The Government announced policy measures for small, tiny, handicraft and village industries on August 6, 1991. The main objectives of this policy are as follows:
1. The investment limit in the small sector has been raised from Rs. 2 lakhs to Rs. 5 lakh.
2. An important feature of the policy is the four-point scheme to provide financial support to the SSI sector.
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While promising to set up an agency to monitor and ensure that the credit demand of the SSIs is fully met, it has been decided to allow equity participation by other industrial undertakings in the SSI, not exceeding 24 per cent of the total share holding.
This is being done to provide small units access to the capital market and to encourage modernisation, technical upgradation, ancillarisation and sub-contracting.
It has also been decided to widen the scope of the National Equity Fund Scheme to cover projects up to Rs. 10 lakh for equity support (up to 15 per cent).
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The single window scheme has also been enlarged to cover projects up to Rs. 20 lakh with a working capital margin upto Rs. 10 lakh. The composite loans under this scheme would also be channelised through commercial banks hitherto available only through state financial corporations.
In addition, a Limited Partnership Act is proposed to be introduced to enhance the supply of risk capital to the SSI sector. The proposed Act would limit the financial liability of the new entrepreneurs to the capital invested.
A suitable legislation is proposed to be introduced to | ensure prompt payment of small industries bills.
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3. The tiny sector will be accorded priority in the government purchase programme. Though not specified, the policy also provides relaxation to the tiny sector from certain provisions of labour laws.
4. The policy envisages market promotion of small and tiny sectors’ products to be undertaken by co-operatives, public sector institutions, and other professional agencies by adopting a consortium approach.
The National Small Industries Corporation would concentrate on marketing of mass consumption items under a common brand name in association with the State Small Industries Development Corporation.
5. The small and tiny sector would be accorded priority in allocation of indigenous raw materials. Adequate and equitable distribution of indigenous and imported raw materials would be ensured to the small sector.
6. With a view to widen complementarily in production programmes of large, medium and small sectors, the policy would encourage production of parts, components etc. required by the large public and private sector in a techno-economically viable manner through small-scale ancillary units.
7. Emphasis will be laid on improving the quality and marketability of the products of the handloom and handicrafts sector pari-passu with consumer preferences instead of merely depending on rebates and subsidies.
The policy promises to initiate measures which would encourage R&D activities, strengthen activities of Khadi and Village Industries Commission and ensure better flow of credit facilities from the financial institutions.