1. Notes Module 3
Bangalore University
Semester III
Small and Medium Enterprises (SME) (Module 3)
Q. Explain the Concept of Small and Medium Enterprises (SME) (2 marks)
Small and Medium Enterprises (SME) or Small and Medium Businesses (SMBs), are companies whose
headcount or turnover falls below certain limits. The abbreviation SME occurs commonly in the
European Union and in international organizations, such as the World Bank, the United Nations, and the
WTO. The term small and medium businesses or SMBs is predominantly used in the U.S.A.
EU Member States traditionally have their own definition of what constitutes an SME, for example, the
traditional definition in Germany had a limit of 250 employees, while in Belgium it could have been 100.
But now the EU has started to standardize the concept. Its current definition categorizes companies with
fewer than 10 employees as "micro", those with fewer than 50 employees as "small", and those with
fewer than 250 as "medium". By contrast, in the United States, when small business is defined by the
number of employees, it often refers to those with fewer than 100 employees, while medium-sized
business often refers to those with fewer than 500 employees.
Q. How did the Ministry of MSMED come into existence?(8 marks)
In India, the SME is generally referred to as 'small Scale industry' including the tiny sector and the 'Small
Scale Services and Business Enterprises' (SSSBE).
SMEs have always represented the model of socio economic policies of the Government of India, which
emphasized judicious use of foreign exchange for import of capital goods and inputs; labor intensive
mode of production, employment generation; non-concentration and diffusion of economic power in
the hands of a few (as in the case of the big business houses); discouraging monopolies practices of
production and marketing; and finally effective contribution to foreign exchange earnings of the nation
with low import-intensive operations.
Recognizing the importance and contribution of small scale industry, the government under notification
dated 9th May 2007 has amended the Government of India (Allocation of Business) Rules, 1961.
Pursuant to this amendment, Ministry of Agro and Rural Industries (Krishi Evam Gramin Udyog
Mantralaya) and Ministry of Small Scale Industries (Laghu Udyog Mantralaya) have been merged into a
single Ministry, namely, Ministry of Micro, Small and Medium Enterprises (Sukshma Laghu Aur
Madhyam Udyam Mantralaya).

2. Now all the activity related to small scale industry, are directed by this Ministry.
Q. Explain the differentiations in SMBs (8 marks)
In accordance with the provision of Micro, Small, and Medium Enterprises Development (MSMED) Act,
2006 the Micro, Small, and Medium Enterprises (MSME) are classified in two classes, which are as
follows:
Manufacturing Enterprises: The enterprises engaged in the manufacture or production of goods
pertaining to any industry specified in the first schedule to the industries (Development and Regulation
Act, 1951).
The manufacturing enterprises are defined in terms of investment in plant and machinery.
i) A micro enterprise is where the turnover/investment in plant and machinery does not exceed 25 lakh.
ii) A medium enterprise is where the investment/turnover in plant and machinery is more than 5 crore
but does not exceed 10 crore.
iii) A small enterprise is where the investment/turnover in plant and machinery is more than 25 lakh
but does not exceed 5 crore.
2) Service Enterprises: The enterprises engaged in providing or rendering of services and are defined in
terms of investment/turnover especially in terms of equipment used.
i) A micro enterprise is where theinvestment/turnover does not exceed 10 lakh.
ii) A small enterprise is, where investment/turnover is more than 10 lakh but does not exceed 2 crore.
iii) A medium enterprise is, where the investment/turnover is more than 2 crore but does not exceed 5
crore.
Q. Explain the different types of SSIs (8 marks)
A small scale industry is an industry that is privately owned and. operated, with a small number of
employees and relatively low volume of sales.
Small businesses are normally privately owned corporations, partnerships, or sole Proprietorships. In
India small business is categorized into following groups:
1) Small Scale Industries: A unit in which turnover/investment in plant and machinery does not exceed
5 crore.
2) Ancillary Units: An undertaking which sells not less than fifty per cent of its output to other industrial
undertakings and in which turnover/ investment in plant and machinery does not exceed 5 crores.

3. 3) Export-Oriented Units: A unit which exports not less than thirty per cent of its output and in which
investment in plant and machinery does not exceed 5 crore.
4)Tiny Units: A unit with an turnover/investment in plant and machinery of not more than 25 lakhs.
5)Small Scale Industries Owned and Managed by Women Entrepreneurs: An enterprise promoted by
women entrepreneurs is a small scale industrial unit in which, individually or jointly have share capital of
not less than 51 per cent. Such units can avail the special concessions offered by the government, like
low interest rates on loan, etc.
6) Micro Business Enterprises: 'Within the tiny and small business sector, micro enterprises are those
whose turnover/ investment in plant and machinery does not exceed 25 lakhs.
7) Small Scale Service and Business (Industry Related) Enterprises: A small scale service and business
enterprise is one whose turnover/ investment in fixed assets of plant and machinery excluding land and
building does not exceed 10 lakhs.
A few examples of such enterprises include advertising agencies, marketing, consultancy, equipment
rental and leasing, photocopying centers, desktop publishing, industrial testing labs,6) laundry and dry-
cleaning, X-ray clinics, tailoring, beauty parlors, and so on.
8) Village Industries: Village Industries means industry located in rural area which produces any goods or
tenders any service with or without the use of power in which the fix capital investment (on building and
machinery) does not exceed 50,000 per capita.
9) Cottage Industries: These are also known as rural industries or traditional industries. These are not
defined by capital investment criteria as in the case of other small scale industries. The features of
cottage industries) are as under:
i) These are organized by individuals, with private resources.
ii) Normally use family labor and locally available talent.
iii) The equipment used is simple.
iv) Capital investment is small.
v) Produce simple products normally in their own premises
Q Explain the Role of Small and Medium Enterprises (12 marks)
India is largely an agricultural country and major part of the population lives in villages.
SME are small in size, but play a big role in economic development of a developing country like India.
India has adopted the ideal of socialistic pattern of society with full employment, balanced regional
development and self-reliance as the major objectives.

4. Small scale firms are helpful in the achievement of these goals in the following ways:
I) Employment: Small-scale firms use labor intensive techniques and, therefore they have high potential
to provide employment to a larger number of people per unit of capital. For every worker employed in
large scale industries about three workers are engaged in small scale and cottage industries. Next to
agriculture small business constitutes the most popular occupation of people in India.
Small firms promote self-employment particularly among the educated and professional class. They also
provide employment t agriculturists who remain idle during a part of the year. In fact, the healthy
growth of small-scale industries . Government Policies and SME in India can be an effective approach to
the pressing problem of unemployment in the country. Several empirical India has built up perhaps one
of the most elaborate development policy framework and program for the small studies have revealed
that the employment generating capacity of small-scale industries in about in times scale sector.
The main objectives of such policy framework are more than that of the large-scale industries.
a) To encourage and facilitate the entry of new entrepreneurs in small sector.
b) To support the growth of small-scale units.
2) Balanced Regional Development: Small scale industries promote decentralized development and help
to remove regional disparities in industrialization. Decentralized development contributes to the process
ofuseful means of rural re-construction and development. Development of decentralized sector also
improve the standard of living of people in backward regions.
3) To protect small firms from acute competition from large sector. self-sustained growth and avoids
concentration of industries in particular areas. By providing employment
4) To solve the problems faced by the small-scale industries in rural areas they help to check migration
and overcrowding in urban areas. Small-scale firms can be to encourage technology up gradation,
productivity improvement and export production in the small-scale require less capital per unit of
output and, therefore, greater31 output can be obtained with small investment. The Annual Survey of
Industries revealed that fixed capital per employee in case of small scale industry was 3,706 as
compared to 27,757 in case of large scale, industry. Small firms also provide% (Kick returns after their
establishment on account of short gestation period. In India, where the rate of capital formation is low,
small scale industries are very suitable.
4)Mobilization of Local Resources: Small scale industries facilitate mobilization and utilization of local
resources and skills which might otherwise remain latent or unutilized. Small business promotes a new
cadre of small entrepreneurs, self-employed and encourages local talent. The growth of small
enterprises helps in tapping latent resources like entrepreneurial skills and small savings especially in
rural areas. Small scale industries account for ninety five per cent of the industrial units in India and
contribute almost forty•per cent of the gross industrial value added.

5. 5) Exchange Earnings: Small scale industries help in reducing pressure on the country's balance of
payments in two ways:
i) They do not require imports of sophisticated machinery and equipment.
ii) They earn valuable foreign exchange through exports of non-traditional items and substitutions of
imports through domestic production. Small scale industries account for forty five per cent of total
exports from India.
6) Feeder to Large Industries: Small scale sector is complementary to the large scale industries. Small
scale industries manufacture various types of components, spare parts, tools and accessories which are
required by the large scale sector. Small firms also distribute the goods produced by large scale firms.
7)Opportunity for Artisan: In villages, artisan/specialist/artist having expertise in different fields are
found. Because of lack of opportunities their skills do not come into limelight. Small businesses provide
opportunities to such people. This provides an impetus to their talent.
8)Increase Standard of Living: With the establishment of small businesses in rural or nearby regions,
villages get many types of facilities, for example, employment, electricity, water, roads, education,
banks, modes of transportation, etc. In such a situation, promotion of standard of living is inevitable.
9)Less Pressure of Population on Agriculture: As more population depends upon land for survival the
land is further divided into small pieces. It no longer remains beneficial to do farming on such small
fields. Every year there is a further increase of approximately. Thirty lakh people who depend on
agriculture. So, this has become necessary to reduce this burden on land. This is possible only when
people will establish small businesses.
10)Equitable Distribution of Income: With the establishment of these businesses the income of the
country is not just concentrated with some handful of city industrialists but is also distributed among
many small rural industrialists. This helps to reduce the gap between the rich and the poor in the
country.
11)Social Advantage: Small-scale units offer opportunity for an independent way of life to people with
small means. They offer savings in social overheads like education, housing, and medical facilities by
taking industry nearer to the people. They help to raise per capita income and standard of living in the
country. A system of widely diffused ownership permits wider participation of people in the process of
economic development. Small-scale sector provides a base for democracy, socialism, and self-
government.
Q. Explain the Problems of SMEs(12 marks)
The micro, small and medium enterprises face problems at every stage of their operation, whether it is
buying of raw materials, manufacture of products, marketing of goods or raising of finance.

6. These industries are therefore not in a position to secure the internal and external economies of scale.
The major problems confronting the sector are as follows:
1) Technology Obsolescence: Majority of the small scale units use old techniques of production and
outdated machinery and equipment. Up-gradation of the technology and achieving economies of scale
is one of the major problems facing the sector. They cannot afford new machines and equipment and
are therefore not in a position to use the latest techniques of production. They do not find it possible to
conduct research and development on a continuing basis. Therefore, productivity and quality in small
scale firms tends to be low while unit cost of production is generally high. But with liberalization of the
economy, the MSMEs are facing stiff competition from imports and need technological up-gradation in
order to produce better quality products at cheap rate.. As far as sourcing technology is concerned,
small businesses face the following three essential problems:
i) Lack of Technological Knowledge: Obtaining information about technology is the first important issue.
For most of them, information about available technology options is through word-of-mouth or from a
visit to an advanced unit. Few have access to technical literature, professional journals or information
about new product launches. But with the advent of internet, new vistas are opening up through
electronic journals, catalogue downloads and advanced search facilities.
ii) Barriers in Implementation: Actual procurement of the technology is the next important issue
because even if information is obtained, there are barriers to import of technology and other problems
relating to technology transfer, vendor capability, after sales support, import procedures, etc., which
impede procurement
iii) Funding Problem: Acquiring finance for technology up-gradation is also a problem. Small enterprises
generally look to external sources of funding for upgrading technology as withdrawing money from
business entails its own costs.
2) Managerial Inadequacies: The managerial skills required for the management of small/medium firms
are not very much different from those necessary in large scale business. The managerial functions of
planning, organizing, staffing, directing and controlling are common to both. But, the scale on which
various functions are performed by owner and manager are different and in small scale, the degree of
complexity is lower. The organizational structure of latter firms is simple due to presence of few
employees. The owner himself acts as the manager and can exercise personal control. However as the
business grows, owner/manager finds it difficult to manage even small business effectively. For this, it
becomes necessary to increase the amount of manpower in the enterprise.
3) Credit and Finance: All kinds of business enterprises require sufficient funds in order to meet their
fixed as well as working capital requirements. Finance is one of the critical inputs for growth and
development of the micro, small and medium enterprises. They need credit support not only for running
the enterprise and operational requirements but also for diversification, modernization/up-gradation of
facilities, capacity expansion, etc. Inadequate access to credit is a major problem facing micro, small and
medium enterprises. Generally, such enterprises operate on tight budgets, often financed through
owner's own contribution, loans from friends and relatives and some bank credit They are often unable

7. to procure adequate financial resources for the purchase of machinery, equipment and raw materials as
well as for meeting day-to-day expenses. This is because, on account of their low goodwill and little fixed
investment, they find it difficult to borrow at reasonable interest rates. As a result, they have to depend
largely on internal resources. In respect of MSMEs, the problem of credit becomes all the more serious
whenever any difficult situation occurs such as a large order, rejection of consignment, inordinate delay,
in payment, etc. Sometimes they have to close down their operations due to shortage of funds. Also,
there is little or no scope for expansion and growth due to dearth of capital. Hence, economies of scale
are not available.
4) Managerial and Organizational: Small scale firms are generally managed by the owners who very
often do not possess the skills required for the efficient management of the enterprise. There is lack of
proper division of work and benefits of specialization are not available. Some owner7manageit are
reluctant to adopt modern methods of organization and management. There instability in business
because the sickness and dearth of the owner manager directly affects the survival and growth of the
small firm.
5) Raw Materials and Products: Non-availability of quality raw materials on a timely basis in an adequate
quantity is one of the main problems faced by micro, small and medium enterprises. There is acute
shortage of even the basic raw materials required by small scale units. These units are under a handicap
in obtaining raw materials of requisite quality at reasonable prices. They do not get the benefits of bulk
buying. For example, the handloom industry is facing shortage of yarn. Small scale industries also face
shortage of power due to which they are unable to make full utilization of plant capacity. Majority of
them cannot afford to install their own power generating plants to ensure uninterrupted operations.
6) Marketing and Export: Out of several problems faced by small and medium scale entrepreneurs, the
absence of adequate marketing and export facilities is one of their main concerns. Almost all types of
business enterprises face marketing problems, but the small and medium scale enterprises face greater
difficulty in the marketing and distribution of their products.
Some of these are:
i) Competition from Large Firms: Small and medium entrepreneurs tend to face tough competition from
the products and sales/marketing strategies of large scale firm's entrepreneurs. They, at times, find it
very difficult to cope with large scale entrepreneurs in terms of cost, quality, standards, popularity,
meeting ever-changing demands/preferences of consumers, etc.
ii) Lack of Marketing Networks: Most of them do not have their own marketing network. So, they
ultimately have to rely on outside sources for distributing their products. This also tends to raise the cost
of their products and services.
iii) Lack of Marketing Concepts: Most of them do not have good knowledge and/or experience of
various marketing concepts and strategies. As a result, they are unable to understand quickly and
accurately the prevailing as well as constantly changing market trends. Furthermore, in spite of having

8. huge potentialities of extensive market for their products, they are mainly unwilling to opt for efficient
marketing techniques.
iv) Lack of Resources: They also lack the resources and funds needed for effective sales promotion.
Many of such enterprises cannot afford to spend much on advertising, sales promotion, market
research, etc.
v) High Cost of Production: They find it difficult to sell their output at remunerative prices because of
higher cost of production and non-standardized quality of products.
vi) Low Negotiating Power: They also have to sell their products at throwaway prices due to their weak
bargaining power (especially in dealing with big buyers) and urgent needs of funds.
Thus, it is right to say that most of small and medium entrepreneurs do not correctly understand as to
what 'kind of products are actually needed by the market, how big/small is the market, when the
products are needed and how to deliver such products. All these problems keep them mainly isolated
from the market trends and conditions and, thus, tend to restrict their operations.
7) Infrastructure: Infrastructure needed by entrepreneurs include all types of transportation facilities
like railways, waterways, roadways and airways (depending on the type of small and medium scale firm
running by these entrepreneurs) as per the suitability of the business, as well as proper established
channels of telecommunication and adequate supply of power. Lack of any of these facility can cause
serious damages to the firm's value chain process, i.e., to the production, consumption and distribution
of the products of small and medium entrepreneurs, who already face problems of lack of finance,
inadequate marketing facilities, technological obsolescence, etc.
Some of the major problems faced by small scale entrepreneurs with respect to infrastructure are:
i) Inadequate infrastructural facilities creates the problem of acute shortage of basic raw materials,
especially those which are scarce and need to be imported from distant places, needed by small and
medium scale enterprises.
ii) Small and medium scale entrepreneurs find it difficult to distribute their products to the markets
which are located at far-off places because of incomplete construction or non-existence of basic
roads/highways.
iii) Lack of proper airways and waterways facilities also restricts the growth prospects of those
medium/small scale firms whose target market is located abroad.
iv) Small and Medium scale enterprises face shortage of power supply, due to which they are unable to
make full utilization of plant capacity. Most of them find it difficult to install their own power generating
plants, so as to ensure their uninterrupted operations, due to lack of required funds.

9. v) Most of them are located in rural areas or remote areas of the country, due to which they find it
difficult to communicate with people outside the region. This is because of non-existence of proper
telecom network.
Q. What are Prospects of SME (12 marks)
The small-scale industries occupy a very important position in any economy. Traditionally, they produce
certain specialized items over which they enjoy virtual monopoly because of the skill and expertise
developed over the years. Many items produced in the small-scale sector are also used as raw materials
in the large-scale industry. Thus, small-scale industries contribute to large-scale production in no small
measure. They will have to take effective measures in the following areas:
I) Quality Control: The products of large-scale industries are of high quality and precision. In a free
economy, the products of the small-scale industry can compete with those of the large-scale sector only
if the high quality is maintained. To meet the competition from the large-scale sector, small-scale
industries should get a good share of the export market where high-quality products are essential.
2) Marketing Arrangements: Many small-scale units have perished because of their inability to sell what
they produced. This happened because of lack of proper marketing arrangements. In a free economy,
inadequate marketing arrangements would only accelerate the downfall of small-scale units, as they
would have to counter competition from the large-scale sector, which enjoys a ready market for its
products. The small-scale units need to conduct systematic and continuous market research and arrange
to tie-up with prospective buyers in order that their products may be readily sold. Advertisement: The
products of the large-scale sector are widely advertised on TV, radio, and newspapers and are well-
known. Since, small-scale industrial units suffer from resource inadequacy; most of them cannot
advertise their products on the mass media. As a result, the products of the small-scale units remain
largely unfamiliar to the public and the units find it very difficult to attain their sales goals.
3)Increasing Competition: An entrepreneur faces several managerial problems in relation to production,
marketing, infrastructure, financing, etc. The basic cause for many of such issues is the existence of
intense competition in the market scenario. Large scale firms/industries that have huge production and
distribution network, or enterprises that have goodwill in the market or have intellectual property
rights/standardization for their products or produces large range of products, etc., are more likely to
dominate the business environment in the country. In contrast, small and medium scale enterprises
mainly deal in one specialized line of products, have very small production and distribution network, and
generally have no protection for their products. As a result, in spite of having useful and good quality
products or having products similar to those produced by large scale firms, they are largely not able to
create/hold demand for their products and tend to lose customers to large scale enterprises owing to
cut-throat competition.
4)Recovery of Receivables: The funds of many small-scale industrial units are blocked in receivables. As a
result, recycling of funds is affected and production suffers. In a competitive environment, it must be
ensured that receivable dues are realized without delay. The small-scale units will have to make special
effort to collect their dues for their growth. They may have to utilize the services of factoring companies

10. for the purpose. Professionalism in Management: Many small-scale industrial units have suffered an
account of proprietary management. Barring very tiny and small units, management of small-scale
industries has become complex. Hence, small-scale industrial units must be managed by professional
managers in order to compete successfully with the large-scale sector, which is professionally managed.
5)Inventory Control: Proper inventory control is an essential prerequisite for optimum production of an
industrial unit. Yet, a large number of small-scale units remain unaware of this requirement. As a result,
they have to remain content with a sub-optimal level of production that affects their profitability
adversely. It is, therefore, imperative that small-scale units familiarize themselves with inventory control
techniques and introduce them at work, particularly in the context of competition in a free economy.
6) Opportunities: By its less capital intensive and high labor absorption nature, the SSI sector has made
significant contributions to employment generation and also to rural industrialization. This sector is
ideally suited to build on the strengths of India's traditional skills and knowledge, by an infusion of
technology, capital, and innovative marketing practices. This is the opportune time to set-up projects in
the small-scale sector. It may be said that the outlook is positive, indeed promising, given some
safeguards. This expectation is based on an essential feature of the Indian industry and demand
SICKNESS IN SME
Introduction.
Sickness is a universal phenomenon.
It is a major problem of SME (SSI) in all countries of the world, may it be developed or developing
countries. SME sickness is a matter of serious concern because besides affecting the owners, employees,
creditors, and suppliers, it causes wastage of national resources and social unrest.
Growing incidence of sickness has been one of the major problems faced by the industrial sector of the
country. Substantial amount of loan able funds of financial institutions is blocked-up in sick industrial
units causing not only wastage of resources but also affecting the healthy growth of the Indian
economy.
Not only some of the traditional industries like cotton textiles, jute, and sugar have been of afflicted
with sickness, but even some other modern industries like engineering, chemicals, rubber, cement,
electrical, and paper have been affected. Therefore, it has been considered very essential to detect
industrial sickness at an early stage and taking measures to prevent sickness.
Q. Explain Meaning of Sick Unit (2 marks)
The prevalence of sickness in SSI sector is a cause of concern. The definition of sickness in SSI sector has
been undergoing changes. The Reserve Bank of India (RBI) was instrumental in appointing committees
from time-to-time to look into the issue of the sickness affecting the Sector.

11. The latest definition of sickness given by the Working Group on Rehabilitation of Sick Units set-up by
the RBI (Kohli Committee) is given below: A small-scale industrial unit is considered sick when:
1) If any of the borrowable accounts of the unit remains sub-standard for more than six months, i.e.,
principal or interest, in respect of any of its borrowable accounts has remained overdue for a period
exceeding one year will remain unchanged even if the present period for classification of - account as
sub-standard is reduced in due course;
or 2) There is erosion in the net worth due to accumulated losses to the extent of 50 per cent of its net
worth during the previous accounting year; and
3) The unit has been in commercial production for at least two years.
Q. Explain the Criteria to Identify Sickness (2 marks)
The necessary information on sickness and incipient sickness among the Units in the Sector was
collected the All India Third Census of Small Scale Industry 2001-2002. In order to measure incipient
sickness, measuring sickness, the latest definition given by the Kohli Committee was adopted. Thus, the
following 'a were adapted to identify sick/incipient sick units in the Third Census
1) Continuous decline in gross output compared to the previous 4 financial years;
2)Delay by more than 12 months in repayment of loan taken from institutional sources; and
3) Erosion in the net worth to the extent of 50 per cent of the net worth during the previous accounting
year.
Q. Explain Symptoms for Sickness (8 marks)
Symptoms for Sickness
Tiwari Committee identified certain symptoms which would be quite helpful in the detection of
industrial sickness at the beginning or 'incipient stage'. These symptoms are:
1. Continuous irregularity in cash credit accounts;
2. Continuous decline in gross output for three consecutive years was identified as a suitable indicator,
whereas as small-scale sector is concerned, small-scale industrial unit is considered to be sick that has
incurred a cash loss in the previous accounting year and is likely to incur cash losses in the rent
accounting account of cumulative cash losses to the extent of 50 per cent or more of its peak net worth
during the last five yearscontinuously defaulted in meeting four consecutive half-yearly installments of
interest or two half-yearly installments of principal on term loan.
3.poor capacity utilization;

12. 4.profit fluctuations,
5. downward trends in sales and stagnation, or fall in profits followed by contraction in the hare of the
market;
6.higher rate of rejection of goods manufactured; education in credit summations whenever the
companies are in financial difficulty;
7.they open a separate mount with another bank and deposit all collections therein; Failure to pay
statutory liabilities;
8.interest on loan on due dates.
9.financing capital expenditure out of funds provided for working capital purposes
According to State Bank of India, "A sick unit is that unit which fails to generate an internal surplus on a
Larger and longer outstanding in the bill accounts; continuous basis and depends for its survival upon
frequent infusion of external funds". Longer period of credit allowed on sale documents negotiated
through the bank and frequent returns by There are different perceptions of the symptoms and
characteristics of SSI sickness
To an investor, it is one which skips dividends, an industrialist, it is a unit which is making losses. To a
banker, it’s a unit which is not repaying its loan or -submission of periodical financial data/stock
statement, etc., in time;
According to the Sick Industrial Companies Act, 1985,
A sick industrial company indicates an industrial ,unit increase in working capital on account of ,
(registered for not less than seven years) which is showing accumulated losses equal to or exceeding its
present Increase in debtors and particularly dues from selling agents, net worth at the end of any
financial year, and has also suffered cash losses during that financial year and in the increase in
creditors, and immediate preceding year. Thus an industrial unit was defined as sick if:
a)general decline in that particular industry combined with many failures
b)rapid turnover of key personnel;
c)existence of a large number of law suits against the company; .
d)rapid expansion and too much diversification within a short time;
- Initially, only private sector companies were covered under the Sick units, Industrial Companies Act.
In December 1991, public sector companies were also brought under the purview of version of funds
for purposes other than running the unit; this Act.

13. The 1992 amendment (introduced in February 1994) has altered the criterion somewhat; firms only
need to be registered for five years, instead of earlier seven years, while other criterion will remain
same in spite of major changes in the shareholdings.
1) It was registered for at least seven years,
2) It incurred cash losses for the current and the preceding year, and
3) Its net worth has eroded.
Q. Suggest some remedial measures for SICK units (8 marks)
1) Effective Planning: SSIs are required to conduct detailed survey of the existing situations prevailing in
small sector and draw productive programs
2) Improvement in Techniques of production and proper technology: SSIs should improve their
techniques of product and adopt modern technology.
3) Training and Development: SSIs should make concerted efforts in imparting proper education training
to workers engaged in this sector as they are valuable asset of industry. Expenditure on training
development activities should be treated as an investment. Small Industries Associations should involve
themselves in providing knowledge and skills required tothem in the changing e.g. Workers should be
encouraged to innovate themselves in the production process as it would enable to compete with their
medium and large-scale counterparts. For this purpose, effective motivation reward system is highly
desirable.
4) Provision of Infrastructural Facilities: Development-finance, power arrangement, water supply, etc.,
necessary for the smooth functioning of SSIs. State Development Corporation, small industries
corporations, state technical consultancy organizations are engaged in provision of these facilities but
their system needs further improvement
5) Regular Supply of Raw Materials: Small Industries Development Corporations and other canalizing
agencies responsible for the supply of raw materials to small-scale sector should take necessary,
maintain a continuous but proper supply of raw materials to SSIs. They should also ensure that bogus
are to be excluded from this type of support.
6) Adequate Credit Arrangement: For SSIs, traditional sources of financing offer little scope for
expansion and alternative means like venture capital are yet to be developed for them. SEBI has
formulated guide for venture capital and there is hope for better finance facility for this sector. Besides,
priority’s lending scheme should be made more broad-based and credit limit is to be enhanced. The SSI*
depend on their own funds and loaned fund from non-banking sector as they are unable to get proper
support banks and other funding agencies. The SIDBI is trying to provide these facilities but interned
involved in the system are creating problems for them. So, SIDBI should try to bring transparency,
effectiveness in its functioning.

14. 7) Effective Marketing Arrangements: SSIs should focus on brand, product, and market development.
should try to remain in the market and special thrust should be given on quality improvement pro
Products at low costs and passing on the benefits to consumers would go in long way to improve
marketing performance. The large companies earn handsome profits from marketing the products of
units by charging a much higher price from the customers. The reason is they have brands. So, SSIs s try
to popularize their products in the market which will provide them separate product and brand identity.
This strategy will benefit them in the long-run. However, efforts should be made to maintain standard
quality of the output then they will get positive support from their potential customers.
8) Development of Suitable Machinery: SSIs have different typical problems and that are handled by
taking offensive strategies. SSIs Association should be offensive and objectively clear in their g pleading
their cases with the government. Associations like FICCI, Assocham, and CH are more maintaining their
relations with the government They should also involve themselves in , the problems being faced by
their members through seminar, conferences, etc.
Q. Explain the term “institutional support to SME” (2 marks)
The term institutional support system generally refers to the economic environment of industry and
business comprising authorities and institutions whose decisions and operational framework affect the
level of business.
These institutions include government owned agencies, statutory corporations and semi-autonomous
organizations. In our country, these authorities and agencies are government organizations and
entrusted with sufficient powers to regulate and promote SSIs in specific areas of activities.
Basically, institutional support system is necessary at three stages of enterprise development. These are
1) Inception or promotion of a business or industrial unit
2) Day to day management or routine management
3) Expansion and diversification
Q. Explain the term “institutional support to SME” in Indian context (2 marks)
In Indian context, institutional support systems include two dimensions:
1) Support system developed by Central Government
2) Support system developed by State Governments,
3) Support system developed by Other Agency

15. Q. Elaborate on Support System Developed by the Central Government (12 marks)
The Department of small scale industries was developed in 1991 under the Ministry of Industry. This
department has been responsible for the development and monitoring of the following support system:
1) SSI Board (Small Scale Industries Board): It was established in 1954 to provide effective coordination
and inter-institutional linkages for the benefits of small scale sector. The Board being an apex body has
been entrusted to play its advisory role in solving the problems of small scale sector. The Board has been
constituted with the following members:
2) SIDO (Small Industries Development Organization): This organization as the name suggest is mainly
created for development of various small-scale units in different areas. SIDO is a nodal agency for
identifying the needs of SSI units, coordinating and monitoring the policies and programs for promotion
of the small industries. It undertakes various programs of training, consultancy, evaluation for needs of
SSI and development of industrial estates. All these functions are taken care with the Organization
Structure of 27 offices, 31 SISI (Small Industries Service Institutes). 31 Extension Centers of SISI and 7
Centers related to Production and Process Development. The main functions performed by the SIDO in
each of its three categories of functions are as follows:
i) Functions Relating to Co-ordination
a) To evolve a national policy for the development of small scale industries,
b) To co-ordinate the policies and programs of various State Governments, .
ii) Functions Relating to Industrial Development
a) To reserve items for production by small-scale industries,
b) To collect data on consumer items imported and then, encourage the setting of industrial units to
produce these items by giving coordinated assistance,
c) To render required support for the development of ancillary units, and
d) To encourage small scale industries to actively participate in Government Stores Purchase Program by
giving them necessary guidance, market advice and assistance.
iii) Functions Relating to Extension
a) To make provision of technical services for improving technical process, production planning,
selecting appropriate machinery, preparing factory lay-out and design,
b) To provide consultancy and training services to strengthen the competitive ability of small-scale
industries,
c) To render marketing assistance to small-scale industries to effectively sell their products, and

16. d) To provide assistance in economic investigation and information to small-scale industries.
3) NSIC (National Small Industries Corporation Ltd.): It was started by the Central Government in 1955
with the objective of promoting and developing SSI units throughout the country.
It started with multiple objectives of helping SSI units for:
i) Providing machinery on hire purchase,
ii) Assisting, marketing and exports,
iii) Enlisting SSI units for tender participation in Government purchases,
iv) Organizing supply of raw-materials,
v) Training of personnel, and
vi) Assistance inmodernization of the units. In India, NSIC has 5 technical centers, 9 zonal offices, 33
branches, 14 sub-branches, 10 business development offices, and 2 tech-parks.
The corporation's Head Office is at Delhi. The company employs, over 500 professionals and it also has
an office in Johannesburg from where it handles its operations pertaining to South African nations. In
the 54 years of its existence, the National Small Industrial Corporation Limited has gone from strength to
strength and has successfully managed to modernize small- scale industries in India by making them
technology-oriented and by emphasizing quality. NSIC has also reinforced the small-scale industry by
fortifying its ties with the large and medium-scale industries.
Functions of NSIC
i) Financial assistance by way of hire purchase scheme for purchase of local and imported machinery.
ii) Provision of various equipment on lease basis.
iii) Assistance for marketing the produce in the country and also to help in exporting the products of SS
units.
iv) Enlisting quality conscious good SSI units for sending enquiries of government stores and purchase
departments. v) Training of workers in various trades required for SSI units.
vi) Assistance in up-gradation of technology, processes, and modernization of plant and machinery.
vii) To make bulk purchases of important raw-materials and distribute to SSI units at reasonable rates.
avoids speculation and exploitation by the traders.
viii) To develop industrial estates and testing facilities in the industrial areas.

17. 4) SIDBI (Small Industries Development Bank of India): Small Industries Development Bank of India was',
established in 1990 as a development bank exclusively for the small-scale industries. It is a Centra1
government undertaking. The prime aim of SIDBI is to promote and develop small industries by
providing them the valuable factor of production, finance. Many institutions and commercial banks
supply finance both long-term and short-term, to small entrepreneurs. SlDBI coordinates the work of all
of them.
Financial Assistance Scheme of SIDBI
The main obstacles and problems in the growth of industrial units are the paucity of primary
infrastructure, unavailability of suitable market for selling the products, working capital requirement and
difficulties arising out of the delays in receiving the bills.
Considering these problems, the following provisions are included in the various schemes of SIDBI:
i) Loan assistance to the institutions providing market or marketing avenues to the small entrepreneurs.
ii) Loan assistance to ancillary units and also for modernization and upgrading technology.
iii) Loan assistance to institutions providing primary services and infrastructure and developing the
growth centers.
iv) Loan assistance to NSIC.
v) Loan assistance to private companies which function on rental basis or contract basis.
SISI (Small Industries Service Institute):
Small Industries Service Institute is a national level organization established by the Central government.
At the state level, SISI functions under the Director assisted by Deputy Directors. There are 28 SISIs and
30 branch of SISIs set-up in State capitals and other industrial cities all over the country.
Functions of SISI
i) Technical Information: SISI provides information about the supply and the availability of raw
materials. It gives technical information about the machines and equipment. Technical know-how about
the process of production, quality testing and standardization of products, modernization and preparing
product design are other services provided by SISI.
ii) Workshop: SISI is a well-equipped workshop which provides services to entrepreneurs at reasonable
rates. Jobs related with machine shops, heat treatment, hardness testing are carried out in these
workshops. The main motive of the workshop facility is to improve the quality of the products.
iii) Technical Training: SISI provides technical training to the workers employed in the various industrial
unite as well as the entrepreneurs in order to improve standards of quality and labor. In the extension
centers of SISI, training is provided for machine shop practice, milling, heat treatment, blueprint reading,
etc. Economic Investigation Division: SISI collects and compiles statistical information regarding various

18. aspects concerned with the establishment and development of small industries. Important aspects are
demand and supply scenarios for different products, investment, raw material, etc. This division
prepares review reports on the items reserved for the small-scale industry. The study of sick industries is
also undertaken by this division. In such studies, SISI tries to identify the causes of the sickness of the
smooth working of these units.
v) Export Promotion: SISI plays a significant role in the efforts regarding export promotion. A special
arrangement is made to provide information about exporting the products. On behalf of the small
entrepreneurs, SISI participates in international exhibitions and promotes the products in the foreign
markets.
vi) Modernization: SISI guides the entrepreneurs in the quality up gradation, modernization and
improvement of productivity.
vii) Development of the Market: SISI acts as a link between the tiny and the small industries and the
medium and the large-scale industries. It provides information about the products and the services of
the small entrepreneurs to the requirements of the large industries. Thus, it bridges the small industries
with the large industries and tries to develop the market. Many of the products manufactured by the
small industries are purchased by the large industries.
viii)Library: SISI has a huge collection of books, journals, magazines, newspaper clippings etc. It provides
valuable services to small entrepreneurs through its well-equipped library. It has a collection of
hundreds of project reports. Entrepreneurs can use these readymade project reports at reasonable
rates.
ix) Exhibition: A permanent exhibition is arranged by SISI in its office premises. SISI exhibits products
manufactured by small entrepreneurs. The exhibition is free of cost. Thus, SISI provides multifarious
services to the small entrepreneurs.
Activities of SISI The main activities of this institution are as follows:
i) Assistance/Consultancy to prospective entrepreneurs,
ii) Assistance/Consultancy rendered to existing units,
iii) Preparation of state industrial profiles,
iv)Preparation/Updating of district industrial potential surveys,
v) Project profiles,
vi) Entrepreneurship development program
vii) Motivational campaigns,
viii) Production index,

19. ix) Management development program,
x) Skill development.
6) KVIC (Khadi and Village Industries Commission):
The Khaki and Village Industries Commission (KVIC) is a statutory body formed by the Government of
India, under the Act of Parliament, `Khaki and Village Industries Commission Act', 1956.
It is an apex organization under Ministry of Micro, Small and Medium Enterprises Govt. of India, with
regard to khadi and village industries within India, which seeks to "plan, promote, facilitate, organize
and assist in the establishment and development of khadi and village industries in the rural areas in
coordination with other agencies engaged in rural development wherever' necessary." In April 1957, it
took over the work of former All India Khadi and Village Industries Board.
Its head office is based in Mumbai, with its six zonal offices in Delhi, Bhopal, Bangalore, Kolkata,
Mumbai an Guwahati. Other than its zonal offices, it has offices in 29 states for the implementation of
its various. I functions also comprise building up of a reserve of raw materials and implements for supply
to producers Objectives of KVIC The KVIC has three main objectives which guide its functioning.
These are as follows:
i) The Social Objective: Providing employment in rural areas.
ii) The Economic Objective: Providing salable articles.
iii) The Wider Objective: Creating self-reliance amongst people and building-up a strong rural
community spin The commission seeks to achieve these objectives by implementing and monitoring
various schemes and program too achieve these objectives, the following schemes are provided by KVIC:
i) Financial assistance for purchase of land, building, workshop, shed, machinery, and equipment at rate
of interest;
ii) Working capital provision;
iii) Prime Ministers Employment Generation Program (PMEGP);
iv) Rebate Scheme;
v) Equity capital;
vi) Loan provision for purchase of raw materials;
vii) Marketing avenues and selling centers for the products of artisans and craftsmen;
viii) Subsidies for the registered societies of artisans and craftsmen belonging to scheduled cast
scheduled tribes, ex-servicemen, women, etc

20. 7) Specialized Institutions:
In addition to the above institutions, the Government has also set-up following specialized institutions
to boost the growth of all types of small-scale industries in the country:
i) Central Institute of Tool Design, Hyderabad: The Central Government set-up this Institute in 19 with
the help of UNDP and ILO to help small-scale industries by imparting specialized training to personnel
working in the design and manufacture of tools, jigs, fixtures, dies and molds. The other functions
performed by it are:
a) To offer consultancy and advisory services and assistance in the design and development of tools.
b) To suggest proper measures to improve the standard of tools, tooling elements, jig component
fixtures, dies, etc.
c) To offer the needed tool room facility. A governing council which consists of representatives of the
Government and industry is constituted to look at the management of the Institute. The governing
council is headed by the Development Commissioner
ii) Central Tool Room Training Centers: In order to provide tool room services and facilities in
manufacture and training, the Government has set-up four tool room training centers located I
Bangalore, Calcutta, Ludhiana and New Delhi.
iii) Central Institute of Hand Tool, Jalandhar: This institute has been set-up with a view to provide
improved technology, raw materials, design and testing for handloom industry. This is the only institute
of its kind in the country located at Jalandhar.
iv)Institute for Design of Electrical Measuring Instruments (IDEM), Mumbai:
This institute was set-up in 1969 with the assistance from UNDP. It was set-up to provide technical
consultancy services in the matters relating to design and development of electrical and electronic
instruments, tool designing and fabrication and training.
v) National Institute of Entrepreneurship and Small Business Development (NISEBUD), New Delhi: It is an
apex national level institute of its kind set-up at New Delhi in 1983. Its main functions are to coordinate
research and training in entrepreneurship development and to impart specialized training to various
categories of entrepreneurs. Besides, it also serves as a forum for interaction and exchange of views
between various agencies engaged in activities relating to entrepreneurial development.
vi) National Institute of Small Industries Extension Training (NISIET), Hyderabad: This institute was set-up
in 1956 to develop the required manpower for running small-scale industries in the country.
Accordingly, its main functions are:
a) To impart training to the persons engaged in small-scale industries.
b) To undertake research studies relating to development of small-scale industries.

21. c) To enter into agreements relating to consultancy services both with national and international
organizations to provide consultancy services to small industries in the country. The institute conducts
courses in business management for the benefit of the entrepreneurs and semi-managerial personnel
of small industries. It is located at Hyderabad.
vii) Other Institutes: Following are some of the important institute’s set-up by the Government for
development of small-scale industries:
a) Electronic Training and Service Institute, Nainital.
b) Central Machine Toots Limited.
c) Sports Goods and Leisure Time
d) Central Institute of Plastics Engineering and Tools, Madras.
e) National Institute of Foundry and Forging Technology, Ranchi.
Q. Explain Support System Developed by the State Government (12 marks)
Director of Industries is the highest authority at kite level to execute the policies and programs with
regard to SSIs, medium and large scale enterprises.
Director/commissioner is responsible for the overall supervision of support system developed for the
SSIs in the state. These support systems are as follows:
1) DIC (District Industries Centers): Governments in the past taken a number of measures for the
development of small and village industries, but the actual achievements have been far below the
expectations. Also the focus of attention for industrial development was mainly on large cities and State
capitals to the neglect of district areas. In addition, multiplicity of institutions involved in small industries
development and complicated systems and procedures made the job of promoting the industrial units
an uphill task for small entrepreneurs. It was felt necessary to establish a development agency, which
could provide all services and facilities to village and small industries under one roof. Accordingly, the
DICs were established in May 1978 in order to cater to the needs of small units.
2) SFC (State Financial Corporations): The State Financial Corporation Act was passed by the
Government of India in 1951 with a view to provide financial assistance to small and medium scale
industries which were beyond the scope of IFCI. According to this Act, a State Government is
empowered to establish a financial corporation to operate within the State.
Functions of SFC
Main function of the SFCs is to provide loans to small and medium scale industries engaged in the
manufacture, preservation or processing of goods, mining, hotel industry, generation or distribution of
power, transportation, fishing, assembling, repairing or package articles with the aid of power, etc. State
Financial Corporation is authorized to grant financial assistance in the following forms:

22. i) Granting of bans or advances to industrial concerns repayable within a period not exceeding twenty
years.
ii) Subscribing to the debentures of industrial concerns repayable within a period not exceeding twenty
years.
iii) Guaranteeing loans raised by industrial concerns repayable within a period not exceeding twenty
years
iv) Underwriting the issue of stock, shires, bonds or debentures by the industrial concerns subject to
their being disposed off within seven years.
v) Guaranteeing deferred payments due from any industrial concern in connection with purchase of
capital goods in India.
vi) Acting as an agent of the Central Government or State Government or the Industrial Finance
Corporation of India in respect of any business with an industrial concern in respect in respect of loans
sanctioned to them.
3) SSIDC (State Small Industries Development Corporations): Under the Companies Act, SSIDC were
started in 1956 in all the states under the Companies Act. These Slate Government undertakings take
care of the growth and development needs of village industries, tiny industries and small industries.
Different states give focus and importance to different industries based on the raw-material and skill
availability in their states.
Functions of SSIDC
i) Assist for procurement of machineries on hire purchase scheme.
ii) Assist in marketing of the products.
iii) Keep stock of vital and scares raw-materials and distribute to small industries.
iv) Develop industrial sheds, estates and godowns for use of small industries.
4) SIDC (State Industrial Development Corporations): The State Industrial Development Corporations
(SIDCs) act as catalyst for promotion and development of medium and large enterprises in their
respective states. In tandem with changing business environment, SIDCs are making efforts to diversify
their activities to cover a range of services and schemes and have entered into the areas of equipment
leasing, merchant banking, venture capital and mutual funds.
The State Industrial Development Corporations (SIDCs) Incorporated under the Companies Act as
wholly-owned undertakings of State Governments for promotion and development of medium and large
industries in respective states, provide financial assistance in the form of rupee loans,
underwriting/direct subscriptions to shares/debentures, guarantees, inter-corporate deposits, and also
opens letters of credit on behalf of its borrowers.

23. They are also involved in setting up of medium and large industrial projects in the Joint sector/assisted
sector in collaboration with private entrepreneurs or wholly-owned subsidiaries. In order to accelerate
industrial development various states have set up Industrial Development Corporations. Andhra Pradesh
and Bihar were the first states to set up such corporations in 1960.Most of the states have set up
institution at present.
Functions of SIDC
i) Grant of financial assistance.
ii) Provision of industrial sheds or plots.
iii) Promotion and management of industrial concerns.
iv) Promotional activities such as identification of project idea, selection and training of entrepreneur,
provision of technical assistance during project implementation.
v) Providing risk capital to entrepreneur by way of equity participation and seed capital assistance. 5)
TCO (Technical Consultancy Organization): Technical Consultancy Organization plays a crucial role in the
industrialization process of the state. The TCOs are organizations established by the state governments.
The primary objective of the TCO is to furnish industrial and technical consultancy to the entrepreneurs.
The TCO is sponsored by national and state level financial institutions and banks like ICICI, IDBI IFCI, SFC,
SIDC, SSIDC, commercial banks, etc.
Functions of TCO
i) Identification of potential entrepreneurs among different target groups as rural poor, women,
minorities, SCs, STs, etc.
ii) Identification of area specific viable manufacturing and servicing activities.
iii) Extending candidate specific hand-holding support right from project identification, securing
financial assistance, accessing market through guidance and monitoring during project implementation
and commercial operation.
iv) Capacity building of other support providers.
6) Industrial Estates: Developing countries require institutional arrangements for their rapid
industrialization and balanced growth. One such institutional measure is industrial estates. The term
'industrial estate' is called by different names, e.g., industrial park, industrial zone, industrial region,
industrial city, industrial area, and industrial township, etc.
An industrial estate has been defined as a method of "organizing, housing and servicing industry, a
planned clustering of industrial enterprises offering standard factory buildings erected in advance of

24. demand and a variety of services and facilities to the occupants". The main features of an industrial
estate are as follows:
i) It is a tract of land sub-divided and developed into factory plots or sheds.
ii) It provides several common facilities or infrastructural amenities such as water, power, transport,
tool room, training, bank, post-office, repairs and maintenance, etc., to the occupants.
iii) It is a planned clustering of industrial units.
iv) It is designed as a tool of industrialization and balanced regional development.
v) It may be developed in urban, semi-urban or rural areas.
vi) It may be large, medium and small.
vii) It may be set-up by the Government or by cooperatives or by private agencies.
Types of Industrial Estates Industrial estates may be classified into the following categories:
i) General Purpose or Composite Industrial Estates: Such an industrial estate provides accommodation
to all types of small-scale industries. It consists of a wide variety and range of industrial units. Most of
the industrial estates in India are of this type.
ii) Special Purpose Industrial Estates: This type of industrial estate is particularly constructed for
specified groups of entrepreneurs, e.g., technically qualified persons, craftsmen or artisans, etc. For
example, industrial estates for artisans and technical personnel have been set-up at Hyderabad.
iii) Ancillary Industrial Estates: Such as industrial estate houses manufacturing units, which produce,
parts and components for a large industrial unit. It is generally set-up near the parent unit.
iv) Functional Industrial Estates: This type of industrial estate consists of industrial units manufacturing
the same product. Such estates have been set-up for leather goods, electronics, sports-goods, food
preservation, ceramics, etc.
v) Flatted Factory Estates: These are multi-storey buildings constructed in big cities, to provide space to
industrial units manufacturing light weight goods with the help of simple machine tools. They help to
conserve space
Q. Explain the Support System Developed by Other Agency (12 marks)
Besides, Central Government and State(Government agencies, there are some Non-Governmental
agencies who are also supporting the cause of small scale industries in the country. These agencies
include Non-Government organizations and industry associations.
They provide a common platform to voice SSI needs and initiate cooperative efforts.

25. Government policies have stressed the increasing role of these associations and NGOs in setting up
common facilities and other cooperative ventures in technology, marketing and other support systems.
Some of these major associations are as follows:
1) ICSI (Indian Council of Small Industries): It was established in 1979 to help tiny, cottage and small
industries and artisans of rural areas. Membership of ICSI constitutes about 1500 associations of the
decentralized sector. Its main functions are as follows:
i) Information dissemination
ii) Entrepreneurship developmental
iii) Consultancy and managerial support
iv) Training & Research
2) LUB (Laghudyog Bharti): It was founded in 1995 to promote and safeguard the interest of tiny and
small scale industries. It has been given representation on the national and state level government
bodies responsible for the development of SSIs. It is responsible to undertake
i) Entrepreneurial training
ii) Support for technology upgradation
iii) Marketing services.
However, it would be better for LUB to take necessary steps in channelizing resources from its members.
Sufficient fund is necessary to meet out growing needs of the above functions.
3) FASH (Federation of Associations of Small Industries of India):
It was promoted in 1959 to represent the problems of SSIs with the government and liaising with other
agencies involved in promotion of SSI sector. Its objectives are as follows:
i)To promote the development of small scale tiny and cottage industries
ii) To cooperate with industrial business, educational institutions in collecting and exchanging
:information pertaining to the small scale sector,
iii) To undertake professional, technical and management consultation services;
iv) To undertake studies, surveys and research assignments,
(v) to further the cause of small industries by interacting with Union and State Governments and other
bodies
( vi) To establish and operate trade centers display centers, sub-contract exchanges and other
promotional institutions for the benefit of the small scale sector and

26. vii) To establish test centers, laboratories and common facility centers for the SSI sector.
4) WASME (World Association for Small and Medium Enterprises): It was established in 1981 to ensure
business, cooperation among its members. Its membership represents chamber of commerce, small
industries development corporations, financial institutions and commercial banks and other State
Government agencies of developing countries. It facilitates technology transfer, manpower traininga
register of experts/consultants, organizing seminars and conferences and acting as a clearingf
information and marketing services etc.
5) FICCI (Federation of Indian Chambers of Commerce and Industry): The FICCI was established in 1927
as the national agency through which the chambers of commerce and trade association in India could
crystallize their views on current economic problems. It serves as the coordinating agency for the
commercial and industrial Interests as represented by various chambers of commerce and trade
associations. The representative functions occupy the foremost place in the activities of the federation.
The Federation maintains very close relations with the Union Government.
6) ACCH/ASSOCHAM(Associated Chambers of Commerce & Industry of India): ASSOCHAM is another
apex organization like -FICCI to which some of the older chambers of commerce are affiliated. It was
founded in December 1920. It seeks to make the businessmen's voice heard and to ensure that their
views are taken into account in the molding of the nation's economic life. It also undertakes persuasive
activities directed to the administrative departments and to the law makers with a view-to acquaint
them with the viewpoint of the member.
7) PHDCCI (PHI) Chambers of Commerce and Industry): It was promoted in 1905 to represent the
interest of trade and industry in northern India. It provides a meeting ground for representatives of
commerce and industry with the government. It also constitutes various expert committees and task
forces through which members representing various interest, pool knowledge and experience are
required to work in the interest of business community. The association has also launched a new system
in 1995, Small Industries and Business (SIB) Help Line to assist and support the SSIs. It is responsible for
the coordination between SSI units and commercial banks and financial institutions.
8) CII (Confederation of Indian Industry): It was created in 1992 by changing the name of Confederation
of Engineering Industry (ECI). The CEI itself was a creation of two merging associations like Indian
Engineering Association (1912) and Engineering Association of India (1942) in 1974. It is responsible for
advisory, consultative and representative services to industry and the government. It has been given
representation on major policy formulating ,bodies, related with the industry. It is also expected to work
as a nodal agency for international.
9) FIEO (Federation of Indian Exporters Organization): This is an apex organization set up in October
1965 by the Ministry of Commerce. It represents Indian entrepreneur’s spirit of enterprise in the global
market. The Federation performs activity of common nature such as sending trade delegations
abroadand inviting trade delegations from foreign countries, sponsoring commodity and market surveys
C011eOtill-and dissemination of commercial intelligence