8 Measures Undertaken to Develop Small-Scale Industry Sectors in India

The Third Census of the small-scale sector covering both registered and unregistered manufacturing units was conducted during 2001-02. Other important measures undertaken for development of small-scale sector included:

1. The investment limit for SSI sector has been raised from Rs. 1 crore in 2006 to Rs. 5 crore in Micro Small and Medium Enterprises Development Act (MSMED) Act, 2006.

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2. In Budget 2005-06, the turnover eligibility limit under the general SSI Excise Exemption Scheme has been raised from Rs. 3 crore to Rs. 4 crore.

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3. The Integrated Infrastructure Development has been extended in entire country with 50 per cent reservation for rural areas.

4. A new Scheme called Market Development Assistance was launched for SSI sector.

5. A credit guarantee scheme was launched to provide guarantee for loans up to Rs. 50 lakh to solve the problem of collaterals.

6. A credit linked capital subsidy scheme for technology upgradation was launched.

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7. As a result of Dereservation Policy, the number of items reserved for the SSI sector came down from 836 in July 1989 to 114 in March 2007. Only 14 items are reserved for small-scale sector.

8. MSMED Act was enacted in 2006. It provides the first-ever legal framework for recognition of the concept of “enterprises” (comprising both manufacturing and services) and integrating the three tiers of these enterprises, viz., micro, small and medium. It also provides for a statutory consultative mechanism at the national level with wide representation of all sections of stakeholders, particularly the three classes of enterprises.

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As a result of all these efforts, there has been a considerable expansion of bank credit to the small- scale sector. As at the end of March 2007, the amount of bank credit outstanding against small-scale industries stood at Rs. 1,02,550 crore which was 7.8 per cent of gross bank credit and 19.7 per cent (i.e. one-fifth) of total priority sector advances by banks.

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Eleventh Five Year Plan provides an outlay of Rs. 11,500 crore for MSME (micro, small 1 and medium enterprises) sector. The production of micro and small enterprises (MSE) sector is targeted to increase from Rs. 6, 82,613 crore in 2007-08 to Rs. 13, 98,803 crore in 2011-12 at current prices (compound annual rate of growth being 15.4 per cent) while employment is targeted to increase from 322.28 lakh persons to 391.73 lakh persons over this period (compound annual rate of growth being 4 per cent).

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