Small Scale Industries play a very vital role in the national economy. They help in generating employment with minimum possible investment and play a very vital role in promoting exports. Therefore, the Government has announced various schemes and policies for the promotion of Small Scale Industries to ensure that control over production is widely distributed. As per the present definition, an industry having investment of upto Rs. 1 crore in plant and machinery is defined as Small Scale Industry.

1. www.IndiaFilings.com
October 2014
LearningCenter
IndiaFilings
Small & Medium
Business
TIps & Information for growing your
Small & Medium sized business.
Concessions available for Small Scale Industries / Small Business in India
Small Scale Industries play a very vital role in the national economy. They help in generating employment with minimum
possible investment and play a very vital role in promoting exports. Therefore, the Government has announced various schemes and
policies for the promotion of Small Scale Industries to ensure that control over production is widely distributed. As per the present
definition, an industry having investment of upto Rs. 1 crore in plant and machinery is defined as Small Scale Industry.
Finance to SSI
The advances to SSI are considered as
Priority Sector Advances by banks. As
per RBI guidelines, 40 % of the advances
of nationalsed bank should be to Priority
Sector. Thus SSI Units are given priority in
bank finance. Further, RBI has announced
that collateral security will not be insisted
for loans by banks upto Rs. 5 Lakhs.
Collateral Free Loans
Availability of bank credit without the hassles of collaterals / third party guarantees
would be a major source of support to the
first generation entrepreneurs to realise
their dream of setting up a unit of their
own Micro and Small Enterprise (MSE).
Keeping this objective in view, Ministry
of Micro, Small & Medium Enterprises
(MSME), Government of India launched
Credit Guarantee Scheme (CGS) so as to
strengthen credit delivery system and facilitate flow of credit to the MSE sector.
Any collateral / third party guarantee free
credit facility (both fund as well as non
fund based) extended by eligible institutions, to new as well as existing Micro
and Small Enterprise, including Service
Enterprises, with a maximum credit cap
of Rs.100 lakh (Rupees Hundred lakh only)
are eligible to be covered. The guarantee
cover available under the scheme is to
the extent of 75% / 80% of the sanctioned
amount of the credit facility, with a maximum guarantee cap of Rs.62.50 lakh / Rs.
65 lakh. The extent of guarantee cover is
85% for micro enterprises for credit up to
Rs.5 lakh
Equity Support
Under National Equity Fund Scheme equity support is available to entrepreneurs
for setting up new projects in tiny/small
scale sector, for undertaking expansion,
modernisation, technology upgradation
and diversification by existing tiny, SSI
and service enterprises and for rehabili
tation of viable sick units in the SSI sector
which fulfill the specified eligibility criteria.
The scope of this scheme was widened in
2000-01 raising the limit of loan from Rs.
6.25 lakhs to Rs. 10 lakhs and project cost
limit from Rs. 25 lakhs to Rs. 50 lakhs.
Interest Rate Concession
Many nationalized banks have special concessional rates for SME. Some banks even
offer finance at the banks Prime Lending
Rate (PLR) for advances below Rs. 2 Lakhs.
be insisted for loans by banks upto Rs. 5
Lakhs.