INSTITUTIONS SUPPORTING ENTREPRENEUR
MODULE 3
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Small industries Financing developing countries.
Small scale industries are usually entrepreneur alone or a small entrepreneurs and hence finance is a matter of concern.
Thus they usually adapt the measures to overcome the insufficiency of funds.
- Rent a building
- Purchase of second hand machinery
- Keep inventory level low
- Seek cash sales
- Hire a machinery
- Substitute equipment
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Need of small industry finance
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- Cash flow challenges
- Capital investments
- Lengthy product development cycles
Sources of finance
- Amount of funds depends upon business.
- Manufacture requires more funds
- Period of funds depends upon capital as well. Capital investments need more longer period as compared to working
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Sources and period of finance
| Type of finance | Period of finance |
|---|---|
| Short term | Less than a year |
| Medium term | One to five years |
| Long term | More than five years |
Short term sources ...
Short term needs for day-to-day funds business is obtained from
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- Indigenous Banks
- Installment credit
- Advances
- Accrued expenses and deferred
- Accounts payable/creditors
- Trade credit
- Bills discounting
- Factoring
- Commercial banks
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Medium term sources
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- Special financial institutions
- Commercial banks
- Public deposits
- Investment companies
- Hire purchase
- Lease financing
- Internal sources
- Loans from government
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Long term sources
- Equity shares
- Preference shares
- Debentures
- Retained earnings
- Loans from fin institutions
- Commercial banks
- Venture capital
- Institutional financing
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Institutions supporting Entrepreneur
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CENTRAL LEVEL
- - SISI
- - SIDO
- - NABARD
- - IIE
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STATE LEVEL
- - DIC
- - TCO
- - SFS
- - KVIC
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FINANCIAL INSTITUTIONS
- Commercial banks
- SIDBI
- IDBI
- SIDCO
- ICICI
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NABARD
- A Development bank providing and re other facilities for agriculture, SSIs, cottage industries, handicrafts and other activities rural development.
- Functions of NABARD:
- Refinancing IRDP projects
- Refinancing projects for development of in rural areas
- Provides grants to agencies engage production centre for women
- Establishes linkages between SHGs and credit
- Refinances projects under National water program and National mission of watershed
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- Monitors and does evaluation implemented by various banks
- Vikas volunteer vahini program – organ club in tribal areas which is involved tribals on asset utilisation, technology
- External aid projects –formulation and implementation of external aided pro bank, OPEC etc. including monitoring
- Inspection and supervision of co-op b
- HRD – provides training to staff of credit its centres like BIRD and RTC
- Support to develop PACs as MSCs
- Project on core banking solutions in co
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Small Industries Development
- SIDO is a sub-ordinate office of & ARI.
- It is an apex body and nodal c formulating, coordinating and policies & programs for promo development of SSI.
- Development commissioner is SIDO.
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Main functions of SIDO
- Co-ordination
- Industrial development
- Extension
- The SIDO functions through 2 Small Industries Service Institu Extension Centres, 3 Product- Process Development Centre Production Cenrtres.
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SMALL SCALE INDUSTRIES BO
- It is also known as Central Small I Board.
- It is an apex advisory body cons render advice to the Govt on all pertaining to development of sm industries.
- The SSIB comprises of 50 membe State Industry Ministry, some mer Parliament, Secretaries of variou Govt of India, financial institution sector undertakings, industry asso and eminent experts in the field.
Functions of SISIS:
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- Economic Consultancy/Information/ED
- Trade & market information.
- Project profiles.
- State industrial potential survey.
- District industrial potential surveys.
- Modernisation and in-plant studies.
- Workshop facilities.
- Training in various trade/activities.
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The National Institute For Entrep and Small Business Developme
- NIESBUD was established in 1983 by of Industry ,Government of India.
- The activities of the institute include
- 1.Evolving effective training strateg methodology
- 2.Standardizing model for training groups
- 3.Formulating scientific selection p
- 4.Developing training aids manual
- 5.Facilitating and supporting edp f central unit.
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Activities of NIESBUD:
- Assisting/supporting EDPs
- Training for trainers/promoters
- - Evolving standardized material and research
- - Creation and capacity building of EDP Insti
- - Small business focus
- - National /international forum for exchange
- - Developing entrepreneurial culture
- - National entrepreneurship development bo
- - Services to affiliate members
- - Sustaining entrepreneurship.
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- - Schemes for medical profession
- - schemes for tourism related activities
- - Schemes for hotel and restaurant projects
- Schemes for infrastructure development
- Equity type assistance schemes
- Scheme for women entrepreneur
- Special scheme for assistance to Ex-Service
- Scheme for specialized marketing agencie
- Schemes for ancillary sub-contracting units
- Schemes for development of industrial arec
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INDIAN INSTITUTE OF ENTREPR (IIE)
- Set up by the ministry of industry in Gawhati in 1993 to pro and consultancy in SME sector
- Objectives:
- to promote and develop entrepreneurs
- to conduct research and provide consultancy for entre
- to coordinate and collaborate with other institutions in consultamcy
- to promote consultancy and monitoring service to mSA
- to promote greater use of IT in activities of IIE
- to comply with statutory requirements
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Functions of IIE
- Designing and organising training acti different target groups and undertakir relevant to entrepreneurship
- Improving efficiency, effectiveness an change agents and development pro
- Provide consultancy service to prospe existing entrepreneurs
- Increasing the outreach of the institute collaboration and effectiveness throu
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Financial institutions
Small Industries Development Bar India (SIDBI)
- SIDBI was established in April 2 1990 as a v subsidiary of IDBI for:
- Promotion, Financing, Development of scale sector.
- Co- coordinating the functions of other in similar activities.
- Aims at empowering MSME in economic employment generation and balanced development.
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Objectives of SIDBI
- Main purpose was to ensure suppo terms of
- Initiating steps for technological upgradation and modernisation units
- Expanding channels for marketir products
- Promotion of employment in sem areas to check migration to urbo
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Functions of SIDBI
- Provides assistance to SSI through existing banking anc institutions like state fin corps, state industrial developm commercial banks, co-operatives, RRBs.
- Functions:
- Refinances loans given by existing fin institutions to SSIs
- Discounts and rediscounts bills arising out of sale and F machinery by SSIs
- Extends seed capital/soft loan assitence under Nation Mahila Udyam Nidhi, Mahila Vikas Nidhi and seed cap
- Direct assistance and refinances loans to SSIs for expor
- Provides leasing, factoring services to SSI units
- Extends financial support to sate small industries corpo providing scarce RM and marketing of products of SSIS
- Extends financial support to National small industries co providing leasing, hire purchase and marketing help to
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SIDBI schemes . . .
- Scheme of Refinance Assistance
- 1. Schemes for setting up SSI units
- firstranker.composite loan scheme
- 3.scheme for SC/ST and physically handica
- 4.schemes for acquisition of:
- In house quality control facilities
- Diesel generating sets and pollution c computers
- For import substitution
- For manufacturing and installation of energy
- 5.Equipment refinance scheme
- 6.Scheme for small road transport operatic
- 7.Schmee for professionals
- 8.Scheme for Marketing activities
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Small Industries Development Corporations (SIDCO)
- State owned companies in differen India for the promotion of small sca like
- Kerala small industries developmen ltd
- Small industries development corpo Jammu and Kashmir
- Tamilnadu small industries developr corporation limited (TANSIDCO)
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Industrial development bar
- Objectives Of IDBI was to promote the growth of industrie India, established in July 1964.
- FUNCTIONS OF IDBI:
- Direct financial assistance to industrial concerns in the forr subscribing/underwriting stocks bonds and debentures
- Indirect financial assistance to SMEs through other fin instit state ind dev corps, coop banks RRBs, commercial banks. refinance, buying shares/bonds or rediscounting of bills.
- Development assistance in the form of development assis industries who have high investment or low expected retu govt and assistance requires approval of govt
- Promotional function like market research, techno-econo and administrative advice for better management.
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Industrial Finance corporation
- IFCI was the first developmental finance corporation set up ir
- FUNCTIONS:
- In order to provide long term credit to medium and large indu
- Provides loans in rupee and foreign currencies
- subscribes to stocks, debentures, underwrites them
- Provides loans only to public limited companies/cooperatives
- Merchant banking, syndication of loansrehabilitation progran
- ACTIVITIES:
- Self-loan assistance- soft loans to small and medium enterprise house R&D
- Entrepreneur development- provides financial support to Entr conducted by other agencies
- Industrial development in backward areas by concessional fir
- Subsidised consultancy for promoting ancillary industries, doir control etc
- Management development – sponsored management deve development banking centre to develop managerial manpc commercial banks and industrial concerns.
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National small industries cor Ltd
- NSIC,an ISO 9001:2000 certified comp establishment in 1995 has been worki mission of promoting ,aiding and foste growth of small scale industries and in small scale services business enterprise country.
Various support and services offered by
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- Managing globalization
- A few focused sectors
- Up gradation of these identified secto
- Product design
- Application of new technologies
- Quality control
- Packaging
- Marketing
- Links to global markets
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Common programs with the stakehold identified sectors. The components of t are:
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- Identification of new markets
- 1. Buyer seller meets
- 2. Quality assurance and rating
- 3. Offering integrated support through:
- 4. Technology up gradation
- 5. Marketing support
- 6. Financial support
- 7. International partnership
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- Focus on specific sectors:
- Agro and food processing
- Auto components
- Bio technology
- Glass and ceramics dimensional ston
- Information technology communicat
- Knit wear and garments
- Leather and leather products
- Light engineering
- Low cost building material
- Pharmaceutical and chemicals
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DISTRICT INDUSTRIES CENTRE
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- Govt of Karnataka established Dic the old Mysore princely state to d industrialization.
- The organisational structure of DIC General Manager, 4 Functional M Project Managers to provide tech the area relevant to needs of disti
- Management of the DIC's is done Govts.
Functions of DIC:
- To conduct industrial potential service keeping in vie resources in terms of material & human skill, infrastruc product, etc. to prepare techno-economic surveys & then to provide investment advice to Entrepreneu
- To prepare an action plan to effectively implement 1
- To guide entrepreneurs in matters in relating to selec appropriate machinery and equipment, sources of it procedure for procuring imported machinery, if need requirements for raw materials, etc.
- To appraise the worthiness of the various proposals re entrepreneurs.
- To assist the entrepreneurs in marketing their produci possibilities of ancillarisation & export promotion of tl
- To undertake product development work appropria
- To conduct artisan training programmes.
- To function as the technical arms of DRDA in adminis programs.
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Single Window
New Industrial Policy, 1991
- July 24, 1991 P V Narasimha Rao introduced NIP,
- Main objectives were:
- - Liberalisation of industry
- - Introduce globalization
- - Enhance privatization
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Salient features of NIP
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- Abolition of industrial licensing
- Diminishing role of public sector
- Incentives and concession for foreign investment
- Drastic amendments to MRTP
- Removal of compulsory convertibility clause
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Implications of NIP
- Growth of new economy companies
- Economy bailed out
- New breed of entrepreneurs
- FDI and new technologies
- Greater competitive strength
- Healthy competition
- Sustained economic growth
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Limitations of NIP
- Industrial policy resolution 1956 was termi
- Indian industries faced threat from multin
- Scope for frauds/scams due to less regulo
- MNCs could rule the market with their tec money power
- May lead to social and economic inequa
- MNCs could exploit small scale industries advantage.
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