Concessions & incentives for SSI

SSI/ancillary units are the industrial units having an investment of not more than 3 crores rupees in fixed assets like plant & machinery’s. Whereas tiny units have 25 lac for the same as on 1998. However recently the govt. has reduced the invt. To 1 crore rupees for SSI & there has been no change for tiny units.

Following are the concessions /incentives offered by govt. to SSI

1. Limits in P&M :

Govt. has reduced the ceiling of investment from 3 crores to 1 crore in 1999 wit a view to secure ownership & control of material resource & easing out the problem of unemployment. This ceiling for tiny units has been retained to 25 lac.

2. Reservation of Items in small scale sector manufactured exclusively:

At present 812 items are listed in this category. These items can be manufactured by large scale units also but with 50% export obligations

3. Reservation of Items for exclusive SSI purchases:

Director general of supplies & disposal (DGS&D) has listed down 358 items, which are offered at purchase price preference 15% as compared to large-scale units & other suppliers. National small industries Corp. Ltd. Does the mktg. Of SSI products to govt. under preferential purchase policy. This avoids multiplicity of registration with various agencies.

4. Text Incentives/ concession & deductions from profits & gains:

• If a unit is set up in backward area under factory act (sec 80HH) 20 % for 10 yr.
• Its is 20% for 10 yr. for SSI in rural area (sec 80HHA)
• 20% for industries setup under factories act for 7 to 9 yr., 355 for corp. society’s for 11 yr., 35% for co.’s for 11 yr.(sec80I)
• 25% for industries under factory act/ 100% for yr. & 25% for next 5 yr. If the unit is in backward area.

5. Exemptions & preferences from central excise duty:

If an SCI’s has a turnover of more than 3 crore then 2options are available

1. For 1^st 1 crore duty in nill, cenvat credit no permissible
2. For 1^st one crore 60% normal duty an cenvat credit permissible

Besides this they get relaxation in mode of duty payment & filing of returns

6. Foreign direct Investment.:

In order to encourage modernization & technological upgradation equity participation upto 25% of total share holding by offer industrial undertaking or foreign collaborators in SSI is permissible. Beyond this approval in needed with a commitment of 75 % to export.

7. Policy of priority credit:

Nationalized commercial banks give priority to SSI’s, out of the 40% banks advances for priority sector, 15 to 17% goes to SSI’s. out of this 40% goes to tiny units having investment. 5 lac in plant & machinery & 20% for those having investment. between 5 to 25 lacs. The interest rates are also very low for these loans. Prime lending rates are applicable for loan above 2 lac.

8. Initiative for credit:

Reserve bank of India has directed 370 specialised SSI banks to provide working capital to SSI upto 20% for annual turnover limit upto 5 crore. Banks are advised to increase no. of SSI branches. Loan from SIDBI for tiny sector for credit availability has been increased form 50,000 to 2,00,000 rupees. The branch mangers are empowered to take the credit decisions at branch level itself to ensure smooth flow of operations.

9. OTC exchange of India.

Institutions like UTI , IDBI, LIC, GIC, ICICI has setup these exchange to raise resource from capital mkt.  It provides trading mechanism like bought out deals, market making, sponsorships for convenient assess to capital market. The minimum requirement for a company to list on the exchange is 30 lac of post issue paid up capital./ It is helpful for entrepreneur to setup new ventures or expand activities. Exchange also provides trading in debentures unit of Mutual Funds, bonds. Exchange has state of art technology to promote transparency for transaction all over the country.

10.Incentive scheme for acquiring ISO9000

Since ISO is required for quality certifications for exports, SSI are given the incentives for acquiring the certification to the extent of 70% of cost of subject to the maximum of 75,000

11.Integrated technology upgradation & management program

Is implemented for energy conservation, pollution control, process mordification. This program is  started for 12 clusters all over India for small scale Units in the 9^th 5 year plan with the cost of 6.5 crore.

12.Technological bureau for small enterprises (TBSE)

It is a joint venture of small industries development bank of India (SIDBI) & the asian pacific centre for transfer of technology. TBSE offers under one roof  assistance & prospecative small enterprises in sphere of technology transfer & fund syndication. The main objective is to have a speedy assess & transfer of technology. This beareau identifies willing collabroaters & extend support for financial assistance in terms of term loans, foreign currencies, venture capital, equity assistance.

3. Small Enterprises information & resource center

This provides data & information for samll enterpreneurs, exporters, market avenues seekers. It also provides technical knowhow. As on date this network has 21 electronic nodes.

4. Interest on delayed payment act.

This act was brought forward to safe guard the interest of the SSI units. In order to tackle the problem of settlement of dues from co.s .

1. Change in the penal rate of interest form 5% above the floor rate to 150% of the prime lending rate (PLR) of SBI
2. The agreed date of settlement of dues no to exceed 120 days form the date of acceptance.
3. Additional alternative Mechanism of arbitration & conciliation to resolve dispute between SSI suppliers & large scale buyers

 

5. Relaxation under environmental laws

As per the water & air pollution control the board of environmental pollution gives grants of approval to SSI’s except 17 categories which are heavily polluting. This granted consent is valid for 15 years provided there is no change in treatment or disposal system. However pollution control board can have random checks or call for any further info.

6. Common effluent treatment plant (CETP)

For cluster of SSI’s financial assistance is provided for above project.

• 25% subsidiary from central & state govt.
• 30% as loan at reduced rate from FI’s
• 20% as contribution from individual units

SSI’s are given some concession for expenditure on effluent disposal system. Training & awareness for cleaner technology are conducted by Dist. Collectorate SSI. The main obj. is to launch a campaign for waste minimisation.

7. Export Promotion Council

These are non-profit orgns. under Companies/ Society Registration Act established to promote SSI’s products in export market by direct mktg., Vendor development or opening of sales outlet abroad. These councils also take bulk orders from buyers and pass on to SSI units for deemed export. For this they charge nominal fees. These councils also decimate info. regarding exim policies, customs & excise duty rules. The membership charges for these councils are minimum for SSI’s

 

8. Industry related research institutes

9. SIDBI strategic initiatives

1. Credit guarantees for SSI’s

This is for guaranteeing the loans & advances upto 10 lac rupees without co-lateral or third party guaranty for SSI’s engaged in IT or software industries for 5 years.