Institutional Support to Small

Enterprise
What do you mean by the term Institutional Support for Entrepreneur ?

• The term institutional support refers to the

part of economic environment of industry and
business.
• It consisting of authorities and institutions
whose decisions and active support in form of
laws, regulation, financial and non-financial
help brings a lot of changes in the functioning
of any business.
• The institutions could be government owned,
statutory, semi autonomous or autonomous.
• It is the government or government
supported institutions authorized to take up
certain activities – financing, marketing,
project preparation, training the to promote
industrial activities in the state.
Need For Institutional Support
• Starting a business or industrial unit requires
various resources and facilities. Small scale
enterprises, given their small resources, find it
difficult to have all these facilities and resources
their own.
• Finance has been an important resource to start
and run an enterprise because it facilitates the
entrepreneurs to procure land, labour, material,
machine and so on from different parties to run
their enterprises.
• Hence, finance is considered as “life blood” for an
enterprise. Recognizing it, the Government through
financial institutions and nationalized banks has come
forward to help small entrepreneurs by providing them
funds called developmental funds.
• In order to start any economic activity, a minimum level
of prior built-up of infrastructural facilities is needed.
• Financial assistance and concessions cannot, in any
case, adequately compensate for the deficiencies of
infrastructure such as transport and communication.
• This is one of the reasons why industries have not been
developing in backward areas in spite of financial assistance
and concessions given by the governments to the
entrepreneurs to establish industries there.
• Creation of infrastructural facilities involves huge funds which
the small entrepreneurs do lack.
• In view of this, various central and state government
institutions have come forward to help small entrepreneurs in
this regard by providing them various kinds of support and
facilities.
• Availability of institutional support helps make the economic
environment more conducive to business or industry.
CENTRAL LEVEL INSTITUTIONS
SUPPORTING ENTREPRENEURS
1. Small Scale Industries Board (SSIB)
2. National Small Industries Corporation (NSIC)
3. Small Industries Development Organization (SIDO)
4. Khadi and Village Industries Commission (KVIC)
5. National Small Industries Corporation Ltd. (NSIC)
6. National Science and Technology Entrepreneurship Development
Board (NSTEDB)
7. National Productivity Council (NPC)
8. National Institute for Entrepreneurship and Small Business
Development (NIESBUD)
9. Entrepreneurship development institute of India
10. Indian institute of entrepreneurship
Small Scale Industries Board (SSIB)

• The government of India constituted a board, namely,

Small Scale Industries Board(SSIB) in 1954 to advice on
development of small scale industries in the country.
• The SSIB is also known as central small industries board.
• The range of development working small scale industries
involves several departments / ministries and several
organs of the central/state governments. Hence, to
facilitate co-ordination and inter-institutional linkages,
the small scale industries board has been constituted.
• It is an apex advisory body constituted to render
advice to the government on all issues pertaining to the
development of small-scale industries.
• The industries minister of the government of India is
the chairman of the SSIB.
• The SSIB comprises of 50 members including state
industry minister, some members of parliament, and
secretaries of various departments of government of
India, financial institutions, public sector undertakings,
industry associations and eminent experts in the field.
NATIONAL SMALL INDUSTRIES
CORPORATION (NSIC)
• The National Small Industries Corporation
(NSIC), an enterprise under the union ministry
of industries was set up in 1955 in New Delhi
to promote aid and facilitate the growth of
small scale industries in the country.
• NSIC offers a package of assistance for the
benefit of small–scale enterprises.
1.Single point registration: Registration under this scheme for participating
in government and public sector undertaking tenders.
2. Information service: NSIC continuously gets updated with the latest
specific information on business leads, technology and policy issues.
3. Raw material assistance: NSIC fulfils raw material requirements of
small-scale industries and provides raw material on convenient and
flexible terms.
4. Meeting credit needs of SSI: NSIC facilitate sanctions of term loan and
working capital credit limit of small enterprise from banks.
5. Performance and credit rating: NSIC gives credit rating by international
agencies subsidized for small enterprises up to 75% to get better credit
terms from banks and export orders from foreign buyers.
6. Marketing assistance programme: NSIC participates in government
tenders on behalf of small enterprises to procure orders for them
SMALL INDUSTRIES DEVELOPMENT
ORGANIZATION (SIDO)
• SIDO is created for development of various small scale units in
different areas. SIDO is a subordinate office of department of
SSI and ARI(Auxiliary and Rural Industry).
• It is a nodal agency for identifying the needs of SSI units
coordinating and monitoring the policies and programmes for
promotion of the small industries.
• It undertakes various programmes of training, consultancy,
evaluation for needs of SSI and development of industrial
estates.
• All these functions are taken care with 27 offices, 31 SISI
(Small Industries Service Institute) 31 extension centres of SISI
and 7 centres related to production and process development.
• The activities of SIDO are divided into three categories as follows:
1. Coordination activities of SIDO:
• To coordinate various programmes and policies of various state
governments pertaining to small industries.
• To maintain relation with central industry ministry, planning
commission, state level industries ministry and financial
institutions.
• Implement and coordinate in the development of industrial
estates
2. Industrial development activities of SIDO:
• To give essential support and guidance for the development of
ancillary units.
• Develop import substitutions for components and
products based on the data available for various
volumes-wise and value-wise imports.
• To recommend the central government for
reserving certain items to produce at SSI level only.
• To provide guidance to SSI units in terms of costing
market competition and to encourage them to
participate in the government stores and purchase
tenders.
3. Management activities of SIDO:
• To provide training, development and consultancy
services to SSI to develop their competitive
strength.
• To provide marketing assistance to various SSI units.
To assist SSI units in selection of plant and
machinery, location, layout design and appropriate
process.
• To help them get updated in various information
related to the small-scale industries activities.
Khadi and Village Industries Commission
(KVIC)
• Statutory body created by an act of Parliament
in 1956.
• It is charged with planning, promotion,
organization and implementation of the
program for the development of Khadi and
other village industries in the rural areas in
coordination with other agencies engaged in
rural development.
• KVIC’s functions also comprise building up a reserve
of raw materials and implements for supply to
producers, creation of common service facilities for
processing of raw materials and provision of
marketing of KVIC products
• KVIC is entrusted with the task of providing financial
assistance to institutions or persons engaged in the
development and operation of Khadi and village
industries and guide them through supply of
designs, prototypes and other technical information
National Small Industries Corporation Ltd.
(NSIC)
• Established in 1955 by GOI with the main objectives
to promote, aid and foster the growth of SSIs in the
country
• Over four decades of transition and growth in the
SSI sector, NSIC has provided strength through a
progressive attitude of modernization, up gradation
of technology, quality consciousness, strengthening
linkages with large and medium-scale enterprise
and boosting exports of products from small
enterprise
Main services provided by NSIC are:
• Machinery and Equipment (Hire Purchase /
Lease scheme)
• Financial Assistance Scheme
• Assistance for Procurement of Raw Material
• Government Store Purchase Program
• Technology Transfer Centre (TTC)
• Marketing Assistance
National Science and Technology Entrepreneurship
Development Board (NSTEDB)
• Established in 1982 by GOI, is an institutional mechanism to
help promote knowledge-driven and technology-intensive
enterprises
Major objectives are: -
• promote and develop high-end entrepreneurship for S&T
manpower as well as self employment by utilizing S&T
infrastructure and by using S&T methods facilitate and
conduct various informational services relating to promotion
of entrepreneurship
• network agencies of support system, academic institutions
and R&D organizations to foster self-employment using S&T
with special focus on backward areas
• - act as a policy advisory body with regard to entrepreneurship
National Productivity Council (NPC)
• Autonomous institution functioning under the overall
supervision of the Ministry of Industry, GOI
• Primary objective is to act as a catalyst in enhancing the
productivity of all sectors of the economy, including industry
and agriculture
• Administered by a tripartite Governing Council (GC) which
has equal representation from the government, industry and
trade unions
• Active in the field of consultancy and training and has a
number of specialized divisions to provide tailor-made
solutions to agriculture and industry.
• These divisions, manned by trained consultants, deal
with issues related to industrial engineering, plant
engineering, energy management, HRD, informal
sector, agriculture and so on
• NPC is a member of the Asian Productivity
Organization (APO), Tokyo, an umbrella body of all
productivity councils in Asian region
• To channelize expertise of NPC to small-scale and
informal sector, SIDBI has tied-up with NPC for
enhancing technology in small units.
National Institute for Small Industry
Extension and Training (NISIET)
• Set up in early 1950s, NISIET acts an important resource
and information centre for small units and undertakes
research and consultancy for small industry development
• An autonomous arm of the Ministry of Small Scale
Industries, the institute achieves its objectives through
training, consultancy, research and education, to
extension and information services
• In 1984, UNIDO has recognized NISIET as an institute
of meritorious performance under its Centre of
Excellence Scheme to extend aid.
National Institute for Entrepreneurship and
Small Business Development (NIESBUD)
• NIESBUD is an autonomous body under the administrative
control of the Office of the DC(SSI)
• NIESBUD established in 1983 by the Ministry of Industry,
GOI, 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 business
• The policy, direction and guidance to the institute is provided
by its Governing Council whose chairman is the Minister of
SSI.
• Besides conducting national and international training
programs, the institute undertakes research studies,
consultancy assignments, development of training aids, etc.
Entrepreneurship development institute of
India
• The Entrepreneurship Development Institute of India
(EDI), an autonomous and not-for-profit Institute, set up
in 1983, is sponsored by apex financial institutions - the
IDBI Bank Ltd., IFCI Ltd., ICICI Bank Ltd. and State Bank of
India (SBI).
• The Government of Gujarat pledged twenty-three acres
of land on which stands the majestic and sprawling EDI
campus.
• To pursue its mission further, EDI has helped set up
twelve state-level exclusive entrepreneurship
development centres and institutes.
• One of the most satisfying achievements, however,
was taking entrepreneurship to a large number of
schools, colleges, science and technology
institutions and management schools in several
states by including entrepreneurship inputs in
their curricula.
• In view of EDI’s expertise in Entrepreneurship, the
University Grants Commission appointed the EDI
as an expert agency to develop curriculum on
Entrepreneurship.
Objectives

• Augment the supply of trained entrepreneurs through

training
• Generate multiplier effect on opportunities for self
employment
• Improve managerial capabilities of small scale industries
• Contribute to dispersal of business ownership and thus
expand social base of the Indian entrepreneurial class
• Contribute to the creation and dissemination of new
knowledge and insight into entrepreneurial theory and
practice through research.
• Promote micro enterprise at rural level
• Inculcate the spirit of entrepreneurship
among youth.
Indian institute of entrepreneurship
• The erstwhile Ministry of Industry set up the Indian
Institute of Entrepreneurship in the year 1994 in the
city of Guwahati in the north eastern state of Assam.
• The national institute is an autonomous body
functioning on its own in developing the skills in
entrepreneurship.
• The institute operates under the management
committee, which is headed by the chairman who is
also the secretary to the Ministry of Small Scale
Industries of the government of India
• The objective of the institute is to develop the skills
and train the entrepreneur. The institute also
designs strategies that are propitious to the various
target groups.
• Documentation for formulation of policy is also a
part of the activity of the institute.
• The research based institute organizes seminars
and conducts discussions to promote and exchange
the views of the different groups that lead to
improvement through interaction.
• The institute also publishes literature for
development of the entrepreneur and his
industry.
• The small-scale industries sector has benefited
from the research and training programs
undertaken by the Indian Institute of
Entrepreneurship in Guwahati.
• The institute helps in planning and organizing
the promotion of this sector of the economy.
STATE LEVEL INSTITUTIONS
1. Directorate of Industries (DIs)
2. District Industries Centers (DICs)
3. State Financial Corporation’s (SFCs)
4. State Industrial Development / Investment Corporation
(SIDC/SIIC)
5. State Small Industrial Development Corporations (SSIDC)
6. Small scale industries development of India
7. National Bank for Agriculture and Rural Development
(NABARD)
8. Industrial development bank of India
9. Technical Consultancy Organizations(TCO)
Directorate of Industries (DIs)

• At the State level, the Commissioner/ Director of

Industries implements policies for the promotion and
development of small-scale, cottage, medium and large
scale industries.
• The Central policies for the SSI sector serve as guidelines
but each State evolves its own policy and package of
incentives.
• The Commissioner/ Director of Industries in all the
States/UTs, oversee the activities of field offices, that is,
the District Industries Centers (DICs) at the district level.
District Industries Centers (DICs)
• In order to extend promotion of small-scale and cottage
industries beyond big cities and state capitals to district
headquarters, DIC program was initiated in May, 1978, as a
centrally sponsored scheme.
• DIC was established with the aim of generating greater
employment opportunities especially in rural and
backward areas in the country.
• At present DICs operate under respective Sate budgetary
provisions.
• DICs extend services of the following nature –
(i) economic investigation of local resources
(ii) supply of machinery and equipment
(iii) provision of raw materials
(iv) arrangement of credit facilities
(v) marketing
(vi) quality inputs
(vii) consultancy
Structure
• A DIC consists of one General Manager, four
Functional Managers and three Project
Managers having technical background.
• Functional Managers are concerned with
economic investigation, credit, village industries
and raw materials/marketing/training, etc.
• Project Managers provide technical service in
the area relevant to the needs of the district
concerned.
• District Industries Centers maintain close
linkages and coordination with various Central
and State level organisations concerned with
promotion and development of cottage, rural
and small-scale industries.
• Government has delegated necessary powers
to these centers. Monitoring and coordination
Committees have been set up to review the
functioning of these centers.
State Financial Corporation’s (SFCs)
• Main objectives are to finance and promote
small and medium enterprises in their respective
states for achieving balanced regional growth,
catalyze investment, generate employment and
widen ownership base of industry.
• Financial assistance is provided by way of term
loans, direct subscription to equity/debentures,
guarantees, discounting of bills of exchange and
seed capital assistance.
• SFCs operate a number of schemes of refinance of IDBI
and SIDBI and also extend equity type assistance.
• SFCs have tailor-made schemes for artisans and special
target groups such as SC/ST, women, ex-servicemen,
physically challenged and also provide financial assistance
for small road transport operators, hotels, tourism-related
activities, hospitals and so on
• Under Single Window Scheme of SIDBI, SFCs have also
been extending working capital along with term loans to
mitigate the difficulties faced by SSIs in obtaining working
capital limits on time
State Industrial Development / Investment
Corporation (SIDC/SIIC)
• Set up under the Companies Act, 1956, as wholly owned
undertakings of the State governments, act as catalysts
in respective states.
• SIDC helps in developing land providing developed plots
together with facilities like roads, power, water supply,
drainage and other amenities.
• They also extend assistance to small-scale sector by way
of term loans, subscription to equity and promotional
services.
• 11 out of 28 SIDCs in the country also function as SFCs
and are termed as Twin-function IDCs.
Small scale industries development of
India(SIDBI)
• The SIDBI was established in 1990 as the apex refinance bank.
The SIDBI is operating different programmes and schemes
through 5 Regional Offices and 33 Branch Offices.
• The financial assistance of SIDBI to the small scale sector is
channelized through the two routes – direct and indirect.
1. Indirect assistance
• a) SIDBI’s financial assistance to small sector is primarily
channelized through the existing credit delivery system, which
consists of state level institutions, rural and commercial banks.
• b) SIDBI provides refinance to and discounts bills of Primarily
Lending Institutions (PLI).
c) The assistance is available for
•  Marketing of SSI product
•  Setting up of new ventures
•  Availability of working capital
•  Expansion
•  Modernisation
•  Human resource development
•  Diversification of existing units for all activities
2. Direct assistance
• a) The loans are available for new ventures, diversification technology up
gradation, modernization and expansion of well run small scale enterprises.
Assistance is also available for private sector.
• b) Small scale sector is eligible for maximum debt-equity ratio of 3:1
• c) Foreign currency loan for import of
equipment are also available to export
oriented small scale enterprises.
• d) SIDBI also provide venture capital assistance
to the entrepreneurs for their innovative
ventures if they have a sound management
team, long term competitive advantage and a
potential for above average profitability
leading to attractive return on investment.
New Initiatives of SIDBI
• a) Two Subsidiaries viz. SIDBI Venture Capital Limited
and SIDBI Trustee Company Limited formed to
oversee Venture Capital.
• b) Technology Bureau for Small Enterprise formed to
oversee Technology Transfer, Match making Services,
Finance Syndication and facilitating Joint Ventures.
• c) SIDBI Foundation for Micro Credit has been
launched to provide financial assistance to the poor
and to meet emerging needs of the micro finance
sector especially in rural areas.
National Bank for Agriculture and Rural
Development (NABARD)
• It is an apex development bank in India having headquarters based in
Mumbai (Maharashtra) and other branches are all over the country.
• It was established on 12 July 1982 by a special act by the parliament
and its main focus was to uplift rural India by increasing the credit
flow for elevation of agriculture & rural non farm sector and
completed its 25 years on 12 July 2007.
• It has been accredited with "matters concerning policy, planning and
operations in the field of credit for agriculture and other economic
activities in rural areas in India".
• RBI sold its stake in NABARD to the Government of India, which now
holds 99% stake.
• The major functions of NABARD include promotion and development,
refinancing, financing, planning, monitoring and supervision.
Role

• NABARD also reaches out to allied economies and

supports and promotes integrated development. And to
help NABARD discharge its duty, it has been given
certain roles as follows:
1. Serves as an apex financing agency for the institutions
providing investment and production credit for
promoting the various developmental activities in rural
areas
2. Takes measures towards institution building for
improving absorptive capacity of the credit delivery
system, including monitoring.
3. Co-ordinates the rural financing activities of all institutions
engaged in developmental work at the field level and
maintains liaison with Government of India, State
Governments, Reserve Bank of India (RBI) and other national
level institutions concerned with policy formulation
4. Undertakes monitoring and evaluation of projects refinanced
by it.
5. NABARD refinances the financial institutions which finances the
rural sector.
6. The institutions which help the rural economy, NABARD helps
develop.
7. NABARD also keeps a check on its client institutes.
8. It regulates the institution which provides
financial help to the rural economy.
9. It provides training facilities to the institutions
working the field of rural up liftment.
10. It regulates the cooperative banks and the
RRB’s.
• NABARD is also known for its 'SHG Bank Linkage
Programme' which encourages India's banks to lend
to self-help groups (SHGs). Because SHGs are
composed mainly of poor women, this has evolved
into an important Indian tool for microfinance.
• NABARD also has a portfolio of Natural Resource
Management Programmes involving diverse fields
like Watershed Development, Tribal Development
and Farm Innovation through dedicated funds set
up for the purpose.
Organizational setup
• NABARD, with its Head office at Mumbai, has 31
Regional Offices located in States and Union Territory, a
cell at Srinagar, 03 Training Establishments in the
Northern, Eastern & Southern parts of India and 418
District Development Managers functioning at district
level.
• NABARD has 2386 professionals supported by 1193
other staff.
• Govinda Rajulu Chintala is the new chairman of the
National Bank for Agriculture and Rural Development
(NABARD).
Industrial development bank of India
• It is an Indian financial service company headquartered Mumbai,
India. RBI categorised IDBI as an "other public sector bank".
• It was established in 1964 by an Act of Parliament to provide credit
and other facilities for the development of the fledgling Indian
industry.
• Initially it operated as a subsidiary of the Reserve Bank of India and
later RBI transferred it to the Government of India.
• Reserve Bank of India has clarified vide a Press Release dated 14
March 2019, that IDBI Bank stands re-categorized as a Private Sector
Bank for regulatory purposes with effect from 21 January 2019.
• It has 3,683 ATMs, 1,892 branches, including one overseas branch
in Dubai, 58 e-lounges and 1,407 centers as of 1 February 2020.
Organisation and Management:

• IDBI consist of a Board of Directors, consisting of a

chairman and Managing Director appointed by the
Government of India, a Deputy Governor of the RBI
nominated by that bank and 20 other Directors are
nominated by the Central Government.
• The board had constituted an Executive Committee
consisting of 10 Directors, including the Chairman
and Managing Director. The executive committee is
empowered to sanction financial assistance.
• The Head office of IDBI is located in Mumbai.
The bank has five regional offices, one each in
Kolkata, Guwahati, New Delhi, Chennai and
Mumbai. Besides the bank have 21 branch
offices.
Role of IDBI
• In order to increase its customer base, the
Industrial Development Bank of India offers a
number of customized and innovative banking
services.
• The services are meant to offer cent percent
satisfaction to the customers. Some of the well
known services offered by the bank are:
1. Wholesale Banking services
2. Retail Banking Services
Wholesale Banking services
The wholesale banking services form a major part of the banking
services of the bank. The services that are offered under the
wholesale division are:
• Cash Management
• Transactional services
• Finance of working capital
• Agro based business transactions
• Trade services
The wholesale banking services are an important source of
income in a number of infrastructure projects such a power,
transport, telecom, railways, roadways, and logistics and so on.
Retail Banking Services
• The Industrial Development Bank of India is also a leader in the retail
banking services.
• The main objective of the retail services is to provide high quality
financial products to the target market to give that one-stop-solution
to the banking needs. The retail products offered by the bank include:
1. Housing loans
2. Personal loans
3. Securities loans
4. Mortgage loans
5. Educational loans
6. Merchant establishment overdrafts
7. Commercial property loans
Main Functions of IDBI

(i) To provide financial assistance to industrial

enterprises.
(ii) To promote institutions engaged in industrial
development.
(iii) To provide technical and administrative assistance
for promotion management or expansion of
industry.
(iv) To undertake market and investment research and
surveys in connection with development of
industry.
Technical Consultancy Organization(TCO)

• A network of Technical Consultancy

Organisations (TCOs) was established by the
all-India financial institutions in the seventies
and the eighties in collaboration with state-
level financial/ development institutions and
commercial banks to cater to the consultancy
needs of small industries and new
entrepreneurs.
Functions:

Initially, TCOs’ functions were focused on pre-investment studies for

small and medium scale enterprises.
• Over the years, they have diversified their functions to include
the following:
• (a) To prepare project profiles and feasibility profiles.
• (b) To undertake industrial potential surveys.
• (c) To identify potential entrepreneurs and provide them with
technical and management assistance.
• (d) To undertake market research and surveys for specific
products.
• (e) To supervise the project and where necessary, render
technical and administrative assistance.
f) To undertake export consultancy for export-
oriented projects based on modern
technology.
(g) To conduct entrepreneurship development
programmes.
(h) To offer merchant banking services.
(i) A summary view of the progress/performance
of TCOs during the last two years.
TCOs have been operating in almost all states in India.These include:
• APITCO
• BITCO
• GITCO
• HARDICON
• HIMCO
• ITCOT
• J&KITCO
• KITCO
• MPCON
• MITCON
• NECON
• NEITCO
• NITCON
• ORITCON
• RAJCON
• UPICO
• WEBCON