, buyer seller meets, marketing consul-tancy services, trade
centres and export marketing assistance. There are some institutions (Central and States) and
schemes to extend marketing support to the small scale enterprises. Marketing support is the
felt need of the hour to the small scaleenterprises in India. The small scale enterprises are in
need of institutional support to market their products and to survive in the business. In order
to assist the small scale industries in their marketing programme. Government of India and
State Governments have established various institutions, such as

 National Small Industries Corporation

 State Small Industries Corporation.
 Small Industries Development Organisation
 Khadi and Village Industries Commission,
 Export Promotion Councils, Commodity Boards,
 State Trading Corporation,
 Minerals and Metals Trading Corporation, etc.,

Entrepreneurship and Financial Support

Finance is the lifeblood of any entrepreneurial venture. It is a basic requirement to commence

a project. Entrepreneurs are in need of capital to start business and they can get financial
assistance at every stage of business. Entrepreneurs should plan in advance to procure the
needed finance for investment from the external sources. They should identify the financial
institutions providing financial assistance for their projects. Financial institutions provide
financial assistance to meet fixed capital working capital and venture capital requirements of
the entrepreneurs. Types of Finance Entrepreneurs require three types of finances depending
upon their nature of business. They are:

Short Term Finance

Short term finance refers to funds required to meet the commitments during the shorter period
of time i.e., less than one year. Short term finance is used to meet the temporary working
capital of the enter-prise. Short term financial requirements can be met through the following
sources:

a. Bank Credit
b. Trade Credit
c. Instalment Credit
d. Customer Advance

Medium-Term Finance

Medium term refers to a period of five years. Medium term finance is required to meet
permanent working capital needs, to expand the business, to replace certain assets and to
meet the expenses for modernization. Medium term financial requirements can be fulfilled
through the following source:

a. Issue of shares and debentures

b. Loans from the financial institutions and commercial banks
c. Ploughing back of profits
d. Public deposits

Long-Term Finance

Long term refers to the period exceeding five years. Long term finance is required to
purchase fixed assets, establish a new business, and to meet the expenses of expansion and
modernization of the business enterprise. The sources of long term finance are listed below:

a. Issue of shares and debentures

b. Long from the financial institutions providing long term finance
c. Ploughing back of profit

Working Capital Support

Working capital refers to the capital required to meet the day-to-day expenses/commitments
of the business enterprise. Working capital needs could be fulfilled through loans from the
commercial banks in the form of hypothecation or pledge. Working capital assistance is also
given by finance companies, state financial corporations and Cooperative banks.

Fixed Capital Support

Fixed capital refers to the capital required to purchase fixed assets such as land and buildings,
plant and machinery, furniture etc., Fixed assets are used for processing the inputs and for
getting standard output. Fixed capital needs could be fulfilled through market borrowings and
term loans from the financial institutions as given below.

Institutional Framework

Department of Industries and Commerce (DIC) The 'District Industries Centre' (DICs)
programme was started by the central government in 1978 with the objective of providing a
focal point for promoting small, tiny, cottage and village industries in a particular area and to
make available to them all necessary services and facilities at one place. The finances for
setting up DICs in a state are contributed equally by the particular state government and the
central government. To facilitate the process of small enterprise development, DICs have
been entrusted with most of the administrative and financial powers. For purpose of allotment
of land, work sheds, raw materials etc., DICs functions under the 'Directorate of Industries'.
Each DIC is headed by a General Manager who is assisted by four functional managers and
three project managers to look after the following activities: Objectives of District Industries
Centre (DIC): The important objectives of DICs are as follow:

1. Accelerate the overall efforts for industrialization of the district.

2. Rural industrialization and development of rural industries and handicrafts.
3. Attainment of economic equality in various regions of the district.
4. Providing the benefit of the government schemes to the new entrepreneurs.
5. Centralization of procedures required to start a new industrial unit and minimizationof
the efforts and time required to obtain various permissions, licenses, registrations,
subsidies etc.

Functions of District Industries Centre (DIC):

i) Acts as the focal point of the industrialization of the district.

ii) Prepares the industrial profile of the district with respect to:
iii) Statistics and information about existing industrial units in the district in the large,
medium, small as well as co-operative sectors.
iv) Opportunity guidance to entrepreneurs.
 v) Compilation of information about local sources of raw materials and their
availability.
vi) Manpower assessment with respect to skilled, semi-skilled workers.
vii) Assessment of availability of infrastructure facilities like quality testing, research
and development, transport, prototype development, warehouse etc.
viii) Organizes entrepreneurship development training programs.
ix) Provides information about various government schemes, subsidies, grants and
assistance available from the other corporations set up for promotion of industries.
x) Gives SSI registration.
xi) Prepares techno-economic feasibility report.
xii) Advices the entrepreneurs on investments.
xiii) Acts as a link between the entrepreneurs and the lead bank of the district.
xiv) Implements government sponsored schemes for educated unemployed people like
PMRY scheme, Jawahar Rojgar Yojana, etc.
xv) Helps entrepreneurs in obtaining licenses from the Electricity Board, Water
Supply Board, No Objection Certificates etc.
xvi) Assist the entrepreneur to procure imported machinery and raw materials.
xvii) Organizes marketing outlets in liaison with other government agencies.

Small Industrial Development Corporation (SIDCO)

SIDCO, a Government owned Public Sector Corporation, was established in November 1975
for the development and promotion for Small Scale Industries in Kerala. God’s own Country,
Kerala, is gifted with abundant natural resources essential for establishing Industrial Units
and SIDCO is taking the initiative to set up industrial units. Kerala SIDCO as a ‘Total
Solution Provider’ for Small Scale Sector offers all facilities and assistance to set up Small
Scale Units across Kerala. The corporation is rendering valuable assistance to the industrial
sector in the State, including Consultancy Services at the beginning of the project to the
Identification of Industrial Site, Commissioning of project, Providing infrastructure facilities,
Distribution of essential raw materials, Marketing of the MSME Products, Undertaking civil
and electrical works etc. Kerala SIDCO competently handles the necessary requisites of any
project. Kerala SIDCO is now in the path of profit and is now granting basic facilities and
marketing security to the industrialists and new entrepreneurs through its diversified activities
and new working style. Currently, SIDCO is expanding its area of works by diversification to
give new vision to MSME sector in Kerala.
SIDCO is a fully owned Government Corporation with its registered office at Trivandrum.
SIDCO owns and operates production units, raw materials depots, Industrial Estates/ Mini
Industrial Estates/Industrial Parks, marketing cell/emporia/centres, Civil Construction
Division, IT&TC Division etc. Kerala SIDCO has been distinguished as No.1 SIDCO among
South Indian SIDCO’s during 2010-2011 in the wake of the achievement of an
unprecedented turnover. Add to its credential, Government of Kerala recognized the IT&TC
Division of Kerala SIDCO as a Total Solution Provider to Government of Kerala. SIDCO is
playing a vital role for the promotion of Small Micro and Medium Industries in the State that
provides more than 10000 direct employment opportunities and over 20,000 indirect
employment opportunities, its activities to lift this sector is very vital from social and
economic view point.

Activities of Small Industrial Development Corporation (SIDCO)

The major activities of SIDCO are under the following divisions.

 Raw Material division: SIDCO Raw Material Division is engaged in the distribution
of various industrial raw materials to the small scale industries sector in Kerala. It also
distributes iron and steel materials to Public Sector Undertakings in Kerala according
to their requirements.
 Production division: Now 8 Production units and a Tool Room (TRTC) are
functioning under Kerala SIDCO in various districts of the State. Government
Departments, Public Sector Undertakings and Autonomous Bodies are free to
purchase all types of furniture and other equipments produced in these units, without
observing usual tender formalities.
 Marketing division: Provides assistance to SSI units for marketing their products.
There are opportunities for export of the products of Kerala's SSI sector, Village
Industries Sector etc., The Marketing Division is now having 7 Sales Emporia and 7
Marketing Centres at various districts of Kerala. The SSI units registered with SIDCO
exhibit their products in the emporia for which SIDCO is not charging any fee. The
Government of Kerala appointed Kerala SIDCO as sole channelizing Agent for
procurement and supply of 20 products. Details of Sales Emporia and Marketing
Centres listed separately.
 Construction division: The main functions of this Division is to undertake
construction and maintenance work of sheds in Industrial Estates, Industrial
 Development Plots, providing infrastructure facilities for Industrial Growth Centres,
setting up of Industrial Parks etc. In addition to these it undertakes civil works
entrusted by the Industries Department, Public Sector Undertaking and Other
autonomous bodies and Grama Panchayaths on centage basis.
 Industrial Infrastructure division: Kerala SIDCO owns 17 Conventional Industrial
Estates and 36 Mini Industrial Estates which are functioning in different Districts of
Kerala. There are 920 factory sheds in which more than 750 SSI units are functioning.
The above said factory sheds were allotted on Lease basis, Hire Purchase basis and
Out Right Purchase basis. A very few sheds are vacant for allotment preferably on
Out Right Purchase basis. In addition to these factory sheds, Industrial Plots are being
allotted to the entrepreneurs in Industrial Estates, Mini Industrial Estates and
Industrial Parks for constructing factory sheds of their own design to run industrial
unitsConsidering the importance of Small Scale Industries, as part of Government
Policy, the scheme for setting up of One Industrial Park in each of the 140 Assembly
Constituencies of the State is being implemented by SIDCO.
 Information Technology and Telecommunication Division: SIDCO IT&T Division is
providing software and hardware solutions to Central and State Government
departments, Central and State Public Sector Undertakings, Local Self Government
Bodies, Autonomous Institutions and SSI units. The areas identified for business are
a. Development & maintenance of software solutions & website
development
b. IT & Telecom products & Services
c. Hardware products & Services
d. Office Automation products & services
e. Spares and other consumables
Kerala SIDCO Ltd IT &T Division supplies Hardware (servers, Laptops, Desktops &
computer peripherals) Software solutions, Telecom products, Office automation
products Annual Maintenance contract, Third Party maintenance contract and repair
and Maintenance Contract. Kerala SIDCO Ltd has empanelled accredited IT &
Telecomm firms to execute projects undertaken. We are fully equipped to execute any
IT & Telecom implementation as per Government Guidelines. Through our business
partners we are capable of providing any solution which the clients demand and with
the wide repertoire of qualified service personnel we can provide on call support for
all our future clients located through the length and breadth of the State.
National Small Industries Corporation (NSIC)

National Small Industries Corporation (NSIC), is an ISO 9001:2015 certified

Government of India Enterprise under Ministry of Micro, Small and Medium
Enterprises (MSME). NSIC has been working to promote, aid and foster the growth
of micro, small and medium enterprises in the country. NSIC operates through
countrywide network of offices and Technical Centres in the Country. In addition,
NSIC has set up Training cum Incubation Centre managed by professional manpower.
Mission: “To promote and support Micro, Small & Medium Enterprises (MSMEs)
Sector” by providing integrated support services encompassing Marketing,
Technology, Finance and other services.
Vision: “To be a premier Organization fostering the growth of Micro, Small and
Medium Enterprises (MSMEs) Sector”. Functions of National Small Industries
Corporation (NSIC)
1) Provide machinery on hire-purchase schemes to small scale
industries.
2) Provide equipment leasing facility.
3) Help in export marketing of the products of small-scale industries.
4) Participate in bulk purchase programme of the Government.
5) Develop prototype of machines and equipments to pass on to small-
scale industries for commercial production.
6) Distribute basic raw material among small-scale industries through
raw material depots.
7) Help in development and upgradation of technology and
implementation of modernization programmes of small-scale
industries.
8) Impart training in various industrial trades.
9) Set up small-scale industries in other developing countries on turn-
key basis.
10) Undertake the construction of industrial estates.
Small Industries Development Bank of India (SIDBI)

It is a national institution for promotion, financing and development of small scale

industries. It came to operation on April 2, 1990. SSI can avail financial assistance
from SIDBI through its direct and indirect financial assistance programme. All the
programmes of the SIDBI are directed to solve the problems of the SSIs in areas like,
quality of upgradation, obsolescence of technology and technology improvement,
marketing, infrastructure development, delayed realization of bills, ancillarisation,
export financing and venture capital financing.
Mission: To facilitate and strengthen credit flow to MSMEs and address both
financial and developmental gaps in the MSME eco-system.
Vision: To emerge as a single window for meeting the financial and developmental
needs of the MSME sector to make it strong, vibrant and globally competitive, to
position SIDBI Brand as the preferred and customer - friendly institution and for
enhancement of share - holder wealth and highest corporate values through modern
technology platform.

Functions of Small Industries Development Bank of India (SIDBI)

1. Small Industries Development Bank of India refinances loans that are extended by
the PLIs to the small-scale industrial units and also offers resources assistance to
them.
2. SIDBI also serves the functions of discounting and rediscounting of bills of SSI
units.
3. It also helps in expanding marketing channels for the products of SSI (Small Scale
Industries) sector both in the domestic as well as international markets.
4. It offers services like factoring, leasing etc. to the industrial concerns in the small-
scale sector.
5. It promotes employment-oriented industries particularly in semi-urban areas for
creating employment opportunities and thus checking the relocation of people to
the urban areas.
6. It also initiates steps for modernisation and technological up-gradation of current
units.
 7. It also enables the timely flow of credit for working capital as well as term loans
to Small Scale Industries in cooperation with commercial banks.
8. It also co-promotes state-level venture funds.
9. SIDBI helps in National small scale industries making Hire purchase, leasing and
marketing activities.
10. SIDBI provides various soft loans like Mahila vikas nidhi, National enquiry fund,
Mahila udayam Nidhi and also provides seed capital to the start ups.

Khadi Village Industry Commission (KVIC)

The Khadi and Village Industries Commission was established by an Act of Parliament in
1956. Promoting Khadi and Village Industries in the rural areas is the basic objective of
KVIC. It provides marketing support to the rural industries. KVIC and established retail
outlets throughout India for selling the products of the rural industries. There are 30 State
Khadi and Village Industries Board functioning in India to cater to the needs of the Khadi and
Village industries. The KVIC provides necessary support needed to the entrepreneurs through
State Khadi and Village Industries Boards and Khadi and Village Industries Programme.
Khadi and Village Industries Board in Collaboration with the concerned District Rural
Development Authority has brought out the following developments:

 Upgrading of Khadi and Village industries technology.

 Improving quality of KVI products
 Establishing rapport with exporters for exporting KVI products
 Utilising distribution network of large scale and reputed business houses.
 Expanding need based product line in KVI.

Functions of KVIC

The following are the functions of Khadi Village and Industries Commission:

1. It plans, promotes, organizes, and implements programmes for the development of

Khadi and Village Industries (KVI).
2. It coordinates with multiple agencies that are engaged in rural development for
several initiatives w.r.t khadi and village industries in rural areas.
3. It maintains a reserve of raw materials that can be further promoted in the supply-
chain.
4. It aids in creating common service facilities that help in processing of raw materials.
5. It aids the marketing of KVI products through artisans and other avenues.
6. It creates linkages with multiple marketing agencies for the promotion and sale of
KVI products.
7. It encourages and promotes research and development in the KVI sector.
8. It brings solutions to the problems associated with the KVI products by promoting
research study and enhancing competitive capacity.
9. It also helps in providing financial assistance to the individuals and institutions related
to the khadi and village industries.
10. It enforces guidelines to comply with the product standards to eliminate the
production of in genuine products.
11. It is empowered to bring projects, programmes, schemes in relation to khadi and
village industries’ development.

Small Industries Service Institute (SISI)

At the heart of all agencies dealing with development of small industry is small industries
development organization, SIDO. It was originally known as central small industries
organization (CSIO). Attached to the ministry, SIDO administers small industries service
institute (SISI’s). The small industries service institutes (SISI’s) are set-up one in each
state to provide consultancy and training to small and prospective entrepreneurs. The
activities of SISs are co-ordinate by the industrial management training division of the
DC, SSI office (New Delhi). In all there are 28 SISI’s and 30 Branch SISI’s set up in state
capitals and other places all over the country. SISI has wide spectrum of technological,
management and administrative tasks to perform.

Functions of SISI

1. To assist existing and prospective entrepreneurs through technical and managerial

counseling such as help in selecting the appropriate machinery and equipment,
adoption of recognized standards of testing, quality performance etc.,
2. Conducting EDPs all over the country;
3. To advise the Central and State governments on policy matters relating to small
industry development;
4. To assist in testing of raw materials and products of SSIs, their inspection and quality
control;
5. To provide market information to the SISI’s;
 6. To recommend SSI’s for financial assistance from financial institutions;
7. To enlist entrepreneurs for partition in Government stores purchase programme;
8. Conduct economic and technical surveys and prepare techno-economic feasible
reports for selected areas and industries.
9. Identify the potential for ancillary development through subcontract exchanges;
10. Organize seminars, Workshops and Industries Clinics for the benefit of entrepreneurs.

Activities of SISI

1) The Small Industries Service Institutes have been generally organizing the following
types of EDPs on specialized courses for different target groups like energy
conservation, pollution control, Technology up-gradation, Quality improvement,
Material handling, Management technique etc. as mentioned earlier.
2) General EDP for educated unemployed youth, ex-service personnel etc. for a duration
of four weeks.
3) In these programmes, classroom lectures and discussions are held on issues such as
facilities and assistance available from State and Central government agencies, banks,
financial institutions and National Small Industries Corporation.
4) Apart from this, exposure is given information regarding market survey, product
identification and selection, technologies involved, management of small enterprises,
particularly in matters relating to financial management, marketing, packaging and
exports.
5) The participants also interact with successful small scale entrepreneurs as a part of
their experience sharing Information of quality; possibilities of diversification and
expansion are also given.
6) The entrepreneurs are helped to prepare Project Reports based on their own
observations and studies for obtaining financial assistance as may be required.
7) Such courses have benefitted many entrepreneurs to set up units of their own choice.

Kerala Industrial Technical Consultancy Organisation (KITCO)

KITCO, the first Technical Consultancy Organisation (TCO) in India, was established in
1972 by Industrial Development Bank of India, other national and state level financial
institutions, Govt. of Kerala and 7 Public Sector Banks for rendering services to
Entrepreneurs, Govt. Departments/PSUs, Local Bodies, etc. Presently, Small Industries
Development Bank of India (SIDBI) is the prime shareholder with 49.77% shares of the
company.

Functions and services of Kerala Industrial Technical Consultancy Organisation (KITCO)

 The aim of setting up of TCO, which had the blessing of Govt. of India and the
Reserve Bank of India, was to provide professional technical consultancy assistance
to banks by appraisal of projects for priority sector lending and to entrepreneurs in the
SME Sector by way of preparation of Project Reports & Market Studies and
conducting training programmes for entrepreneurship development. Subsequently
similar TCOs were set up in almost all the states with one of the National Financial
Institutions (IDBI, IFCI or ICICI) as the prime shareholder.
 Over the years, in line with the dynamic nature of its clients’ requirements, KITCO
has evolved into a multi-functional and multi-disciplinary organization offering a
wide range of services to the industrial and infrastructure sector and to a wider
spectrum of clientele including those outside the geographic bounds of Kerala. The
diversification enabled KITCO to offer consultancy services for implementation of
projects under one roof from “Concept to Commissioning” and obtain a stamp of
approval from clients in other areas like Operation & Maintenance, Energy Audits,
Asset Valuation, Skill Certification, Placement Services, etc.
 The major services offered by KITCO are Project Consultancy, Detailed
Engineering & Project Execution, Technical Services, Environmental Engineering
and HRD Consultancy. During the past 40 years, KITCO has extended consultancy
services to a wide range of clientele, mainly public sector undertakings and various
Departments of Govt. of India & Govt. of Kerala.
 KITCO has implemented more than 600 projects of varying magnitude across sectors
like Airports, Office & Commercial Buildings, Institutional Buildings, Tourism,
Industrial Parks/SEZs, Roads & Bridges, Industrial Plants, Water Supply Systems,
Effluent Treatment Plants, etc., and prepared more than 3500 Feasibility
Reports/Bankable Project Reports/Detailed Project Reports/Study Reports.
 KITCO has been successfully providing the Operation & Maintenance services for
two leading SEZs in the country – Cochin Special Economic Zone at Kochi and
MEPZ SEZ at Tambaram.
 KITCO has trained more than 80,000 entrepreneurs through Entrepreneurship
Development Programmes in various sectors.
  KITCO has been accredited as the Assessing Body under Skill Development Initiative
(SDI) scheme of Ministry of Labour & Employment, Govt. of India and so far
assessed more than 60,000 candidates from various State and Union Territories.
 KITCO has successfully implemented projects like Cochin International Airport Ltd.
Titanium Sponge Project, International Marina, Cochin Special Economic Zone, etc
and presently implementing a multimodal Mobility Hub at Cochin, all of which are
first of its kind in the country in their own respect.
 KITCO has successfully completed the Phase-1 of CIAL Golf Course & Country
Club and Ghallah Wentworth Golf Course at Muscat, Sultanate of Oman, thereby
establishing itself in an area, which was considered to be the forte of European
Consultants.
 The prestigious overseas assignments KITCO so far has completed include the
technical evaluation of electrical power distribution network at King Abdul Aziz
International Airport, Jeddah. KITCO has a full-fledged office facility at Cochin with
more than 250 competent and highly qualified professionals in various branches of
engineering and also in the fields of Finance, Economics, Management, Information
Technology, etc.
 Apart from the above, to meet the requirements from time to time, KITCO has a panel
of Specialist Consultants in various fields. KITCO’s revenue during 2012-13 was
Rs.372.02 million. The company has been paying dividend consistently since 1997-
98.

Science and Technology Entrepreneurship Development Project (STEDP)

The Government of India, in the year 1985, set up a National Science and technology
Entrepreneurship Development Board (NSTEDB) particularly to encourage entrepreneurship
amongst the Science and Technology persons and that too specifically in the industrially
backward areas of the country. Besides, discovering of new resources and manufacturing
techniques, remedying growing unemployment and achieving better industrialization in the
country, too have been its other objectives. The NSTEDB therefore took up a special project
entitled ‘Science and Technology Entrepreneurship Development’ (STED). For this, 12
districts which are industrially backward and have immense untapped and under tapped
natural resources had been selected under this project from all over the country from most of
the states. Jodhpur district in Rajasthan was selected as one of these centres. In this district,
the project was started in the year 1985-86, under the control of Director, Science and
Technology, Government, of Rajasthan, Jaipur.

The STED Project

In the project mode, the STED project aims to bring about a socio-economic development of
an area through the intervention of Science & Technology. The project envisages matching of
the material and the human resources of the district to create new enterprises and employment
by usage of Science & Technology processes. It involves identification of opportunities
through a detailed scientific survey and exploitation of the opportunities thus identified by the
entrepreneurs. The total project life is four years. Currently the STED project is being
implemented in 43 districts of the country.

Objectives / Activities of STEDP

The broad objectives of the project are:-

 To identify possible resource based projects in the region covering both rural and
urban areas.
 To identify S&T intervention (like technology selection, modification, alteration and
dissemination) for exploiting the opportunities by prospective entrepreneurs.
 To improve working of existing enterprises through S&T intervention to upgrade the
technology and modernisation of units.
 To organise regular enterprise awareness programmes and skill development
programmes for creating suitable entrepreneurial environment in the district.
 To launch at least 200 micro-enterprises in the district during the four years of
duration in which at least 50 technology-driven micro-enterprises are to be in
technology specific areas as identified by the implementing agency earlier.

Strategies of National entrepreneurship Development Board (NEDB)

Objective

The main objective of the National Entrepreneurship Development Board (NEDB) Scheme is
promotion of entrepreneurship for encouraging self-employment in small-scale industries and
small business.
Functions of NEDB

The main functions of NEBD are to:

 Identify and remove entry barriers for potential entrepreneurs (first generation and
new entrepreneurs) including study on Entrepreneurship development.
 Focus on existing entrepreneurs in small sector and identify and remove constraints to
survivals, growth and continuously improve performance.
 Facilitate the consolidation, growth and diversification of the existing entrepreneurial
venture in all possible ways.
 Support skill up-gradation and renewal of learning processes among practicing
entrepreneurs and managers of small and medium enterprises.
 Support agencies about the current requirement of growth in the area of
entrepreneurship.
 Act as catalyst to institutionalise entrepreneurship development by supporting and
strengthening state level institutions for entrepreneurship development.
 Setting up of incubators by entrepreneurship development institutions and other
organisations devoted to the promotion of entrepreneurship development.

Eligibility

Any institution seeking financial assistance for the activities mentioned above relating to
entrepreneurship development under the NEDB Scheme has to send their application giving
details including objective, activities proposed to be covered, cost break-up, funding
arrangements, details of the organisation including audited accounts of the last 3 years, etc. to
the Joint Secretary, Ministry of Small Scale Industries.

National Institute for Entrepreneurship and Small Business Development (NIESBUD)

The National Institute for Entrepreneurship and Small Business Development (NIESBUD)
was established in 1983 by the ministry of industry (now ministry of small scale industries),
Govt. of India, as an apex body for coordinating and overseeing the activities of various
institutions/agencies engaged in entrepreneurship development particularly in the area of
small industry and small business. NIESBUD was registered as a society under the
government of Indian societies Registration Act, XXI of 1860. It started up its functioning
from 6th July 1983, it was established by the government of India as an apex body for
coordinating and overseeing the activities of various institutions and agencies engaged in
entrepreneurship development, it was mainly in the areas of small industry and small
business. The policy, direction and guidance to the Institute is provided by its Governing
Council whose Chairman is the Minister of SSI. The Executive Committee consisting of
Secretary (Small Scale Industry & ARI) as its Chairman and Executive Director of the
Institute as its Member Secretary executes the policies and Decisions of the Governing
Council through its whole-time Executive Director. NIESBUD - "Setting the standards in
Entrepreneurship and Small Business development since 1983" To evolve standardized
materials and processes for selection, training, support and sustenance of entrepreneurs,
potential and existing.

Objectives

1) To evolve standardized materials and processes for selection, training, support

and sustenance of entrepreneurs, potential and existing.
2) To help/support and affiliate institutions/organizations in carrying out training
and other entrepreneurship development related activities.
3) To serve as an apex national level resource institute for accelerating the
process of entrepreneurship development ensuring its impact across the
country and among all strata of the society.
4) To provide vital information and support to trainers, promoters and
entrepreneurs by organizing research and documentation relevant to
entrepreneurship development.
5) To train trainers, promoters and consultants in various areas of
entrepreneurship development.
6) To provide national/international forums for interaction and exchange of
experiences helpful for policy formulation and modification at various levels.
7) To offer consultancy nationally/internationally for promotion of
entrepreneurship and small business development.
8) To share internationally experience and expertise in entrepreneurship
development.
9) To share experience and expertise in entrepreneurship development across
National frontiers.

In order to attain its objectives NIESBUD carries out a wide range of activities such as the
following.
  Evolving effective training strategies and methodology
 Standardizing model syllabus for training various target groups.
 Formulating scientific selection procedures.
 Developing training aids, manuals, and tools.
 Facilitating and supporting Central/state/other agencies in executing entrepreneurship
development programmes.
 Conducting such programmes for promoters, trainers, and entrepreneurs who are not
undertaken by other agencies.
 Maximizing benefits and accelerating the process of entrepreneurship development.
 Organizing all those activities that help develop entrepreneurial culture in the society.
 NIESBUD also serves as the secretariat for National Entrepreneurship development
Board (NEDB), the apex body which determines policy for entrepreneurship
development in the country.
 The institute, therefore, performs the task of processing the recommendations made
by the Board.

Techno Park

Technopark Kerala refers to a technology park in Thiruvanathapuram (Trivandrum), India

dedicated to electronics, software, and other Information Technology (IT) ventures. The
technology park represents the first, and largest, in India. Launched in 1990, Technopark
currently has 3.2 million square feet (310,000 square meters) of built-up space, serving as
home to over 125 companies, which employ more than 17,000 professionals. They include
one CMMI level 5 and PCMM level 5 company, four CMM Level 5, two CMM Level 3 and
several ISO 9001 certified companies. The Government of Kerala promotes the Technopark
with a mandate to nurture entrepreneurship and employment in the region. The policy of
economic liberalisation initiated by the government of India in 1991 and the rapid growth of
the global software industry during the 1990s has substantially contributed to the growth of
Technopark. Over 70% of Kerala's IT exports come from Technopark. The Indian
government's initiative to establish Technopark, Kerala, arose from an awareness that
economic success in the twenty-first century depended upon becoming competitive in the
international market place in Information and Knowledge Technology. The Indian
government understood that the traditional course of developing heavy industries before
moving to clean industries could be modified with the advent of the Knowledge and
Information Age. Shortly after the establishment of India as an independent republic, the
importance of the computer, communications, and biological sciences became evident. The
Indian government's support for the creation of Technopark, Kerala from a campus
embracing Indian and international companies to the establishment of a technology city has
rightly gained the attention of the world community.

Functions of Techno park

1. Opportunities aplenty for development

2. Provision and maintenance of excellent infrastructure facilities
3. Establishment of a high security zone at low cost
4. Creation and sustenance of a world class working environment
5. Augmented employability quotient of youth
6. Enormous annual supply of fresh college pass outs to the work force
7. Lowest rate of manpower attrition
8. Environment friendly campus that aims to stay green
9. Reduction of waste and enhanced water and energy efficiency
10. Perfectly harmonious work settings

Incentives

The term “incentive’, generally means encouraging productivity. It is a motivational force,

which encourages an entrepreneur to take a right decision and act upon it. The objective of
providing incentives is to motivate an entrepreneur to set up a new venture in the larger
interest of the nation and the society. Government provides many types of incentives to
entrepreneurs. These incentives help to increase productivity. It acts as a motivating force for
the entrepreneur. These incentives are categorized as concession, subsidies and bounties.
Subsidies are a one time lump sum amount given to the entrepreneur by the government. It is
a financial help to cover the cost. Bounty is a financial help provided to an industry so that it
can compete with other units of the country as well as any foreign industry in the same
business.

Importance

1. To eliminate Economic constraints: Entrepreneurs face many types of constraints. e.g.

lack of adequate infrastructure, far flung locations of supporting offices for projects,
lack of related knowledge by entrepreneurs viz., managerial know how, market
intelligence, etc. Thus government incentives in the form of availability of power,
 concessional finance, capital investment subsidies, transport subsidies etc., aims at
eliminating such constraints and promote entrepreneurship.
2. To bring about regional parity in development: In our country there is imbalance in
the development across different regions. Some are well established and some are
underdeveloped. In order to see that there is equal development of all the regions,
government provides special incentives for establishing entrepreneurs in the backward
regions.
3. To enhance competitive capability: In this competitive world small scale enterprises
established by entrepreneurs face stiff competition from big firms. If they are not
provided appropriate support from the government then they cannot survive and grow.
Thus certain incentives are required. Eg: reservation policy, price preference,
preferential purchase, etc., help to improve their competitive strength.
Entrepreneurs in the present globalized market economies are the engine of economic
development. Due to their private ownership for majority of cases, entrepreneurial
spirit, their flexibility and adaptability and also their capability to react to challenges
and changing environments, enterprises lead to sustainable growth and employment
generation in a significant manner. Enterprises, especially small and medium
enterprises are considered to have strategic importance in national economy for many
reasons. Therefore government helps enterprises including small and medium ones by
supporting entrepreneurs. By doing so, it is possible to create new job positions,
increase gross domestic product (GDP) and rising living standard of population.
Government provides support to entrepreneurs in the following ways.
4. Training: Basic training varies from product to product but will necessarily emphasise
on sharpening of entrepreneurial skills. In this regard central and state government’s
technical institutions provide need based technical training. Entrepreneurship
development programmes are conducted by many government organizations and non
government institutions.
5. Marketing assistance: Government and non government agencies provide marketing
assistance to entrepreneurs. Government promotes MSME products through
exhibitions. NSIC directly markets the MSME product in the national and
international market, NSIC manages single point registration scheme for
manufacturers for government purchases. Enterprises registered under this scheme
obtain the benefit of free tender documents and exemption from earnest money
deposit and performance guarantee.
 6. Promotional schemes: Government provides highest preference for development of
MSME by formulating and implementing conducive policies and government
schemes. Government provides development land and sheds on actual cost basis with
appropriate infrastructure. The government has designed the special schemes for
specific purposes such as quality upgradation, common facilities, entrepreneurship
development and consultancy services at minimal charges. The government provides
financial support to entrepreneurs to obtain ISO 9000 certificate by providing up to
75% of actual cost with maximum ceiling of Rs 75000/-.
7. Concession of Excise duty: Government provides exemption to MSME units for a
particular level of annual turnover from paying excise duty. The limit of turnover is
variable.
8. Credit facility: Credit to micro, medium and small scale sector is covered under
priority sector lending by [Link] industries development bank of India (SIDBI)
is mainly responsible for implementing various schemes of providing financial
support to small entrepreneurs. Loans are also provided to small entrepreneurs by
scheduled banks without collateral security. This limit is variable.

Classification of Incentives

Broadly, incentives include concessions, subsidies and bounties. Incentives may be financial
or non-financial. Non financial incentives push an entrepreneur towards decision and action.
Entrepreneurs in India are offered a number of incentives. These incentives normally aim at
reducing some of the problems faced by small scale industrialists.

Subsidy: Subsidy is a financial assistance or a sum of money provided by a government, to

an industry for public welfare or interest. It is any financial aid, grant, or contribution.
“Subsidy” means a single lump sum of money that is given by a Government to an
entrepreneur to cover the cost.

Bounty: The term “Bounty” denotes a bonus or financial aid given to an industry to help it to
compete with other units established in country or in a foreign market.

Examples of Incentives

Industrial estates, industrial complexes, availability of power, concessional finance, capital

investment subsidy, transport subsidy, are few examples of incentives to solve constraints
faced by entrepreneurs in small scale sector.
Schemes of State Governments

 The state governments also provide technical and other support services to MSME
through their directorate of industries and district industries centre.
 In general all the state governments extend support of following types:
 Deferment/ suspension of sales tax.
 Power subsidy
 Capital investment subsidies to new enterprises established in some selected
districts.
 Margin money/seed capital assistance schemes.
 Priority in providing power connection/water connection.
 Technical and consultancy support.
 Need for Incentives and Subsidies

The need for incentives and subsidies arises for the following reasons:

1) To Remove Regional Disparities in Development: Industries may be concentrated

and overcrowded in some regions, in order to correct this regional balance,
incentives are provided to entrepreneurs. They will start new ventures in such
backward areas. Thus the backward areas become developed and regional
imbalances are corrected.
2) To Provide Competitive Strength, Survival and Growth: Several other incentives
are provided for the survival and growth of industries. For example, reservation of
products, price preference etc. will improve the competitive strength. Other
concessions like concessional finance, tax relief etc., contribute their survival and
growth.
3) To Generate More Employment and Remove Unemployment: Market adjustments
and external economies play a significant role in the economic development of a
country. Subsidies cause movement of entrepreneurs from developed areas to
developing or backward areas. In short, incentives and subsidies serve as a
catalyst to start a dynamic process of development.
4) To Promote Entrepreneurship: Industrial estates, availability of power,
concessional finance, capital investment subsidy, transport subsidy etc, are few
examples of subsidies which are aimed at encouraging entrepreneurs to take up
new ventures.