Assignment of Rural Entrepreneurship

Role of District Industries Centre

Submitted To Dr. Vikas Batra Lecturer Amity School of Rural Management

Submitted By Priyanka Singh MBA Rural Management 4th Semester (A4011309006) Amity School of Rural Management

DISTRICT INDUSTRIES CENTRE Industrial Growth after Independence Prior to independence the ownership or control of much of the large private industries were in the hands of managing agencies, which grew under the British system and had access to London money markets. Thus the owners of these managing agencies controlled a major portion of the economy, prior to independence.

But things changed after independence. Parliament enacted a legislation to curb the powers of managing agencies. By 1971 the government had banned the managing agencies. The Industrial Policy Resolution declared in 1948, clearly put forward the goal of the Government's policy with respect to industrialization and classified them into four categories. Those industries completely owned by the Government e.g. ordinance, atomic energy, railways and any industry of national importance. Certain important industries like coal, iron and steel, aircraft manufacture, ship building, telephone, telegraphs and communications, were given the permission to operate for ten years, at the end of which the government would nationalize them. A group of 18 specified industries were in control of the central government in liaison with the state governments. The remaining industrial options were left open to the private sector.

Industrial Development & Regulation Act 1951 The act gave complete authority to the government. This resulted in the bureaucracy extending complete control over the industrialization of the country.

They controlled the authorization of capability, whereabouts and growth of

any request for manufacture of new products.

They controlled the authorization of foreign exchange expenditure on the

import of plant and machinery.

They controlled the authorization for the terms of international joint ventures.

Industrial Policy In 1956 In 1956 a new policy for industrialization was initiated. All basic industries and sensitive industries in India were under the purview of public sector enterprises and were called as category A type of industries. In category B, industries were a joint venture of both public

Page 2

and private enterprises. The remaining industries came under category C, to be under the control of private initiative. The policy of 1956 for the first time recognized the contribution of small scale industries in the growth of the Indian economy. It laid stress on rational distribution of national income and effective utilization of resources.

Monopolies Commission -1964 The Government of India appointed a monopolies inquiry commission to study the presence and outcomes of concentration of economic power in private sector. The commission observed the presence of monopolistic and restrictive practices in certain key sectors of the economy. The commission recommended the setting up of the Monopolies and Restrictive Trade Practices Commission.

FERA Amendment 1973 The Foreign Exchange and Regulation Act was amended in 1973.This resulted in a tremendous shift in the foreign investment policy of the Government of India. Foreign Investment was allowed in only those industries that were directly into exports. Restrictions were placed on foreign investments. International companies could hold a maximum of 40% equity. But some industries in the field of advanced technology were given permission for 51% foreign capital.

Industrial Policy 1973 The policy listed out the various appendix 1 industries that could be started by large business houses so that small industries were not driven out of business. The establishment of small and medium industries was encouraged. Private industries were encouraged to set up production units in rural areas and in backward areas with a vision to give thrust for the economic development of those areas.

Industrial Policy 1977 The focus of this industrial policy was judicious promotion of small scale and cottage industries. The idea of District Industries Centres was introduced for the first time. Small

Page 3

industries were encouraged to set up base in rural areas away from the big cities.

As mentioned above the concept of District Industries Centre came during the year 1977 with a view to promote district-wise Industrial development in the Nation, when Government of India announced the new Industrial policy on 23.12.1977. It laid special stress on the development of Small Scale, Village and Cottage Industries and indicated that the "District Industries Centre" would be the main focus agency for promotion of small scale, village and cottage industries. In each district, one agency was created to deal with all requirements of small and village industries. The activity of DIC was to survey the existing traditional and new Industries and also the availability of raw materials and human resources and making arrangements for training facilities in production/management of small units of entrepreneur. The District Industries Centre is functioning mainly with the aim of promoting, facilitating and developing industrial growth in the territory. For the convenience of existing and new entrepreneurs, the Administration has identified various clearance needed and incorporated them in a computerized monitoring system called SWIFT (Single Window Invest Friendly Time Bound System). Activities are being monitored through Single Window. Applications are received at Single Window from 10.00 a.m. to 1.00 p.m. on all working days. Replies / certificates can be taken and enquires can be made from 2.30 p.m. to 4.00 p.m. All the applicants are required to apply in the proper prescribed application form enclosing all necessary certified true copies or notarized documents, at the Single Window. Applicant can contact/approach for any grievances to the General Manager, (DIC) and Director (Industries) or Collector. To create employment opportunities and to motivate entrepreneurship among the educated unemployed youth they are providing training programmes as per their requirement which are imparted in the following categories:

In-Plant Training Vocational Training Advance / High Skill Training Entrepreneurship Development Programme (EDP) Management Training

Page 4

In-Plant Training The training is imparted to the educated unemployed youth at various industrial establishments in a real time environment. The trainees acquiring the skill by observing, assisting and learning the job on his own in the plant itself. The training make them acquire better skill in the trade so as to start either their self ventures or to get employment in the established industries. The training is imparted for a period of one year with monthly stipend at rates based on educational qualification. Vocational Training The objective of the programme is to create more employment opportunities broadly for the unemployed youth particularly to the women to pursue wide career opening besides selfventures by giving training in trades like Tailoring & Embroidery, Beauty Parlour, Arts & Design. The training is institution oriented. (Six Months) Advance / High Skill Training The objective of the programme is to enhance the skill of those who have completed the basic training and interested for advance training in their trade or the candidates having technical qualification who are willing to undergo some special high skilled training to start their own ventures or to get suitable employment opportunity in competitive fields. Selected candidates are sponsored to training in relevant courses offered by reputed Training Institutions situated in the neighbouring states. Entrepreneurship Development Programme (Edp) The objective of the programme is to develop Entrepreneurship skill among the educated unemployed for setting up of own projects towards self-employment. The programme tends to motivate the prospective entrepreneur, highlight the salient features of the project of concern and the course of actions to taken for setting up and successful running of the unit. Management Training Management training is imparted as means to enhance productivity. It is imparted to the entrepreneurs / industrialists or their representative in various disciplines namely Financial

Page 5

Management, Marketing Management, Personnel Management, Quality control, etc, so as to discharge their duties in an efficient manner benefiting both the employee and employer and the economy.

District Industries Centres also facilitate in many different ways such as identification of a suitable activity, they provide relevant information required for establishment and proper functioning of an enterprise, few such facilities are mentioned below. Market information is available with MSME Development Institutes (MSMEDIs) and DIC's of respective states/areas. Market Survey reports on various items and Industrial potential surveys of particular areas provide the information about the market potential of items. Industry and Trade associations, specialized institutions like PPDC can also provide such information. MSMEDI and State Governments agencies viz. DICs and SIDCs provide guidance on market potential. The gap in demand & supply can be established through potential surveys and market assessments with the help of these agencies. Entrepreneurs can also join special short term training programmes. MSMEDI's, DIC's, NSIC etc. provide intensive consultancy to such first generation entrepreneurs. DICs, SFCs can help you in preparing the Project Report. A model proforma for preparing the project report is available with DICs for the guidance of entrepreneurs However, these project profiles have to be recast in accordance with specific needs of the entrepreneurs and the current prices of inputs. DICs provide consultancy which includes identification of suitable product, market, technologies, Raw Materials, production method, regulatory requirement etc. In fact any problem can be addressed by these institutions for setting up or running of the enterprise. DIC has successfully Implemented various employment generation programme like:

Self employment for educated unemployed youth (SEEUY) of GOI

Page 6

ADMINISTRATION Joint Director is the head of the District Industries Centre. The post of Joint Director is of the rank of Special Deputy Commissioner (Revenue). The Joint Director is assisted by Deputy Director/ Assistant Director, Industrial Promotion Officer and Industrial Extension Officer at taluk level. General Manager Accounts Officer Cl.-II Manager (Credit) Cl.-II Manager (RM) Cl.-II Manager (EI) Cl.-II Manager (Marketing) Cl.-II Tech.Officer Industrial & Manager Promotion (Project) Officer Cl.-II Cl.-II

Monitoring of DICs

The functions and activities are monitored by the Directorate of

Industries and Commerce.

DIC SCHEMES There are mainly three schemes under DIC which are shown below

PMEGP

DIC schemes
District Industries Centre Loan Scheme: Seed Money Scheme (SMS)

Page 7

A) PMEGP Coverage : Extent of assistance: 90% loan for general group and 95% for special group will be available from public sector banks, Regional rural banks, IDBI. In urban areas, 15% margin money subsidy for general group and 25% for special group will be available through KVIC. In rural areas, the margin money subsidy will be 25% to 35% respectively. Special group include SC/ST/OBC/minority/woman/ex-

servicemen/physically handicapped.

B) Seed Money Scheme (SMS) The objective of the scheme is to encourage unemployed person to take up self-employment ventures through industry, service and business, by providing soft loans to meet part of the margin money to avail institutional finance. Scope 1. Project cost up to Rs. 25 Lakhs for industry, service and business activity. 2. Seed Money assistance at 15 per cent of the project cost approved by financial institutions is offered. In case of projects costing up to Rs. 10 Lakhs, the quantum of assistance ranges up to 15 per cent for General category and 20% for SC/ST and OBC/NT/VT/Handicapped up to 20 per cent. 3. Seed Money component up to 3.75 Lacks maximum. C) District Industries Centre Loan Scheme: 1. The objective of the scheme is to provide financial assistance in the form of margin/seed money for the promotion of micro industries in semi-urban and rural areas with a view to generate employment opportunities including self employment. 2. Margin money assistance is admissible only to those units whose investment in plant & machinery does not exceed Rs. 2 Lakhs. 3. All towns and rural areas having population of less than 1 Lakhs are covered under the Scheme.

Page 8

4. The extent of assistance is 20 % of the total investment or Rs. 40000/- whichever is less in case of entrepreneur belonging to general category and in case of entrepreneur belonging to scheduled caste & scheduled tribe, assistance up to 30 % of total fixed capital investment or up to maximum of Rs. 60000/- whichever is less is provided. 5. All units falling within the purview of the Small Scale Industries Board and Village Industries, handicrafts, handlooms, Silk & Coir Industries are covered under the Scheme. 6. The State Governments rate of interest on this loan is 4 % and repayment is to be done within 7 years. 7. This scheme is particularly useful for rural artisans

FUNCTIONS A .Registration of MSMEs DIC (District Industries Centre) is the primary registering centre. Registration Procedure: EM (Entrepreneur Memorandum) has to be submitted to the Concerned DIC.

Types of Em Filing There are two types of filing of Entrepreneur Memorandum - Part I & Part II 1. Entrepreneur Memorandum Part I is for the proposed enterprises. 2. Entrepreneur Memorandum Part II is to the established enterprises after commencement of commercial production. The form of Memorandum is in two parts. Any person who intends to establish a micro, small or medium enterprise engaged in providing or rendering of services may file or those who want to establish medium enterprise engaged in the production or manufacture of products shall file Part- I of the Entrepreneurs Memorandum to District Industries Centre.

Page 9

Once the above enterprises start production or start providing or rendering services, they shall file Part II of the Entrepreneurs Memorandum to District Industries Centre. In case of non- filing of Part II of the Entrepreneurs Memorandum within two years of the filing of Part I, the Memorandum (Part I) filed by the entrepreneur will become invalid. In case of change in the investment in plant and machinery or in equipment, the enterprises who have already filed Entrepreneurs Memorandum should inform the District Industries Centre of the same in writing within three month of the change in investment. In case of change of products and that of services or addition in products or services, the enterprises which have already filed Entrepreneurs Memorandum shall inform the District Industries Centre of the same in writing within three months of the change

B. Infrastructure Assistance to Entrepreneurs

Grievance redressal through the District Level Clearance Committee under the chairmanship of the Deputy Commissioner of the District. Allotment of KIADB's land to MSME's in the District through District Level Clearance Committee. Allotment of KSSIDC's Plot and Shed to MSME's in the District through District Level Clearance Committee. Recommendation for loans from financial Institutions & banks.

C. Implementation of Incentives Scheme

Sanction and Disbursement of Investment Subsidy of Government of Karnataka Inspection and recommendation of Investment Subsidy to food processing Industries of Government of India.

D. Employment Generation programmes

Implementation and Monitoring of Prime Minister Employment Generation programmes.

E. Special Component Plan (SCP) and Tribal Sub Plan (TSP)

Implementation and Monitoring of Special Component Plan (SCP) and Tribal Sub Plan (TSP) schemes to provide assistance to the SC and ST artisans;

Page 10

Training. Leaving cum work-sheds. Improved toolkits. Soft seed capital. Venture capital. Equity Share.

F. Entrepreneurship development and Awareness programmes.

Hobli level, Taluk level and District Level. Vendor development programmes.

G. Other works

Arranging Buyer-Seller Meets. District and Taluk level Industrial Exhibitions. Cluster development programmes. Sensitization programmes. Recovery of departmental loans Follow up of Industrial Approvals

STUDY OF THE DISTRICT INDUSTRIES CENTRES PROGRAMME After going through above statements we can easily understand the roles and functions of DIC, it also become important to know how these DIC are working and benefited in the development of country and removing the regional differences, for this I would like to focus on a study done by planning commission of India on DICs The main objectives of the study were the following: i) To find out the extent to which the District Industries Centre was able to provide support and services under `one roof' to small and village entrepreneurs, ii) To assess the views of the entrepreneurs regarding the working of DICs, and iii) To identify the bottlenecks and shortcomings in the functioning of the programme and its overall impact on entrepreneurs.

Sample Size/Criteria for selection of sample For selection of DICs, the States were divided into three categories:
Page 11

i) States having up-to 20 DICs, ii) States having between 21 to 30 DICs, and iii) States having above 30 DICs.

Main Findings States except the states of Kerala, Tamil Nadu, Gujarat, Haryana and Himachal Pradesh, reported that the funds were adequate. It was observed that at the state level only a few states namely Andhra Pradesh, Maharashtra, Assam and West Bengal had a monitoring Cell which was regularly monitoring the work of DICs. It was reported that the artisan units had to waste a lot of time due to procedural delay on the part of DICs and the bank for raising the fixed capital. There was a wide gap in the number of applications received by DICs and the number of beneficiaries who could actually set up their ventures It was observed that 93.6 per cent of the SSI respondents had received guidance from the DIC officials in getting their units registered. Of these, nearly 94 percent had reported the timely help and 92 percent were satisfied with the help received. The selected entrepreneurs had expressed the view that the growth of SSIs and artisan units in terms of production availability of credit and subsidy was faster since the set up of DICs. After the setting up of the DICs' almost one-third of the selected artisan units were using improved tools and implements. It was also reported that only 15 per cent of the selected artisans received help from DICs for purchase of tools and implements. Major Suggestions Efforts should be made to minimise the cases of rejection in respect of beneficiaries. In order to make the DIC programme more effective, proper collection of statistics regarding the requirement of machinery and raw materials by the SSI and artisan units Monitoring and observation of market fluctuations of certain items of raw materials should be undertaken by DICs more seriously.

Page 12