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Modul

e4

Moder
nSmal
lBusi
nessEnt
erpr
ises

Cont
ent
s

 Rol
eofSmal
lScal
eIndust
ri
es

 I
mpactofGl
obal
i
zat
ionandWTOonSSI
s

 Concept
sanddef
ini
ti
onsofSSI

 Gov
ernmentpol
i
cyanddev
elopmentofsmal
lscal
esect
ori
nIndi
a

 Gr
owt
handper
for
manceofSSIi
nIndi
a

 Si
cknessi
nSSIsect
or

 Pr
obl
emsf
orSSI

 Anci
l
lar
yandt
inyi
ndust
ry(
def
ini
ti
ons)
.

Rol
eofSmal
lScal
eIndust
ri
es

 SSIconst
it
utesav
eryi
mpor
tantsegmentoft
heI
ndi
aneconomy
.

 SSIhaspr
omi
nentr
olei
nsoci
o-economi
ctr
ansf
ormat
ionoft
hecount
ry.

 SSIaccountsf
or35per
centofi
ndustr
ial
product
ion,
40per
centofexpor
tsand
60percentemploy
mentoppor
tuni
ti
es.

I
mpor
tanceofSSI
:

 Pr
ovi
dei
ncr
easedempl
oymentt
hroughl
abour-
int
ensi
vepr
ocess.
\

 Requi
rel
owergest
ati
onper
iod.

 Easyt
osetupi
nrur
alandbackwar
dar
eas.

 Needsmal
l
/local
mar
ket
.

 Encour
agegr
owt
hofl
ocal
ent
repr
eneur
shi
p
 Cr
eat
eadecent
ral
i
zedpat
ter
nofowner
shi
p.

 Fost
erdi
ver
sif
icat
ionofeconomi
cact
ivi
ti
es.

 I
ntr
oducenewpr
oduct
spar
ti
cul
arl
ytocat
ert
olocal
needs.

 I
nfl
uencet
hest
andar
dofl
i
vingofl
ocal
peopl
e.

 Pr
ovi
deequi
tabl
edi
sper
sal
ofi
ndust
ri
est
hroughoutr
ural
andbackwar
dar
eas.

I
mpactofGl
obal
izat
iononSSIi
nIndi
a

Withglobalizat
ion, SSIsareexposedt osev erecompetitionbot hf r
om thelargescal
e
sectorandf rom MNCs.Thepoorgr owthr at eintheSSIsect ordur ingpost-
l
iberal
izati
onper i
odcanbeat tr
ibut
edt ov ariousfactor
ssuchasnewpol iciesofthe
governmentt owar dsliberal
izat
ionandgl obal i
zati
onwi thoutensur ingint
erestsor
pri
orit
yoft hesect or.Lefttothemer cyofl endinginsti
tutionsandpr omotional
agencieswhosemai nagendai stoser v
ebi gunitsandmul ti
nationals,
SSIsect or
s
havesuf f
ereddet eriorat
ioninthequalit
yofi tsoutput,
indust r
ial si
cknessand
ret
ardedgr owth.

TheproblemsofSSIsintheliber
alizedenv i
ronmentar emul ti
dimensional–delayi
n
i
mplement at
ionofproj
ects,i
nadequat eavailabi
l
ityoffinanceandcr editet
c.
Competit
ioninthedomest i
cmar kethasf ur
therintensi
f i
edwitht hearr
ival
of
mult
inati
onalcompaniesast her
est ri
cti
onsonf oreigndirectinvestmentswere
removed.

Tomeetthepresentaswellasfutur
erequi
rementsoftheSSIsectorandnat
ional
economysat
isfactor
il
y,pol
i
ciesandproj
ect
sf orSSIsect
orswil
lhavetobeeffect
ive
andgrowt
horiented.

Inor
dertoprot
ect,
suppor
tandpromotesmallent
erpr
ises,anumberofprot
ect
ive
andpromoti
onalmeasur
eshavebeenunder
takenbycentralgov
ernment.

Thepr
omot
ional
measur
esar
e:

 I
ndust
ri
alext
ensi
onser
vices

 I
nst
it
uti
onal
suppor
tinr
espectofcr
edi
tfaci
l
iti
es

 Pr
ovi
si
onofdev
elopedsi
tesf
orconst
ruct
ionofsheds
 Pr
ovi
si
onoft
rai
ningf
aci
l
iti
es

 Suppl
yofmachi
ner
yonhi
repur
chaset
erms

 Assi
stancef
ormar
ket
ingandt
radi
ng

I
mpactofWor
ldTr
adeOr
gani
zat
ion(
WTO)onSSI

 Itwasestabl
i y1st1995andheadquar
shedonJanuar t
ersatGenev
a.
 Itservesast hel
egalandinst
it
uti
onalfoundat
ionofthemul t
il
ater
alt
radi
ng
system.
 Ithas134members.

I
mpactofWTOonSSI
s:

 Emer gingchallengest oSSI sar eduet otheimpactoft heagr eement sundert he


WTOt owhi chI ndiaisasi gnat oryalongwi th134membercount r
ies
 Set t i
ngupofWTOhasal t
er edt hef ramewor koft hei nternationalt radet owar ds
non-di storti
ve mar ketor i
ent ed pol ici
es.Thisi s due t ot he pol icyshi ftt hat
occur r
edwor ldwi desi ncet heear l
y1980si nfav ouroff reemar ketf orcesandt i
l
t
from t he statei ntervention/ regulation int he economi c act iv i
ty.The mai n
out comeofsuchpol i
cywoul dber educt ioni nexpor tsubsi dies,gr eatermar ket
access,Remov alofnon- tari
f fbar ri
ersandr educt i
oni ntariffs.Thi swoul dal so
br i
ngaboutt i
ght erpat entl awst hrought her egul ationofi ntellectualpr oper t
y
right sundert heTr adeRel at edaspect sofI ntell
ect ualPr oper tyRi ghts( TRIPS)
Agr eementwhi chl aydownwhati st obepat entedandf orwhatdur ati
on.The
i
ncr easedmar ketaccesst oi mpor tswi l
lmeanopeni ngupt hedomest i
cmar ket
tolar gef l
owofi mpor ts.
 Incr easedmar ketacessunderWTOr equi remental someanst hatouri ndustries
cancompet ef orexpor tmar ketsi nbot hdev elopedanddev elopi ngcount r
ies.
Butt heexpect edsur gei nourexpor t
scancomeaboutonl yi fSSIsect ori s
rest ructuredtomeetdemandsofgl obalcompet i
tiveness, whi chi skeyt of ut
ur e
ofsmal li
ndust ri
esi npr esentcont ext.

Obj
ect
ivesofWTO;

 Makeopt i
maluseofworldsresour
ces.
 Encouragesustai
nabl
edev el
opmentandalsotoensur
eenv i
ronmentcareand
devel
opmentalacti
vi
ti
es.
 Eff
ortsshoul
dbemadet hatpoorcountri
esaswel
lasdevel
opi
ngcountri
eshave
ashareinthegrowthi
nthewor l
dtrade.
Funct
ionsofWTO:

 It has f ormulated rul


es and r egul
ati
ons f or al
l commoditi
es that are
i
nt ernational
lytraded
 Itinterferesi
fther ei
sanyissuesi
nt heint
ernati
onaltr
adepol
ici
esofitsmember
count ri
es.
 Itar r
angesv i
si
tsofi tsexper
tcommi tt
eest ovari
ouscountr
iesfortr
ainingand
dev elopmentact ivi
ti
es.
 Ithel psi nsorti
ngoutdi sputesbetweenv ari
ouscountri
esintheinternat
ional
trade

Adv
ant
agesorpr
osofWTO:

1.Thesy stem hel pspromot epeace.


2.Disputesarehandl edconstructiv
ely.
3.Rulesmakel ifeeasi erforal
l.
4.Freertradecut sthecost sofl i
vi
ng.
5.I
tpr ov
idesmor echoi ceofpr oductsandquali
ti
es.
6.Trader ai
sesi ncomes.
7.Tradest i
mulat eseconomi cgr owth.
8.Thebasi cprinciplesmakel i
femor eeff
ici
ent
.
9.Thesy stem encour agesgoodgov ernment

Di
sadv
ant
agesofWTO:

 WTOhasoft
enbeencri
ti
ciz
edforignor
ingthepl
ightoft
hedevel
opi
ngwor
ld.
 I
tisar
guedt
hebenef
it
soff r
eetr
adeismost l
ytothedevel
opedwor
ld.
Conceptsanddefini
ti
onsofSSI

Asmal lscaleindust
ry(SSI)i
sanindustr
ialundert
aki
ngi
nwhi chthei
nvestmentinfi
xed
assetsinpl ant& machinery,whetherheldonowner shi
pt erm oronl easeorhire
purchase,doesnotexceedRs.100lakhasonMar ch31,
2001.However,t
hisinv
estment
l
imitisvari
edbyt heGovernmentfr
om timet oti
me.

Ananci llaryuni tissubclassofSSI .Ani ndust


ri
alundertakingwhichisengagedoris
proposedt obeengagedi ni)manufactureofparts,components,sub-
assembli
eset
c.or
i
i)r enderingofser vi
ces,orsuppl yi
ngorr enderi
ngnotl esst
han50per centofits
productionorser v
ices,
whosei nv estmenti nfixedassetsinpl antandmachi ner
y ,whet
herheldonownership
termsoronl easeoronhi repurchase,doesnotexceedRs.1cr oreasonMar ch31,
2001, i
st obet reatedasanci l
l
aryunit.
Export-
orient
edUnit
(EOU) :Anindustri
alunder
taki
nginwhichtheinvest
mentinf i
xed
assetsinplantandmachinery
,whetherheldonownershi
pterms,oronlease,
orbyhire
purchase,doesnotexceedRs100l akhandhasanobl i
gat
iontoexport30percentof
producti
on.

Ti
nyUnit
:theinvestmentli
miti
nplantandmachi
ner
yinr
espectoft
inyent
erpr
isesi
sRs.
25Lakhi
rrespecti
veoflocat
ionofuni
t.

Smal l
-scal
eservicesandBusinessEnt
erpri
ses(SSSBEs)
:Indust
ryrel
atedser
vicesand
businessenter
prisewithafixedasset
s,excludi
nglandandbuil
ding,uptoRs10l akh,
i
rrespecti
veoflocati
onasonMar ch31,2001.

Gov
ernmentpol
i
cyanddev
elopmentofsmal
lscal
esect
ori
nIndi
a
 Variousmeasur estakenbycentralandstategovernments,forthedevelopment
ofSSIi ncludespr oductreser
vati
ons,fi
scalconcessi
ons,mar keti
ngassistance,
exportsetc.
 Manyi nstit
utionsnamel yNSIC,SIDOetchavebeen est abli
shedbyGov ernment
ofIndiatopr omoteSSI s.
 Admi ni
strati
velySSIsectorisdi
videdint
osevenindustr
ygr oups:

Sl Tr
adi
tionSect
or Sl Moder
nSect
or
n no
o
1 Handicraf
ts 6 Powerl
ooms
2 Handlooms 7 Resi
dualsmal
l
-scal
e
I
ndustr
ies
3 Khadi,
vil
lageand
cot
tage
i
ndustri
es
4 coi
r
5 Seri
cul
ture

Thedef
ini
ti
onofSSIi
sbasedlar
gel
yoncumul
ati
veamountofi
nvest
menti
npl
antand
machi
neryandi
nvest
mentli
miti
sasgi
venint
abl
ebelow
I
ndust
ri
alPol
icy1991:

 Pol
i
cypr
oposedbyGov
ernmentofI
ndi
a.

 Emphasi
sonpr
omot
ionandst
rengt
heni
ngofsmal
l
.Ti
nyandv
il
lage
i
ndust
ri
es.

 Policyalsoproposedtoencour
ageandsupporti ndustr
yassociat
ionst
o
establi
shcounselingandcommont est
ingfaci
li
ties,andtechni
calup
gradationaimedatimprovi
ngproducti
vi
ty,
effi
ciencyandcost
effecti
venessinSSIsector
.

Pol
icyI
nit
iat
ivessi
nce1999:

 Anewmi ni
str
yofSSIandAgroandRuralI
ndustr
ieswascreat
edonOct
ober
14,
1999.Themini
str
yannouncedanagendaformill
enni
um pol
icy
.

 Anewcr edi
tInsur
anceSchemewasannouncedinBudget1999-
2000forSSI
secur
it
ytobanksandt oi
mprovet
hefl
owofi nv
estmentcredi
ttoSSIuni
ts.

 Anati
onal
programmetoboostrurali
ndustr
ial
izat
ionhasbeenannounced,
wit
h
amissi
ontosetup100rur
alcl
usterseveryyear.

Gr
owt
handper
for
manceofSSIi
nIndi
a

 Si
ncebegi
nni
ngofplanni
ngin1950-
51,
effor
tshavebeenmadef
ordev
elopment
ofSSIi
nvi
ewofthei
rpotent
ial
forcr
eat
ingemploy
ment .
 Per
for
manceofSSIsectori
nIndi
adur
ing1980s,
1990sandov
eral
lper
for
mance
ar
egiveni
nthet
ablesbelow.
Thegrowthrat
einemploy
menti
nSSIsect
orhadbeenondecl
i
ne.Anal
lti
medecr
easewas
seenbetween1995-
2000.

Si
cknessi
nSSIsect
or

Pr
obl
emsi
nSSI