annexure

Annexure-I

Speech of the

Hon'ble Prime Minister

Shri Atal Bihari Vajpayee

At Conference on Small Scale Industries

New Delhi, 30th August, 2000

My Colleagues, Shri L.K. Advani and Smt Vasundhara Raje

Representatives of Small Scale Industries Sector,

Ladies and Gentlemen:

It gives me great pleasure to be here with you today. Two years ago, Laghu Udyog Bharati had invited me to their conference in this very hall. Several measures were then suggested for strengthening the Small Scale sector.

In these two years, various initiatives have been taken to address your concerns and strengthen the Small Scale Industries sector. These include the decision to lower investment limit to Rs. 1 crore from Rs. 3 crore and the setting up of a separate Ministry for Small Scale Industries.

I am happy to note that the Small Scale sector has responded to our initiatives by improving their performance. The growth rate registered by you is higher than that of the overall industrial sector.

No less important is the fact that the Small Scale sector has registered steady growth in employment generation. Indeed, this sector continues to lead the way in generation of employment opportunities.

As you are aware, a Group of Ministers, headed by Shri L.K. Advani, was constituted by the Cabinet to recommend measures to strengthen Small Scale industries.

I am glad to inform you that based on the recommendations of the Group of Ministers, Government has decided to implement a set of measures which will substantially strengthen the Small Scale sector. These include:

l The Small Scale sector has suffered due to inadequate access to credit availability. We have, therefore, decided to raise the limit for composite

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loans from Rs. 10 lakhs to Rs. 25 lakhs. Entrepreneurs will now be able to secure term loans and working capital from the same agency. l Industry related service and business enterprises with a maximum investment of Rs. 10 lakhs will qualify for priority lending. These services are essential for the proper functioning of the Small Scale sector. These services also provide employment in rural and semi-urban areas. l Bearing in mind the urgent need for technology upgradation, Government is happy to announce a capital subsidy of 12% for investment in technology in select sectors. We will set up an inter-ministerial committee of experts to define the scope of technology upgradation and sectoral priorities. l Government is alive to the grievance that frequent inspections by multiple agencies are a source of harassment to the Small Scale sector. We will set up a Group to recommend, within three months, means of streamlining inspections. These would include repeal of laws and regulations applicable to the sector that have since become redundant. I would urge you to submit your suggestions in this regard to the Ministry of Small Scale Industries. l The last census of Small Scale industries was conducted 12 years ago. For effective policy-making and implementation, we need to update our data. Therefore, we have decided to go in for a fresh census that will cover, inter-alia, the incidence of sickness and its causes. I request industry associations to cooperate with the census authorities so that a true picture emerges. I am happy to note that more and more Small Scale units are opting for ISO 9000 certification. To encourage total quality management, we have decided to continue, for the next six years, granting Rs 75,000 to each unit that obtains ISO 9000 certification. We have also decided to give one time capital grant of 50% to Small Scale associations who wish to develop and operate testing laboratories, provided they are of international standard. The SSI sector already enjoys some special fiscal incentives. However, for quite some time, this sector has been requesting for an increase in the


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limit for exemption from excise duty to improve its competitiveness and to help the units facing sickness. I am happy to announce that in response to your requests, we are increasing the exemption limit from Rs. 50 lakhs to Rs. 1 crore. This will be the second increase made by our Government, the first one having been in 1998 when the limit of Rs. 30 lakhs was increased to Rs. 50 lakhs. There are certain other requests relating to customs duties. The Finance Minister will be announcing suitable measures in due course. Development of Khadi and Village Industries is a critical component of the strategy to achieve a balanced and integrated development. This segment is an important link not only to the informal economy, but it fosters skills, promotes entrepreneurship at a micro level and is integral to our growth process. Khadi is environment friendly. It provides jobs to millions of people. With upgradation of skills and quality of Khadi products, it can be marketed globally. We are committed to further strengthening the viability of this sector. A rebate on sale of Khadi products has been continued. Beyond this, we are working out a new comprehensive package to strengthen Khadi and Village Industries that will further upgrade the skills of the Khadi workers. These will cover. l Provision for 20% of projected annual turnover to be given as working capital loan; l Continuation of concessional lending facilities; and, l Preference for loans for technology upgradation. Government is conscious of the problems faced by the Handloom sector. This sector represents a rich heritage and craftsmanship that needs to be protected and promoted. I am happy to announce that yesterday, Government has approved a Deendayal Hathkargha Protsahan Yojana. This is a scheme aimed at supporting the handloom sector through finance, design and marketing inputs.


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The scheme, to be implemented by the Centre and States, has a total financial implication of Rs. 447 crores. This scheme provides comprehensive financial and infrastructural support to weavers and handloom organisations that will substantially strengthen this sector. I have broadly touched on some of the measures to strengthen the Small and Medium Industries. The Ministry of Small and Medium Industries will be separately announcing some other measures to further strengthen this sector. The global environment is changing rapidly. The Small Scale sector has an important contribution to make in enhancing the competitive strength of our industry, provide an avenue for new employment and harness the entrepreneurial skills available in abundance in this country. You must accept the challenge of globalisation and improve your product quality to effectively deal with the forces of competition. We will support your endeavours to meet this challenge on a sustainable basis. I congratulate today's prizewinners for their outstanding achievements. Small entrepreneurs, rural artisans and cottage industry have done the country proud in the last 50 years. They form one of the pillars of our national economy. Let us together strengthen this pillar so that our national economy can take off for newer heights. Thank you.


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Annexure-II Speech of the Hon'ble Minister of State (Independent Charge) SSI & ARI Smt. Vasundhara Raje At National Conference on Small Scale Industries New Delhi, 30th August, 2000 Respected Prime Minister, Hon'ble Home Minister, This is a momentous and a memorable occasion. It marks the SSI family's first National Conference. Our immediate focus is on the Small-Scale Entrepreneur. It is a cherished endeavour to convert our dreams and aspirations into reality. By his venerable presence, our Hon'ble Prime Minister has abundantly endorsed and re-affirmed his commitment to the SSI entrepreneur and the SSI movement. Sir, I take this opportunity to welcome you and our distinguished guests on behalf of the entire SSI family. The Small Scale Sector has over the years developed a momentum of its own. It has demonstrated an extraordinary resoluteness and resilience for growth. Interestingly, over the past decade or so, this sector has enjoyed higher overall growth rate than the large industrial and manufacturing sectors as you have just seen in the audio-visual presentation that preceeded this. This in itself is no mean achievement and time to reason that the SSI sector be deemed to represent the corner stone of our country's economic foundation. The target growth rate we have set ourselves and which we consider well within achievable limits is 9% for the coming fiscal year. I would like to emphasis here that SSI development is an affirmed and assured policy of the NDA Government. The common man is the sector's most valuable resource. His ingenuity and enterprise is most precious contribution, his toil and labour our guarantee of success. The Nation salutes these untiring economic warriors. Their heroic efforts have convincingly established our country on the global economic map, a map charted by the global demand of the New Millennium. This saga is replete with varied instances of


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entrepreneurs transorming into the large scale sector from roots firmly entrenched in the SSI movement. Some of today's most glorious corporate names-Videocon, Nirma, Hero Honda Cycles and many many more have humble SSI beginnings. These and others of their ilk deserve our gratitude for their pioneering efforts. They have shown the light and the path to larger goals. We are small, but small is not only beautiful, it is very vital. It is also increasingly large corporations that are sourcing essential accessories and inputs from the SSI. We must not forget that the small-sector is the second largest employer after agriculture. Our thrust is to provide micro-credit to women entrepreneurs and educated unemployed youth living below the poverty line, also in creating employment opportunities for the disadvantaged. This Ministry through the Prime Minister's Rozgar Yojana has succeeded in generating employment for 17.84 lakh individuals at the amazingly economic cost of just 5,000/- rupees per person by way of direct subsidy assistance from the Government. Thus a minimum of 2.20 lakh educated unemployed per year are granted the chance to participate in nation building. We pay continuous homage to the Father of the Nation's philosophy by emphasizing the continued relevance of the Khadi and the Rural Industries Sector. Khadi represents not just a product but an essential way of life, appropriate not only to the historical past but increasingly to the exciting future. KVIC promotes self-reliance amongst the people. It tries to create a powerful community base. It extends financial assistance through grants, through subsidies to institutions who in turn assist the rural entrepreneur. These institutions subsequently impart necessary training and through the cluster approach it ensures that benefits of the economies of scale reach the rural destinations. The Coir Board has contributed immensely to the promotion and worldwise development of brown fiber. The Board, through its untiring R&D efforts has developed and continued to refine an extensive range of utility items. These are not just aesthetically beautiful but environmentally friendly


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and contemporary. Some as the Coir geo-textiles and coir-pith are especially mentionable. The imperative here is the access to inexpensive and timely credit. A credit scheme with an initial corpus of 125 crores rupees has been established. This will facilitate easier accessibility of credit to small producers, by-passing difficult collateral requirements. This scheme becomes operational today. Technology, the contemporary mantra of progress, has to be made available at the appropriate cost in time. We are upgrading industries by the cluster approach. By this strategy critical initiative will be infused cluster-wise to provide impetus where required. Currently, two project documents for the Toy and the Stone industries, have been signed with UNIDO to augment the already established industries. Essentially, the aim is to provide technological upgradation, establishment of common facilities and market linkages. We realize that there are road blocks in our path to success. Rationalization of the tax structure is a case in point. Reforms are under way, but need more attention. Today the single man unit contends with 37 inspections, 52 laws and is expected to maintain all of 116 forms and registers. Nevertheless efforts are in progress to rationalize and streamline these procedures to obviate unnecessary delays and impediments in a time bound framework. There has been much speculation about the impact of globalization and liberalization on the SSI. But the enormous indigenous SSI industrial base representing manufacture, processing, assembling, jobbing, servicing and repairing are well entrenched and not easily substitutable nor replaceable in a cost-effective manner. We are not afraid of competition, rather we will seek to take full advantage of the opportunities available. SSI's forte of adaptability and the ability to undertake small and special orders for specific products are unmatchable. In export terms, SSI has climbed from 16.25% in 1974-75 to an impressive 35% in 1998-99. So there should be no apprehensions. Since SSI units are competitive abroad it only stands to reason that we will be more than competitive domestically. Quality is the catchword. If it be maintained, the phenomenon of globalization will actually benefit the SSI as India's strength lies in her entrepreneurship. Technological upgradations, state-of-the-art adaptations coupled with scientific marketing practices will


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render our products unbeatable in the world markets. The removable of quantitative restrictions has not witnessed any untoward increase in imports. Nevertheless, should the occasion arise, necessary safeguard measures will be put in place. However rosy the picture, we must guard against complacency. Constant endeavours must be undertaken to gain foreign exposure through the medium of international fairs and exhibitions, besides aggressive brand imaging, formation of marketing consortia, establishing trading agreements with like minded countries, promoting sub-contracting and vendor development schemes and providing WTO compliant measures of support. The NSIC are undertaking the task of popularizing the SSI products both internationally and domestically. We must achieve an export growth of between 9% and 10% and to reach this target a level playing field is a prerequisite. The Hon'ble Prime Minister has assured us that no efforts will be spared in removing obstacles from the path of sustainable development nor in pursuing a proactive policy towards export promotion. Towards this end and on his initiative, a group of ministers was formed headed by Shri L.K. Advani, our Home Minister, and under his able guidance this group has displayed an anormous amount of interest and empathy for the SSI sector. A very favorable package of recommendations has emerged which will surely add tremendous movement and momentum to the movement. I take this opportunity to thank all members of this committee, individually, for their forbearance and for their basket of recommendations forwarded to the Prime Minister. On the flip side, the incidence of the SSIs unit sickness is a pressing issue. At the end of March 1999, approximately 3 lakh units were sick. A majority of these are not potentially viable. They want a clear exit route. Concerted effort and expertise of various concerned agencies are needed in order to stem the tide of sickness. The State Level Inter Institutional Committees are being reinforced and strengthened, and States have been requested to establish industry Facilitation Councils and till date, 19 States are on stream.


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My grateful thanks to Shri Yashwant Sinha for providing a one time relief package to sick industries with NPAs upto 5 crores. This scheme was announced by the RBI on July 27, 2000. The Finance Minister has been a pillar of strength and understanding and we shall be knocking on his door for future assistance. His unqualified support has been a crucial factor in the overall development of the SSI sector. The 21st century belongs to the SSI sector. The future must be redefined in our terms. We must consolidate our strength and make an effort to get over our weaknesses. The new anthems are operational efficiency, quality standardization and harmonization between the large and the small sectors. Reorienting operation strategies, strengthening and building relevant institutions, collaboration between industry associations, establishment of common facilities, determination of the critical and crucial information and technology, proactive marketing strategies, easily accessible and available advisory services at affordable cost. These are the key to the accelerated growth requirements of the SSI sector. The Ministry of the SSI & ARI for its part pledges to fashion itself into a dedicated organization, to function primarily as a facilitator, friendly and easily accessible partner in progress, single-mindedly devoted to the advancement of the SSI industries in India. We resolve to contribute our mite and evaluating India that will emerge on the world stage at a position of predominance and preeminence in the current century. I take this opportunity to also congratulate the awardees and encourage them to greater achievements in the future. Finally, in conclusion I wish to thank from the bottom of my heart, the Hon'ble Prime Minister, my cabinet colleagues, members of the Group of Ministers, Mr. Pant, Mr. Kanshi Rama Rana, Hon'ble Ministers from the States, Cabinet Secretary Mr. Prabhat Kumar, Officers of the Central and the State Governments, friends from the media, distinguished guests and our vast and numerous SSI family. I must add here that SSI policy cannot be fashioned sitting at the desk. We at the Ministry of SSI & ARI have travelled the length and breath of this country over a period of many months and have interacted with our friends in the various small scale associations, many of you whom I can see are sitting here today, whether


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it is Mr. Narsimhan of FASSI or Mr. Chakradhari of WASME or Mr. Sudarshan Sarin of Laghu Udyog Bharati or Mr. Crasta of KASSIA, Mr. Vijay Kalantri and Mr. Samadri from export organization, Mrs. Ela Bhatt and Mr. Magan Bhai Patel, Mr. Sanjay Modi, Mr. Dalmia, ladies Rama Deviji and Rajni Agarwal, Mr. Dadi Mistry and the friends on the CII, ASSOCHEM, FICCI and also of course our friends of the Swadeshi Jagran Manch. I thank you all and many many other friends. This has been a huge exercise in our Ministry to reflect the hopes and the aspirations and the fears of all of you in this new SSI policy. I intend to interact closely with all of you concerned and all those who are worrying about the implementation part of this. I would like to ally all your fears and tell you here that this would be the thing we would also monitor very closely. I also want to thank many unsung heroes of this Ministry who have toiled over the last so many months to convert all these hopes into reality. Secretary Mr. Bagchi, Additional Secretary Mr. Tuteja and the rest of my team, thank you all from the bottom of my heart. Thanks also to all of those who have assembled here, Ambassadors, Secretaries, people from all over the various parts of the States. Thank you very much all of you. I again conclude with the lines that sum up the theme of today's conference. The dawn beckons towards a new tomorrow It's rays enkindle hope To toil, to create, and to achieve A feeling to surge towards the sun I see glory on the horizon. Yehin hai hamari unde ki Asha. Thank you all very much for being here today.


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Annexure-III No. 12/4/95-SSI (P) Government of India Ministry of Industry Department of Small Scale Industries and Agro and Rural Industries Udyog Bhavan, New Delhi-11 Dated the 24th December, 1997 To The Secretary/Commissioner (Industries) Director of Industries All States and Union Territories Subject :Tiny Enterprises _ Investment Limit _ regarding Sir, The Central Government in exercise of the powers conferred by Sub-section (i) of Section 11 B and Sub-section (i) of Section 19B of the Industries (Development & Regulation) Act, 1951 has notified vide its Notification No.857 (E) dated 10.12.97 that an Industrial Undertaking having investment in fixed assets in plant and machinery upto Rs. 300 lakhs, will be accorded the status of a Small Scale Industrial Undertaking. Such investment limit in respect of "Tiny Enterprises" now stands increased from the present level of Rs. 5 lakhs to Rs. 25 lakhs, irrespective of the location of the unit. All existing guidelines with regard to registration etc. for tiny units with the enhanced limit of Rs. 25 lakhs will remain unchanged. Yours faithfully Sd/- (S. Nayak) Director


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Annexure-IV Gazette Notification Extraordinary Part II-Section 3-Sub-section (ii) New Delhi, Friday, December 24, 1999 PAUSA 3, 1921 Ministry of Commerce and Industry (Department of Industrial Policy and Promotion) New Delhi, the 24th December, 1999 Order S.O. 1288 (E)-Whereas the Central Government considers it necessary with a view to ascertain which ancillary and small scale industrial undertakings need supportive measures, exemption or other favourable treatment under the Industries (Development and Regulation) Act, 1951 (65 of 1951) (hereinafter referred to as the said Act) to enable them to maintain their viability and strength so as to be, effective in- (a) promoting in a harmonious manner, the industrial economy of the country and casing the problem of unemployment, and (b) securing that the ownership and control of the material resources of the community are so distributed as best to subserve the common goods; And whereas the Central Government considers it necessary to amend the order of the Government of India in the erstwhile Ministry of Industry (Department of Industrial Policy and Promotion) Number S.O. 857 (E), dated the 10th December, 1997 for the said purpose: And whereas a copy of the said Amendment of the notified Order in draft was laid before each House of Parliament for a period of thirty days as required under sub-section (3) of section 11B of the said Act;


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And whereas no modification in the draft of the proposed notified Order has been suggested by both the Houses of Parliament; Now, therefore, in exercise of the powers conferred by sub-section (1) of Section 11B and sub-section (1) of Section 29B of the Industries (Development and Regulation) Act, 1951 (65 of 1951), the Central Government hereby makes the following amendments in the Order of the Government of India in the erstwhile Ministry of Industry, Department of Industrial Policy and Promotion number S.O. 857 (E), dated the 10th December, 1997, namely:- In the said Order- (a) in the paragraph relating to Small Scale Industrial Undertakings, for the words "rupees three crores", the words "rupees one crore" shall be substituted and (b) in the paragraph relating to Ancillary Industrial Undertaking, for the words "rupees three crores", the words "rupees one crore" shall be substituted. (No. 10(6)/97-1P) Sd/- (Ashok Kumar) Jt. Secy. Note : The principal notified Order was published in the Gazette of India, PartII, Section 3, sub-section (ii), Extraordinary dated the 11th December, 1997.


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Annexure-V Government of India Ministry of Finance (Department of Revenue) New Delhi, dated the 1st March, 2001 10 Phalguna, 1922 (Saka) Notification No. 8/2001-Central Excise Dated 1st March, 2001 G.S.R.-(E)-In exercise of the powers conferred by sub-section (1) of Section 5A of the Central Excise Act, 1944 (1 of 1944) and in supersession of the notifications of the Government of India in the Ministry of Finance (Department of Revenue) No. 8/2000-Central Excise, dated the 1st March, 2000, published in the Gazette of India vide number G.S.R. 186(E), dated the 1st March, 2000, except as respects things done or omitted to be done before such supersession, the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts clearances, specified in column (2) of the Table below (hereinafter referred to as the said Table) for home consumption of excisable goods of the description specified in the Annexure appended to this Notification (hereinafter referred to as the specified goods), from so much of the aggregate of:- (i) the duty of excise specified thereon in the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986); and (ii) the special duty of excise specified thereon in the Second Schedule to the said Central Excise Tariff Act, as is in excess of the amount calculated at the rate specified in the corresponding entry in column (3) of the said Table:-


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2. The exemption contained in this Notification shall apply subject to the following conditions, namely:- (i) A manufacturer has the option not to avail the exemption contained in this Notification and instead pay the normal rate of duty on the goods cleared by him. Such option shall be exercised before effecting his first clearances at the normal rate of duty. Such option shall not be withdrawn during the remaining part of the financial year. (ii) While exercising the option under condition (i), the manufacturer shall inform in writing to the Deputy Commissioner or Assistant Commissioner of Central Excise with a copy to the Superintendent of Central Excise, giving the following particulars, namely:- (a) name and address of the manufacturer; (b) location/locations of factory/factories; (c) description of specified goods produced; (d) date from which option under this Notification has been exercised; (e) aggregate value of clearances of specified goods (excluding the value of clearances referred to in paragraph 3 of this Notification) till the date of exercising the option; (iii) The manufacturer shall not avail the credit of duty on inputs under rule57AB or rule 57AK of the Central Excise Rules, 1944, paid on inputs used in the manufacture of the specified goods cleared for home consumption, the aggregate value of first clearances of which, as calculated in the manner specified in the said Table, does not exceed rupees one hundred lakhs. (iv) The manufacturer also does not utilise the credit of duty on capital goods under rule 57AB or rule 57AK of the said rules, paid on capital goods, for payment of duty, if any, on the aforesaid clearances, the aggregate value of first clearances of which does not exceed rupees one hundred lakhs, as calculated in the manner specified in the said Table. (v) Where a manufacturer clears the specified goods from one or more factories, the exemption in his case shall apply to the aggregate value of clearances mentioned against each of the serial numbers in the said Table and not separately for each factory.


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(vi) Where the specified goods are cleared by one or more manufacturers from a factory, the exemption shall apply to the aggregate value of clearances mentioned against each of the serial numbers in the said Table and not separately for each manufacturer. (vii) The aggregate value of clearances of all excisable goods for home consumption by a manufacturer from one or more factories, or from a factory by one or more manufacturers, does not exceed rupees three hundred lakhs in the preceeding financial year: 3. For the purposes of determining the aggregate value of clearances for home consumption, the following clearances shall not be taken into account, namely:- (a) clearances, which are exempt from the whole of the excise duty leviable thereon (other than an exemption based on quantity or value of clearances) under any other notification or on which no excise duty is payable for any other reason; (b) clearances bearing the brand name or trade name of another person, which are ineligible for the grant of this exemption in terms of paragraph 4; (c) clearances of the specified goods which are used as inputs for further manufacture of any specified goods within the factory of production of the specified goods; (d) clearances of strips of plastics used within the factory of production for weaving of fabrics or for manufacture of sacks or bags made of polymers of ethylene or propylene. 4. The exemption contained in this Notification shall not apply to specified goods bearing a brand name or trade name, whether registered or not, of another person, except in the following cases:- (a) where the specified goods, being in the nature of components or parts of any machinery or equipment or appliances, are cleared for use as original equipment in the manufacture of the said machinery or equipment or appliances by following the procedure laid down in Chapter X of the Central Excise Rules, 1944. Manufacturers, whose aggregate value of clearances of the specified goods for use as original


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equipment does not exceed rupees one hundred lakhs in the financial year 2000-2001 as calculated in the manner specified in paragraph 1, may submit a declaration regarding such use instead of following the procedure laid down in Chapter X of the said Rules; (b) where the specified goods bear a brand name or trade name of:- (i) the Khadi and Village Industries Commission; or (ii) a State Khadi and Village Industry Board; or (iii) the National Small Industries Corporation; or (iv) a State Small Industries Development Corporation; or (v) a State Small Industries Corporation; (c) where the specified goods are manufactured in a factory located in a rural area. 5. This Notification shall come into force on the 1st day of April, 2001. Explanation - For the purposes of this Notification:- (A) "brand name" or "trade name" means a brand name or a trade name, whether registered or not, that is to say, a name or a mark, such as symbol, monogram, label, signature or invented word or writing which is used in relation to such specified goods for the purpose of indicating, or so as to indicate a connection in the course of trade between such specified goods and some person using such name or mark with or without any indication of the identity of that persons; (B) where the specified goods manufactured by a manufacturer bear a brand name or trade name, whether registered or not, of another manufacturer or trader, such specified goods shall not, merely by reasons of that fact, be deemed to have been manufactured by such other manufacturer or trader; (C) "value" means:- (i) in respect of specified goods which have been notified under Section 4A of the Central Excise Act 1944 (1 of 1944), the value as determined in accordance with the provisions of that section, and


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(ii) in respect of specified goods other than those referred to in sub clause (i), the value as determined in accordance with the provisions of Section 4 of the Central Excise Act, 1944 (1 of 1944), or the tariff value fixed under Section 3 of the said Act; (D) in the determination of the value of clearances of Chinaware or Porcelainware or both, where a manufacturer gets Chinaware or Porcelainware or both fired in a kiln belonging to or maintained by a Pottery Development Centre run by the Central Government or a State Government or by the Khadi and Village Industries Commission, the value of the Chinaware or Porcelainware or both, belonging to the said manufacturer and fired in such kiln, shall be taken into account; (E) where the specified goods are manufactured in a factory belonging to or maintained by the Central Government or by a State Government, or by a State Industries Corporation, or by a State Small Industries Corporation or by the Khadi and Village Industries Commission, then the value of excisable goods cleared from such factory alone shall be taken into account; (F) "normal rate of duty" means the aggregate of duty of excise specified in the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) and the special duty of excise specified in the Second Schedule to the said Central Excise Tariff Act read with any relevant notification (other than this notifiation or a notification in which exemption is based on the value or quantity of clearance) issued under sub-section (1) of Section 5A of the said Central Excise Act, 1944; (G) "clearances for home consumption", wherever referred to in this Notification, shall include clearances for export to Bhutan and Nepal. (H) "rural area" means the area comprised in a village as defined in the land revenue records, excluding. (i) the area under any municipal committee, municipal corporation, town area committee, cantonment board or notified area committee, or (ii) any area that may be notified as an urban area by the Central Government or a State Government.


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ANNEXURE All goods specified in the First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), other than the following, namely:- (i) all goods which are chargeable to nil rate of duty or are exempt from the whole of the duty of excise leviable theron; (ii) all goods falling under heading No. 09.02; (iii) all goods falling under heading No. 21.06 and sub-heading Nos. 2101.10 and 2101.20; (iv) all goods falling under Chapter 24 of the First Schedule (other than unbranded chewing tobacco and preparations containing chewing tobacco, falling under heading No. 24.04); (v) all goods falling under heading No. 25.04; (vi) sandalwood oil; (vii) all goods falling under heading No. 36.05; (viii) all goods falling under heading Nos. 37.01, 37.02, and sub-heading No. 3703.10; (ix) strips of plastics intended for weaving of fabrics or sacks, polyurethane foam and articles of polyurethane foam; falling under Chapter 39 of the First Schedule; (x) all goods falling under Chapter 51 of the First Schedule other than those falling under sub-heading Nos. 5105.30 and 5105.40 and heading Nos. 51.06, 51.07, 51.08, 51.09, 51.10 and 51.11 (except woven fabrics of wool falling under heading Nos. 51.10 or 51.11) and 51.21; (xi) all goods falling under Chapter 52 of the First Schedule other than goods falling under heading No. 52.04; (xii) all goods falling under Chapter 53 of the First Schedule except goods falling under heading Nos. 53.01, 53.02, 53.04, 53.05, 53.08 (other than goods falling under sub-heading No. 5308.14), 53.11 (other than woven fabrics of ramie);


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(xiii) all goods falling under Chapter 54 of the First Schedule except goods falling under heading Nos. 54.01; (xiv) all goods falling under Chapter 55 of the First Schedule except goods falling under heading Nos. 55.05, 55.08 and shoddy yarn manufactured from used or new rags falling under heading No. 55.09 or 55.10; (xv) all goods falling under Chapter 56 of the First Schedule except goods falling under heading Nos. 56.01, 56.02. 56.03. 56.04. 56.05 (other than of manmade filaments), chenille yarn falling under sub-heading No.5606.00, 56.07 (other than of jute), 56.08 and 56.09; (xvi) all goods falling under Chapter 57 of the First Schedule; (xvii) all goods falling under Chapter 58 of the First Schedule except goods falling under heading Nos. 58.03, 58.06, 58.07, 58.08, uncut grey (unprocessed) woven weft pile fabrics of cotton manufactured from grey unprocessed cotton yarn falling under sub-heading No. 5801.21, unprocessed woven pile fabrics of cotton falling under sub-heading No. 5801.21 and unprocessed woven pile fabrics of man-made fibres falling under sub-heading No. 5801.31, fabrics of cotton or man-made fibres falling under sub-heading No. 5802.51, and unprocessed cotton terry towelling fabrics falling under sub-heading No. 5802.21; (xviii) all goods falling under Chapter 59 of the First Schedule except goods falling under Heading Nos. 59.01, 59.05, 59.06, 59.08, 59.09, 59.10, 59.11 and textile fabrics coated or laminated with preparations of lowdensity polyethylene; (xix) all goods falling under Chapter 60 of the First Schedule except goods falling under sub-heading No. 6002.10 and fabrics of cotton man-made fibres not subjected to any process falling under heading Nos. 60.01 or 60.02; (xx) all goods falling under Chapter 62 of the First Schedule; (xxi) blankets of wool falling under Chapter 63 of the First Schedule; (xxii) aluminium circles, whether or not trimmed, falling under Chapter 76 of the First Schedule;


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(xxiii) (A) All goods falling under:- (a) heading No. 74.03, excluding the following goods falling under sub-heading No. 7403.21, namely:- (i) cast brass bars/rods of a length not exceeding three feet; (ii) cast brass bars/rods of a length not exceeding ten feet used in the factory of production for making wires falling under sub-heading No. 7408.29; (iii) cooper flats of a weight not exceeding two kilograms used for making copper strips falling under heading No. 74.09; (iv) brass billets weighing upto five kilograms; (b) heading No. 74.09 (excluding copper strips produced from copper flats of a weight not exceeding two kilograms); (c) sub-heading Nos. 7407.11, 7407.12, 7408.11, 7408.21; and (B) copper circles, whether or not trimmed; (xxiv) ball or roller bearings falling under Chapter 84 of the First Schedule; (xxv) all goods falling under heading Nos. 87.01, 87.02, 87.03, 87.05, 87.06 and 87.11 [other than powered cycles and powered cycle rickshaw ("powered cycle" or "powered rickshaw" means a mechanically propelled cycle or, as the case may be, mechanically propelled cycle rickshaw, which may also be peddled, if any necessity arises for so doing)]; (xxvi) all goods falling under heading Nos 91.01 or 91.02; (xxvii) all goods falling under Chapter 93 of the First Schedule; (xxviii) all goods falling under sub-heading No. 9605.10. F.No. 334/1/2001-TRU Sd/- (T.R. Rustagi) Joint Secretary to the Government of India


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Annexure-VI Reserve Bank of India Rural Planning & Credit Department Central Office Central Office Building, 13th Floor, Fort, Mumbai-400 001 Rpcd Plnfs No. BC. 25/06.02.31/2000-1 October 10, 2000 All Scheduled Commercial Banks (including RRBs) Dear Sir, Flow of Credit to SSI _ Enhancement in Composite Loan Limit The composite loan limit for providing working capital and term loan through a single window was raised from Rs. 5 lakh to Rs. 10 lakh vide our circular RPCD PLNFS No. BC. 65/06.02.31/99-2000 dated 3 March 2000. Persuant to the policy announcements made by the Prime Minister in the National Conference on SSI held on 30 August 2000 as also the decisions taken by the Group of Ministers on SSI in its meeting, held on 16 August 2000 it has been decided to raise the above limit from Rs. 10 lakh to Rs. 25 lakh. We shall be glad if you will please take immediate steps to implement the above decision and issue necessary instructions to your controlling offices/branches for appropriate action. 2.Please acknowledge receipt. Yours faithfully Sd/- (V.M. Mathew) Dy. General Manager


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Annexure-VII Office of the Development Commissioner (SSI) Ministry of SSI, Agro & Rural Industries Government of India Nirman Bhavan (South Wing), 7th Floor Maulana Azad Road, New Delhi-110011 No. 4(5)/2000-SSI Bd. & Policy Dated, the 19th September, 2000 The Secretary/Commissioner of Industries Director of Industries (All States/Union Territories) The Director, All Small Industries Service Institutes Subject : Small Scale Service & Business (Industry Related) Enterprises (SSSBEs) _ enhancement of investment limit _ Reg. Sir, Kindly refer to this office letter No: 2(3)91-SSI Bd dated 30th September, 1991, wherein the investment limit for Small Scale Service & Business (Industry Related) Enterprises (SSSBEs) was prescribed. The Government have now decided that Industry Related Service and Business Enterprises with investment upto Rs. 10.00 Lakhs in fixed assets, excluding land and building, will be eligible for benefits as Small Scale Service & Business (Industry Related) Enterprises (SSSBE) as against Rs. 5.00 lakhs at present. Other conditions shall remain unchanged. An illustrative list of activities which presently qualify as SSSBEs and those which do not, may be seen at Appendix I & II respectively. A revised illustrative list is under finalisation and will follow. This may be brought to the notice of all concerned. Yours faithfully, Sd/- (Pankaj Jain) Encl: As above Director (SSI Bd. & Pol.) Tel: 3012694


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Copy for information and further action to : 1) Shri A.V. Sardesai, Chief General Manager, Rural Planning and Credit Department, Reserve Bank of India, Central Office, 5, Carumichal Road, Mumbai-400026. 2) All as per mailing list. 3) The Deputy Director (SENET), O/o The DC (SSI) _ New Delhi, for inclusion in Website. 4) The Deputy Director (Facilitation Counter) _ O/o The DC (SSI), NewDelhi. Sd/- (Pankaj Jain) Encl: As above Director (SSI Bd. & Pol.)


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*Appendix-I* Illustrative List of Small Scale Service and Business (Industry Related) Enterprises (SSSBEs) (Ref: 2(3)/91-SSI. Bd. Dt. 30.9.91 for Sl. 1 to 27) 1. Advertising Agencies 2. Marketing Consultancy (extended to All "Marketing, Industrial Consultancy and Advertising Agencies vide letter of even number 27.8.92) 3. Industrial Consultancy 4. Equipment Rental & Leasing 5. Typing Centres 6. Zeroxing 7. Industrial photography 8. Industrial R&D Labs. 9. Industrial Testing Labs. 10. Computerised Design and Drafting 11. Creation of databases suitable for foreign/Indian markets 12. Software development 13. Auto repair, services and garages. 14. Documentary Films on themes like Family Planning, Social forestery, energy conservation and commercial advertising 15. Laboratories engaged in Testing of Raw Materials, Finished Products 16. "Servicing Industry" Undertakings engaged in maintenance, repair, testing or electronic/electrical equipment/instruments i.e. measuring/control instruments servicing of all types of vehicles and machinery of any description including, televisions, tape recorders, VCRs, Radios, Transformers, Motors, Watches, etc. 17. Laundry and Dry Cleaning


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18. X-Ray Clinic 19. Tailoring 20. Servicing of agriculture farm equipment e.g. Tractor, Pump, Rig, Boring Machine, etc. 21. Weight Bridge 22. Photographic Lab. 23. Blue printing and enlargement of drawing/designs facilities 24. ISD/STD Booths for industries (extended to all ISD/STD Booths vide this office letter of even number dated 27.6.92) 25. Teleprinter/Fax Services (Software Servicing & Data Processing (including computer graphics) and Printing Press which were earlier registerable as SSSBEs have since been recognised as industrial activity registerable as Small Scale Industry (SSI) vide this office letter of even number dated 3.1.1992) 26. Sub-contracting Exchanges (SEXs) Ref: letter of even number established by Non-Government Dt. 3.1.92 Industry Associations 27. EDP Institutes established by Ref: letter of even number Voluntary Associations/ Dt. 3.1.92 Non-Government Organisations 28. Coloured, and Black and White Ref: letter of even number Studios equipped with Dt. 27.8.92 processing laboratory 29. Ropeways in hilly areas Ref: letter of even number Dt. 10.8.93 30. Installation and operation Ref: letter No. 2 (3)/93-SSI. of Cable TV Network Bd & Pol. Dt. 1.2.94 31. Operating EPABX under franchises Ref: 2(3)(1)/92-SSI Bd. (3) Dt. 10.6.94 32. Beauty Parlours and Creches Ref: 2(3)/94-SSI Bd. & Pol. Dt. 26.10.94


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*Appendix-II* Illustrative List of Activities Which Are Not Recognised As Small Scale Industry/Business (Industry Related) Enterprises (SSSBEs) 1. Transportation. 2. Storage (except cold storage which is recognised as SSI). 3. Retail/Wholesale Trade Establishments. 4. General Merchandized Stores. 5. Sale Outlets for industrial components. 6. Health Services including pathological laboratories. 7. Legal Services. 8. Educational Services. 9. Social Services. 10. Hotels.


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Annexure-VIII Small Industries Development Bank of India 10/10, Madan Mohan Malviya Marg, Lucknow-226 001 December 26, 2000 Circular No. Fl. 19/2000-2001 The Chief Executives of all eligible State Financial Corporations Twin Function Industrial Development Corporations Scheduled Commercial Banks Scheduled Urban Cooperative Banks and State Cooperative Banks Dear Sir, Refinance-Modifications in the National Equity Fund (NEF) Scheme Please refer to our circular No. Fl.6/2000-2001 dated May 19, 2000 advising enhancement in the project cost ceiling under NEF Scheme from Rs. 10 lakh to Rs. 25 lakh and soft loan assistance at 25% of the project cost, subject to a ceiling of Rs. 6.25 lakh per project. In line with the announcement made by the Hon'ble Prime Minister, while declaring the SSI Policy on August 30,2000, it has now been decided to further modify the Scheme as under: i Project Cost Ceiling The project cost ceiling stands enhanced from Rs. 25 lakh to Rs. 50 lakh. ii Soft Loan Component The extent of soft loan assistance will be 25% of the project cost subject to a maximum of Rs. 10 lakh per project. iii Service Charge The service charge of 5% p.a. as against 1% p.a. at present will be charged on the soft loan component. Of which, while PLIs would continue to retain service charge of 1% p.a., remaining 4% p.a. should be passed on to SIDBI. All other terms and conditions under the Scheme shall remain unchanged. The above modifications will be applicable in respect of loans sanctioned by Primary Lending Institutions on or after December 21, 2000. The contents of the circular may please be brought to the notice of all your offices and meanwhile please acknowledge receipt. Yours faithfully, Sd/- (S. Gunasegaran) General Manager


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Annexure-IX Credit Guarantee Fund Trust For Small Industries 14th Floor, Nariman Bhawan, Nariman Point, Mumbai-400021 CGTSI/(16)/72 September 29, 2000 All Scheduled Commercial Banks Dear Sir, Credit Guarantee Fund Scheme for Small Industries (CGFSI) Please refer our Chairman's letters dated August 8, 2000 and September27, 2000 on the subject. We inform that the observations/suggestions received from banks and sent by IBA on the New Guarantee Scheme were deliberated by the Board of Trustees of CGTSI at its meeting held on September 26, 2000. As already explained certain basic features of the Guarantee Scheme outlined by GOI viz; eligibility of borrowers, quantum of guarantee cover, ceiling on rate of interest to be levied by the lending institutions to the eligible borrowers etc. would remain. Other suggestions made by the IBA and Banks to bring about operational flexibility were taken into account. Accordingly, the draft of the Undertaking to be executed by the lending institution and the Guarantee Scheme have been suitably modified to make it simpler to operate. We forward herewith the modified draft of the Undertaking to be executed by the lending institutions as also the Guarantee Scheme. The important modifications considered and agreed to are:- 4 As per recent GOI directions, the eligible credit limit for guarantee cover has been enhanced from Rs. 10 lakh to Rs. 25 lakh and consequently the maximum guarantee cap stands enhanced from Rs.7.50 lakh to Rs. 18.75 lakh. 4 As suggested by IBA & most of the Banks, the credit facilities extended to a single eligible borrower jointly by multiple lending institutions will not be entertained. In other words, a single lending institution should finance the entire credit facilities of a borrower for obtaining guarantee cover under the Scheme. Incidentally, GOI have since taken


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decision to enhance the composite loan (both term loan and working capital) to SSIs up to Rs. 25 lakh. 4 In terms of the Scheme, the Trust shall pay 75 per cent of the guaranteed amount on preferring of eligible claim by the lending institution within 30 days subject to the claim being otherwise found in order and complete in all respects. Keeping in view the suggestion made by IBA and other banks, a view has been taken that the Trust shall pay to the lending institution interest on the eligible claim amount at the prevailing Bank Rate in case of dealy, if any, beyond the specified period of 30 days. 4 Payment of annual service fee by the lending institution to the Trust even after settlement of 75% of the guaranteed amount has since been deleted. 4 The cost of inspection to be borne by the lending institution, has since been deleted. In the Draft of Undertaking, Clauses 5, 11 and 15 have been suitably modified keeping in view the suggestions made by IBA. We also clarify that there is no minimum amount of loan which can be covered under guarantee scheme though the maximum eligible credit facility per borrower to be covered is Rs. 25 lakh. IBA would be constituting a Review Forum from its member-banks for periodical interaction with the Trust. We are sure such a Forum will facilitate better working relationship between the Trust and the Member-Banks. We hope, the above modifications/changes in the Draft of Undertaking and the Guarantee Scheme will now make the Scheme more attractive and simple to operate. You are requested to register the name of your Bank with the Trust by executing the Undertking in favour of the Trust and start availing the guarantee cover in respect of their collateral free advances up to Rs. 25 lakh to the eligible borrowers. Thanking you, Yours faithfully, Sd/- (S.N. Sadhwani) Deputy General Manager


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Annexure-X F.No. 6(7)2000-IF. II Government of India Ministry of Finance (Banking Division) New Delhi, the 5th September, 2000 Order The activities, coverage and overall performance of State Financial Corporations (SFCs) have expanded considerably over the years. However, with the passage of time, their operations have thrown up several problems connected with the organization, management, resource mobilisation, operational efficiency and overall financial health. Some of the SFCs have eroded their net worth and their operations have become moribund. With the introduction of financial sector reforms, the business environment of SFCs alongwith other financial institutions is becoming increasingly competitive. To enable SFCs to adapt themselves to the emerging environment and promote the growth of the small scale and tiny industries sector in the desired manner, Government has recently enacted amendments to State Financial Corporations Act, 1951, with a view to enlarge their shareholders base, provide them with greater functional autonomy and operational flexibility and consequent ability to respond to the needs of the changing financial system. Along with the amendments to SFCs Act, 1951 a need has also been felt to restructure the SFCs for strengthening and revitalising them. 2. Considering the above facts and circumstances, the Government has decided to set up a Committee under the Chairmanship of Shri G.P. Gupta, Chairman & Managing Director, Industrial Development Bank of India to look into the functioning of State Financial Corporations (SFCs) and to make recommendations for their restructuring and revitalisation. The Committee shall consist of the following: 1. Shri G.P. Gupta, CMD, IDBI, - Chairman of the Committee 2. Shri S.S. Kohli, CMD, SIDBI - Member 3. Shri S.K. Tuteja, Development - Member Commissioner (SSI)


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4. Shri I.D. Aggarwal, ED, RBI - Member 5. Shri V. Trivedi, MD, MPFC - Member 6. Shri P.V. Rajaraman, Principal Secretary (Finance), Tamil Nadu - Member 7. Shri B.D. Jethra, Advisor, Planning - Member Commission 8. Shri A.K.D. Jadhav, M.D. SICOM - Member Limited (Maharashtra) 9. Dr. Amitava Mukherjee, Ph.D. - Member Ex-Banker & Management Consultant 3.The Terms of Reference of the Committee are as under: (1) Identification of the Role and Status of SFCs in the emerging Indian Financial System; (2) Suggestions for operational, financial and organisational restructuring of SFCs to provide them with greater functional autonomy and operational flexibility; (3) Composition and adequacy of Capital Structure particularly with reference to Capital Adequacy Ratio of SFCs; (4) Financial restructuring, recapitalisation and revitalisation of SFCs; (5) Identification of sources through which restructuring and recapitalisation shall be funded; (6) The desirability and feasibility of potential Mergers and Amalgamation of various state level financial institutions; (7) Measures for containment of Non-Performing Assets; (8) Profile of Business and change of Business Mix; (9) To make any other recommendation as may be appropriate to enable SFCs to develop a proper strategy and plan of action that will go towards improving their viability and competitive position in the emerging financial system. 4.The Committee shall submit its report to the Government within a period of three months. Sd/- (Shekhar Agarwal) Joint Secretary to the Government of india

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1. Shri G.P. Gupta, CMD, IDBI, - Chairman of the Committee 2. Shri S.S. Kohli, CMD, SIDBI - Member 3. Shri S.K. Tuteja, Development - Member Commissioner (SSI) 4. Shri I.D. Aggarwal, ED, RBI - Member 5. Shri V. Trivedi, MD, MPFC - Member 6. Shri P.V. Rajaraman, Principal - Member Secretary (Finance), Tamil Nadu 7. Shri B.D. Jethra, Advisor, Planning - Member Commission 8. Shri A.K.D. Jadhav, M.D. SICOM - Member Limited (Maharashtra) 9. Dr. Amitava Mukherjee, Ph. D. - Member Ex-Banker & Management Consultant Copy forwarded for information to Managing Directors of all State Financial Corporations. Coy to: Secretary-General, COSIDICI, New Delhi.


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	Annexure-XI Reserve Bank of India Rural Planning & Credit Department Central Office Central Office Building, 13th Floor, Mumbai-400 001 Ref.No.RPCD.PLNFS.BC.16/06.02.31/2000-01 15th September 2000 All Scheduled Commercial Banks Dear Sir Flow of Credit to SSI Sector _ Decision of the Group of Ministers Please refer to our Circular RPCD.PLNFS.No.BC.73/06.02.31/98-99 dated 1st March 1999, in terms of which Banks were advised of the enhancement in the limit from Rs. 4 crore to Rs. 5 crore for computation of the aggregate working capital requirements of SSI units on the basis of minimum 20% of their projected annual turnover. 2. The issue has been discussed recently at the meeting of the Group of Ministers on Small Scale Industries held on 16th August 2000 under the Chairmanship of Hon'ble Home Minister. In this connection, we reiterate the instructions contained in our Circular dated 1stMarch 1999 and advise that you may ensure the provision of working capital to the SSI units on the basis of the norms specified therein. 3. Further, it was also observed by the Group that the banks should develop schemes to encourage investment by SSI units in technology upgradation and harmonize the same with SIDBI schemes. We shall be glad if you please take necessary steps in this regard. 4. Please acknowledge receipt and advise us the action taken by you in this regard. Yours faithfully Sd/- (A.D. Rane) General Manager


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	Annexure-XII Office of the Development Commissioner (SSI) Ministry of SSI, Agro & Rural Industries Govt. of India Nirman Bhavan (South Wing), 7th Floor Maulana Azad Road, New Delhi-110011 No. 18(57)/2000-11D Dated, the 19th September 2000 To, The Secretary (Industries), All States/UTs The CMD, SIDBI, Lucknow Subject :Package for the Development of Small Scale Sector _ regarding Sir, You are aware that with a view to strengthening the small scale sector, a number of policy decisions were announced by the Prime Minister while addressing the National Conference of Small Enterprises on 30th August, 2000. Amongst others, these decisions included two major modifications in the on-going Scheme of Integrated Infrastructural Development (IID). These modifications are: - The IID Scheme will progressively cover all areas in the country with 50% reservation for the rural areas. - Under the IID Scheme, 50% of the plots developed will be earmarked for the tiny sector (as against 40% done earlier). It is requested that the above modifications may please be noted and that new proposals for setting up IID Centres may please be formulated keeping in view the above modifications. A copy of the IID Scheme as notified and circulated vide this Office F. No.2(1)/90-Plg. dated 7th March, 1994 is also enclosed for ready reference. Yours faithfully Sd/- (K.S. Ludu) Encl. : As above Addl. Development Commissioner


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F. No. 2(1)/90-Plg.

Government of India

Ministry of Industry

(Department of Small Scale Industries

& Agro and Rural Industries)

Udyog Bhavan

New Delhi, 7th March, 1994

Office Memorandum

Sub:- Scheme of Integrated Infrastructural Development (including technological back-up services for small scale industries in rural/backward areas)

Pursuant to Policy Measures for promoting and strengthening small, tiny and village enterprises announced on 6th August, 1991, the Scheme of Integrated Infrastructural Development (IID) (including technological back-up services) for small scale industries in rural/backward areas has been prepared. The said Scheme has since been approved by the Government of India. The details of the Scheme of IID as finalised are given below:-

2.Objectives of the Scheme

(i) To Set up about 50 IID Centres in backward districts/rural areas in the country excluding those districts covered under the Scheme of Growth Centres.

(ii) To promote clusters of small scale and tiny units with a view to crea