Project Assistance Short Answer Type Questions

Question 1.
State the name of the institution offering financial assistance.
Answer:
The names of institutions offering financial assistance to SSIs are:

  • State Financial Corporations.
  • Industrial Development Bank of India.
  • Industrial Finance Corporation of India.
  • Industrial Credit and Investment Corporation of India.
  • Industrial Reconstruction Bank of India.
  • Commercial Banks.
  • Life Insurance Corporation.
  • General Insurance Corporations.
  • Unit Trust of India
  • Small Industries Development Bank of India.
  • Mutual funds
  • Leasing Companies
  • Risk Capital Foundation
  • National bank for Agriculture and Rural Development.
  • Khadi and Village Industries Commission
  • Stock Exchange
  • Venture Capital Finance
  • Housing Development Finance Corporation Ltd.
  • The Shipping Credit and Investment Company of India
  • The World Bank
  • Asian Development Bank
  • Infrastructure and Leasing Finance Corporation.

Question 2.
Write a note on different financial institutions connected with small industry.
Answer:
The growing sector of SSIs is supported by various types of financial institutions which are required for expansion of units, providing infrastructure, availing raw material, technical know how etc.
1. State Financial Corporations established by respective states are playing a significant role in providing financial assistance and other types of support to SSIs. State Financial Corporation Act passed in 1951 provides long term finance for certain identified group of items in manufacturing as well as service sectors.

2. KSFC extends financial assistance to set up tiny, small, medium and large scale industrial units in Karnataka. Finances such as long and medium term loans, lease and hire purchase finance are provided by KSFC. It also renders merchant banking services. Fund based activities are also considered.

3. SIDBI was established in 1990. This institution through its five regional offices and about 33 branches, provides varied types of finance to SSIs. The types are (i) Direct finance, (2) Foreign currency loans (3) Venture capital fund (4) Refinancing and (5) Microfinancing.

4. Various commercial banks are also extending financial assistance to SSIs through their schemes such as priority sector leading, institutional arrangement, General Purpose term loans, Entrepreneur Scheme, Equity Fund Scheme, Stree Shakti Package, Margin Money Scheme, Mahila Udyam Nidhi Scheme, Export finance scheme, etc.

5. KSZDC is another institution which extends financial support to SSIs in Karnataka. This organisation of Karnataka has no specific financial programme for adaptation of pollution control etc., but provides medium and long term loans, equipment financing and direct equity participation.

6. IFCI, the first development financial institution in India was established in 1948 as a statutory Corporation. Besides providing project finance, financial services, nonproject specific assistance, corporate advisory services. IFCI has promoted institution such as National Stock Exchange, Management Development Institute. ICRA Ltd., LIC Housing Finance Ltd, and a number of TCOs.

Question 3.
Discuss the objectives of State Financial Corporations (SFC’s).
Answer:
The objectives of state financial corporations (SFC’s) are:

  • To fulfill the financial needs of the small and medium scale industries.
  • Extends loans to industrial units.
  • Development of Infrastructure Facilities.
  • Extending financial assistance to the prospective entrepreneurs,
  • It provides term loan to small and medium scale industries for creation of assets.
  • It provide working capital term loan to the industrial units.
  • It provides non fund based services like merchant banking.
  • To establish uniformity in regional industries.
  • To provide incentive to new industries.
  • To bring efficiency in regional industrial units.
  • To provide finance to small-scale, medium sized and cottage industries in the state.
  • To develop regional financial resources.

Question 4.
What are the objectives of (SIDBI) Small Industries Development Bank of India?
Answer:
Small Industries Development Bank of India (SIDBI) was set up by an Act of Parliament, it commenced operations in April 2, 1990.
The objectives of SIDBI are:

  • Promotion, financing and developing of industry in the small scale sector.
  • Co-ordinating the functions of other institutions engaged in similar activities.
  • Setting up to new projects
  • Expansion, diversification, modernization, technology upgradation, quality improvement rehabilitation of existing units.
  • Strengthening of marketing capabilities of SSI units.
  • Development of infrastructure for SSI units
  • Export promotion.

Question 5.
Discuss the role of SIDBI in promoting small industries in India.
Answer:
The role of SIDBI in promoting small industries in India are:
1. SIDBI directly finances:

  • SSI units for new/expansion/diversification/modernisation projects.
  • Marketing development projects which expand the domestic and international marketability of SSI products.
  • Existing well run SSI units and ancillaries/ subcontracting units/vendor units for modernisation and technology upgradation.
  • Infrastructure development agencies for developing industrial areas.
  • Leasing and hire purchase companies for offering leasing / hire purchase facilities to SSI units.
  • Existing EOUs to enable them acquire ISO 9000 certification.

2. It provides foreign currency loan to:

  • Import equipment by existing export oriented SSIs and new units having definite plans for entering export markets.
  • Execute confirmed export orders by way of pre-shipment credit/letter of credit and provides post shipment facilities.

3. SIDBI’s Venture Capital Fund provides assistance to: Small scale entrepreneurs using innovative indigenous technology and expertise.

4. SIDBI refinances:

  • Loans granted by PLIs for new SSI projects and for expansion, technology, upgradation, modernisation, quality promotion.
  • Loans sanctioned by PLIs to small road transport operators, qualified professionals for self employment, small hospitals and nursing homes, and to promote hotel and tourism related activities.

Question 6.
Briefly explain the role or objectives of KSIDC in the up-liftment of small scale industries.
Answer:
The role of KSIDC in the up-lifting of small scale industries can be summarized as follows:
(i) Amenities like Training institute, P&T office: KSIDC estates are provided with required amenities like Training institute, P&T office, dispensary, community garden banks canteen etc.

(ii) Ready to occupy sheds for immediate starting: KSIDC provides ready to occupy sheds for immediate starting of industries and also provide Gowdown for storage of its materials.

(iii) Transparent: KSIDC being a Government Organization is, transparent and of the prices of land/building. The prices so fixed are accepted by Financial Institutions for quick approval of loans.

(iv) Free from Local Taxes and Octroi: KSIDC estates, once declared : as notified area, are free from Local Taxes and Octroi.

(v) Benefits: KSIDC estates, provides a unique opportunity to entrepreneur cluster benefits related to Raw material, market technology services, linkages etc.,

(vi) Special services in acquiring and allotting land: KSIDC provides special services in acquiring and allotting land to SSI entrepreneurs,

(vii) Needy SC & ST units of Backward areas: KSIDC allots land on top priority basis to start industry by SC/ST/SEDC applicants, further to needy SC & ST units of Backward areas will be paid subsidy amount and also reduced payment of EMD / application / scrutiny fee.

(viii) Provides ISI testing: KSIDC estate provides ISI testing units to help SSI units to process quality products.

(ix) Get easy loans: KSIDC estates where SSI units established will get easy loans from financial institutes and nationalized banks for purchase of machinery and also loans to purchase raw materials.

Question 7.
State various functions of KSSIDC.
Answer:
The various functions of KSSIDC are:
(i) KSSIDC provides ready to occupy sheds for immediate starting of industries and also provide Gowdown for storage of its materials.

(ii) KSSIDC being a Government Organisation is, transparent and of the prices of land/building. The prices so fixed are accepted by Financial Institutions for quick approval of loans.

(iii) KSSIDC estates, once declared as notified area, are free from Local Taxes and Octroi.

(iv) KSSIDC estates, provides a unique opportunity to entrepreneur cluster benefits related to Raw material, market technology services, linkages etc.,

(v) Any upgradation programme undertaken in KSSIDC estate will be advantage to all industries located therein.

(vi) KSSIDC provides special services in acquiring and allotting land to SSI entrepreneurs.

(vii) KSSIDC allots land on top priority basis to start industry by SC/ ST/SEDC applicants, further to needy SC & ST units of Backward areas will be paid subsidy amount and also reduced payment of EMD / application / scrutiny fee.

(viii) KSSIDC divisional offices established in the state will have raw- material depots to distribute raw materials to SSI units.

(x) KSSIDC estate provides ISI testing units to help SSI units to process quality products.

Question 8.
Write a note on IFCI.
Answer:
IFCI, the first development financial institution in India was established in 1948 as a statutory Corporation. Besides providing project finance, financial services, non-project specific assistance, corporate advisory services, IFCI has promoted institutions such as National Stock Exchange, Management Development Institute, ICRA Ltd., LIC Housing Finance Ltd. and number of TCOs. (Technical Consultancy Organisations).

The primary objective of IFCI is to provide medium and long term financial assistance to mainly manufacturing concerns and to fulfill the overall goals of industrial and economic development in India.

The main activities of IFCI are:

  • Project financing
  • Financial services i.e. assistance given to existing concerns through various schemes of acquisition of assets, as part of their expansion, diversification and modernisation programmes.
  • Non project specific assistance in the form of short term loans, working capital, bill discounting.
  • IFCI provides rupee and foreign currency loans to the industrial
    sector.
  • Its financial resources include: Share capital, Bonds and Debentures and other borrowings.

Question 9.
Write a note on District Industries Centre. OR Write a note on non financial assistance from DIC.
Answer:
The Government of Karnataka established the District Industries Center (DIC) in 1913 under the erstwhile Princely State of Mysore to oversee the Industrial Development in the State.

The following are some of the main functions of the DIC:
(i) Registration of MSMEs: It monitors the registration of MSMEs.

(ii) Provides infrastructural assistance: It provides infrastructural assistance to entrepreneurs in form of grievance redressal through the District level clearance committee of Industries and commerce, allotment of KIADB’s land to MSME’s in the District and recommendation for loans from financial institutions.

(iii) It assists in implementation of incentive schemes through sanction and disbursement of Investment Subsidy.

(iv) Monitoring: It is responsible for the implementation and Monitoring of the Prime Minister Employment Generation programme.

(v) Monitoring of the Special Component Plan: It helps in the implementation and monitoring of the Special Component Plan and the Tribal Sub plans that provide assistance to SC & ST artisans in form of training, better toolkits, venture and equity capital etc.

(vi) Conducting various entrepreneurship: DIC is also involved in con-ducting various entrepreneurship and vendor development and awareness programmes at Hobli, Taluk and District levels.

(vii) Buyer – seller meets: DIC helps in arranging buyer – seller meets.

(viii) Cluster Development Programmes: Various other programmes are taken up by DIC such as Cluster Development Programmes and Sensitization Programmes.

(ix) Industrial Exhibitions: DIC conducts various Industrial Exhibitions at District and Taluk levels where young entrepreneurs could showcase their products and services and artisans could showcase their work.

(x) Industrial Approvals: DIC also follows – up the Industrial Approvals.

Question 10.
Explain any six functions of SISI.
Answer:
The main functions of SISI i.e, small industries service institutes involve the following:

  • The small industries service institutes provide consultancy and training to small and prospective entrepreneurs.
  • SISI co-ordinate industrial management training division of the DC, SSI office.
  • To assist existing and prospective entrepreneurs through technical and managerial counselling such as help in selecting the appropriate machinery and equipment, adoption of recognized standards of testing, quality performance etc.
  • SISI perform technological, management and administrative tasks.
  • SISI conduct EDPs all over the country.
  • They advise the Central and State governments on policy matters relating to small industry development.
  • SISI assist in testing of raw materials and products of SSIs, their inspection and quality control.
  • To recommend SSI’s for financial assistance from financial institutions.
  • To enlist entrepreneurs for partition in Government stores purchase programme.
  • SISI conduct economic and technical surveys
  • SISI prepare techno-economic feasible reports for selected areas and industries.

Question 11.
Write a note on Small Industriess Services Institute.
OR
Write a note on non financial assistance from SISI.
Answer:
SISI has been established by GOI to help the SSI sector on different issues. Its main activities include:

  • Assistance/consultancy to prospective entrepreneurs
  • Assistance/consultancy to existing units
  • Publishing information pertaining to economic and industrial activities of the state.
  • Conducting surveys to identify emerging business opportunities.
  • Profiling various projects.
  • Undertaking Entrepreneurship Development (EDP) Programmes.
  • Publishing the data on production index.
  • Quality control and Upgradation.
  • Export Promotion measures
  • Setting up of ancillary industries
  • Creation of common facility workshop
  • Preparation of Directory of specific Industry
  • Intensive Technical Assistance
  • Coordinate with DICs in promoting industrial development.
  • Coordinate with various government functionaries
  • Conducting market surveys on various products/services.

Question 12.
Write a note on Entrepreneurship Development Institute or EDI.
Answer:
EDI is an autonomous and not-for-profit institution. It is sponsored by the IDBI, the IFCI, the ICICI and the SBI.

EDI has set up centre for Research in Entrepreneurship Education and Development (CREED), which serves as an important link between theory and practice in the field of entrepreneurship with special focus on applied research backed by sound theoretical underpinnings.

EDI beliefs in the notion that entrepreneurs need not necessarily be born, but can be developed through training and education.

EDI aims at:

  • Creating a multiplier effect on opportunities for self employment.
  • Increasing the supply of competent entrepreneurs through training.
  • Participating in institution building efforts
  • Promoting micro enterprises at rural level
  • Developing and disseminating new knowledge and insights in entre-preneurial theory and practice.
  • Facilitating corporate excellence through creating intrapreneurs.
  • Improving managerial capabilities of SSIs.
  • Building a support system to facilitate potential and existing entre-preneurs establish and manage their enterprises.

Question 13.
Write a note on Small Scale Development Organisation or SIDO.
Answer:
SIDO functions under the Department of SSI, GOI.

  • Its main functions include:
  • Framing of policies pertaining to SSI sector
  • Coordinating with different agencies in the SSI sector.
  • Monitoring policy implementation
  • Industrial development
  • Extension services.
  • To encourage exporters
  • SIDO provides exhibition space and shipment of exhibits ex-Mumbai free of cost for this purpose.
  • Encourages participation in International Fairs/Exhibitions
  • Conducts training programmes on packaging for exports, with a view to render assistance to SSIs.
  • Technical and Managerial consultancy services are provided to SSIs through a network of field offices so as to ensure higher level of production and generation of higher exports.
  • National Awards for Quality Products are given to outstanding units, who have made a significant contribution for improving quality of their products.
  • SIDO has regional testing centres which are equipped with basic testing facilities for raw materials, semi finished products and end products.
  • It has also set up tool rooms to assist SSI units in their technical upgradation by providing good quality toolings.
  • SIDO also provides extension services in the form of programmes for modernisation and setting up sub contracting exchanges.

Question 14.
Write a note on Technical Consuitanct Organisations. OR State any five functions of TCO.
Answer:
TCOs were established by financial institutions like ICICI, IFCI, IDBI, SFC etc in collaboration with state level financial institutions and commercial banks to cater to the consultancy needs of small and medium enterprises.

Its functions include:

  • Giving advice on technical aspects of business.
  • Preparing project profiles and feasibility reports
  • Technical collaboration and technology transfer
  • Technical consultancy to new entrepreneurs
  • Financial potential survey.
  • Advice on industrial management.
  • Market research and survey for specific product.
  • Conducting survey on behalf of central and state governments on issues like power needs, modernisation of plant, rehabilitation of sick industries etc.
  • Offering merchant banking facilities
  • Opportunity scanning and product selection.
  • Conduct entrepreneurship development programmes.

Question 15.
Explain the objectives of seminars and conventions organised by AWAKE. Dec 2019, Nov 2018
Answer:
AWAKE – Association of Women Entrepreneurs of Karnataka is a not- for-profit, Non-Governmental Organization (NGO) based in Bangalore, India, working towards’Empowerment of women through entrepreneurship development to improve their economic condition’.

AWAKE strives to promote entrepreneurship among women as a means to achieve self-reliance and socio-economic independence. AWAKE provides support and guidance to aspiring women from rural, urban, national and international arenas to be successful entrepreneurs, irrespective of their age, academic, social, economic background. AWAKE’s services are extended to women Self Help Groups (SHGs), NGOs and other development agencies engaged in Income Generation Activities and Entrepreneurship Development.

AWAKE’s process in entrepreneurship development involves awareness programs, business counseling, trainings, skill development, mentoring, business incubation, information sharing and networking, marketing assistance, credit referral and policy advocacy. The organization comprises of women entrepreneurs from various sectors as its members.

Members of AWAKE contribute their time and expertise to support women entrepreneurs, based on the approach ‘Entrepreneur guiding Entrepreneur’. AWAKE has built up a strong support network with Government, non-government, corporate, developmental agencies, funding and finance agencies, working with them to provide the expertise in entrepreneurship development for both rural and urban women.

AWAKE collaborates as a resource organization in institutional competence building, training, policy making and enabling technology transfers for state, national and international agencies. AWAKE fosters an entrepreneurial culture in women such that their contribution to the global economy is recognized.

Question 16.
Write note on (i) AWAKE (ii) TCP (Hi) TECSOK (iv) KVIC.
Answer:
(i) Association of Women Entrepreneurs of Karnataka (AWAKE):
This is one of India’s premier institutions totally devoted to entrepreneurship development among women. It aims to empower women through entrepreneur development to improve their economic condition, enhance their social status and develop a spirit of individuality and creativity. It organises conventions and seminars. The seminars emphasise the imperative need for growth of women owned enterprises in the changing economic scenario.

(ii) Technical Consultancy Organisations (TCOs):
TCOs were established by financial institutions like ICICI, IFCI, IDBI, SFC etc in collaboration with state level financial institutions and commercial banks to cater to the consultancy needs of small and medium enterprises.

Its functions include:

  • Giving advice on technical aspects of business.
  • Preparing project profiles and feasibility reports
  • Technical collaboration and technology transfer
  • Technical consultancy to new entrepreneurs
  • Financial potential survey.
  • Advice on industrial management.
  • Market research and survey for specific product.
  • Conducting survey on behalf of central and state governments on issues like power needs, modernisation of plant, rehabilitation of sick industries etc.
  • Offering merchant banking facilities.
  • Opportunity scanning and product selection.
  • Conduct entrepreneurship development programmes.

(iii) Technical Consultancy Services Organisation of Karnataka (TECSOK):
Technical Consultancy Services Organisation of Karnataka (TECSOK) is a Government of Karnataka Organisation and it provides the following range of services to the entrepreneur:

  • Identification of project ideas and selection of investment opportunities.
  • Selection of suitable locations for setting up industrial units
  • Conducting market surveys
  • Preparation of detailed techno-economic feasibility report.
  • Turnkey assistance
  • Assistance in obtaining necessary licences and clearances.
  • Energy audit and conservation
  • Modernisation studies
  • Dissemination of information on industrial policies and procedures.
  • Co-ordinating and conducting management development programmes.
  • Identification and development of ancillary industries.
  • Assistance to government in providing information about new policies, programmes and schemes.

(iv) Khadi and Village Industries Corporation (KVIC):
The KVIC is engaged in the development of Khadi and Village industries in rural areas.

Its objectives are:

  • To preserve traditional arts and crafts of India.
  • To equip the artisans and craftsmen to take up challenges of modern market.
  • To promote the handicrafts, Khadi, village and cottage industry by facilitating them with the necessary inputs like raw materials, equipment, capital etc.
  • To develop a market for these products.
  • To introduce the products in the international market.

Question 17.
Mention the tax holiday benefit available to SSI.
Answer:
New Industrial undertakings, including SSI are exempted from the payment of income tax. The deduction at the rate of 6 percent from the total income is allowed in the assessment year in which the unit begins to manufacture, provided that the conditions specified in Sec 80J are fulfilled by small scale industries. This concession is for five years from the commencement of production.

Small scale units should satisfy the following conditions before they become eligible for tax benefits:

  • They should not have been formed by the splitting or reconstitution of an existing unit.
  • They should employ 10 or more workers in a manufacturing process with power, or 20 or more persons without power.

Question 18.
Discuss the assistance for obtaining Raw Material of SSI.
Answer:
Various organizations provide different types of raw material assistance to small scale industries. Some of them are as follows:
a. NSIC scheme: Raw Material Assistance Scheme aims at helping Medium and Small scale Enterprises (MSEs) by way of financing the purchase of Raw Material (both indigenous & imported). This gives an opportunity to MSEs to focus better on manufacturing quality products. The following are the benefits of this scheme:

  • Financial Assistance for procurement of Raw Material upto 90 days.
  • MSEs helped to avail Economics of Purchases like bulk purchase; cash discount etc
  • NSIC takes care of all the procedures, documentation & issue of Letter of credit in case of imports.

b. NSIC also helps in organizing supply of raw materials like coal, iron, steel and other materials and even machines needed by small scale private industries by mediating with other government companies like Coal India Limited, Steel Authority of India Limited, Hindustan Copper Limited and many others, who produce this materials to provide same at concessional rates to SSIs.

c. The Central Government has introduced a buffer stock scheme to ensure availability of scarce raw materials to this sector,

d. State Small Industries Development Corporations have set up depots for distribution of raw materials to SSIs.

Question 19.
Explain various Technical Assistances required for SSI.
Answer:
Technology is the key to enhance an organisation’s competitive advantage in today’s dynamic information age. SSIs need to develop and implement a technology strategy in addition to financial, marketing and operational strategies, and adopt the one that helps integrate their operations with their environment, customers and suppliers.

National small Industries Corporation Ltd (NSIC) offers SSI units the following support and services through its Technical Services Centre, Extension Centres, Software Technology Parks and Technology Transfer Centre:

  • Technology audits and benchmarking.
  • Technology needs assessment.
  • Technology sourcing.
  • Application of new techniques.
  • Technology acquisition.
  • Material testing facilities through accredited laboratories.
  • Product design including Computer Aided Designs.
  • Common facility support in machining.
  • Energy and environment services at selected centers.
  • Classroom and practical training for skill upgradation.

Software Technology Parks (STPs) facilitate small industries in setting up 100% export oriented units for software export. They also act as major point to activate software exports directly through NSIC. These STPs extend support in terms of the requisite infrastructure to the SSI units to start business operations with a minimum lead-time. Following facilities are available at NSIC Software Technology Park:
→ Built-up Space: This enables the software industries to commence their operations with minimum gestation period.

→ Instant Power Connection: Instant power connections and Generator facility is also available on site, which will allow software units to work without any interruptions.

→ High Speed Data Link: High-speed data communication facility through satellite connection is available.

→ Business Centre: A business centre comprising of Conference Hall, Photocopier, Fax, Training aids, etc. is available inside the STP complex for the member units.

→ Telephones: Each member units will be provided with one telephone line for business promotion on occupation.

Question 20.
Explain the objectives or role of industrial estates.
Answer:
Industrial estate is defined to indicate the provision of the basic infrastructure for the rapid development of the area. The primary objective of the Industrial Estate is to provide factory accommodation to small scale industries at suitable sites with facilities of water, electricity, steam, transport, banks, post offices, canteens, first aid etc. and thus create a healthy atmosphere for the development of industries.

The objectives underlying the establishment of industrial estates in India as follows:

  • To foster the growth of small scale industries
  • To shift small scale industries from congested areas to estate premises with a view to increase their productivity.
  • To achieve decentralised development in small towns and large villages.
  • To encourage growth of ancillary industries in the townships, surrounding major industrial undertakings.
  • To encourage the development of industry as well as entrepreneurship by providing economies and incentives.

Question 21.
Explain the types of an industrial estates.
Answer:
The term industrial estate is defined to indicate the provision of the basic infrastructure for the rapid development of the area.

Types of industrial estates: The term industrial estate includes all the four variants of the concept i.e. industrial areas, industrial estates, industrial townships and galas. In an industrial area, the infrastructure facilities and services are provided but factory accommodation is constructed by entrepreneurs.

In an industrial estate, both infrastructural facilities and factory accommodation are provided by the sponsoring authority. In an industrial township, besides the infrastructure facilities and factory sheds, accommodation and other civic amenities associated with a town are also provided. In galas, space is provided in a big building to set up SSIs, along with infrastructural facilities.

On the basis of functions, industrial estates are classified into:

  • Conventional
  • Special

On the basis of organisational set up, Industrial estates are classified into:

  • Government
  • Private
  • Co-operative
  • Municipal estates.

There are a number of other variants such as:

  • Ancillary Industrial Estate
  • Functional Industrial Estate
  • The Workshop bay.