Published on: Mar 4, 2016
Transcripts - Policysupporttosmallscaleindustries 090622104828-phpapp01
TO SMALL SCALE
ROLL NO 15
After attaining independence in 1947 India
adopted mixed economic planning as a method
to achieve economic development. Along with
the Large Scale sector the thrust was on Small
Scale sector because of it decentralized, its
small size, use mainly indigenous technology,
employment intensity and its suitability for rural
area with limited techno-economic structure.
Industrial policies over the year have focused to
promote SSIs through various incentives related
to financial, fiscal and infrastructure measure;
along with a heavy industrial base.
The various provisions under Industrial
Policy Resolutions formulated by the
government in assisting the small scale
The various fiscal incentives for SSIs
RESOLUTION AND SSIs
1. INDUSTRIAL POLICY RESOLUTION 1948
1.1 SSIs are particularly suited for the utilization of local resources
and creation of employment opportunities .
1.2 The primary responsibility for developing small industries by
creating infrastructure has been provided to state government .
1.3 Central government frame the broad policies and coordinates
the efforts of State Government for development of SSIs.
2. INDUSTRIAL POLICY
2.1 It stated that besides continuing the policy support to
cottage, village and small industries by differential
taxation or direct-subsidies, the aim of state policy
would be that the development of this sector is
integrated with that of large scale industry.
2.2 The focus was to improve the competitive strength of
2.2.1 to achieve this 128 items were exclusively
reserved for production in SSIs, and 166 items were
reserved for exclusive purchase by government from
5.INDUSTRIAL POLICY RESOLUTION
The basic thrust of this resolution was to simplify regulations and
procedures by delicensing, deregulation . Its salient feature are:
1. SSIs were exempted from licensing for all articles of manufacture.
2. The investment limit for tiny enterprises was raised to Rs.5 lacs irrespective
3. Equity participation by other industrial undertaking was permitted up to a
limit of 24% of shareholding in SSIs.
4. Factoring services were to launch to solve the problem of delayed payment
5. Priority was accorded to small and tiny units in allocation of indigenous and
6. Market promotion of products was emphasized through co-operatives, public
institutions and other marketing agencies and corporations.
INDUSTRIAL POLICY ON SSIS 2004-
Policy initiatives for this year are as follows:
• The national commission on Enterprises in the Un-organized/Informal Sector was
set up in September 2004.It suggested measures considered necessary for
improvement in the productivity of these enterprises, generation of large scale
employment opportunities, linkage of the sector to institutional framework in area
like credit ,raw material supply, infrastructure, technology up gradation ,marketing
facilities and skill development by training .
• 85 items were de-reserved in October 2004.
• The investment limit in plant and machinery was raised from Rs One crore to Rs 5
crore in October 2004,in respect of seven item of sports goods to help to upgrade
the technology and enhance competitiveness.
• The Small and Medium Enterprise (SME) fund of Rs 10000 crores was stared by
SIDBI since April 2004,with 80% of the lending for SSI units. The interest rate was
2%below the prevailing Prime Lending Rate (PLR) of the SIDBI.
• The reserve Bank of India raised the composite loan limit from Rs 50 lakhs to Rs
• Promotional Package for small enterprises was initiated.
POLICY PACKAGE FOR SME
THIS POLICY PACKAGE CONTAINS THE FOLLOWING POINTS
1. 180 items were dereservation.
2. Small and Medium Enterprises were recognized in the services sector , and were
treated on par with SSIs in the manufacturing sector.
3. The corpus of the Credit Guarantee Fund was raised from Rs 1132 crore in March
2006 to Rs 2500 crore in five years.
4. Credit Guarantee Trust for Small Industries (CGTSI) was advised to reduce the
one time guarantee fee from 2.5% to 1.5% for all loans.
5. Insurance cover was extended to proximately 30,000 borrowers, identified as chief
promoters, under the CGTSI. The sum assured would be Rs 200000 per
beneficiary and the premium will be paid by CGTSI.
6. The emphasis was laid on Cluster Development model not only to promote
manufacturing but also to renew industrial towns build new industrial township .
The model is now being implemented, in nine sector including khadi and village
industries, handlooms, textiles, agricultural products and medicinal plants.
FISCAL INCENTIVES TO SSIs
Fiscal incentives are provided through tax
concessions granted in the form of
exempted of direct or indirect taxes
leviable on production or profits, besides
special tax concessions.
These incentives have been provided to
promote the SSIs and discussed in
With effect from financial year 2005-06, deduction in
respect of profit and gains for small scale industrial
undertaking is available under Section 80IB.
Small scale industrial undertaking can claim deduction
at the following rates:
1. If SSI unit is owned by a company , the deduction
available is 30% for first 10 year,
2. If SSI unit is owned by a co-cooperative society, the
deduction to be availed is 25% for first 10 years, and
3. If any other person owns SSI units ,the deduction to
be claimed is 25% for first 10 years.
TAX EXEMPTION CONDITIONS:
1. No small scale or ancillary undertaking shall be subsidiary of, or
owned or controlled by other industries undertaking .
2. The SSI unit should commence business between 1st
3. SSI unit can manufacture any nature/type of goods /article to
4. They should employ at least 10 workers in manufacturing process
carried out with aid of power or at least 20 worker in
manufacturing process carried out without the aid of power.
5. This tax exemption from total income is allowed from the
assessment year in which the unit being to manufacture or
produce goods or articles.
Government of India has provided a major
relief by grating full exemption from the
payment of central excise duty on a
specified output and thereafter slab-wise
The following concessions are available to
them in this regard:
1, SS units producing goods up to Rs.100 lakhs are exempted from payment of
2. SSI units having turnover less than Rs.60 lakhs per annum need not have a
separate storeroom for storing the finished products.
3.SSIs are also not required to maintain any statutory records such as daily
stock account of production and clearance , raw material account ,personal
ledger account etc. their own record are adequate for excise purpose.
4. There is no distinction between registered and unregistered units for SSI
concessions for SSIs has been based on annual turnover rather than SSI
registration . Duty liability is to be discharged by 15th
of following month.
5. The SSI exemption is available for home consumption ,as well as in respect
of goods exported to Nepal & Bhutan.
6. Normally ,excise officers are not expected to visit SSI units paying less than
Rs.11lakhs duty annually .
7.With effect from 1-4-1994, Gate –Pass System was replaced by manufacturer
invoice to cover clearance of goods as the duty-paying document.
TWO STREMS OF CONCESSIONS TO
SSI Scheme (without CENVAT): With effect from 1st
The rate of duty applicable to such manufactures whose turnover
does not exceed Rs.3 crores in the pervious financial year in respect
of excisable goods for home consumption from one or more factories
of the same manufacturer or from factory by one or more
RATE OF DUTY IN RESPECT OF CLEARNCE OF EXCISABLE
VALUE OF CLEARENCE(RS) RATE OF DUTY
UP TO RS.100 Lakhs NIL
100-300 Lakhs normal rate of duty
SSI Scheme (with CENVAT): with effect 1st
It provides the concessional rate of duty in respect of clearance of
specified goods for home consumption and also states that all
clearance of the specified goods which are used for captive
consumption in production of the specified goods shall be subjected
to be ‘nil’ rate of duty.
Rate of duty in respect of clearance of Specified goods.
Value of clearance (Rs) Rate of duty
up to 100 lakhs 60%of normal rate
100-300 lakhs normal rate of duty
MEASURES FOR PROMOTION
AND DEVELOPMENT OF SSIs
Central and state Government have formulated several schemes to make
the SSIs vital and competitive.
• Reservation policy
• Government’s purchased preference policy for SSI products.
• Government’s price preference policy for marketing SSI products.
• Technical assistance
• Raw material assistance
• Financial assistance
• New initiatives
Out of 836 items reserved in 1989,39 items were dereserved in four
15 items in 1997’
9 items on 1999
1 item on 2001 and,
14 item on 2001.subsequently,
51 item were dereserved in 2002,
75 item in 2003 and
85 items in 2004,
108 in March 2005 and
180 in May 2006.
Now 298 items stand reserved for this sector.
PREFERENCE POLICY FOR SSI
Under the Store Purchase Policy of the Government 409
items of store were reserved for exclusive purchase
from KVIC/Women’s Development Corporation/Small
Scale units in 1989.
This list reviewed .
In February2004, the Committee (set up to consider the
question of inclusion of additional items) revised list and
358 items were approved, after deleting items having
common nomenclature and addition of some new ones.
This list also includes 8 handicraft items reserved for
purchase from the Handicraft Sector.
GOVERNMENT PRICE PREFERENCE
POLICY FOR MARKETING SSI PRODUTS
These facilities includes the following :
1. Price preference up to 15%in case of
2. No registration fee.
3. A consortium to channelize and identify
for the production of SSIs both in India
Technology audits and benchmarking
Technology needs assessment
Application of new acquisition.
Technology acquisition .
Material testing facilities through accredited laboratories.
Product design including Computer Aided Designs.
Common facility support in machining
Energy and environment services at selected centers.
Classroom and practical training for skill upgradation
Advisory and Mentoring services
Technology Business Incubators
> Information technology.
> Production design.
> Energy and Environment
> Bio-Technology .
> Electronics and Communications
Suppliers Rating Accreditation Services.