Role of Government in Promoting Small Business

Helping small businesses start and thrive is a win-win situation for the
government. Local businesses help support the tax base through businesses
taxes and through the wages provided to employees. The possibility of workforce
expansion and economic growth prompts municipalities, counties, states and the
federal government to offer various forms of assistance, such as grants, research
opportunities, beneficial legislation and worker training programs. To find out
what services are available in your area, contact your state and local economic
development offices and ask about business incentives in your area.
Economic Development Programs

Some government programs help businesses start, grow and relocate to specific
areas. In some ways, local, county and state governments compete with each
other for jobs. They do this by offering start-up incentives and taking steps to
create a “business-friendly” environment. These steps include tax credits, worker
training, free land, zoning changes, low-interest loans, infrastructure
improvements and help with fast-tracking licensing and permitting.
Loan Guarantee Programs

Government agencies such as the U.S. Small Business Administration provide

loan guarantees to small businesses and encourage local banks to work with
start-ups or established companies that want to expand. Talk to your banker
about state or federal loan programs that offer low interest rates. If you are a
woman, minority or operate a business in select industries, additional loan
opportunities also may be available. Contact your state's economic development
office to learn if it has loan programs.
Research and Development

The federal government provides grants to academic institutions working to

develop new technologies that will benefit industry with the caveat that the
institutions share the technologies with industry. In some instances, the
government provides grants to private companies making a new product or
service that will improve a vital area of an economy, such as transportation,
energy, agriculture or communications. Some states also fund research and
development projects and work with private investors and the federal government
to raise funds.
Infrastructure Improvement Funding

Business does better when it can move raw materials to factories efficiently and
get finished goods to plants and markets quickly. Governments help improve the
infrastructure needed for businesses to succeed. This includes building and
maintaining roads, bridges, rail lines, airports, seaports, energy transmission
lines and telecommunications systems.
Education and Training Programs

To ensure businesses have access to trained workers, governments provide free

schooling for primary and secondary students, grants and loans for higher
education and worker training programs. Governments often work with trade
schools, community colleges and universities to provide free worker training.
District Industries Centres | Objectives | Resources | Structure

The industrial Policy 1977 contained the concept of District Industries Centres
(DIC). DIC program was initiated on 1st May 1978 as a centrally sponsored
scheme. It was a landmark measure in development of cottage and small
industries in smaller towns in India. DIC’s were started with a view to provide
integrated administrative framework at the district level for industrial promotion.

It is aimed at providing all assistance and support to entrepreneurs in various

states. These centres are responsible for effective promotion of cottage and small
scale industries at district level. These centres also to provide support facilities,
concessions and services to develop tiny, cottage and district industries centres
small scale units.
Objective of District Industries Centres
The basic purpose of these DIC’s is to generate more employment opportunities
for rural people. It was intended to make the Centre as a central location for-

1. granting financial and other facilities to small units

2. developing close links with development blocks and specialized institutions

providing help to set up industries in rural areas

3. identifying and helping new entrepreneurs

Resource for District Industries Centres

Financial assistance is provided by the Government of India for District
Industries Centre in the following manner:

1. A non-recurring grant up to Rs.2 lakh for construction of an office building.

2. A non-recurring grant up to Rs.3 lakh for meeting the expenditure on furniture

and fixtures, office equipment and vehicles.

3. Recurring establishment expenditure to the extent of 75 percent of the actual

expenditure, limited up to Rs.3.75 lakhs.

Structure of District Industries Centres

DIC’s comprise of:

1. One General Manager

2. Four functional managers, of whom three would be in the areas of economic
investigation, credit and village industries. The fourth functional manager may be
entrusted with responsibility in any of the areas like raw materials marketing,
training etc., depending on the specific requirements of each district.

3. Three Project managers to provide technical service in the area relevant to

needs of the district concerned. Their role is to facilitate modernization and
upgradation of technology in the small sector.

Activities of District Industries Centres

1. Registration of SSI units (Permanent/ Provisional).

2. Registration of Handicrafts/Cottage industries.

3. Implementation of Prime Minister’s Rozgar Yojana.

4. Granting of Subsidies to SSI units.

5. Distribution of Project profiles among entrepreneurs.

6. Training for Entrepreneur Development Programme.

7. Organisation of Industrial Cooperative Societies.

8. Raw Material assistance through SIDCO.

9. Allotment of sheds in Electrical & Electronic Industrial Estates.

10. Marketing assistance through SIDCO.

11. Conducting Motivation Campaigns.

12. Clearance of licences etc. through Single Window Meeting.

13. Rehabilitation of sick SSI units.

14. Recommendation of Awards to SSI units.

15. Recommendation of loan applications to banks under KVIC Scheme.

Small Industries Service Institute

The Small Industries Service Institute, Imphal or SISI is one of the premier
industrial organizations of the city and the state as well. Working with the main
objective of promoting small scale industries, the Small Industries Service
Institute of Imphal was established in 1971. The Small Industries Service
Institute, Imphal is located in the Takyelpat Industrial Estate of Imphal
in Manipur. The Small Industries Service Institute in Imphal undertakes certain
programs like:

 Entrepreneurship Development Programs

 Organizing conferences and seminars on various issues
 Organizing exhibitions
 Management Development Programs
 Skill Development Programs

Other activities of SISI include providing assistance to potential entrepreneurs, preparing

state and district industrial potential surveys, pollution control, export promotion and
much more.

The Small Industries Service Institute in Imphal boasts of a workshop, equipped with
latest technological machines and tools. The Small Industries Service Institute focuses on
certain trades that deal with the production of food products, chemical products, electrical
products, mechanical products, glass products, ceramic products, metallurgical products,
leather and footwear products.

Entrepreneurship Development Institute to focus on start-ups in coming years’

The Ahmedabad-based Entrepreneurship Development Institute of India (EDII) was set

up in 1983 as an autonomous and non-profit catalyst to facilitate the emergence of
competent first generation entrepreneurs and the transition of existing SMEs into growth-
oriented enterprises through entrepreneurship, education, training, research and
institution-building. EDII was sponsored by IDBI Bank Ltd, IFCI Ltd, ICICI Bank Ltd
and State Bank of India.

The premier institute has since emerged as an international resource centre facilitating
various facets of entrepreneurship development. Besides having entrepreneurship
development centres in 12 states across India, it is now going overseas in a big way.

Excerpts from an interview with EDII Director Dr Sunil Shukla:

How many foreign delegates have been trained by EDII in the past decade?

Over 5,000 delegates from various countries have been trained at EDII in the last 10
years or so. We conduct various training programmes of six to eight weeks’ duration. At
any point of time, we have nearly 100 foreign students. At present, they include nearly 30
from China as well. Annually, we train about 400 foreign students across 15 programmes
under the Indian Technical and Economic Cooperation Division of the Ministry of
External Affairs. In recognition of its international achievements, the United Nations
Economic and Political Commission for Asia and the Pacific (UN-ESCAP), Bangkok,
Thailand, has declared EDII as a Centre of Excellence.

How has EDII reached out to other countries in the recent past and what are its
plans to increase its footprint abroad?

The Vienna-based United Nations Industrial Development Organisation (UNIDO) has set
up its first overseas centre at EDII. And we have already established entrepreneurship
development centres in Vietnam, Cambodia, Laos and Myanmar. We will shortly open
one in Uzbekistan as infrastructure, faculty and other requirements to commence
operations are in place there. In 2017, we plan to open centres in Rwanda, Namibia and
Zambia, to be followed by two more in Africa.

At present what are the focus areas of EDII?

We are currently focusing on (1) Entrepreneurship education and research; (2) Micro-
enterprises, micro-finance and sustainable livelihood; (3) SMEs and business
development services; (4) Cluster competitiveness, growth and technology; (5) social
entrepreneurship and CSR and (6) Women entrepreneurship and gender studies. In the
near future, we will focus on creating and assisting more start-ups with emphasis on
innovation, technology and global competitiveness. EDII has set up its own Technology
Business Incubator named as the Centre for Advancing and Launching Enterprises
(CrAdLE).

Is the institute also encouraging women entrepreneurship?

Of course. We are training nearly 1,000 women per annum in entrepreneurship through
over 40 programmes in association with different partners across India and around a third
of them actually turn entrepreneurs.

How have Indians keen on entrepreneurship training responded to EDII’s efforts?

We are currently engaged in creating a database of all our alumni. EDII has an alumni
base of nearly 1,500 students who have passed out from the full-time PG course. About
70 per cent of them run their own businesses. EDII has created over one lakh
entrepreneurs in the last three decades through its own programmes/ courses or its
association with other institutions spread across India.

What has been the response from students of Gujarat, which is seen as an
entrepreneurship-friendly state?

About 40-45 per cent of EDII students are from Gujarat, 20-30 per cent from the
neighbouring states of Maharashtra, Rajasthan and Madhya Pradesh and the remaining
from the rest of India. Of the students from Gujarat, about 60 per cent have a background
in family business and many of them go back to their family business. But some of them
start their own enterprises instead of going back to their family business.
SIDBI – Small Industries Development Bank of India & its Functions

 How to apply for the loan through SIDBI

SIDBI was made responsible for administering Small Industries Development Fund and
National Equity Fund that were administered by IDBI before. SIDBI is the Primary
Financial Institution for promoting, developing and financing MSME (Micro, Small and
Medium Enterprise) sector.
Besides focussing on the development of the Micro, Small and Medium Enterprise sector,
SIDBI also promotes cleaner production and energy efficiency. SIDBI helps MSMEs in
acquiring the funds they require to grow, market, develop and commercialize their
technologies and innovative products. The bank provides several schemes and also offers
financial services and products for meeting the individual’s requirement of various
businesses.

Finance Facilities Offered by SIDBI

Small Industries Development Bank of India, offers the following facilities to its
customers:

1. Direct Finance
SIDBI offers Working Capital Assistance, Term Loan Assistance, Foreign Currency
Loan, Support against Receivables, equity support, Energy Saving scheme for the MSME
sector, etc.

2. Indirect Finance
SIDBI offers indirect assistance by providing Refinance to PLIs (Primary Lending
Institutions), comprising of banks, State Level Financial Institutions, etc. with an
extensive branch network across the country. The key objective of the refinancing
scheme is to raise the resource position of Primary Lending Institutions that would
ultimately enable the flow of credit to the MSME sector.

3. Micro Finance
Small Industries Development Bank of India offers microfinance to small businessmen
and entrepreneurs for establishing their business.
Functions of SIDBI (Small Industries Development Bank of India)
1. Small Industries Development Bank of India refinances loans that are extended by the
PLIs to the small-scale industrial units and also offers resources assistance to them
2. It discounts and rediscounts bills
3. It also helps in expanding marketing channels for the products of SSI (Small Scale
Industries) sector both in the domestic as well as international markets
4. It offers services like factoring, leasing etc. to the industrial concerns in the small-scale
sector
5. It promotes employment oriented industries particularly in semi-urban areas for
creating employment opportunities and thus checking relocation of people to the urban
areas
6. It also initiates steps for modernisation and technological up-gradation of current units
7. It also enables the timely flow of credit for working capital as well as term loans to
Small Scale Industries in cooperation with commercial banks
8. It also co-promotes state level venture funds

Benefits of SIDBI

1. Custom-made
SIDBI policies loans as per the requirements of your businesses. If your requirement
doesn’t fall into the ordinary and usual category, Small Industries Development Bank of
India would assist funding you in the right way.

2. Dedicated Size
Credit and loans are modified as per the size of the business. So, MSMEs could avail
different types of loans custom-made for suiting their business requirement.

3. Attractive Interest Rates

It has a tie-up with several banks and financial institutions world over and could
offer concessional interest rates. The SIDBI has tie-ups with World Bank and the
Japan International Cooperation Agency.

4. Assistance
It not just give provides a loan, it also offers assistance and much-required
advice. It’s relationship managers assist entrepreneurs in making the right
decisions and offering assistance till loan process ends.
5. Security Free
Businesspersons could get up to INR 100 lakhs without providing security.

6. Capital Growth
Without tempering the ownership of a company, the entrepreneurs could acquire
adequate capital for meeting their growth requirements.

7. Equity and Venture Funding

It has a subsidiary known as SIDBI Venture Capital Limited which is wholly
owned that offers growth capital as equity through the venture capital funds
which focusses on MSMEs.

8. Subsidies
SIDBI offers various schemes which have concessional interest rates and
comfortable terms. SIDBI has an in-depth knowledge and a wider understanding
of schemes and loans available and could help enterprises in making the best
decision for their businesses.

9. Transparency
Its processes and the rate structure are transparent. There aren’t any hidden
charges.

How to apply for loan through SIDBI

For processing a loan through Small Industries Development Bank of India, an
entrepreneur would have to go through the below-mentioned process:
Step 1: Recognized consultants empanelled with the SIDBI would prepare the
documents needed. Depending on the requirements and information specified by
the MSMEs, the consultants would prepare a BIM (Basic Information
Memorandum). This document would include all the information related to the
rating agencies and banks.
Step 2: The Basic Information Memorandum is approved by MSME
entrepreneur. The accredited consultants would then submit the Basic
Information Memorandum to Small Industries Development Bank of India.
Step 3: In case required, the proposal would be rated by the rating agency which
is approved by the Reserve Bank of India.
Step 4: SIDBI would directly handle the below-mentioned cases:
 i. SIDBI would offer equity or quasi-equity to the existing units that are growth-
oriented
ii. The bank would finance units which are in the service sector
iii. It would offer credit to MSMEs for Cleaner Production Processes and Energy
Efficient.
Step 5: For other cases, the application for the loan would be submitted to the
Public-Sector Banks. SIDBI (Small Industries Development Bank of India) has
an MOU (memorandum of understanding)with the public-sector banks for the
issuing loans. Small Industries Development Bank of India would help the
entrepreneur at each stage until the loan is finally processed. MSMEs stands a
better chance of availing the loan in time and also could avoid needless delays.

RUDSET stands for Rural Development and Self Employment Training (India)
RUDSET Institute, Kannur – the only RUDSET Institute in Kerala was originally
established in the year 1985 at Maipady in Kasaragod district, catering to the
needs of the unemployed youth in Kasaragod, Kannur , Mahe and Wayanad
district. In 1994 the Institute shifted to a rented building atKannapuram. In the
year 2011 the institute has shifted to own campus at Kanhirangad, Near
Taliparamba. The same was inaugurated on 6th January 2012 by Sri KC Joseph,
Hon’ble Minister for Rural Development, Govt of Kerala. The present building is
the result of financial support given by Ministry of Rural Development [MORD],
Govt of India and our sponsors.
The Institute is currently managed by Sri. PV Surendran, Senior Manager on
deputation as Director from sponsor organization, Canara Bank.
The functioning of our Institute is monitored by a Local Advisory Committee,
chaired by Deputy General Manager, Canara Bank, Circle Office, Calicut
consisting of eminent personalities from Govt. departments, NABARD as well as
from sponsor banks as members. The Committee, periodically review the
performance and assist in achieving the progress and better performance of the
Institute.

MISSION
 Channellising youth power for wealth creation.
 Empower youth to share economic progress equitably.
 PHILOSOPHY
Transformation of rural youth to acquire productive identity through short
duration intervention. This is achieved by bringing technology, training and
credit within their reach, utilizing little experience gained in their life.

OBJECTIVES
 Identify, orient, motivate, train and assist the rural youth to take up self-
employment ventures as an alternative career.
 Promote rural entrepreneurship.
 Train village level workers.
 Counseling and project consultancy.

MANAGEMENT
The Board of Governors consisting chief executives of sponsor organizations is
the supreme policy making body. The “Governing Council” with ‘Executive
Director’, an officer deputed by sponsor banks aids ‘The Board of Governors’ in
monitoring RUDSETI. Dr. D.VeerendraHeggade, President of ‘Shri.
DharmasthalaManjunatheshwara Education Trust’ is the President of the ‘
Board of Governors’ as well as ‘Governing Council’. Change the line like this ‘
Each RUDSETI has an Advisory Committee under the chairmanship of District
Collector named ‘District Level RSETI Advisory Committee’ [DLRAC] with
representatives of sponsor organizations, Government Officials and eminent
personalities.

FOLLOW UP
The post training follow up of the trainees is the salient feature of the Rudseti
training, to sustain the motivational level and over come problems faced by the
trainees.
Systems followed through :
 Correspondence
 Branch Level Meet
 Door to Door visit
 Taluk level meet
 Reply through Post Card
 Unit Visit by the officials of the Institute

RUDSETI APPROACH IN DEVELOPING ENTREPRENEURS

 Identify, orient, motivate, train and assist the rural youth to take up self-
employment ventures as an alternative career.
 Promote rural entrepreneurship.
 Train village level workers.
 Counseling and project consultancy.

Self Help Groups

Women’s collectives – or Self Help Groups – are a global phenomenon that have existed
in many forms throughout space and time. These networks provide individual benefits –
self-esteem, agency, confidence – as well as a platform for collective action. These
groups ignite a spark – as women meet together, they work together, and as they work
together, they begin to have hope – for themselves and for their communities. With the
power of hope in their hands, women begin to design and create the change that they
want to see in their communities.

Self Help Groups are voluntary groups, typically comprised of 15-20 people who meet
every week to save, start small business activities, and create change both for themselves
and their communities. SHGs are created with the underlying assumption that when
individuals join together to take action toward overcoming obstacles and attaining social
change, the result can be individual and/or collective empowerment. Empowerment, in
turn, creates the bedrock for a wide range of positive outcomes, many of which provide
the enabling environment for good governance, political change, and economic growth.
As groups grow in maturity, SHG members begin to facilitate new groups, replicating
organically and exponentially. Thematic content for groups can extend well beyond
savings and business skills, with topics ranging from health practices to disaster risk
prevention to human rights.
How it works
Phase 1: Group Formation

Community members are invited to learn more about the Self Help Group approach
and are invited to join an SHG. As individual groups start to meet, on a weekly
basis, facilitators help the group members to name their group, agree their by-laws,
and begin to work collectively to support each other and members of their
community.

Phase 2: Group Strengthening

Over the course of many weeks, SHG members begin to save, start small
businesses, and give each other micro-loans from their savings. As women work
together, their confidence and their aspiration for change begins to
grow. They activate to stop childhood marriage, advocate with government for
access to services, and support vulnerable members of their community.

Phase 3: Maturity and Growth

As the SHG reaches maturity, they begin to seed and support new SHGs. As the
SHG movement grows, groups start to create federated structures, with group
members forming clusters and federal level structures that become formally
recognized as the Community Based Organization, begin to drive change at scale,
from the bottom up.

We will be together forever. We are sisters.”

National Institute for Entrepreneurship and Small Business Development

Basic details
Established On

1983

Management

Private Institute

About Institution
NIESBUD is an apex body under the Ministry of Micro, Small & Medium
Enterprises , Government of India for coordinating and overseeing the activities
of various institutions/agencies engaged in entrepreneurship development
particularly in the area of small industry and small business. The Institute which
is registered as a Society under Societies Registration Act, 1860 (XXI of 1860),
started functioning from 6th July, 1983.

The policy, direction and guidance to the Institute is provided by its Governing
Council whose Chairman is the Minister of MSME.The Executive Committee
consisting of Secretary (Micro, Small & Medium Enterprises) as its Chairman and
Director General of the Institute as its Member-Secretary, executes the policies
and decisions of the Governing Council through its whole-time Director General.

Courses Offered

Management PG Diploma
Post Graduate Diploma in Management (PGDM)
Course Details
Duration of course

: 2 Years

Course Name

: Management
System of examinations

: Quarter

Lateral Entry Availability

: No

Course Type

: Full time

NATIONAL ADVISORY COUNCIL ON INNOVATION &

ENTREPRENEURSHIP (NACIE)

The National Advisory Council on Innovation & Entrepreneurship

(NACIE) is charged with identifying and recommending solutions to
issues critical to driving the innovation economy, including enabling
entrepreneurs and firms to successfully access and develop a skilled,
globally competitive workforce.

The Council will serve as a vehicle for ongoing dialogue with the
entrepreneurship and workforce development communities, including
working with business and trade associations. The duties of the Council
are solely advisory, and it reports to the Secretary of Commerce
through the Economic Development Administration and the Office of
the Secretary.

Government of India Support for Innovation and Entrepreneurship in India

The Government of India has undertaken several initiatives and instituted policy
measures to foster a culture of innovation and entrepreneurship in the country. Job
creation is a foremost challenge facing India. With a significant and unique
demographic advantage, India, however, has immense potential to innovate, raise
entrepreneurs and create jobs for the benefit of the nation and the world.
In the recent years, a wide spectrum of new programmes and opportunities to
nurture innovation have been created by the Government of India across a number
of sectors. From engaging with academia, industry, investors, small and big
entrepreneurs, non-governmental organizations to the most underserved sections of
society.

Recognising the importance of women entrepreneurship and economic

participation in enabling the country’s growth and prosperity, Government of India
has ensured that all policy initiatives are geared towards enabling equal
opportunity for women. The government seeks to bring women to the forefront of
India’s entrepreneurial ecosystem by providing access to loans, networks, markets
and trainings.

A few of India’s efforts at promoting entrepreneurship and innovation are:

· Startup India: Through the Startup India initiative, Government of India

promotes entrepreneurship by mentoring, nurturing and facilitating startups
throughout their life cycle. Since its launch in January 2016, the initiative has
successfully given a head start to numerous aspiring entrepreneurs. With a 360
degree approach to enable startups, the initiative provides a comprehensive four -
week free online learning program, has set up research parks, incubators and
startup centres across the country by creating a strong network of academia and
industry bodies. More importantly, a ‘Fund of Funds’ has been created to help
startups gain access to funding. At the core of the initiative is the effort to build an
ecosystem in which startups can innovate and excel without any barriers, through
such mechanisms as online recognition of startups, Startup India Learning
Programme, Facilitated Patent filing, Easy Compliance Norms, Relaxed
Procurement Norms, incubator support, innovation focused programmes for
students, funding support, tax benefits and addressing of regulatory issues.

· Make in India: Designed to transform India into a global design and

manufacturing hub, the Make in India initiative was launched in September 2014.
It came as a powerful call to India’s citizens and business leaders, and an invitation
to potential partners and investors around the world to overhaul out-dated
processes and policies, and centralize information about opportunities in India’s
manufacturing sector. This has led to renewed confidence in India’s capabilities
among potential partners abroad, business community within the country and
citizens at large. The plan behind Make in India was one of the largest undertaken
in recent history. Among several other measures, the initiative has ensured the
replacement of obsolete and obstructive frameworks with transparent and user -
friendly systems. This has in turn helped procure investments, foster innovation,
develop skills, protect intellectual property and build best-in-class manufacturing
infrastructure.

· Atal Innovation Mission (AIM): AIM is the Government of India’s

endeavour to promote a culture of innovation and entrepreneurship, and it serves as
a platform for promotion of world-class Innovation Hubs, Grand Challenges, start-
up businesses and other self-employment activities, particularly in technology
driven areas. In order to foster curiosity, creativity and imagination right at the
school, AIM recently launched Atal Tinkering Labs (ATL) across India. ATLs are
workspaces where students can work with tools and equipment to gain hands -on
training in the concepts of STEM (Science, Technology, Engineering and Math).
Atal Incubation Centres (AICs) are another programme of AIM created to build
innovative start-up businesses as scalable and sustainable enterprises. AICs
provide world class incubation facilities with appropriate physical infrast ructure in
terms of capital equipment and operating facilities. These incubation centres, with
a presence across India, provide access to sectoral experts, business planning
support, seed capital, industry partners and trainings to encourage innovative sta rt-
ups.

· Support to Training and Employment Programme for Women (STEP):

STEP was launched by the Government of India’s Ministry of Women and Child
Development to train women with no access to formal skill training facilities,
especially in rural India. The Ministry of Skill Development & Entrepreneurship
and NITI Aayog recently redrafted the Guidelines of the 30-year-old initiative to
adapt to present-day needs. The initiative reaches out to all Indian women above 16
years of age. The programme imparts skills in several sectors such as agriculture,
horticulture, food processing, handlooms, traditional crafts like embroidery, travel
and tourism, hospitality, computer and IT services.

· Jan Dhan- Aadhaar- Mobile (JAM): JAM, for the first time, is a
technological intervention that enables direct transfer of subsidies to intended
beneficiaries and, therefore, eliminates all intermediaries and leakages in the
system, which has a protential impact on the lives of millions of Indian citizens.
Besides serving as a vital check on corruption, JAM provides for accounts to all
underserved regions, in order to make banking services accessible down to the last
mile.

· Digital India: The Digital India initiative was launched to modernize the
Indian economy to makes all government services available electronically. The
initiative aims to transform India into a digitally-empowered society and
knowledge economy with universal access to goods and services. Given
historically poor internet penetration, this initiative aims to make available high-
speed internet down to the grassroots. This program aims to improve citizen
participation in the digital and financial space, make India’s cyberspace safer and
more secure,abd improve ease of doing business. Digital India hopes to achi eve
equity and efficiency in a country with immense diversity by making digital
resources and services available in all Indian languages.

· Biotechnology Industry Research Assistance Council (BIRAC): BIRAC

is a not-for-profit Public-Sector Enterprise, set up by Department of Biotechnology
to strengthen and empower emerging biotechnology enterprises. It aims to embed
strategic research and innovation in all biotech enterprises, and bridge the existing
gaps between industry and academia. The ultimate goal is to develop high -quality,
yet affordable, products with the use of cutting edge technologies. BIRAC has
initiated partnerships with several national and global partners for building
capacities of the Indian biotech industry, particularly start-ups and SME’s, and has
facilitated several rapid developments in medical technology.

· Department of Science and Technology (DST): The DST comprises

several arms that work across the spectrum on all major projects that require
scientific and technological intervention. The Technology Interventions for
Disabled and Elderly, for instance, provides technological solutions to address
challenges and improve quality of life of the elderly in India through the
application of science and technology. On the other hand, the ASEAN-India
Science, Technology and Innovation Cooperation works to narrow the development
gap and enhance connectivity between the ASEAN countries. It encourages
cooperation in science, technology and innovation through joint research across
sectors and provides fellowships to scientists and researchers from ASEAN
member states with Indian R&D/ academic institutions to upgrade their research
skills and expertise.

· Stand-Up India: Launched in 2015, Stand-Up India seeks to leverage

institutional credit for the benefit of India’s underprivileged. It aims to enab le
economic participation of, and share the benefits of India’s growth, among women
entrepreneurs, Scheduled Castes and Scheduled Tribes. Towards this end, at least
one women and one individual from the SC or ST communities are granted loans
between Rs.1 million to Rs.10 million to set up greenfield enterprises in
manufacturing, services or the trading sector. The Stand-Up India portal also acts
as a digital platform for small entrepreneurs and provides information on financing
and credit guarantee.

· Trade related Entrepreneurship Assistance and Development

(TREAD): To address the critical issues of access to credit among India’s
underprivileged women, the TREAD programme enables credit availability to
interested women through non-governmental organizations (NGOs). As such,
women can receive support of registered NGOs in both accessing loan facilities,
and receiving counselling and training opportunities to kick-start proposed
enterprises, in order to provide pathways for women to take up non-farm activities.

· Pradhan Mantri Kaushal Vikas Yojana (PMKVY): A flagship initiative

of the Ministry of Skill Development & Entrepreneurship (MSDE), this is a Skill
Certification initiative that aims to train youth in industry-relevant skills to
enhance opportunities for livelihood creation and employability. Individuals with
prior learning experience or skills are also assessed and certified as a Recognition
of Prior Learning. Training and Assessment fees are entirely borne by the
Government under this program.

· National Skill Development Mission: Launched in July 2015, the mission

aims to build synergies across sectors and States in skilled industries and
initiatives. With a vision to build a ‘Skilled India’ it is designed to expedite
decision-making across sectors to provide skills at scale, without compromising on
quality or speed. The seven sub-missions proposed in the initial phase to guide the
mission’s skilling efforts across India are: (i) Institutional Training (ii)
Infrastructure (iii) Convergence (iv) Trainers (v) Overseas Employment (vi)
Sustainable Livelihoods (vii) Leveraging Public Infrastructure. Click here to
download the framework for implementation.

· Science for Equity Empowerment and Development (SEED): SEED aims

to provide opportunities to motivated scientists and field level workers to
undertake action-oriented, location specific projects for socio-economic gain,
particularly in rural areas. Efforts have been made to associate national labs and
other specialist S&T institutions with innovations at the grassroots to enable access
to inputs from experts, quality infrastructure. SEED emphasizes equity in
development, so that the benefits of technological accrue to a vast section of the
population, particularly the disadvantaged.

Various Sources of Finance Available to an Entrepreneur

Businesses run on money; you'll most likely have to think about financing often,
even if your company is profitable. When sorting through available sources of
finance, research interest rates and repayment terms. Also consider how easy or
difficult it will be to have access to funds, and trade-offs for the convenience of
readily available cash.
Personal Nest Egg

It's not uncommon for business owners to finance business activities with
personal money, especially if a company is a sole proprietorship, which is closely
tied financially to its owner's assets. Keep track of how much money you're
putting into your business, and check in with your assets regularly regarding how
much you're willing and able to risk. If you have partners, agree about terms and
ownership responsibilities before you infuse capital.
Credit Cards and Credit Lines

If your company is in reasonably good financial standing, you'll most likely be

able to get a business credit card from your bank. Unless there's a deep
recession with a tight lending climate, business credit cards are relatively easy to
get, although their rates tend to be high. You may also qualify for a business line
of credit. Like a business credit card, the funds available to you through a line of
credit become available to borrow again as you pay them. Interest rates on credit
lines are usually much lower than on credit cards. A business line is usually
linked to your company bank account, making it convenient for you to access
capital.
Internal Sources of Financing

You may not need to borrow money at all to finance company operations. If your
business is profitable, it will earn more than it spends and more than it pays you
in owner income, and you can use some of that money to finance expansion and
day-to-day cash flow. Other internal sources of financing include selling assets
such as equipment you no longer use, and managing your capital closely by
seeking advantageous payment terms from vendors and requiring that customers
pay you promptly.
Crowd Funding

If your business has a dedicated following, you can launch a crowdfunding

campaign using a platform such as Kickstarter or GoFundMe. Crowdfunding
platforms let you set the terms and rewards – which may range from a heartfelt
thank you to valuable merchandise. If you launch a Kickstarter campaign, you
won't receive any of the money pledged unless you reach your funding goal. If
you use GoFundMe, you get to keep all the money even if you don't reach your
goal.
Although GoFundMe's approach is relatively risk free, Kickstarter's all-or-nothing
policy creates a sense of urgency that spurs people to donate. When launching a
crowdfunding campaign, be sure to include the cost of rewards in your budgeting
process.
Bank and SBA Loans

Another option that many small business owners pursue are loans. Business
loans can come from banks or from other institutions, like business organizations
and microlending platforms. In many cases, these loans are backed by the
United States Small Business Association (SBA). Securing an SBA-backed loan
is typically an easier, less risky process for the borrower than obtaining a bank
loan, but there are circumstances under which an entrepreneur is better served
by a non-SBA backed loan. The SBA looks for a track record of a couple of
years, so if you are entirely new to the entrepreneurship game, you may not
qualify for an SBA loan.

What is Mudra Loan?

The MUDRA loan is provided under the Pradhan Mantri MUDRA Yojana (PMMY) to
non-farming and non-corporate micro and small enterprises. These enterprises can avail
loans up to Rs.10 Lakh under the MUDRA (Micro Units Development & Refinance
Agency Ltd.) scheme.

The scheme was launched by the Prime Minister back in 8th April 2015, and as of FY
2017-18 has:
• Sanctioned more than 4 crore loans.
• Sanctioned more than Rs.2.5 lakh crore.
• Disbursed more than Rs.2.4 lakh crore.

There are 3 products under the Pradhan Mantri MUDRA loan:

1. Shishu
Shishu under the MUDRA loan scheme provides up to Rs.50,000 to those entrepreneurs
who are either in their initial stages of business or looking to start one.
Checklist
• Machinery quotation and other items to be purchased.
• Details of the machinery to be purchased.
Borrowers also have to provide details of the machinery supplier.

2. Kishor
Kishor under the MUDRA loan yojana offers up to Rs.5 Lakh to those businesspersons
who are looking for additional funds to expand their operations.
Checklist
• Last 6 months of account statements from an existing banker, if any.
• Balance sheet for last 2 years.
• Income/sales tax returns.
• Estimated balance sheet for 1 year or for the duration of the loan.
• Memorandum and articles of association, if any.
• Sales made before filing the loan application and in the current FY.
Borrowers also have to provide a report containing the economic and technical viability
of the business.

3. Tarun
Under the Pradhan Mantri MUDRA yojana loan arrangement, Tarun sanctions up to
Rs.10 Lakh if the business owner meets certain eligibility criterions.
Checklist
• Same as Kishor.
In addition to the above, borrows also have to provide:
• Certificate of SC, ST, OBC, etc.
• Address proof
• Identity proof

If you are looking for a higher loan amount with a hassle-free borrowing experience, you
can opt for a Business Loan from Bajaj Finserv that is especially designed for SMEs like
yours. With unsecured loans up to Rs.30 lakh that can be repaid within 12-60 months,
your loans get approved in under 24 hours with minimal documentation.
Bajaj Finserv even provides pre-approved offers to existing customers that not just
simplify the application process but also gives you access to instant funds.
 Product / Offerings of MUDRA
Micro Units Development and Refinance Agency Ltd. [MUDRA] is an NBFC supporting
development of micro enterprise sector in the country. MUDRA provides refinance
support to Banks / MFIs for lending to micro units having loan requirement upto 10 lakh.
MUDRA provides refinance to micro business under the Scheme of Pradhan Mantri
MUDRA Yojana. The other products are for development support to the sector. The
bouquet of offerings of MUDRA is depicted below. The offerings are being targeted
across the spectrum of beneficiary segments.

Mudra Offerings
Pradhan Mantri MUDRA Yojana (PMMY)
Under the aegis of Pradhan Mantri Mudra Yojana (PMMY), MUDRA has created
products / schemes. The interventions have been named 'Shishu', 'Kishor' and 'Tarun' to
signify the stage of growth / development and funding needs of the beneficiary micro unit
/ entrepreneur and also provide a reference point for the next phase of graduation /
growth to look forward to :

 Shishu : covering loans upto 50,000/-

 Kishor : covering loans above 50,000/- and upto 5 lakh
 Tarun : covering loans above 5 lakh and upto 10 lakh
 It would be ensured that more focus is given to Shishu Category Units and then Kishor
and Tarun Categories.
Within the framework and overall objective of development and growth of micro
enterprises sector under Shishu, Kishor and Tarun, the products being offered by
MUDRA are so designed, to meet requirements of different sectors / business activities as
well as business / entrepreneur segments.
The funding support from MUDRA are of four types :

 Micro Credit Scheme (MCS) for loans upto 1 lakh finance through MFIs.
 Refinance Scheme for Commercial Banks / Regional Rural Banks (RRBs) / Scheduled
Co-operative Banks
 Women Enterprise programme
 Securitization of loan portfolio

Micro Credit Scheme :

Micro Credit Scheme is offered mainly through Micro Finance Institutions (MFIs), which
deliver the credit upto Rs.1 lakh, for various micro enterprise activities. Although, the
mode of delivery may be through groups like SHGs/JLGs, the loans are given to the
individuals for specific income generating micro enterprise activity. The MFIs for
availing financial support need to enroll with MUDRA by complying to some of the
requirements as notified by MUDRA, from time to time.
Refinance Scheme for Banks
Different banks like Commercial Banks, Regional Rural Banks and Scheduled
Cooperative Banks are eligible to avail of refinance support from MUDRA for financing
micro enterprise activities. The refinance is available for term loan and working capital
loans, upto an amount of 10 lakh per unit. The eligible banks, who have enrolled with
MUDRA by complying to the requirements as notified, can avail of refinance from
MUDRA for the loan issued under Shishu, Kishor and Tarun categories.
Women Enterprise Programme
In order to encourage women entrepreneurs the financing banks / MFIs may consider
extending additional facilities, including interest reduction on their loan. At present,
MUDRA extends a reduction of 25bps in its interest rates to MFIs / NBFCs, who are
providing loans to women entrepreneurs.
Securitization of loan portfolio
MUDRA also supports Banks / NBFCs / MFIs for raising funds for financing micro
enterprises by participating in securitization of their loan assets against micro enterprise
portfolio, by providing second loss default guarantee, for credit enhancement and also
participating in investment of Pass Through Certificate (PTCs) either as Senior or Junior
investor.
Purpose of MUDRA loan
 Mudra loan is extended for a variety of purposes which provide income generation and
employment creation. The loans are extended mainly for :

 Business loan for Vendors, Traders, Shopkeepers and other Service Sector activities
 Working capital loan through MUDRA Cards
 Equipment Finance for Micro Units
 Transport Vehicle loans

Following is an illustrative list of the activities that can be covered under MUDRA loans:
Transport Vehicle
Purchase of transport vehicles for goods and personal transport such as auto rickshaw,
small goods transport vehicle, 3 wheelers, e-rickshaw, passenger cars, taxis, etc.
Community, Social & Personal Service Activities
Saloons, beauty parlours, gymnasium, boutiques, tailoring shops, dry cleaning, cycle and
motorcycle repair shop, DTP and Photocopying Facilities, Medicine Shops, Courier
Agents, etc.
Food Products Sector
Activities such as papad making, achaar making, jam / jelly making, agricultural produce
preservation at rural level, sweet shops, small service food stalls and day to day catering /
canteen services, cold chain vehicles, cold storages, ice making units, ice cream making
units, biscuit, bread and bun making, etc.
Textile Products Sector / Activity
Handloom, powerloom, khadi activity, chikan work, zari and zardozi work, traditional
embroidery and hand work, traditional dyeing and printing, apparel design, knitting,
cotton ginning, computerized embroidery, stitching and other textile non garment
products such as bags, vehicle accessories, furnishing accessories, etc.
Business loans for Traders and Shopkeepers
Financial support for on lending to individuals for running their shops / trading &
business activities / service enterprises and non-farm income generating activities with
beneficiary loan size of upto 10 lakh per enterprise / borrower.
Equipment Finance Scheme for Micro Units
Setting up micro enterprises by purchasing necessary machinery / equipments with per
beneficiary loan size of upto 10 lakh.
Activities allied to agriculture
'Activities allied to agriculture', e.g. pisciculture, bee keeping, poultry, livestock, rearing,
grading, sorting, aggregation agro industries, diary, fishery, agriclinics and agribusiness
centres, food & agro-processing, etc.(excluding crop loans, land improvement such as
canal, irrigation and wells) and services supporting these, which promote livelihood or
are income generating shall be eligible for coverage under PMMY in 2016-17.
MUDRA Card
MUDRA Card is an innovative product which provides working capital facility as a cash
credit arrangement. MUDRA Card is a debit card issued against the MUDRA loan
account, for working capital portion of the loan. The borrower can make use of MUDRA
Card in multiple withdrawal and credit, so as to manage the working capital limit in a
most efficient manner and keep the interest burden minimum. MUDRA Card will also
help in digitalization of MUDRA transactions and creating credit history for the
borrower.
National Payment Corporation of India (NPCI) has given RuPay branding to MUDRA
Card and also separate BIN / IIN for the same, by which credit history can be tracked.
MUDRA Card can be operated across the country for withdrawal of cash from any ATM
/ micro ATM and also make payment through any ‘Point of Sale’ machines.
The design of the MUDRA card as approved by DFS, GoI and NPCI is given below.
Banks can customize the same by incorporating their logo and name.

Portfolio Credit Guarantee

Traditional financing in Indian context adopts an Asset Based lending approach with
emphasis on collaterals. Micro units, most of the times, are unable to provide the comfort
of collaterals. Hence MUDRA loans i.e. loans upto 10 lakh, have been made collateral
free, as per the RBI norms in this regard.
To mitigate the issue of collaterals, MUDRA is offering a Credit Guarantee Product.
MUDRA Credit Guarantee is extended by creation of a Fund called “Credit Guarantee
Fund for Micro Units” [CGFMU] and the scheme has been notified by GoI vide its
notification dated April 18, 2016. Accordingly, all eligible micro loans sanctioned since
April 08, 2015 is covered under the Scheme. The Scheme is being managed by National
Credit Guarantee Trustee Company Ltd. [NCGTC], an agency promoted by the GOI.
Further, given the context of the industry /segment, since the individual loan sizes would
expectedly be small and number of loans will be large, Mudra Credit Guarantee scheme
provide a Portfolio Guarantee. Under this, Credit Guarantee or Risk Sharing is provided
for a portfolio of homogenous loans instead of a Scheme for individual loan - by - loan
guarantee. This is expected to create administrative efficiencies and increase
receptiveness for the Credit Guarantee product. The Guarantee product is one of the key
interventions proposed with the objective of bringing down the cost of funds for the end
beneficiary to improve its creditworthiness.
 Creation of Resources for Credit Enhancement / Guarantee Facility
The corpus proposed for the Credit Guarantee Scheme would be regularly augmented
with a charge on the outstanding loans under refinance. The same would be utilized for
providing first loss guarantee / credit enhancement for securitized portfolio loans, as
discussed below4.
4 Credit enhancement : Facilities offered to cover probable losses from a pool of
securitized assets in the form of credit risk cover through a letter of credit, guarantee or
other assurance from the originator / co-originator or a third party to enhance
investment grade in any securitization process. First loss facility is the first level of credit
enhancement offered as part of the process in bringing the securities to investment grade.
Second loss facility provides the second / subsequent tier of protection against potential
losses.
Development and Promotional Support
Besides the credit constraints, the NCSBs face many non-credit challenges, like,

 Skill Development Gaps

 Knowledge Gaps
 Information Asymmetry
 Financial / Business Literacy
 Lack of growth orientation

To address these constraints, MUDRA will adopt a credit- plus approach and offer
Developmental and Support services to the target audience. It will act as a market maker
and build –up an ecosystem with capacities to deliver value in an efficient and sustainable
manner.
Imparting Financial / Business Literacy
Financial / business literacy or financial education can broadly be defined as 'providing
familiarity with and understanding of financial market products, especially rewards and
risks, in order to make informed choices.'
Financial Inclusion and Financial / business Literacy are twin pillars. While Financial
Inclusion acts from supply side providing the financial market / services that people
demand, Financial Literacy stimulates the demand side – making people aware of what
they can demand. Supporting the financial literacy drive will contribute substantially
from the demand side to the national agenda of financial inclusion.

 Skill Development Gaps

 Knowledge Gaps
 Information Asymmetry
 Financial / Business Literacy
 Lack of growth orientation
To address these constraints, MUDRA will adopt a credit- plus approach and offer
Developmental and Support services to the target audience. It will act as a market maker
and build –up an ecosystem with capacities to deliver value in an efficient and sustainable
manner.

Imparting Financial / Business Literacy

This apart, the micro enterprise segment also needs business literacy which will help
them in acquiring knowledge on running / managing business, keeping accounts, working
out ratios, etc.
Promotion and Support of Grass Root Institutions
One of the major focus areas will be to formalize and institutionalize the last mile
financiers / grass root institutions so that a new category of financial institutions viz.
Small Business Finance Companies can be created and ecosystem developed for their
growth.
Rural innovations at micro enterprise / unit level would also be one of the key areas for
intervention and support. Support to Micro units by way of the facility of incubators
would be taken up. This would ensure that at the most grass root levels in the country,
there is climate for promotion of innovation as well as incubation of ideas from educated
rural youths which would germinate in viable micro enterprises.
Creation of Framework for "Small Business Finance Entities"
An enabling framework for support to "Small Business Finance Entities" would be
created leading to formalization of the economy which is presently included in the
informal sector.
Synergies with “Make in India” Campaign
Government of India has initiated several steps for encouraging enterprise creation in our
country. The major one is “Make in India” movement. Make in India is a major national
programme designed to facilitate investment, foster innovation, enhance skill
development, project intellectual property and build best in class manufacturing
infrastructure. This coupled with Start-up India and Stand-up India campaign, has created
a conducive environment of enterprise creation in different scales. MUDRA, being an
initiative for promoting micro enterprises, fits well with Make in India initiative for
supporting these micro enterprises.
Synergies with National Rural Livelihoods Mission / National Urban Livelihood Mission
The National Rural Livelihoods Mission [NRLM] is set up "To reduce poverty by
enabling the poor households to access gainful self-employment and skilled wage
employment opportunities, resulting in appreciable improvement in their livelihoods on a
sustainable basis, through building strong grassroots institutions of the poor." To achieve
the above, NRLM Mission inter alia follows a demand driven strategy for continuous
capacity building, imparting requisite skills and creating linkages with livelihood
opportunities for the poor, including those emerging in the organized sector.
Similarly, the Deendayal Antodaya Yojana [DAY] National Urban Livelihood Mission
is another progamme which is aimed at reducing Urban poverty through creation of
micro enterprises, individually and group mode.
MUDRA, being an initiative for promoting micro enterprises, would make all efforts to
draw synergies between NRLM, NULM and MUDRA interventions for supporting micro
enterprises and creating sustainable livelihood opportunities for the poor.
Synergies with National Skill Development Corporation
NSDC is already engaged in the process of skill development at a National scale.
Synergizing with NSDC will help MUDRA in augmenting the skill sets of the sectoral
players.
Working with Credit Bureaus
With the growth of responsible lending practices, Credit Bureaus (CB) have gained
increasing level of acceptability in the micro finance sector. The CB culture will help in
creating credit history over a period of time which will facilitate faster credit dispensation
as the system evolves.
Working with Rating Agencies
Accreditation / rating of MFI entities is one of the roles earmarked for MUDRA. Further,
a segment of financial intermediaries for the non corporate small business sector is
envisaged to emerge in the financing architecture. MUDRA would work in coordination
with Rating Agencies so that appropriate rating framework (s) which take into account
sector specific features are devised for various sector participants. In the longer run,
availability of rating for sector participants would facilitate formalization and further
flow of capital to the sector.
The MUDRA Pricing
Access to finance is critical and equally critical is the cost of finance to the
NCSB/ultimate beneficiary. The funds mobilized by micro units from the informal
sources are at a high cost. There is scope for cost rationalization. However, the
rationalization is intricately linked with the cost of funds for the last mile MFIs.
GOI while announcing the formation of MUDRA also announced a refinance corpus for
MUDRA at 20000 crores, to be allocated by RBI from the Priority Sector lending
shortfall. Accordingly, RBI has provided the allocation which helps in bringing down the
cost of lending at the ultimate borrower level as MUDRA refinance will reduce the
average borrowing cost of the lending institutions
The NBFC-MFIs are presently regulated by Reserve Bank of India and RBI has already
prescribed detailed guidelines for margin cap in respect of MFIs. The margin cap has
been pegged at 10% for MFIs having loan portfolio of more than 100 crore and 12% for
smaller MFIs having loan portfolio of less than 100 crore or 2.75 times the average base
rate of five major commercial banks, whichever is less. In the backdrop of these
guidelines and the fact that MFI sector has been constantly trying to reduce its costs,
MUDRA would also help MFIs reduce their cost to bring down the overall cost to the end
beneficiaries. Further, at the time of appraisal, MUDRA would be studying / assessing
individual MFIs on this as well as other related parameters and suitably price its
assistance based on such assessment.
In the case of Banks, RBI has also put a cap on the interest rate at Base rate/ MCLR for
lending micro units by Commercial Banks by availing of MUDRA refinance. Similarly,
the RRBs and Cooperatives have been given a interest cap of 3.50% over and above
MUDRA refinance rate, while lending to MUDRA loan by availing of MUDRA
refinance.
In case of NBFCs, RBI has also stipulated a interest cap of 6% over and above MUDRA
refinance while their lending to MUDRA segment.
All these are expected to have a positive impact on the pricing of MUDRA loans in the
country whereby the Micro enterprises will be able to avail of credit at a affordable
interest rate. But, first and foremost objective is to ensure accessibility of credit.
Development finance institutions and private
sector development

National and international development finance institutions (DFIs) are specialised development banks or subsidiaries set
countries. They are usually majority-owned by national governments and source their capital from national or internation
This ensures their creditworthiness, which enables them to raise large amounts of money on international capital market