1. GOVT. POLICIES
TOWARDS SSIs
Fundamentals of Entrepreneurship
Tanushree Bhowmick, Astt. Professor,
Deptt. of Business Administration,
DSMS Group of Institutions

2. INTRODUCTION
 The striking feature : Progress of industrialisation over the
last 40 years
 Tremendous stress on development strategy through SSI
sector
 Important element of development strategy : Promotion of
industries during 5 year plans
 SSI sector enjoys the status of priority sector for seeking
financial assistance
 Until 1991 > stress was on indigeneous production, domestic
industries protected from both internal & external
competition

3. INTRODUCTION CONTD……
 Protection from internal competition by licensing
 Protection from external competition through import
restriction & high tariff barrier
 The Govt.’s objectives & intentions towards industry
including small scale industry were announced through
Industrial Policy Resolutions (IPRs) of 1948, 1956, 1977,
1980, 1990 & 1991.

4. THE IPR, 1948
 The importance of small scale industries in overall industrial
development of the country was accepted for the first time.
 The objectives were :
 Create large scale employment with low capital investment
 Mobilise unused resources of capital & skill
 Ensure more equitable distribution of national income
 Widen opportunities for medium & small units & counter the
tendencies towards concentration of economic power
The Central Govt. set up the Small Industries Development
Organisation (SIDO) in 1954, under the Ministry Of Industries,
to develop SSI sector.

5. THE IPR, 1956
 Aim of the policy : Protection plus development
 The Govt. reserved 128 items for exclusive production in
small sector, to make SSIs self supporting
 The resolution also reserved 166 items for exclusive purchase
by Govt. from small sector
 The policy puts forth the following arguments in favour of
small scale industrial units :
 The employment argument
 The equality argument
 The latent resource argument
 The decentralisation argument

6. THE EMPLOYMENT ARGUMENT
 SSI sector – an important solution for a labour-surplus
economy
 Small enterprises are labour intensive & more employment
oriented compared to large scale industries
 Most small enterprises are run by sole traders or partnership
firms which helps in better employer-employee relationships

7. THE EQUALITY ARGUMENT
 Large enterprises cause concentration of economic power &
monopolistic tendencies , whereas small scale industries
bring about equality in income distribution & impulses of self
development

8. THE LATENT RESOURCE
ARGUMENT
 Small enterprises are able to tap latent resources like
entrepreneurial ability, hoarded wealth, creativity,
innovativeness etc.
 Conducive environment for growth & development if
provided to entrepreneurs, can make them more competitive
 Contribution of SSIs in industrial production: 40%, in
country’s export : 35%

9. THE DECENTRALISATION
ARGUMENT
 Stresses the need of regional dispersal of industries
 Society & people can take benefit of industries if the location
of industries is suitable to them
 Setting small industries in remote & rural areas can give
more benefit than concentration of only large industries in
metropolitan cities
 Decentralization can help in tapping local resources like raw
materials, idle savings, local talent

10. THE IPR, 1977
 Main thrust on promotion of cottage & small industries
 The policy categorized small sector in three categories :
 Small scale industries
 Tiny units
 Cottage & household industries
 It reserved 504 items for production in small sector
 Providing special marketing services like quality control,
product standardization etc
 Establishment of District Industries Centres (DICs) in all
districts of the country to serve as a focal point of
development of small & cottage industries

11. THE IPR, 1980
 The main objective was facilitating an increase in industrial
production through optimum utilization of installed capacity
& expansion of industries
 The resolution envisaged:
 Increase in investment ceiling from Rs. 1 lakh – Rs. 2 lakhs
for tiny units, from Rs. 10 lakhs – Rs. 20 lakhs for small scale
units & from Rs.15 lakhs – Rs. 25lakhs for ancillaries
 Promotion of village & rural industries to generate economic
viability in villages
 Nucleus plants replaced District Industry Centres to promote
maximum small scale industries, in industrially backward
district

12. THE IPR,1990
 The resolution continued to give increasing importance to
small scale enterprises for employment generation
 Investment ceiling in plant & machinery was raised from Rs.
35 lakhs to Rs. 60 lakhs & for ancillary units from Rs.45
lakhs to Rs. 75 lakhs
 836 items were reserved for exclusive manufacture in small
sector
 A new scheme of Central Investment Subsidy exclusively
for small sector had been implemented in rural & backward
areas

13. THE IPR,1990 Contd….
 To improve the competitiveness of products manufactured in
small scale sector, programmes of technology up gradation
will be implemented under the umbrella of Technology
Development Centre in Small Industries Development
Organisation (SIDO)
 The Small Industries Development Bank Of India (SIDBI)
was established in 1990, to ensure adequate & timely flow of
credit facilities for small scale industries
 To establish a special cell in SIDO for training of women &
youth


14. THE IPR,1990 Contd…
 Implementing de-licensing of all new units with investment
of Rs. 25 crores in fixed assets in non-backward areas & Rs.
75 crores in centrally notified backward areas
 De-licensing shall be implemented in case of 100% export
oriented units set up in Export Processing Zones (EPZ) up to
an investment ceiling of Rs. 75 lakhs

15. THE SMALL SCALE INDUSTRIAL
POLICY, 1991
 The main thrust of the policy is to impart more vitality &
growth impetus to the small sector, to enable it to contribute
towards output, employment & exports
 The salient features of the policy are :
 Increase in investment limit in plant & machinery of tiny
enterprises from Rs. 2lakhs to Rs. 5 lakhs, irrespective of the
location of the enterprise
 Inclusion of industry related services & business enterprises
in small scale industry, irrespective of their location

16. THE SMALL SCALE INDUSTRIAL
POLICY, 1991Contd…
 Market promotion of small industries products through co-
operative / public sector institutions, other specialized
professional / marketing agencies
 To accord priority to small & tiny sector in allocation of
indigenous raw materials