Critically analyse the impact of regulatory framework on growth and efficiency of industry.

Critically analyse the impact of regulatory framework on growth and efficiency of industry.

As a part of this assignment I met with few small scale entrepreneurs and enquired extensively about their experiences with the government agencies and the existing scheme/ policy framework for SSI sector. Except some of the problems associated with procedural delay and the bureaucratic style of the government working, most of the entrepreneurs appreciated the policies and schemes of the government in this sector. Presented below is the outcome of my discussion with these entrepreneurs which is self explanatory and exhibits some of the answers for the posed question.

Reservation of products for exclusive manufacture in the SSI Sector has been one of the important policy measures for promoting this sector. This policy was initiated in 1967 with 47 items which was enlarged to 807 items in 1978. At present 812 items are reserved for manufacture in this sector. This Policy got a legal backing when the I(D&R) Act was amended in March, 1984 empowering the Government to reserve items under this Act. The overwhelming consideration for reservation of an item is its suitability and feasibility for being made in the small scale sector without compromising quality aspects.
The small units manufacturing items served for manufacture in small scale sector do not require any prior licence. This is a major relaxation where no licensing or restriction in production in small scale sector exists. The locational restrictions have also been minimised. Similarly, Labour Act has been simplified in 1988 to assist the small establishments.


Single Window Scheme

The Scheme envisages sanction and disbursement of working capital and term loan together from a single agency. It is applicable to projects with cost upto Rs. 50 lakhs. The Scheme is operated both by banks and financial institutions. State Financial Corporations under Single Window Scheme provide working capital loan along with the term loan to new tiny and small scale sector units so as to overcome the initial difficulties and delays faced by them to start production expeditiously.

Industrial Estates

Industrial Estate Programme in India is perhaps the biggest undertaken by any developing country. The programme started in 1952 when the first such estate was established at Hadapsar in Maharashtra. The main objective of the programme is to encourage and support the creation, expansion and modernisation of SSI through provision of factory accommodation, common service facilities and assistance and servicing throughout, all stages of establishment and operation and developing sub-contracting relationships within the small scale and large scale industries and specialised manufacturing activities. Subsequently, the programme has also assumed the role of regional development through provision of built-in factory accommodation with the requisite facilities and services in semi-urban, rural and backward areas.

National Awards for Outstanding SSI Entrepreneurs

To bolster and motivate small entrepreneurs for setting up SSI and modernisation, quality upgradation, market expansion, export development, innovation and technological improvements, an Incentive-cum-Recognition Scheme of National Awards for outstanding SSI entrepreneurs has been introduced since 1983. The Awards consist of a citation, trophy and cash prize amount of Rs. 25,000/-, Rs.20,000/- and Rs. 15,000/- for I, II and III positions respectively and are given on national basis by SIDO. Special Awards to SC/ST and women entrepreneurs have been introduced since 1993-94 in this category. Apart from the National-level Awards, State-wise Special Recognition Awards are also given in this category to the entrepreneurs in each State.

National Awards for Quality Products in Small Scale Sector

Since 1986 a Scheme for giving National Awards to small scale units producing quality products in 15 selected group of industries of consumer interests has been introduced. The selection of 15 industries vary from year to year. This Award also consists of a citation, a trophy and lump sum amount of Rs. 25,000/- as prize money for each of the 15 selected products. The purpose of this Award is to bring awareness amongst entrepreneurs for manufacturing quality products both of National and International standards

Excise Exemption Scheme Tax Holiday

Excise duty concessions have been given to the small scale industries in what is called the General Excise Duty Exemption Scheme for small Industries. This is to enable the small scale industries to compete on favourable terms with their counterparts in the large and medium sector. As of now, the Excise Duty Exemption Scheme applies to the entire small scale industries spectrum, barring a few specified items.

Venture Capital

Venture capital is a relatively new phenomenon. Technology based small scale units and first generation entrepreneurs keen to enter new technology areas are the ones who can be supported by venture capital. Small Industries Development Bank of India has recently introduced a venture capital scheme to extend venture capital support to SSI units. This concept needs to be widely practiced in both the public and private sector. Venture capital funds can give fund support to new units in a variety of ways. Setting up of limited partnership with the entrepreneur is one such.



Factoring Services

Factoring services make available the much needed working capital to Small Scale Enterprises and is likely to induce customers to make timely payments for fear of adverse "customer-image" in the market. Factoring services are being increasingly set up, which is a good sign. Some private factoring companies have also come up.

Technology Development & Modernisation Fund

SIDBI has set up Technology Development & Modernisation Fund (TDMF) scheme for direct assistance of small sale industries to encourage existing industrial units in the sector, to modernise their production facilities and adopt improved and updated technology so as to strengthen their export capabilities. Assistance under the scheme is available for meeting the expenditure on purchase of capital equipment acquisition of technical know-how, upgradation of process technology and products with thrust on quality improvement, improvement in packaging and cost of TQM and acquisition of ISO-9000 series certification.

National Equity Fund

National Equity Fund (NEF) under Small Industries Development Bank of India (SIDBI) provides equity type assistance to SSI units, tiny units at one per cent service charges. The scope of this scheme was widened in 1995-96 to cover all areas excepting Metropolitan areas, raising the limit of loan from Rs. 1.5 lakhs to Rs. 2.5 lakhs and covering both existing as well as new units.

Participation in International Fairs/Exhibitions

With a view to ensure that exporters from small scale sector exhibit their products in the International Exhibitions, required assistance & support is provided. Expenditure on account of space rent, handling and clearing charges, insurance and shipment charges etc. are met by the office of the Development Commissioner (Small Scale Industries) under one of the plan schemes. Enquiries generated during such exhibitions abroad are disseminated to all SSI units through a net work of field offices of this organisation. This strategy has been found to be successful for exporters from small scale sector in identifying new foreign buyers/markets.

Packaging for Exports

Role of packaging for exports has gained much significance in view of trends in the world markets. The need for better and scientific packaging for exports from small sector was recognised long back. With a view to acquaint SSI Exporters of the latest Packaging standards, techniques etc. training programmes on packaging for exports are organised in various parts of the country. These programmes are organised in association with Indian Institute of Packaging which has requisite expertise on the subject.

Technical & Managerial Consultancy Services

Technical & Managerial Consultancy Services to the SSI manufacturers/exporters is provided through a network of field offices of this office so as to ensure higher level of production and generation of higher exports.

Marketing Development Assistance

Marketing Development Scheme (MDA) is being operated by Ministry of Commerce under which MDA is given to exporters through FIEO and Export Promotion Councils/ Commodity Boards to plan their marketing strategy for export growth.

Awards to exporters

Ministry of Commerce gives awards to exporters for their outstanding export performance, under the scheme of National Export Award for export performance. Earlier, a total of 17 Awards including 5 Awards for Small Scale Sector in the form of Trophy were given every year. However, from the year 1997-98 and onwards, the number of awards have been increased to 20, out of which the number of Awards (Trophy) earmarked for small scale sector have been increased from 5 to 8. Upto 8 awards will be given to the exporters in the small scale and cottage sector subject to achievement of normative level of performance by the concerned SSIs and cottage sector units. Out of 8 Awards., one will be given for Khadi & Village Industry.