Policies Governing SMEs

Evolution of policy framework & support measures of the government can be broadly grouped into three Periods 1. 1948-1990
2. 1991-1999 3. 1999 onwards -----

1. 1948-1990 A BRIEF OVERVIEW 2. 1991-1999 INDUSTRIAL POLICY 1991 (SME) 3. 1999 onwards
COMPREHENSIVE POLICY PACKAGE FOR SSI, 2000 MSME DEVELOPMENT ACT, 2006 PACKAGE FOR PROMOTION OF MICRO AND SMALL ENTERPRISES 2007

Regional Level NEIP 2003 / NEIIPP 2007 Assam Industrial Policy 2003 / 2008

1948-1990 A brief overview

In All the policy resolution 1948-1990 , recognition was given to micro & small enterprises with a view to 1. Expand Employment Opportunity 2. Equitable distribution of national Income 3. Effective mobilization of Capital & Skills 4. SIDO (MSMEDO) was set up in 1954 for sustained & organized growth of SMEs 5. Next 2 years NSIC , KVIC & Coir board were set up

Policy changes with change in settings

1948: First
Industrial Policy Resolution in independent India.

1956: A

more comprehensive policy resolution

the cornerstone

announced.

1956 Policy Resolution: Remains

of Indias march towards industrialization, despite modifications/ extensions announced in 1973, 1977, 1980, 1985 and 1986.

Supportive measures were

1. Reservation of items for exclusive manufacture by SMEs 2. Priority Sector lending Program by Bank 3. Excise Exemption 4. Reservation under govt. purchase program 5. 15% price preference in purchase 6. Infrastructure Development 7. Establishment of Institute for Entrepreneurship & Skill Development eg. SISI (Now MSME development Institute) , DICs

1991-1999
1. the framework for government support in context of liberalization 2. To replace protection with competitiveness 3. To infuse growth in the face of foreign competition & open market 4. Supportive measures were to improve infrastructure, technology & quality ( Test centre) 5. SIDBI & TDMF (Technology dev.& modernization fund) were created for finance & technology

1999 Onwards
1. Ministry of MSME came in to being (SSI & ARI) - focused attention dev. & prom. of SMEs 2. Policy Package 2000 to address the problems of credit, infrastructure, Technology & Marketing 3. Credit linked capital Subsidy scheme launched to encourage technology up gradation 4. Credit guarantee scheme to provide collateralfree loan 5. Excise exemption limit raised to 1 crore

6. Market Development Assistance Scheme introduced 7. List of Products reserved fos SMEs gradually reduced 8. Long awaited SME Development Act, 2006 enacted 9. PACKAGE FOR PROMOTION OF SMEs 2007 Proposal & scheme having direct impact on SME promotion & development particularly in view of fast changing economic environment where competitiveness is the key to success

Industrial Policy 1991 (SME)

Why industrial policy?

Industrial Policy outlines the approach of the Government to industrial growth and development

Time has changed, & we must change with time

In the 1990s it was being felt that India need to grow as part of the world economy and not in isolation.

The needs of the hour were:

encouragement of entrepreneurship, bringing in new technology, dismantling of the regulatory system, development of the capital markets, and

increasing competitiveness of Indian industry

Came the 1991 Policy

Policy sought to trigger initiatives in the following areas Industrial Licensing.- Industrial licensing abolished Foreign Investment - Increased openness Foreign Technology Agreements.- Hiring Tech Public Sector Policy - focus on privatisation MRTP Act.- GREATER FREEDOM OF ENTRY & EXPANSION

SME Development
Policy 1991 had special emphasis on Promotion & strengthening of SMEs Equity participation up to 24% by other Undertakings New Scheme of integrated Infrastructure development initiated with participation from State Govt. & FIs Setting up of Counseling & common Testing Facilities Reorientation program for Modernization & Technological up gradation aimed at Productivity, Efficiency & Cost Effectiveness