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Small Scale Industry Subsidy Guide

The document discusses several key factors in setting up small-scale industries: 1. Location is a critical consideration and involves selecting the region, locality, and exact site. Key factors that affect location include raw materials, market, power/fuel, transport, and government policy. 2. Setting up an SSI unit involves several steps such as analyzing objectives, choosing a business line, deciding on ownership, obtaining permits, arranging facilities, recruiting personnel, and establishing marketing. 3. Entrepreneurs face both internal problems like weak planning and management, and external issues such as infrastructure bottlenecks, financial constraints, and market challenges. Incentives and subsidies can help but must be implemented carefully to avoid mis

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0% found this document useful (0 votes)
11 views23 pages

Small Scale Industry Subsidy Guide

The document discusses several key factors in setting up small-scale industries: 1. Location is a critical consideration and involves selecting the region, locality, and exact site. Key factors that affect location include raw materials, market, power/fuel, transport, and government policy. 2. Setting up an SSI unit involves several steps such as analyzing objectives, choosing a business line, deciding on ownership, obtaining permits, arranging facilities, recruiting personnel, and establishing marketing. 3. Entrepreneurs face both internal problems like weak planning and management, and external issues such as infrastructure bottlenecks, financial constraints, and market challenges. Incentives and subsidies can help but must be implemented carefully to avoid mis

Uploaded by

baskaran4you
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd

Unit - V

Setting Small Scale Industries


Location of Enterprise
Location consideration for the establishment of manufacturing
plant is critical to the operation of the setup in an uninterrupted
and least resistant manner.

Steps in enterprise location


1. Selection of the region
2. Selection of locality
3. Selection of the exact site
4. Selection of an optimum site
Factors affecting location of an enterprise
• Raw materials
• Market
• Power and fuel
• Transport
• Climate
• Government policy
• Competition
• Labour
• Finance and research facilities
• Water
• Local taxes and restrictions
• Banking
• Communication
• Culture
• Education
• Political factors
• Soil
• Waste disposal
• Price of land
• Expansion
• Health care
• Flood and drought
• Nature
• Attitude of local people
• State assistance
Steps in setting SSI Unit
1. Analyze yourself and your objectives
2. Update yourself with newer ideas
3. Consult publications and agencies
4. Discuss with all around you and with SISI & DI office
5. Date with yourself for a decision
6. Choose a line
7. Decide on form of ownership
8. Decide whether to purchase a going concern or to start a new one
9. Obtain the project report from SISI or others
10. Decide on location and site
11. Arrange the work shed with facilities
12. What laws will affect you – make sure
13. Obtain clearance from state, central & local authorities and SISI reg.
No.
14. Plan finance
15. Plan sources of machinery
16. Plan order for machinery
17. Apply for materials
18. Plan buying
19. Install machinery
20. Procure materials
21. Recruit personnel
22. Trial run
23. Decide on pricing policy
24. Organise marketing
25. Plan out record keeping
26. Produce
27. Sell
28. Keep up to date
29. Plough back profits
30. Diversification
31. Modernisation
32. Compete with others
33. Grow bigger
34. Ancillary development
Problems of Entrepreneurs
Internal
– Choice of an idea
– Feeble structure
– Faculty planning
– Poor project implementation
– Poor Management
– Poor production, quality
– Marketing, labour problem
– Financial crunch
– Capacity utilisation
– Lack of integration
– Lack of strategies, Vision
– Inadequate training
– Lack of motivation
External
– Infrastructure
• Location
• Power, water
• Communication
– Financial
• Capital , Working capital
• Long term funds
– Marketing
– Taxation
– Raw materials
– Regulations
– Inspections
– Technology
– Govt. policy
– Competition
Problems of women entrepreneurs
1. Need for achievement, economic independence and
autonomy are absent
2. No risk bearing
3. Lack of education
4. Family involvement
5. Male dominated society
6. Lack of information and expertise
7. Liquidity and easy availability of finance
Sickness in small scale industries
A sick industrial unit may be defined as one when it fails to
generate surplus on a continuous basis and depends on frequent
infusion of external funds for survival

Causes of Sickness
-Internal
-External
Internal Causes External Causes
1. Planning 1. Infrastructural bottlenecks
• Technical feasibility 2. Financial bottlenecks
• Economic viability
3. Govt. controls and polices
2. Implementation
4. Market constraints
3. Production
5. Extraneous factors
• Production Management
• Labour Management
• Marketing Management
• Financial Management
• Administrative Management
Remedial Measures
1. Early deduction of sickness
2. Corrective action from financial institutions and banks
3. Restore financial health – make attempts
4. Training of employees
5. Incentives should be provided to sick units
6. Special institution – the Board for financial and industrial
reconstruction
7. Take over by other companies
Incentives and Subsidies
The term incentive means encouraging productivity. It is a
motivational force which makes an entrepreneur take a right
decision and act upon it.

Subsidy denotes a single lump-sum which is given by a govt to


an entrepreneur to cover the cost.

Need for incentives


1. To correct regional imbalances in development
2. To promote entrepreneurship by removing economic
constraints
Advantages of Incentives and Subsidies
1. Motivational force
2. Industries in backward areas
3. Uniform development
4. Develop more new entrepreneurs
5. Encourage confidence in entrepreneurs
6. Reduce problems of small scale entrepreneurs

Problems of Incentives and Subsidies


1. Misuse
2. Dishonesty
3. Corruption
4. Unethical business practices
5. The real objective not achieved
Evaluating entrepreneur performance
Entrepreneurial Performance refers to measure of business
success and the rewards may refer to the recompense – financial
or psychic accuring to the entrepreneur .

Measures – Longevity of survival, sales growth, growth in


market share, growth in market scope, growth in investment,
additional units created, diversification, growth in number of
employees, profit and so on..

Customer satisfaction, employees satisfaction, image , credit


rating, stock price, EPS etc.,
Rural Entrepreneurship
Khadi and Village Industries Commission (KVIC ) – village or
rural industry means any industry located in rural area,
population of which doesn't exceed 10,000 or such other amount,
which produces any goods or renders any services with or
without use of power and in which the fixed capital per head of a
worker does not exceed Rs.1000/-

Recently modified –Population – 20,000


Investment – 3 crores
Village industries
1. Mineral – based industry
2. Forest – based industry
3. Agro – based industry
4. Polymer & Chemical – based industry
5. Engineering and non conventional industry
6. Textile industry
7. Service industry
Need for Rural Entrepreneurship
1. Employment generation
2. Income generation
3. Balanced regional development
4. Build up village republic
5. Promotes art and creativity
6. Economic development in rural areas
7. Environment friendly
Problems of Rural Entrepreneurship
• Financial constraints
• Lack of technical know – how
• Lack of training and extension services
• Lack of quality control
• Lack of communication and market information
• Lack of storage and warehousing facilities
• Lack of promotional strategy
• Obsolete & primitive technology
To develop Rural Entrepreneurship
• Strengthen the raw material base in rural areas
• Provide easy credit and term loans
• Marketing assistance
• Develop entrepreneurial attitude and competency through
EDP & Training
• Entrepreneurial education in schools, colleges and universities
• Disseminate information and create awareness
Women Entrepreneurs
An enterprise owned and controlled by a women having a
minimum financial interest of 51% of the capital and giving at
least 51% of the employment generated in the enterprise to
women.

Functions of Women Entrepreneur


– Exploration of the prospects of starting a new business
enterprise
– Undertaking risk
– Introduction of innovation
– Co-ordination, administration and control
– Supervision and leadership
Problems of Women Entrepreneur
• Problem of finance
• Scarcity of Raw material
• Stiff competition
• Limited mobility
• Family ties
• Lack of education
• Male dominated society
• Low risk bearing ability
Develop Women Entrepreneurs
• Treat women as specific target groups
• Vocational training facilities for women
• Promote appropriate technologies
• Assistance for marketing their products
• Involve women in decision making process.
End of Unit - V

Common questions

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When selecting a location for a small-scale manufacturing plant, critical factors include raw materials availability, market proximity, power and fuel availability, transport facilities, climate conditions, government policies, competition, labor supply, finance and research facilities, water availability, local taxes and restrictions, banking and communication infrastructure, regional culture, education, political stability, soil conditions, waste disposal systems, land prices, prospects for expansion, healthcare services, flood and drought risks, and the local population's attitude. These factors impact operational efficiency by affecting production cost, logistical convenience, access to resources and markets, regulatory compliance, and susceptibility to disruptions. For instance, proximity to raw materials reduces transportation costs, while access to a skilled labor pool enhances productivity .

Rural entrepreneurship can be fostered by strengthening local supply chains, improving access to credit and financial services, providing comprehensive entrepreneurial education, and delivering skills training tailored to rural contexts. Marketing assistance and promotional strategies are essential for reaching broader markets. Developing infrastructure and investing in modern technologies can alleviate technical barriers. Ensuring strong communication lines and disseminating market information are crucial for integrating rural enterprises into wider economic systems. Fostering an entrepreneurial mindset through policy support and community-based initiatives can significantly enhance sustainable growth in rural areas .

Rural entrepreneurship contributes to regional development by generating employment, increasing income, balancing regional economic disparities, fostering village autonomy, promoting art and creativity, and supporting environmentally friendly economic practices. Challenges include financial constraints, lack of technical know-how, insufficient training, quality control issues, inadequate communication and market information, poor storage facilities, and obsolete technology. Overcoming these challenges requires strengthening rural raw material bases, providing easy credit, marketing assistance, entrepreneurial training, and information dissemination to build competencies and increase rural economic resilience .

Selecting an optimum site for a small-scale industry is significant because it directly affects logistical efficiency, operational costs, and expansion potential. An optimum site ensures access to essential resources like raw materials, markets, and labor while minimizing transportation and utility costs. It also supports compliance with regulatory requirements relating to environmental impacts and zoning laws. Poor site selection can lead to increased operational costs, logistical inefficiencies, compliance issues, and restricted growth opportunities, ultimately impacting profitability and sustainability .

Internal causes of sickness in small-scale industries include poor planning related to technical feasibility and economic viability, inadequate implementation, and deficient management across production, labor, marketing, financial, and administrative functions. External causes involve infrastructural and financial bottlenecks, restrictive government controls and policies, market constraints, and external environmental factors. These factors impede financial health by reducing operational efficiency, increasing operational costs, causing revenue loss, and necessitating frequent external financial support. Lack of systematic planning and effective management leads to operational inefficiencies, while external constraints limit market opportunities and resource access .

Incentives and subsidies act as motivational forces by encouraging productivity, removing economic constraints, and promoting regional development. They enhance entrepreneur confidence, support industries in backward areas, and foster uniform economic development. However, potential drawbacks include misuse, dishonesty, and corruption, which can result in unethical business practices and failure to achieve the intended developmental goals. Such issues arise when incentives are not monitored effectively, leading to misappropriation and deviation from policy objectives .

The process involves several steps, each significant for ensuring successful establishment. These include analyzing personal objectives, updating ideas, consulting with agencies, making decisions, choosing a business line, selecting ownership form, deciding on starting or buying an existing business, obtaining project reports, selecting location, arranging work facilities, understanding relevant laws, obtaining necessary clearances, financial planning, machinery acquisition, materials procurement, personnel recruitment, and trial runs, among others. Each step is designed to minimize risks and prepare the entrepreneur for operational challenges. For example, choosing the correct form of business ownership impacts legal liabilities and tax obligations, while choosing the location affects logistical efficiencies .

Integrating women entrepreneurs into mainstream economic development offers advantages such as diversification of business practices, broadening the talent pool, and fostering innovation through varied perspectives. It promotes gender equality and contributes to overall economic growth. Strategies to ensure increased participation include providing targeted vocational training, promoting technologies suitable for women-led businesses, offering marketing support, involving women in decision-making processes, and implementing policies that address gender-specific challenges. Creating an inclusive business environment encourages women to leverage their unique skills and contribute to economic development .

Early detection of industrial sickness is crucial as it allows timely corrective actions to prevent further financial deterioration and operational disruptions. Remedial measures include intervention by financial institutions, restoring financial health through financial aid, training employees, offering incentives to sick units, and facilitating takeovers by financially healthy companies. Establishing dedicated institutions like the Board for Financial and Industrial Reconstruction helps monitor and support such recovery efforts, ensuring sustainable solutions to financial challenges faced by struggling industries .

Women entrepreneurs play crucial roles in exploring new business prospects, undertaking risks, introducing innovation, and providing leadership. Challenges they face include financial constraints, raw material scarcity, intense competition, limited mobility, family obligations, lack of education, societal biases, and lower risk tolerance. Addressing these challenges involves treating women as specific target groups, providing vocational training, promoting suitable technologies, assisting in product marketing, and involving them in decision-making processes. These measures empower women, enhance their skill sets, and promote gender equality in entrepreneurship .

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