The Indian Non-Corporate Small Business Sector (NCSBS) produces goods and services worth Rs 6.28 Lakh Crores each year. It is the backbone of India's economy. The Non-Corporate sector is the reason why economically backward people can still afford to eat food.
According to the Harvard Business Review, Caste and Entrepreneurship in India, October 18, 2011, 57% of NCSBS are owned by Backward Classes in urban areas and 63% in rural areas. This makes NCSBS the biggest source of employment for the backward classes. Also, NCSBS have contributed around 45% to India’s GDP, making them the largest contributors.
NSSO Survey 2013 indicated that NCSBS is the largest employment generator in the country. About 5.77 Crore enterprises in this sector employ 46 Crore people, which accounts for 90% of National employment.
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The Non-Corporate Small Business Sector mostly operates as small manufacturing units, shopkeepers, fruits/vegetable sellers, truck operators, food-service units, repair shops, machine operators, small industries, artisans, food processors and so on. A large portion of this sector is run by self-employed people.
The best way to enhance the lifestyle of the SCs, STs and OBCs is to promote them as entrepreneurs, rather than bestowing on them reservations and freebies. As such, Government subsidy for small business is very effective. Hence, the government is striving to make credit easily available to the SMEs by giving subsidies to small businesses. Following are some of them:
The Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGMSE) was launched with an aim of providing collateral-free credit to MSMEs. Both existing and new businesses are eligible for this scheme. A trust named Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) was established to implement the scheme.
Financial assistance: CGMSE provides credit facilities of up to Rs 1 Crore. These are offered in the form of term loans and working capital loans. The Government and SIDBI make contributions in the ratio 4:1. CGMSE also offers rehabilitation assistance to sick units covered under the guarantee scheme.
Commercial production units manufacturing organic fertilizers or bio-fertilizers can get subsidies towards capital investment, by the National Project on Organic Farming.
Financial assistance: This subsidy is interest-free. Banks charge interest on the loan amount excluding the subsidy amount.
After your loan is sanctioned and the first installment disbursed, and you have submitted your project profile cum claim form, a 50% advance subsidy will be released by NABARD to the participating bank. The remaining 50% is disbursed after conducting an inspection.
Technology Upgradation Fund Scheme was introduced in April 1999 by the Ministry of Textiles. This scheme aims to facilitate the induction of state-of-the-art technology by the textile units.
Financial assistance: A subsidy in the form of credit is given towards capital as follows:
This Scheme finances setting up/expansion/modernization of food processing industries. It covers agri-horticultural sectors like fruits and vegetables, milk products, and so on, which add value and shelf life to such products.
Financial assistance: 25% of the plant and machinery and technical civil work are granted. Maximum amounts granted are Rs 50 Lakhs in General Areas and 33.33% up to Rs 75 Lakhs in Difficult Areas.
The scheme aims to upgrade the existing tanneries, footwear, footwear components and leather products. Such upgradation is expected to meet productivity gains, right-sizing of capacity, cost-cutting, design and development, diversification and setting up of new units.
New units can benefit from this scheme only after meeting the eligibility criteria. Eligible units need to submit the copy of all the required registrations, NOC documents from the concerned Government Departments, for setting up the unit.
This scheme was introduced by the Ministry of Small Scale Industries (SSI) to help SMEs flourish in international trade markets. Known as the Credit Linked Capital Subsidy Scheme (CLCSS), eligible beneficiaries are sole proprietorships, partnership firms, cooperative, private and public limited companies.
Financial assistance: It provides an upfront capital subsidy of 15% (a maximum of Rs 15 Lakhs) to SSI units for credit availed for the modernization of plant and machinery.
The scheme funds:
This scheme aims to encourage the MSME sector adopt quality standards. This scheme is mainly for the acquisition of ISO certifications like ISO 9000, ISO 14001 and HACCP. The initiative aims to increase productivity, technology upgradation and energy conservation in the manufacturing process.
This scheme is set up by the Center to assist States. Mini Tool Room and Training Centres aim to provide Financial assistance by giving a one-time grant-in-aid to develop more tool room facilities. It also aims to provide training facilities in tool manufacturing and tool design to create a skilled workforce.
Under this scheme, NSIC provides two subsidies, namely raw material assistance and marketing assistance.
Raw Material Assistance Scheme finances the purchase of Raw Material. SSI focuses on manufacturing quality products. Marketing Assistance is provided to enhance competitiveness and marketability of products.
Cold Chain, Value Addition and Preservation Infrastructure aim to provide an integsmrated cold chain and preservation infrastructure facility with no break from the farm gate to the consumer. It provides pre-cooling facilities at production sites, reefer vans, mobile cooling, etc.
The eligible beneficiaries are Individual, Groups of Entrepreneurs, Cooperative Societies, Self Help Groups, Farmers Producer Organizations (FPOs), NGOs, Central/State PSUs and so on.
This scheme gives subsidies for innovative and value-added coconut production. Assistance is provided to any individual for setting up of coconut based industries other than the husk.
Financial assistance: The Coconut Development Board grants a technology transfer fee for virgin coconut oil and dietary fibers, packing of tender coconut water, spray dried milk powder, vinegar and so on.
With a budget of Rs 6000 Crores, the Scheme for Agro-Marine Produce Processing and Development of Agro-Processing Clusters, aims at integrating current and new schemes in the food processing sector. The objective of this scheme is to reduce food wastage and double farmers’ income.
The NABARD dairy farming subsidy was launched to strengthen the Indian dairy farming industry.
Financial assistance: Subsidy is given on a pro-rata basis depending on the unit size.
In 1984, the Government of India established the National Horticulture Board (NHB). The aim was the development of hi-tech commercial horticulture, development of modern post-harvest management infrastructure, promotion and market development of fresh horticulture produce.
Following are some subsidies given to help meet the objectives of the NHB:
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