study material for ba economics entrepreneurial development

STUDY MATERIAL FOR B.A. ECONOMICS ENTREPRENEURIAL DEVELOPMENT - II

SEMESTER - IV, ACADEMIC YEAR 2020 -21

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UNIT CONTENT PAGE Nr

I FORMS OF ENTREPRENEURSHIP 02

II GENERAL ATTITUDES OF ENTREPRENEURSHIP 24

III ENTREPRENEURIAL OPPORTUNITIES 30

IV INSTITUTIONAL SUPPORTS IN TAMILNADU 34

V PROGRAMMES AND SCHEMES 43



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UNIT - I FORMS OF ENTREPRENEURSHIP

Forms of Entrepreneurship: Emerging forms of entrepreneurship - working definitions One-person enterprises and

self-employment has been part of the business landscape for some time, and at the same time this business model has contributed to structural change in the business landscape. These changes are shaped by socio-demographic, economic and technological developments which have affected the speed of knowledge transfer, market access and business development. Some industrial sectors have a high proportion of one-person enterprises and self-employment.

In many sectors these emerging forms of entrepreneurship are having a significant

impact on business dynamics and conditions of employment. The result is a need for a more heterogeneous and diversified understanding of entrepreneurship. This section presents an introduction to the specific forms of entrepreneurship that are the focus of this report, using definitions that have informed the search for information. The definitions are based on very specific elements, such as income shares, drawn from literature. One-person enterprises and the self-employed; businesses employ no staff, This form of entrepreneurship includes persons undertaking business activities, which, irrespective of their legal status, whether incorporated or not, contribute an important part to the person’s income and hence go beyond hobby activities.

Self-employment is not a new phenomenon, although the sectors where such business

activity is common have changed over time. Several sectors, such as ICT and related services, crafts and construction, have particularly high levels of one-person enterprises and self-employment. The important characteristic of this form of entrepreneurship is that the entrepreneur conducts his or her business activities without permanent employees. However, they often cooperate with other businesses. There are no general, common definition of part-time entrepreneurs.

The Organization for European Economic Cooperation (OECD) does not provide any

definition of this entrepreneurial form. The definitions outlined by the EU Labour Force Survey make a distinction between fulltime and part-time work or entrepreneurship, based on a spontaneous response from the respondents. Thus, in some countries a part-time entrepreneurship is defined as someone working fewer than 35 hours per week. Other sources, such as Entrepreneurship in Missouri, define parttime entrepreneurs in terms of how big a share of their income is generated by a person’s selfemployed activities. However, part-time entrepreneurs are also often regarded as initial entrepreneurs in transition, testing the market to see whether their business is economically sustainable before becoming a full-time entrepreneur. Other authors, such as F.Welter (2009), see part-time entrepreneurship as being often a necessity-based way of earning a living, and observe that such businesses are characterized by low-growth ambitions and low survival rates. Part-time entrepreneurs can be employed, retired, enrolled in education or training programmes, or undertaking household chores alongside running a business. Examples are a part-time social worker running a farm shop on the side, and business or IT consultants who are employed part time and also take on self-employed contracts.

Part-time students may be working on a self European Foundation for the Improvement

of Living and Working Conditions, 2011, 5 employed basis in parallel with their studies, and parents may run their own part time business alongside their childcare responsibilities.



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Parallel entrepreneurs: Run two or more businesses at the same time, in addition to the opportunities of part-

time entrepreneurship, there are examples of entrepreneurs running several different businesses in parallel. The flow of knowledge and hence of business opportunities allowsparticularly active entrepreneurs to set up and run several businesses at the same time. These businesses may be based on common synergies, such as addressing the same customer base, but offering the supply of different products and services. These businesses may be at different stages of their life cycles; an entrepreneur may, for instance, start up a new business when it becomes apparent that an existing one will not be competitive at some point in the future. When this happens, the definition of a parallel entrepreneur can overlap with the next category, serial entrepreneurship. Serial entrepreneurs:

starting up a business after selling, closing or introducing new management to a previous one Entrepreneurs can assume these days that they will not need to devote 10, 20 or 30 years to their businesses. Business cycles are faster, perhaps because products are being replaced more quickly in the market, and the competitive situation can change more rapidly.

An entrepreneur may also realize that their expertise lies in start-up rather than

consolidation. It is possible to build a successful business over a short period, perhaps in five to eight years, and then sell it on. The market for purchasing and investing in these kinds of companies has developed dramatically in recent years. In other words, an entrepreneur who prefers the process of starting a company can sell off their young company or transfer its ownership or management to another entrepreneur and then begin again. Business transfers and successions; the transfer of management or ownership to a new entrepreneur while the business continues to operate This survey defines business transfer as the transfer of ownership or a major part of it, or the transfer of management control from one entrepreneur to another while the business itself continues, including its employment relationships with its workers and any other contracts it has entered into. Business transfers can take place in different situations. These include:

➢ Transfer from parents to a son or daughter, a traditional generational change. ➢ After passing the entrepreneurial stage of business development, a company will

typically face new strategic options and managerial challenges that are likely to demand a fresh injection of skills. At this stage, it is common to introduce new management skills and perhaps to transfer ownership to a professional board.

➢ Transfer of ownership, or part of it, through a management buyout or the private sale of the business or shares.

Small scale entrepreneurship

Small-scale industry comprises of a variety of undertakings. The definition of small-scale industry varies from one country to another and from one time to another in the same country depending upon the pattern and stage of development, Government Policy and administrative set up of the particular country. As a result, there are nearly 50 different definitions of SSIs found and used in 75 countries. All these definitions either relate to capital or employment or both or any other criteria. The evolution of the legal concept of small-scale industry in India is traced in this unit.



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There can be two bases for defining small business and these are:

I. Scale of Business:

The size or scale of business can be measured in various ways like: (i) Investment on plant and machinery (ii) Employment generation. (iii) Investment and Employment. (iv) Volume and/or value of production. (v) Volume and/or value of sales.

II. Qualitative Aspects:

These can be:- (i) Ownership of small business is in the hands of an individual or a few individuals. (ii) Management and control of small-scale firm is with the owner or owners. (iii) Technology adopted in small-scale unit is normally labour intensive. (iv) Small-scale business is normally carried on in a limited or local area. Before

Second World War a small concern was defined as a unit having capital invested up to Rs. 30,000 and those concerns having capital in excess of that amount were classified as large scale units.

The definition of small-scale enterprise has undergone changes over years with the

ceiling raised to take into account the rising cost of machinery as well as falling value of rupee. Various definitions of small-scale unit are as under:

According to Fiscal Commission, 1950 “A unit operating mainly with hired labour usually 10 to 50 hands.” According to Small Scale Industries Board, 1955 “A unit employing less than 50 persons if using power and less than 100 persons without the use of power and with a capital investment not exceeding Rs. 5 lakhs.”

According to Ministry of Commerce and Industry, 1960 “An industrial unit with a capital

investment of not more than Rs. 5 lakhs irrespective of the number of persons employed.” According to Ministry of Commerce and Industry, 1966 “An undertaking having an

investment in plant and machinery of not more than Rs. 20 lakhs and 25 lakhs in case of ancillary units.” According to Government of India, 1985 “An undertaking having an investment in plant and machinery of not more than Rs. 35 lakhs and not more than Rs. 45 lakhs in case of ancillary units.” According to Government of India, 1991 “An undertaking having an investment in plant and machinery of not more than Rs. 60 lakhs and not more than 75 lakhs in case of ancillary units.”

According to Government of India, 1997 “An undertaking having an investment in plant

and machinery of not more than Rs. 3 crores.” According to Government of India, 2000 “An undertaking having an investment in plant and machinery of not more than Rs. 1 crores.” It is evident from the above definitions that there was upward revisions in the investment limit on plant and machinery in small scale sector from Rs. 5 lakhs to Rs. 3 crores over years but this limit has been reduced to Rs. 1 crore in the year 1999-2000. Tiny Industries :

Very small industries with an investment of less than Rs. 25 lakhs are included in the category of Tiny industries. Capital investments for this purpose means investment in plant and



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machinery. The location restrictions or the setting up of Tiny Units have been removed by Small Industries Policy of 1992. The number of persons employed in these units must be less than 50. These units are normally operated under sole proprietorship form of ownership. These units are managed by family members and not professionals which result in lower profit generation. Ancillary Units:

Industrial units having an investment in plant and machinery, whether held on ownership or by lease or by hire purchase does not exceed Rs. 1 crore and engaged or is proposed to be engaged in the manufacture or production of parts, components, sub assemblies, tooling and intermediaries, or the rendering of service and supply or render at least 50 per cent of its production or services as the cases may be to one or more other industrial undertakings. Cottage Industries:

These are also called household industries. They are organised by individuals’ and with the help of members of the household (including family labour) and are pursued as full time or part time occupation. The capital investment is small and the components used are simple. These industrial units normally use local resources and local skills. The output produced in each industrial unit is generally sold in the local market. FEATURES OF SMALL SCALE INDUSTRIES

The following are the features of small scale industries: 1. Ownership:

Ownership of small-scale unit is with one individual in sole proprietorship or it can be with a few individuals in partnership.

2. Management and Control:

A small scale unit is normally a one man show and even in case of partnership the activities are mainly carried out by the active partner and rest are generally sleeping partners. These units are managed in a personalized fashion. The owner is actively involved in all the decisions concerning business.

3. Gestation Period:

Gestation period is that period after which teething problems are over and return on investment starts. Gestation period of small-scale unit is less as compared to largescale unit.

4. Area of Operation:

The area of operation of small scale unit is generally localised catering to the local or regional demand. The overall resources at the disposal of a small-scale units are limited and as a result of this, it is forced to confine its activities to the local level.

5. Technology:

Small industries are fairly labour intensive with comparatively smaller capital investment than the larger units. Therefore these units are more suited for economies where capital is scarce and there is abundant supply of labour.

6. Resources:

Small scale units use local or indigenous resources and as such can be located



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anywhere subject to the availability of these resources like labour and raw materials.

7. Dispersal of Units: Scale units use local resources and can be dispersed over a wide territory. The

development of smallscale units in rural and backward areas promotes more balanced regional development and can prevent the influx of job seekers from rural areas to cities.

8. Flexibility:

Small-scale units as compared to large-scale units are more change susceptible and highly reactive and responsive to socio-economic conditions. They are more flexible to adopt changes like new method of production, introduction of new products etc.

OBJECTIVES OF SMALL SCALE INDUSTRIES

The small scale sector can stimulate economic activity and is entrusted with the responsibility of realizing the following objectives:-

1. To create more employment opportunities with less investment.

2. To remove economic backwardness of rural and less developed regions of the economy.

3. To reduce regional imbalances.

4. To mobilize and ensure optimum utilization of unexploited resources of the country.

5. To improve standard of living of people.

6. To ensure equitable distribution of income and wealth.

7. To solve unemployment problem.

8. To attain self-reliance.

9. To adopt latest technology aimed at producing better quality products at lower costs.

SMALL BUSINESS AS A SEEDBED OF ENTERPRENEURSHIP

Seedbed refers to the preparing of soil for the sowing of seeds so that we may have good crop may be cultivated.

Small business is regarded as a seedbed for entrepreneurship as it provides conducive

conditions for the emergence and growth of entrepreneurs. Small-scale units employ available technology and can be started with less investment. They use local resources and cater mainly to local demand. These units normally revolve round one individual who is called upon to perform various roles. He is the owner, manager and risk bearer and hence can be called an entrepreneur. The emergence, growth and success of entrepreneurs are linked with the growth of small business. The Government of India too has given small-scale industry an important place in the framework of economic planning for economic and ideological reasons. Thus setting up of more small scale units will create more opportunities for entrepreneurial development and more and more educated unemployed will come forward for setting up their own enterprises. It will usher in an era wherein enterprising persons will assume entrepreneurial career in future.



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Small enterprises are called seedbed of entrepreneurship due to the following reasons:

1. Small-scale enterprises can be started with lesser investment, which can be contributed by the promoter or arranged from friends and relatives.

2. Small-scale units carry on business on a small scale and as such the element of risk is less.

3. Small-scale units are generally based on local resources and as such there is no problem regarding their availability.

4. Small-scale entrepreneur adopts labour intensive technology. Thus he generates employment for himself as well as for others.

5. Small-scale units can be located anywhere and thus help in the development of backward areas of the country.

6. Small-scale units generally cater to local demand and necessary modifications can be made in the products keeping in mind the changing demand of people.

7. Small-scale units provide ample opportunities for creativity and experimentation.

8. Small-scale units have shorter gestation period and hence waiting period for getting return on investment is less.

9. These units are relatively more environmental friendly.

10. Small-scale units help in building achievement motivation amongst entrepreneurs.

11. Small-scale units are viewed favorably by the government and society because these help in equitable distribution of income and wealth.

Keeping in mind the above potentials of small scale industry as a developer of entrepreneurial talent, the government of India has facilitated this sector by providing it with various concessions and incentives. Role of government in the development of small scale entrepreneurship

Small scale industries play an important role for the development of Indian economy in many ways. About 60 to 70 percent of the total innovations in India come from the SSIs. Many of the big businesses today were all started small and then nurtured into big businesses. The roles of SSIs in economic development of the country are briefly explained below.

1. Small Scale Industries Provides Employment

I. SSI uses labour intensive techniques. Hence, it provides employment opportunities to a large number of people. Thus, it reduces the unemployment problem to a great extent.

II. SSI provides employment to artisans, technically qualified persons and professionals. It also provides employment opportunities to people engaged in traditional arts in India.

III. SSI accounts for employment of people in rural sector and unorganized sector. IV. It provides employment to skilled and unskilled people in India. V. The employment capital ratio is high for the SSI.

2. SSI Facilitates Women Growth

I. It provides employment opportunities to women in India. II. It promotes entrepreneurial skills among women as special incentives are given to

women entrepreneurs.

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3. SSI Brings Balanced Regional Development I. SSI promotes decentralized development of industries as most of the small scale

industries are set up in backward and rural areas. II. It removes regional disparities by industrializing rural and backward areas and

brings balanced regional development. III. It promotes urban and rural growth in India. IV. It helps to reduce the problems of congestion, slums, sanitation and pollution in

cities by providing employment and income to people living in rural areas. It plays an important role by initiating the government to build the infrastructural facilities in rural areas.

V. It helps in improving the standard of living of people residing in suburban and rural areas in India.

VI. The entrepreneurial talent is tapped in different regions and the income is also distributed instead of being concentrated in the hands of a few individuals or business families.

4. SSI Helps in Mobilization of Local Resources I. It helps to mobilize and utilize local resources like small savings, entrepreneurial

talent, etc., of the entrepreneurs, which might otherwise remain idle and unutilized. Thus it helps in effective utilization of resources.

II. It paves way for promoting traditional family skills and handicrafts. There is a great demand for handicraft goods in foreign countries.

III. It helps to improve the growth of local entrepreneurs and self-employed professionals in small towns and villages in India.

5. SSI Paves for Optimisation of Capital I. SSI requires less capital per unit of output. It provides quick return on investment

due to shorter gestation period. The pay back period is quite short in small scale industries.

II. SSI functions as a stabilizing force by providing high output capital ratio as well as high employment capital ratio.

III. It encourages the people living in rural areas and small towns to mobilize savings and channelize them into industrial activities.

6. SSI Promotes Exports I. SSI does not require sophisticated machinery. Hence, it is not necessary to

import the machines from abroad. On the other hand, there is a great demand for goods produced by small scale sector. Thus it reduces the pressure on the country’s balance of payments.

II. SSI earns valuable foreign exchange through exports from India.

7. SSI Complements Large Scale Industries I. SSI plays a complementary role to large scale sector and supports the large scale

industries. II. SSI provides parts, components, accessories to large scale industries and meets

the requirements of large scale industries through setting up units near the large scale units.

III. It serves as ancillaries to large Scale units.

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8. SSI Meets Consumer Demands I. SSI produces wide range of products required by consumers in India.

II. SSI meets the demand of the consumers without creating a shortage for goods. Hence, it serves as an anti-inflationary force by providing goods of daily use.

9. SSI Ensures Social Advantage I. SSI helps in the development of the society by reducing concentration of income

and wealth in few hands. II. SSI provides employment to people and pave for independent living.

III. SSI helps the people living in rural and backward sector to participate in the process of development.

IV. It encourages democracy and self-governance.

10. Develops Entrepreneurship I. It helps to develop a class of entrepreneurs in the society. It helps the job

seekers to turn out as job givers. II. It promotes self-employment and spirit of self-reliance in the society.

III. Development of small scale industries helps to increase the per capita income of India in various ways.

IV. It facilitates development of backward areas and weaker sections of the society. V. Small Scale Industries are adept in distributing national income in more efficient

and equitable manner among the various participants of the society.

ROLE OF SMALL SCALE INDUSTRIES IN INDIA Small-scale and cottage industries have been playing an important role in Indian

economy in terms of employment generation and growth. It is estimated that this sector has been contributing about 47 per cent of the gross value of output produced in the manufacturing sector and the generation of employment by the small-sector is more than five times to that of large-scale sector. The following are some of the important roles played by small-scale industries in India.

1. Number of Units:

Total number of registered small-scale and cottage units has been increasing rapidly from 16,000 in 1950 to 36,000 in 1961 and 8.53 lakh units in 1985-86 to 14.96 lakh 17 units in 1991-92. Moreover, there were about 5.84 lakh unregistered small-scale units in India. In 2000-01 the total number of small-scale and cottage units further increased to 33.7 lakh. But as per the census of SSI units, about 30 to 40% of these registered units might be non-functional. The Second All India Census of registered small-scale industrial units was conducted by Small Industries Development Organisation in 1987-88. Findings of the census also give added empirical support to the generally accepted hypothesis about the distinct characteristics of the SSI sector compared with those of the large and medium sector, namely lower capital base, lower capital/labour ratio, lower productivity of labour and higher productivity of capital and lower wage rates. These small-scale industries are also producing various types of commodities starting from simple consumer goods to the manufacture of sophisticated electronic goods.

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2. Employment Generation: Small-scale industries are labour-intensive and thus are generating a large

number of employment opportunities. Total employment generated by these small-scale industries has increased from 39-7 lakhs in 1973-74 to 96 lakhs in 1985-86. Employment of the small-scale sector has again increased from 129.8 lakh in 1991-92 to 219.7 lakh in 2004- 05, showing an increase of about 4% over the previous year.

3. Investment:

Investment in the small-scale sector has been increasing at a faster rate. As per the statistics made available by SIDO, total amount of investment in the small-scale units of India has increased significantly from Rs. 2233 crores in 1972-73 to Rs. 4431 crores in 1978-79 and then to Rs. 14,730 crores in 2004-05. Fixed investment per employee which was Rs. 6.4 thousand in 18 1972 as per SSI census gradually rose to Rs. 92.07 thousand in 2004-05 as per the results of Annual Survey of Industries (ASI).

4. Output:

Total production of the small-scale units has increased from Rs. 7200 crores in 1973-74 to Rs. 57,100 crore in 1985-86. The value of output of the SSI sector in 2004-05 is at Rs. 7,89,620 crores showing an increase of 10.2% over the output of Rs. 5,72,887 crores in 1999.

5. Contribution to Exports:

The contribution of SSI sector towards export has been increasing at a faster rate. The value of exports of the products produced by the small-scale sector has increased from Rs.393 crore in 1973-74 to Rs. 9,100 crore in 1990- 91 and then to Rs. 68,280 crore in 2004-05. Again in dollar terms, the value of exports from SSI sector has also increased from Dollar 8.87 billion in 1993-94 to Dollar 15.18 billion in 2004-05. The share of export from small-scale sector in the total export has increased from 9.6% in 1971-72 to 42% in 2004-05.

6. Equitable Distribution of Income:

Small-scale and cottage industries has been resulting more equitable distribution of national income and wealth. This is mainly due to the fact that the ownership of small-scale industries is quite widespread as compared to large-scale industries and small-scale sector is having a higher employment potential than that of large-scale sector.

7. Mobilisation of Capital and Entrepreneurial Skill:

Small-scale industries can mobilise a good amount of savings and entrepreneurial skill from rural and semi-urban areas which remained untouched from the clutches of large-scale sector. Thus, a huge amount of latent resources are being mobilised in the SSI sector for the industrial development of the country.

8. Regional Dispersal of Industries:

Small-scale industries are playing an important role in dispersing the industrial units of the country in the various parts of the country. As the large-scale industries are mostly located in some states like Maharashtra, West Bengal, Gujarat, Tamil Nadu, thus dispersal of SSI units throughout the country can achieve the balanced pattern of industries development in the country.



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9. Better Industrial Relation: The small-scale industries are maintaining a better industrial relations between

employers and employees and thus can lessen the frequency of industrial disputes. But the large-scale industries are facing the problems of strikes and lockouts and hence good industrial relations in these industries are very difficult to maintain. Thus, the loss of production and mandays are comparatively less in small-scale sector.

It is due to the above mentioned factors the growth rate of small-scale industrial sector has remained faster in terms of its number, employment and output.

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 provide loan guarantees to small businesses and encourage local banks to work with start-ups or established companies that want to expand. For woman, minority or operate a business in select industries, additional loan opportunities also may be available. State's economic development office can be contacted 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.



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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. Role of Government in the Development of Corporate Entrepreneurship

Cooperatives are community-based, rooted in democracy, flexible, and have participatory involvement, which makes them well suited for economic development (Gertler, 2001). The process of developing and sustaining a cooperative involves the processes of developing and promoting community spirit, identity and social organization as cooperatives play an increasingly important role worldwide in poverty reduction, facilitating job creation, economic growth and social development (Gibson, 2005).

Cooperatives are viewed as important tools for improving the living and working

conditions of both women and men. Since the users of the services they provide owned them, cooperatives make decisions that balance the need for profitability with the welfare of their members and the community, which they serve. As cooperatives foster economies of scope and scale, they increase the bargaining power of their members providing them, among others benefits, higher income and social protection. Hence, cooperatives accord members opportunity, protection and empowerment - essential elements in uplifting them from degradation and poverty (Somavia, 2002). As governments around the world cut services and withdraw from regulating markets, cooperatives are being considered useful mechanisms to manage risk for members and keep markets efficient (Henehan, 1997).

In a number of ways, cooperatives play important role in global and national economic

and social development. With regard to economic and social development, cooperatives promote the “fullest participation of all people” and facilitate a more equitable distribution of the benefits of globalization. They contribute to sustainable human development and have an important role to play in combating social exclusion.

Thus the promotion of cooperatives should be considered as one of the pillars of

national and international economic and social development (Levin, 2002). In addition to the direct benefits they provide to members, cooperatives strengthen the communities in which they operate. According to Somavia (2002) cooperatives are specifically seen as significant tools for the creation of decent jobs and for the mobilization of resources for income generation.

Many cooperatives provide jobs and pay local taxes because they operate in specific

geographical regions.It is estimated that cooperatives employ more than 100 million men and women worldwide. In Nigeria, cooperatives can provide locally needed services, employment, circulate money locally and contribute to a sense of community or social cohesion. They can provide their employees with the opportunities to upgrade their skills through workshops and courses and offer youth in their base communities short and long-term employment positions. Students could also be employed on casual-appointment basis during long vacations. Through these, cooperatives will contribute to economic development.

Starting A Cooperative Like other businesses, cooperatives start with the recognition of

a need or an opportunity. In fact, the economic motivation for starting a cooperative is very much the same as for starting other businesses. Starting a new cooperative takes energy and



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resources. By following a planned stepby-step procedure, the process can be completed in an efficient and timely manner.

Because cooperatives are people-driven organizations, the first key to their success is to

identify individuals with like needs who want to explore the feasibility of forming a cooperative business. Without this important first step, the chance for a successful cooperative business is slight. The original group of individuals is usually potential users of the cooperative.

They often have leadership and organizational skills. They organize informational

meetings for other potential users and discuss topics such as: how the proposed cooperative could meet identified needs, cooperative operational practices, advantages and disadvantages of the cooperative business structure, member investment and financial requirements, and member commitment needed.

Use of outside advisors experienced in cooperative development work, legal, tax, and

finance issues, and product experts may save the group from making expensive mistakes and losing valuable time. Criteria used for selecting advisors should include: level of cooperative experience, ability to work as a team, understanding of issues related to start-up organizations, and objectivity. There seem to be absence of consensus as to the steps involved in starting a cooperative society. Various authors, cooperators and cooperative consultants view the steps differently. Steps in starting a cooperative

Hold an organizing meeting establish steering committee. A core group of interested individuals should hold an informational meeting of potential cooperative members and others in the community. The primary purpose of the meeting is to explain the identified need and how a cooperative would address it. It is important that the group come to general agreement on the nature and importance of the problem and the potential for a cooperative to address it. Such an agreement will become the group’s shared vision, so it is worth spending as much time as necessary to achieve it. If sufficient interest is generated, a steering committee is selected from the group. Although these six to eight individuals have no legal authority, they will be responsible for bringing the interests and concerns of the group to outside parties and meeting with resource people. The steering committee meets regularly and reports its activities and findings to the larger group. Leadership skills, sound business judgement, and a desire to reach decisions are valuable qualities for committee members. Critical questions this step poses include: is there general agreement on the nature of the problem? Does the cooperative form of business meet the group’s needs? Is there sufficient interest among potential cooperative members to proceed with a feasibility study? Are there individuals willing to serve in a leadership capacity? Sub-committees on business plan, by-laws and policies, purchasing and construction, and personnel could be formed.

Survey on potential members Under the guidance of the steering committee and

resource persons, potential cooperative members are surveyed. Topics include: need for services, volumes to be purchased or marketed, willingness to join, finance, and use of and familiarity with cooperatives. Feasibility study of the businessand report on the results

The steering committee can either conduct a feasibility study (using the guidelines provided), or hire a consultant to carry out the study. The purpose of a feasibility study is to



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examine critical opportunities and obstacles that might make or break the proposed cooperative business. The feasibility study should give the group a good idea of whether the cooperative is likely to be successful as a business. The critical issues that a feasibility study analyzes include the number and interest level of potential members; market issues; operating costs; start-up costs; and availability of financing. The quality of the feasibility study is critical because it will influence all future decisions on the development of the cooperative. Contributions by potential cooperative members are often used to help cover the cost of a feasibility study.

These members will be the primary beneficiaries of the cooperative, so naturally they

should assume some responsibility for the financial costs of assessing its feasibility. The steering committee should hold a follow up meeting with potential cooperative members to report on the results of the feasibility study.

A summary of the feasibility report should be distributed to participants, and the full

report made available to anyone who wishes to see it. The preliminary financial projections should tell the group how much equity will be required from each member of the cooperative, and whether or not the cooperative is projected to return any patronage refunds to members during the first few years of operation. These are key pieces of information that will influence each person’s decision about whether to join the cooperative. This should be a major decision point. If the feasibility study indicates that the cooperative is not a viable business, or if sufficient commitment does not exist among the group, the steering committee should not proceed with forming the cooperative. Develop a business plan:

If the feasibility study results are favorable, the steering committee carries out or hires a consultant firm to develop a detailed business plan. The business plan serves two primary purposes: to provide a blueprint for the development and initial operation of the cooperative and to provide supporting documentation for potential members, financial institutions and other investors. A typical outline of a business plan includes a description of the company, a market analysis, research and development related to the cooperative’s product or service, a marketing and sales plan, capitalisation supplied by members and loans, description of facilities and equipment, and financial business projections such as fixed and variable operating costs, sources of income, and pro forma statements. Develop legal documents:

Under the guidance of professional advisors, the steering committee should draft legal documents for approval by prospective members. These documents are: articles of incorporation bylaws and other legal documents. The articles of incorporation declare the cooperative’s purpose, kind and scope. Bylaws provide instruction on how the cooperative will conduct its declared purpose and must be approved by the membership. Other legal documents, such as membership applications and marketing agreements, are necessary to meet a cooperative’s special needs. The next thing would be to incorporate the association.

In Nigeria, incorporation takes place when a cooperative files its articles with the

Corporate Affairs Commission. As soon as the cooperative is incorporated and thus exists as a legal entity, two or three members of the steering committee should open a bank account in the cooperative’s name. This account will be used to deposit equity contributions from new members.



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Secure financing for the cooperative: Cooperative businesses vary greatly in the amount of capital they need to get up and

running. The business plan should include the amount and type of financing needed by the cooperative and a strategy for obtaining it. The steering committee and its advisors are responsible for implementing this strategy. Virtually all cooperatives require some level of member financing, usually in the form of stock purchases or membership fees. Member financing not only provides equity for the cooperative, it also provides a financial base that helps other investors, particularly banks, feel more secure in investing in the cooperative. The steering committee should prepare a membership application for new members to fill out and sign. It should identify the member’s name, address, and phone number; the number of shares of stock being purchased; and a stated agreement that the new member agrees to belong to and abide by the bylaws and contracts of the cooperative. Each member’s initial financial contribution should be collected at the time the membership application is submitted. Recruit members for the cooperative:

During their organizational phase, many cooperatives hold meetings for potential members, conduct surveys and mail organizing updates to them, and collect initial down payments on membership fees. All of these activities provide a good indication of the level of interest in, and commitment to, the cooperative. Thus, when the time comes to actually “ante-up” and join, potential members are more primed to act. Even so, the steering committee may need to recruit new members in addition to those who have attended one or more of the organizational meetings. This should be a major decision point. If the cooperative is unable to obtain the necessary debt financing, or if sufficient commitment does not exist among potential members to provide sufficient equity capital, the steering committee should not proceed with developing the cooperative at this time. Hire management and staff:

Hold Cooperative’s First Membership Meeting, Hire management and staffafter financing has been secured and sufficient members have signed up, the first general membership meeting is convened. There are two major pieces of business that must be conducted at this meeting: the members adopt the cooperative’s bylaws; and the members elect the board of directors for the cooperative. This meeting marks the transition from a steering committee and interim leadership group to a formally elected board and legally approved bylaws. In their capacity as owners, members elect the board of directors to function as their representatives in overseeing the administration of the cooperative. It is this mechanism through which a cooperative is member-controlled. As the members’ representatives, the board’s primary responsibilities are to develop policies, conduct long-range planning, hire and supervise the cooperative manager, and guide the cooperative in pursuing its mission and goals. Some new cooperatives identify management personnel early in their organizing process, especially if members of the steering committee already know one or more key individuals. However, recruiting staff personnel is listed as a later step in the cooperative formation process because the cooperative is not a definite “go” until the necessary financing has been secured. One or more of the key individuals can be hired as consultants at an early stage with the mutual intent that they will work for the cooperative once it is formally established. This approach also has the effect of making investors feel more comfortable about financing the cooperative because proposed management staff have been identified. For some lenders, competent management is the most important thing they look for in making a loan decision.



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Start Cooperatives: The directors must acquire the necessary facilities for business operations. Actual

operations may begin after all facility transactions are completed and the manager has hired the needed complement of employees. It is important to note, however, that forming a cooperative is not a guarantee for success. Cooperatives are subject to the same marketplace demands and planning requirements as any business, including careful market analysis; sound business planning; competent management; and adequate capital to start-up and grow. A good cooperative is the one, which is viable, efficient, self-reliant and project-oriented. A cooperative must not only meet its members’ needs, but also survive in the marketplace while doing so. The social and economic benefits of co-operatives can have far reaching impact, but they need support from the development community to reach their potential

In the year 2002, July 4, marks the International Day of Co-operatives, a day which reminds the world that co-operatives are much more than the local shop, or a troubled bank. They are a dynamic people centered business model operating in more than 100 countries.

They have been around for 200 years, since Robert Owen proposed "villages of co-

operation" as a response to the economic crisis in 1815. The idea spread, was adapted, and went global, with around 1 billion members of co-operatives worldwide - far more than trade unions - in over 100 countries. After faith groups, they are one of the most common institutions at village level in Africa.

Co-operatives come in all shapes and sizes and all sectors of the economy. Snake

catchers in India, prisoners in Ethiopia and taxi drivers in Rwanda are some diverse examples of co-operatives, and 75% of Fairtrade products are from farmers' co-operatives.

In the 1950s and 60s, co-operatives, particularly in Africa, were seen as major players in

development, loaded down with expectations, as well as government interference. As a result, many failed, and co-operatives were written off by most development agencies.

In recent decades, co-operatives have made a comeback, that co-operatives can and do

make major contributions to millennium development goals. They can generate income for their members and also offer a range of benefits depending on why they are set up. In meeting their members needs co-operatives enhance incomes and secure livelihoods for their members and their communities.

Their role is again being recognised within the development community. Last year saw

the UN International Year of Co-operatives. The UN's Food and Agricultural Organisation sees co-operatives as key to feeding the world; the International LabourOrganisation as a way of organising in the informal economy. Co-operatives cannot provide the whole answer to global poverty and economic injustice, but they are certainly part of the answer, as they are part of a movement sharing a set of global values and principles.

With renewed attention brings challenges. The primary role of co-operatives is to meet

their members' needs. Too often, they have been viewed as instruments for the delivery of the goals set by external agencies, such as governments and NGOs, and criticised for not reaching the poorest. Co-operatives must let to the co-operatives, which are 'for profit' enterprises. Therefore it is vital that there is respect for a co-operatives institutional integrity with their distinctive model of governance and enterprise, and their enshrined values and principles. The

http://www.co-op.ac.uk/our-heritage/robert-owen/

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http://www.thereporterethiopia.com/index.php/living-and-the-arts/society/item/405-project-mekele-hope-inside-a-prison

http://www.co-op.ac.uk/wp-content/uploads/2010/07/The-Co-operative-Movement-in-Africa-Part-3-village-banks.pdf

http://www.co-operative.coop/RevolutionFiles/fairtrade2013/images/Fair%20Trade%20Brochure%20FINAL.PDF

http://labordoc.ilo.org/record/412725

http://www.ilo.org/public/english/support/lib/resource/subject/coop/birchallbook_2004.pdf

http://social.un.org/coopsyear/

http://www.fao.org/home/en/

http://www.copac.coop/2012-WFD-Report.pdf

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ILO Recommendation 193 set the international standards for this 'new' take on co-operatives, defining the roles for governments, co-operatives and labour unions as well as embedding co-operative values and principles at the heart of it all. There is an online guide to Recommendation 193 which I wroteseveral years ago, but still holds for most aspects.

Another main challenge facing many co-operatives is over-control and regulation by

government. Co-operatives are often subject to more burdensome regulations than other private sector players with high cost and time burdens associated with setting up a co-operative. A robust legal environment with prudential regulation needs to protect democratic member control, autonomy and independence, and voluntary membership.

At the same time, many agencies working with co-operatives do not recognise or

understand their specific governance and histories, for example attaining fair trade certification is a common one and for which the setting up of the co-operative is seen as a formality and not the labour intensive and time consuming process it actually is.

The Co-operative College ran a workshop several years ago in partnership with Oxfam

about working with co-operatives. The aim was to provide an opportunity for information sharing and a briefing about co-operatives in the development context. The workshop was well attended and valued by the NGOs whose knowledge of cooperatives was limited.

Capacity building, training and education remain critical for co-operative development

in the developed and developing world, and strengthening networks is crucial. There are a number of things that can be done:

➢ Education – whether in the developed or developing world co-op members and staff can benefit from co-operative values based education and training

➢ Recognize the existence of the local co-operative movement and existing co-operatives; become familiar with their history and challenges; and try to work with them.

➢ Co-operatives work better when they are networked, so encourage the formation of secondary co-operative networks to help increase the performance of primary co-operatives.

➢ Help develop national co-operative structures, or apex bodies to represent the voice of co-operatives in engagement with government.

➢ Cooperatives are both enterprises and associations of members and both aspects need supporting to reach a balanced form of co-operative development. A single bottom line is not used to assess the 'success' of a co-operative, as they deliver both social and economic benefits for their members.

➢ International networks are used as they can be invaluable. The ICA unites, represents and serves co-operatives worldwide. Some international bodies also represent different sectors, eg the World Council of Credit Unions and the International Co-operative and Mutual Insurance Federation.

Role of entrepreneurs in Economic Development

The role of entrepreneurs is not identical in the various economies. Depending on the material resources, industry climate and responsiveness of the political system, it varies from economy to economy. The contribution of entrepreneurs may be more in favourable

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opportunity conditions than in economies with relatively less favourable opportunity conditions.

Adam Smith, the foremost classical economist, assigned no significance to

entrepreneurial role in economic development in his monumental work."An Enquiry into the Nature and Causes of the Wealth of Nations”, published in 1776. Smith extolled the rate of capital formation as an important determinant of economic development.The problem of economic development was ergo largely the ability of the people to save more and invest more in any country. According to him, ability to save is governed by improvement in productivity to the increase in the dexterity of every worker due to division of labour. Smith regarded every person as the best judge of his own interest who should be left to pursue his own advantage. According to him, each individual is led by an “invisible hand” in pursuing his interest. He always advocated the policy of laissez-faire in economic affairs.

David Ricardo identified only three factors of production, namely, machinery, capital

and labour, among whom the entire produce is distributed as rent, profit and wages respectively. Ricardo appreciated the virtues of profit in capital accumulation. According to him, profit leads to saving of wealth which ultimately goes to capital formation Thus, in both the classical theories of economic development, there is no room for entrepreneurship. Economic development seems to be automatic and self-regulated. Thus, the attitude of classical economists was very cold towards the role of entrepreneurship in economic development. They took the attitude: “the firm is shadowy entity and entrepreneur even shadowed or at least is shady when he is not shadowy.”

The economic history of the presently developed countries, for example, America,

Russia and Japan tends to support the fact that the economy is an effect for which entrepreneurship is the cause. The crucial role played by the entrepreneurs in the development of the Western countries has made the people of underdeveloped countries too much conscious of the significance of entrepreneurship for economic development. At present, people have begun to realize that for achieving the goal of economic development, it is necessary to increase entrepreneurship both qualitatively and quantitatively in the country. It is only active and enthusiastic entrepreneurs who fully explore the potentialities of the country‟s available resources – labour, technology and capital. Schumpeter(1934) visualised the entrepreneur as the key figure in economic development because of his role in introducing innovations.

Parson and Smelser (1956) described entrepreneurship as one of the two necessary

conditions for economic development, the other being the increased output of capital. Harbison (1965) includes entrepreneurs among the prime movers of innovations, and Sayigh (1962) simply describes entrepreneurship as a necessary dynamic force.

It is also opined that development does not occur spontaneously as a natural

consequence when economic conditions are in some sense “right” a catalyst or agent is always needed, and this requires an entrepreneurial ability.It is this ability that he perceives opportunities which either others do no see or care about. Essentially, the entrepreneur searches for change, sees need and then brings together the manpower, material and capital required to respond the opportunity what he sees. Akio Morita, the President of Sony who adopted the company’s products to create Walkman Personal Stereo and India’s Gulshan Kumar of Series who skimmed the audio-cassette starved vast Indian market are the clearest



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examples of such able entrepreneurs. The role of entrepreneurship in economic development varies from economy to

economy depending upon its material resources, industrial climate and the responsiveness of the political system to the entrepreneurial function. The entrepreneurs contribute more in favourable opportunity conditions than in the economies with relatively less favourable opportunity conditions. Viewed from the opportunity conditions point of view, the underdeveloped regions, due to the paucity of funds, lack of skilled labour and nonexistence of minimum social and economic overheads, are less conducive to the emergence particularly of innovative entrepreneurs. In such regions, entrepreneurship does not emerge out of industrial background with well developed institutions to support and encourage it. Therefore, entrepreneurs in such regions may not be an “innovator” but an “imitator” who would copy the innovations introduced by the “innovative” entrepreneurs of the developed regions (Brozen 1954-55). In these areas, according to McClelland’s (1961) concept of personality aspect of entrepreneurship, some people with high achievement motivation come forward to behave in an entrepreneurial way to change the stationary inertia, as they would not be satisfied with the present status that they have in the society.

Under the conditions of paucity of funds and the problem of imperfect market in

underdeveloped regions, the entrepreneurs are bound to launch their enterprises on a small-scale. As imitation requires lesser funds than innovation, it is realized that such regions should have more imitative entrepreneurs. And, it is also felt that imitation of innovations introduced in developed regions on a massive scale can bring about rapid economic development in underdeveloped regions also. But, it does not mean that such imitation requires in any way lesser ability on the part of entrepreneurs. In this regard, Berna opines:“It involves often what has aptly been called “subjective innovation”, that is, the ability to do things which have not been done before by the particular industrialists, even though unknown to him, the problem may have been solved in the same way by the others.

These imitative entrepreneurs constitute the main spring of development of

underdeveloped region Further, India which itself is an underdeveloped country aims at decentralized industrial structure to militate the regional imbalances in levels of economic development, small-scaleentrepreneurship in such industrial structure plays an important role to achieve balanced regional development.

It is unequivocally believed that small-scale industries provide immediate large- scale

employment, ensure a more equitable distribution of national income and also facilitate an effective resource mobilization of capital and skill which might otherwise remain unutilized. The establishment of Entrepreneurship Development Institutes and alike by the Indian Government during the last decades is a good testimony to her strong realisation about the premium mobile role of entrepreneurship plays in economic development of the country. The important role that entrepreneurship plays in the economic development of an economy can be put in a more systematic and orderly manner as follows: Promotes Capital Formation:

Entrepreneurs promote capital formation by mobilising the idle savings of public.They employ their own as well as borrowed resources for setting up their enterprises. Such type of entrepreneurial activities lead to value addition and creation of wealth, which is very essential for the industrial and economic development of the country.



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Creates Large-Scale Employment Opportunities: Entrepreneurs provide immediate large-scale employment to the unemployed which is a

chronic problem of underdeveloped nations. With the setting up. of more and more units by entrepreneurs, both on small and largescale numerous job opportunities are created for others. As time passes, these enterprises grow, providing direct and indirect employment opportunities to many more. In this way, entrepreneurs play an effective role in reducing the problem of unemployment in the country which in turn clears the path towards economic development of the nation. Growing unemployment

Particularly educated unemployment is the problem of the nation. The available employment opportunities can cater only 5 to 10 % of the unemployed. Entrepreneurs generate employment both directly and indirectly.

Directly, self employment as an entrepreneur and indirectly by starting many industrial units they offer jobs to millions. Thus entrepreneurship is the best way to fight the evil of unemployment. Promotes Balanced Regional Development:

Entrepreneurs help to remove regional disparities through setting up of industries in less developed and backward areas. The growth of industries and business in these areas lead to a large number of public benefits like road transport, health, education, entertainment, etc. Setting up of more industries lead to more development of backward regions and thereby promotes balanced regional development. When the new entrepreneurs grow at a faster rate, in view of increasing competition in and around cities, they are forced to set up their enterprises in the smaller towns away from big cities. This helps in the development of backward regions. Reduces Concentration of Economic Power:

Economic power is the natural outcome of industrial and business activity. Industrial development normally lead to concentration of economic power in the hands of a few individuals which results in the growth of monopolies. In order to redress this problem a large number of entrepreneurs need to be developed, which will help reduce the concentration of economic power amongst the population. Wealth Creation and Distribution:

It stimulates equitable redistribution of wealth and income in the interest of the country to more people and geographic areas, thus giving benefit to larger sections of the society. Entrepreneurial activities also generate more activities and give a multiplier effect in the economy. Increasing Gross National Product and Per Capita Income:

Entrepreneurs are always on the lookout for opportunities. They explore and exploit opportunities, encourage effective resource mobilization of capital and skill, bring in new products and services and develops markets for growth of the economy. In this way, they help increasing gross national product as well as per capita income of the people in a country. Increase in gross national product and per capita income of the people in a country, is a sign of economic growth.

An increasing number of entrepreneurs are required to meet this increasing demand for



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goods and services. Thus entrepreneurship increases the national income. Improvement in the Standard of Living:

Increase in the standard of living of the people is a characteristic feature of economic development of the country. Entrepreneurs play a key role in increasing the standard of living of the people by adopting latest innovations in the production of wide variety of goods and services in large scale that too at a lower cost. This enables the people to avail better quality goods at lower prices which results in the improvement of their standard of living. Promotes Country's Export Trade:

Entrepreneurs help in promoting a country's export-trade, which is an important ingredient of economic development. They produce goods and services in large scale for the purpose earning huge amount of foreign exchange from export in order to combat the import dues requirement. Hence import substitution and export promotion ensure economic independence and development. Induces Backward and Forward Linkages:

Entrepreneurs like to work in an environment of change and try to maximise profits by innovation. When an enterprise is established in accordance with the changing technology, it induces backward and forward linkages which stimulate the process of economic development in the country. Facilitates Overall Development:

Entrepreneurs act as catalytic agent for change which results in chain reaction. Once an enterprise is established, the process of industrialisation is set in motion. This unit will generate demand for various types of units required by it and there will be so many other units which require the output of this unit. This leads to overall development of an area due to increase in demand and setting up of more and more units. In this way, the entrepreneurs multiply their entrepreneurial activities, thus creating an environment of enthusiasm and conveying an impetus for overall development of the area. Creating innovation:

An entrepreneur is a person who always look for changes. A part from combining the factors of production, he also introduces new ideas and new combination of factors. He always tries to introduce newer and newer technique of production of goods and services. An entrepreneur brings economic development through innovation. Entrepreneurs Create New Businesses:

Path breaking offerings by entrepreneurs, in the form of new goods & services, result in new employment, which can produce a cascading effect or virtuous circle in the economy. The stimulation of related businesses or sectors that support the new venture add to further economic development. Government as Entrepreneurs

The function of entrepreneurship in economy is not hidden to anybody. Most of the business activities are executed by entrepreneur. These persons with reference to their characteristics can enter business market. Entrepreneur’s role is not only in the boost of production but also in the recruitment of mass labour force.



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They due to awareness role of entrepreneurship in economy, government is interested to direct and guide entrepreneurs’ need to capital, technology and other amenities for performing their activities. For that reason government can play imperative role for providing these facilities. With support of laws and regulations, Governments can give needed information and capital, and make available to better technology can help entrepreneurs.

Government can also carry out planning, draw policy, and establish strategy for helping

entrepreneurs. In early stages of sustained growth, government is regularly provides incentives, subsidies, promotional schemes, concession on Excise duty for entrepreneurship development to take grip. Another vital role government have played inbeginning near the stages are to develop transportation, power and water facilities and to help launch the sort of capital and money markets in which lenders could have assurance. Economists have disputed that, at very least; governments can commence to prevent serious and long-lasting recessions. Only in this way can a general business psychology be developed.

1) Training: Fundamental training changes according to product will require involving improving of entrepreneurial skills. As per requirement of entrepreneur, training is offered by government. Many government institutions and NGOs carry out EDPs (Entrepreneurship Development Programme) and MDPs (Management Development Programme). These programmes are conducted by MSME’s, NIESBUD, NSIC, EDI, etc.

2) Marketing Assistance: The governmental and non-governmental expert institutions offer marketing support. Generally MSME products are promoted during trade fairs but NSIC directly market the MSME product at national level and in a foreign country.

3) Promotional Schemes: Central government has been implementing incentive scheme for offering refund of payment upto 75% of cost for obtaining ISO 9000 certification.

4) Concession on Excise Duty: MSME units with an income-expenditure of Rs.1 crore or less per year has been excused from excise duty charges. In addition, for production of branded products through MSME in rural areas excise duty is excused.

5) Credit Facility to MSME: Credit offered by banks to micro-small-medium segment is bounded under priority sector. Small Industries Development Bank of India (SIDBI) is apex institution for financing MSME. Some institutions viz. SIDBI, SFCs, and scheduled banks, SIDCs, NSICs are envisioned for funding.

6) Policies and Schemes for Promotion of MSME Implemented by State Governments: All the state governments facilitate (particularly in Maharashtra) technical and other support services to entrepreneurs through their Directorates of Industries, and District Industries Centers. Even if schemes differ state wise but common areas of support are: Expansion and administration of industrial estates, suspension deferment of sales tax, priority in distribution of power and water connection, etc.

Role of MNCS as entrepreneurs:

Multinational corporations (MNCs) are huge industrial organizations having a wide network of branches and subsidiaries spread over a number of countries. The two main characteristics of MNCs are their large size and the fact that their worldwide activities are centrally controlled by the parent companies. Such a company may enter into joint venture with a company in another country. There may be agreement among companies of different countries in respect of division of production, market, etc. These companies are to be found in



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almost all the advanced countries, with the USA perhaps the biggest amongst them. Their operations extend beyond their own countries, and cover not only the advanced countries but also the LDCs.

The MNCs play an important role in the economic development of underdeveloped

countries.

1. Filling Savings Gap: The first important contribution of MNCs is its role in filling the resource gap between targeted or desired investment and domestically mobilized savings. For example, to achieve a 7% growth rate of national output if the required rate of saving is 21% but if the savings that can be domestically mobilised is only 16% then there is a ‘saving gap’ of 5%. If the country can fill this gap with foreign direct investments from the MNCs, it will be in a better position to achieve its target rate of economic growth.

2. Filling Trade Gap: The second contribution relates to filling the foreign exchange or trade gap. An inflow of foreign capital can reduce or even remove the deficit in the balance of payments if the MNCs can generate a net positive flow of export earnings.

3. Filling Revenue Gap: The third important role of MNCs is filling the gap between targeted governmental tax revenues and locally raised taxes. By taxing MNC profits, LDC governments are able to mobilize public financial resources for development projects.

4. Filling Management/Technological Gap: Fourthly, Multinationals not only provide financial resources but they also supply a “package” of needed resources including management experience, entrepreneurial abilities, and technological skills. These can be transferred to theirlocal counterparts by means of training programs and the process of ‘learning by doing’.Moreover, MNCs bring with them the most sophisticated technological knowledge about production processes while transferring modern machinery and equipment to capital poor LDCs. Such transfers of knowledge, skills, and technology are assumed to be both desirable and productive for the recipient country.

5. Other Beneficial Roles: The MNCs also bring several other benefits to the host country.

a) The domestic labour may benefit in the form of higher real wages.

b) The consumers benefits by way of lower prices and better quality products.

c) Investments by MNCs will also induce more domestic investment. For example, ancillary units can be set up to ‘feed’ the main industries of the MNCs

d) MNCs expenditures on research and development(R&D), although limited is bound to benefit the host country.



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UNIT – II GENERAL ATTITUDES OF ENTREPRENEURSHIP

Meaning of Attitudes and Motivation : Attitude defines overall aspects of persons behavior . Attitude shows general perspective of person towards things. Person’s attitude matches with its personality. According to attitude is by default it comes fromheart need not to think about it but for motivation have to read books . Revisualise self and have to motivate self.

Attitude is just like impression which comes directly from brain but motivation is just

like fuel which we have to provide to our brain daily so that we can stand tougher to our daily situation.

“change attitude by practicing daily but for that need fuel and that fuel is called motivation.”

Motivation is an urge to behave or act in a way that will satisfy certain conditions, such as wishes, desires, or goals. Psychologists believe that motivation is rooted in a basic impulse to optimize well-being, minimize physical pain, and maximize pleasure. Attitudes and Motivation:

These 12 attitude attributes can put in the right mindset for achieving entrepreneurial success. 1. Have passion for your business.

Work should be fun. Passion will help to overcome difficult moments and persuade people to work and want to do business. Passion can't be taught. When it wanes, as it surely will in difficult times, take some quiet time. Whether it be an hour or a week, take inventory of all the reasons you started the business. That should renew your passion.

2. Set an example of trustworthiness. People have confidence in trustworthy individuals and want to work for them in a culture of integrity. The same is true for customers.

3. Be flexible, except with core values. It's a given that your plans and strategies will change as time goes on. This flexibility for rapid change is an inherent advantage of small over large business. However, no matter the pressure for immediate profits, do not compromise on core values.

4. Don't let fear of failure hold you back. Failure is an opportunity to learn. All things being equal, venture capitalists would rather invest money in an individual who tried and failed founding a company than in someone who never tried.

5. Make timely decisions. It's okay to use your intuition. Planning and thought are good. But procrastination leads to missed opportunity.

6. The major company asset is you. Take care of yourself. Your health is more valuable than the most expensive machinery or computer software for the company. You don't have to choose between your family or your company, play or work. Maintain your health for balance and energy, which will, in turn, enhance your mental outlook.

7. Keep your ego under control. Don't take profits and spend them on expensive toys to impress others. Build a war chest for unexpected needs or opportunities. This also means hearing out new ideas and suggestions no matter how crazy they sound.



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8. Believe. You need to believe in yourself, in your company, and that you will be successful. This confidence is contagious with your employees, customers, stakeholders, suppliers and everyone you deal with.

9. Encourage and accept criticism graciously. Admit your mistakes. You need to constantly work on convincing your employees that its okay even necessary to state their honest opinions even it if conflicts with the boss's opinion. Just stating it once or putting it in a mission statement won't cut it for most people.

10. Maintain a strong work ethic. Your employees will follow your lead. It will also help you beat your competition by outworking them, particularly when your product or service is very similar.

11. Rebound quickly from setbacks. There surely will be plenty of ups and downs as you build the business. Learn from the setbacks and move on. You can't change the past.

12. Periodically get out of your comfort zone to pursue something important. Many times you will feel uncomfortable in implementing a needed change in technology, people, mission, competing, etc. For the company and you to grow personally, you sometimes have to step out of your comfort zone.

Many organizational and leadership shortcomings can be overcome or mitigated with the good attitudes described above. All can be learned except passion, which comes from within. Take time out of your hectic schedule to periodically reflect on these attributes.

Here are five key attitudes every entrepreneur must conquer in order to run a prosperous business venture:

1. PASSION ➢ Entrepreneurs should be passionate about their ideas, goals and, of course, their

companies. This passion is what drives them to do what they do. ➢ Some entrepreneurs love the adventure and excitement of creating something

new, and once it is established they lose interest and move on to something else. ➢ Other entrepreneurs feel passionately about the product they are constructing

or the sense of accomplishment they feel because they know they are helping other people, helping animals or helping the planet.

➢ Whatever drives an individual to try to succeed is where his/her passion lies, and that passion is integral to entrepreneurial life.

2. BRAVERY

Entrepreneurs, like everyone else, feel fear. They are fearful that they won’t succeed or fearful a well-conceived idea cannot be executed. They do not, however, let these fears of failure define them. They are brave. They learn from failure. They utilize their fear of failing to push themselves to work harder and to strive to correct the mistakes that may have caused them to fail.

Many entrepreneurs need multiple attempts to create a successful company. It is bravery that drives them to pursue success.

3. FLEXIBILITY

Entrepreneurs experience setbacks. There are hurdles to overcome on any journey. Not everyone handles change or disappointment well. However, entrepreneurs

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must possess flexible mindsets so they can alter a course that seems to be headed toward failure.

Flexible entrepreneurs should be aware that they may have to modify the route toward their established goal, or even perhaps tweak that established goal, in order to reach it successfully.

4. STRONGWORKETHIC

It is not easy to start from the ground up and become a successful business owner. Many hours of hard work, frustration, creativity and supervision are poured into a new venture. No successful business is created quickly, easily or withoutstrife.

Entrepreneurs do not work a standard 9-5 day, nor do they log 40-hour work weeks. They are always working establishing new ideas, creating new products, designing new processes, hiring smart and talented people.Entrepreneurs motivate themselves and continually look forward.

5. INTEGRITY

Entrepreneurs must be able to show others they are truthful and honest. Regardless of the type of business they hope to establish, colleagues, vendors, customers and investors must trust them. There is no way around this - entrepreneurs must be trusted, and trust must be earned.The best business idea in the world will likely fail if an untrustworthy person is at the helm. Suppliers need to know that payments for goods they have shipped will arrive on time.Customers need to know that whatever product or service they have ordered will be delivered as promised. Colleagues need to know that they are a valued part of the company’s success. Investors need to know that the company has to potential to grow.

6. Entrepreneurship as a desirable and Feasible Career option

Developed countries are moving from ‘managerial’ to ‘entrepreneurial’ economies. India, as an emerging economy, is ensuring that entrepreneurship is embraced as a career choice for the young.A study conducted in 2013 by International School of Entrepreneurship Education and Development (ISEED) revealed that more than 87 per cent students surveyed aspire to become an entrepreneur at one point of life, while about 90 per cent believe that the country is full of entrepreneurship opportunities.

Encouraging Entrepreneurship A number of initiatives are being practiced to encourage creation and growth of new

ventures. A ministry of skill development and entrepreneurship has been formed by the current government, educational institutes are providing courses on entrepreneurship, large number of incubators and business accelerators have been set up both by universities and the private sector to mentor, coach and train entrepreneurs, open forums, celebration of entrepreneurs in the community role models through seminars, webinars, YouTube videos, blogs, books, massive open online course (MOOC) from Coursera & Stanford Online and other media are some of the other initiatives that are driving the youth to choose entrepreneurship.The National entrepreneurship network has been encouraging entrepreneurship facilitation through training programs on entrepreneurship for faculty, nationally. The Indus Entrepreneurconducts a number of programs for rookie entrepreneurs. A number of organisations support mentoring



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by their senior management employees, free cloud space which are major contributions by industry.

Support of idea generation and innovation competition by the industry helps too.

Alumni of various institutions are now returning to their campuses and are actively involving themselves through mentoring and creating an angel fund. The current ecosystem for entrepreneurship is vibrant.

Creation of campus companies would improve learning. Often the youth do not want to

engage in this, as it is stressful, ambiguous, has no structure and in the initial years’ one has no free time. Through the exposure, they can make up their minds accordingly – understanding that all ideas are not opportunities, needs recognition.A small percentage of engineering students have technological ideas and work on them, but they need support to approach it form a business perspective. Whereas, a large percentage of business school students prefer a secure job rather than creating a start-up immediately after their education. Taking Entrepreneurial Plunge

Entrepreneurs are job creators rather than job seekers. They create products and services. An entrepreneur is an independent-minded or innovative business person. Being an entrepreneur, teaches life skills, increases creativity and problem solving skills, provides better understanding of business and market economics, enhances competencies of persistence, communication, teamwork and networking skills and hence, enhances employability. Being a failure in entrepreneurship too is a learning experience.

Entrepreneurial careers could be varied from being an entrepreneur to serial entrepreneurs, angel investors, partners in venture capital or PE firms, corporate entrepreneurs, educators, mentors, and policy making in the government.

Aspects that could support youth in taking entrepreneurship as a career could be, reduction in regulatory burden during the start-up phase, tax rebates, ease in closing of businesses, reduction in taxation when entrepreneurs obtain funding from angel investors amongst others.

Similarly, educational institutions could offer a deferred placement processes, could encourage students work on their venture idea, instead of an internship or project, alumni entrepreneurs could be utilised as mentors and create an angel investment pool for students at their respective universities.

Helping Bridge the Gap Strong networks between entrepreneurial associations and academic institutions could

help bridge the divide. Organizations could introduce sabbaticals for employees, who want to initiate a venture and welcome them back, if they are unsuccessful, as many opportunities are identified by, the marriage of work experience and the environment.

Ventures of varied sizes, family managed businesses, corporate entrepreneurship, and

franchisees amongst others need to be encouraged. Calculated risk taking need to be encouraged. Many are of the opinion that one should start young by learning how to create and sell small products and services, which are the laboratories of experience.



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Other influencers include, the environment, the place one lives in, the peer group, the family and the educational institution she is from, which play a large role in determining the career options. Characteristics of a successful Entrepreneur: 1. Self-Motivation

One of the most important traits of entrepreneurs is self-motivation. When you want to succeed, you need to be able to push yourself. You aren’t answerable to anyone else as an entrepreneur, and that sometimes means that it’s hard to get moving without anyone to make you. You need to be dedicated to your plan and keep moving forward — even if you aren’t receiving an immediate paycheck.

2. Understand What You Offer

As an entrepreneur, you need to know what you offer, and how it fits into the market. Whether it’s a product or a service, you need to know where you fit in. That means you need to know when it’s time to tweak things a little bit. This also includes knowing whether you are high end, middle of the road or bargain. Being able to position yourself and then adjust as needed is an important part of entrepreneurship.

3. Take Risks

Successful entrepreneurs know that sometimes it’s important to take risks. Playing it safe almost never leads to success as a business owner. It’s not about taking just any risk, though. Understanding calculated risks that are more likely to pay off is an important part of being an entrepreneur. You’ll need to be willing to take a few risks to succeed.

4. Know How to Network

Knowing how to network is an important part of entrepreneurship. Sometimes who you know is an important part of success. Being able to connect with others and recognize partnership opportunities can take you a long way as a business owner. Figure out where to go for networking opportunities and make it a point to learn how to be effective.

5. Basic Money Management Skills and Knowledge

We often think of successful entrepreneurs as “big picture” people who don’t worry so much about managing the day to day. And it’s true that you might have an accountant or other team members to help you manage the business. However, if you want to be successful, you should still have basic money management skills and knowledge. Understand how money works so that you know where you stand, and so that you run your business on sound principles.

6. Flexibility

To a certain degree, you need to be flexible as an entrepreneur. Be willing to change as needed. Stay on top of your industry and be ready to adopt changes in processes and product as they are needed. Sometimes, you also need flexibility in your thinking. This is an essential part of problem-solving. You want to be able find unique and effective solutions to issues.

7. Passion

Finally, successful entrepreneurs are passionate. They feel deeply about their product or service or mission. Passion is what will help you find motivation when you are discouraged and it will drive your forward. Passion is fuel for successful entrepreneurship. If you find yourself

https://due.com/blog/zig-ziglar-motivation-and-baths-recommended-daily/

https://due.com/blog/should-you-charge-hourly-or-on-a-per-project-basis/

http://www.biblemoneymatters.com/tips-for-business-networking-at-a-conference/

http://experts.allbusiness.com/how-willingness-to-change-resulted-in-350-sales-growth-for-one-small-business/23217/



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losing your passion that might be the clue that it’s time to move on to something else (that stokes your passion). There are many serial entrepreneurs that create successful businesses, sell them, and then create something else.



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UNIT - III ENTREPRENEURIAL OPPORTUNITIES

Overview of Entrepreneur opportunities in contemporary business environment in the early 21st century

While innovation still is possible, much has changed. Ford’s invention no doubt was heralded as something just short of a miracle. Today’s feature-laden minivans, hybrids and electric cars mean any new entrant in the vehicle market will also need to enable flight if it’s to be seen as anything other than an also-ran. Competition is fierce and becoming even more so in the current climate.

This trend has forced entrepreneurs and business owners to evolve their views on innovation. Innovation in the 21st century demands we retrain ourselves to find pockets of spaces within industries where we can create a more fulfilling experience for customers. Here are a few proven ways to leverage that inspiration to sustain or build companies.

1. Ease the burden of responsibilities:

Many people work more than one job to satisfy all their financial responsibilities. This makes it difficult to juggle work and family duties.

Even so, this shift has created a business opportunity: the errand-services industry. These businesses exist to make people’s lives easier. Services range from the exceptional to the mundane -- from dog-walking and grocery-getting to doing laundry, caring for elderly family members or performing concierge services.

All one needs to make a start in this industry is a willingness to do whatever his or her clients ask. It shouldn’t come as a surprise to learn how many people are willing to pay someone else if it means reducing their non-work responsibilities. After all, skipping hours on the job typically will be more costly for them.

2. Facilitate business operations:

In the words of Cova CEO Gary Cohen: “In the course of running a business, you will find that there are functions and responsibilities that you need to carry out to ensure the smooth and optimal running of your business. These services are usually such that even though they may not be increasing revenue, not handling them will certainly prove costlier for you.”

Third-party companies take care of many of these functions. Software-as-a-servic (Saas) companies such as Dropbox help people save vital business documents in the cloud.

3. Upgrade a product or service:

In the Babylonian era, toothbrushes -- or more aptly, chew sticks -- were made by fraying the end of a twig. In 1498, the first true toothbrush was made by rooting Siberian pig-hair bristles into a handle (typically made of cattle bone). The efficiency of modern electric toothbrushes would put all their predecessors to shame.

VitaCup’s CEO suffered a vitamin deficiency as a child. As an entrepreneur, he discovered a way to make conventional coffee and tea healthier by infusing them with vitamins. People now can get all their necessary vitamins in America’s most-consumed beverage -- without sacrificing taste.

Uber is worth billions today, but it grew from an idea to improve and streamline the transportation industry. Getting everyone in on the action is the perfect way to hitch a ride.

http://www.covasoft.com/

http://www.dropbox.com/

http://computersmiths.com/chineseinvention/toothbrush.htm

http://www.vitacup.com/

http://www.uber.com/



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4. Create a meeting point:

People’s need for problems to be solved as quickly and easily as possible led to what I like to call “bridge companies.” In our digital world, these businesses often emerge as online platforms. Fiverr and Freelancer are among the industry’s biggest players. Both help people easily complete work-related or personal assignments.

Google Advertising spearheaded an online revolution that spurred companies such as Admitad -- which further specializes in marketing for CPA firms -- and a host of others. Each serves as a platform where advertisers can meet publishers who are willing to display their marketing materials.

In this model, entrepreneurs don’t necessarily need to solve the problems themselves. Creating a convergence point adds value (and potential profit) enough.

5. Offer an experience.

Many times, people’s complaints about a product or service have less to do with the quality of the item or assistance received than with how the solution was delivered.

Hotels, for instance, are a massive part of the hospitality industry. People lodge in hotels for a myriad of reasons. But in recent years, a curious trend has arisen: Those who embark on casual travel for vacationing or sightseeing don’t like the idea of staying in hotels. They want to soak up the atmosphere, culture and language. In short, they want to feel what it’s like to be part of the community -- and many of them want to bring their pets along for the adventure.

A hotel, though, is loaded with constant reminders that they are visitors. Not so with the home-hospitality experience, whose owners list their primary homes or vacation properties with third-party rental agencies. Airbnb, Acmehouse and HomeAway fulfill this need internationally and locally while offering the full range of experiences possible in each locality.

Types of Enterprise as follows

➢ Sole proprietorship

A company runs by a single individual, typically for their benefit, with unlimited liability for any damages that occur as a result of the business’ operations.

➢ Partnership

A business run by two or more individuals or entities who share ownership – not necessarily equal ownership, however.

➢ Corporation

A for-profit entity created to shield the owner(s) from liability should the enterprise become subject to a lawsuit. There are different forms of corporations, depending on how many owners there are.

➢ Limited Liability Company (LLC)

An LLC offers the legal protection of a corporation and the tax treatment of a partnership.

➢ Professional Company/Professional Limited Liability Company (PC/PLLC)

http://www.fiverr.com/

http://www.freelancer.com/

https://www.admitad.com/en/

http://www.airbnb.com/

http://www.acmehouseco.com/

https://www.homeaway.com/



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PCs and PLLCs are for licensed professional firms, such as accountants, architects, engineers, doctors, and lawyers, and provide liability protection similar to a corporation.

Factors that influence Entrepreneurship development

Five factors are the key to entrepreneurial success, creativity, tolerance for risk, responsiveness to opportunities, leadership and the ability to take advantage of the rights afforded.

1. Creativity and Accumulation of Ideas Do not be dissuaded by the challenge to be creative. You need not be the original wheel

creator to improve upon a stone cylinder. By standing on the shoulders of giants, you can take existing ideas and make small improvements upon them. Your best ideas may come to you as you are falling asleep or while you are taking a shower. Recognize when you have a fresh idea and do not let them get away from you. Write them down! Not every idea has to be a home run. By accumulating your ideas, you will be able to distill the great ones from the rest and be ready to run with the best.

2. Risk Tolerance and Taking Advantage of Opportunity

Rewards rarely come without risk. Your ability to take advantage of an opportunity will depend, in part, on your tolerance for risk. As the founder of a start-up, investors will expect you to have a vested interest in your business. If you will not bet on your idea, why should anybody else?

If you cannot afford the risk, financially or emotionally, then you might make decisions that are too tepid to be successful. To do well, an entrepreneur needs the strong sense of self-efficacy to believe the risk will be surmountable.

3. Responsiveness to Opportunity

Opportunity can leave quickly. With the internet, the spread of information and ideas has led to deeper, faster competition to be the first mover. The ability to respond to the market and new business opportunities can be the difference between a successful entrepreneur and a failed business model.

To be responsive, an entrepreneur must have the flexibility of mind and resources necessary to see and take advantage of new and upcoming possibilities. Learning from your mistakes and those of others to implement change can keep businesses afloat. Calcifying rigidity, on the other hand, can turn a start-up into dust.

4. Leadership and Inspiring Others

It is up to the entrepreneur to marshal assets. Leaders are challenged with taking possibilities and turning them into inspiring visions for others. You will inevitably have to sell either your idea or your product to begin your entrepreneurship. It will be up to the entrepreneur to take the idea and turn it into actions and products to capitalize on the opportunity. Leadership can come in many forms, but it is nevertheless essential to entrepreneurship. You must take the lead for your ideas to come to fruition.

5. Intellectual Property Rights

Intellectual property laws can provide you with exclusive business rights to your ideas. If you do not protect your ideas, they may be copied – cheaply. Once an idea is in the public



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domain, it may no longer be possible to use that idea as a competitive advantage. Society values ideas being shared.

In exchange for sharing ideas, governments provide limited monopolies that will allow you to capitalize on them for a period, making up in part for the costs you have incurred in research and development. Intellectual property professionals can aid in seeking such rights.



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UNIT – IV INSTITUTIONAL SUPPORTS IN TAMILNADU

Institutions and schemes in Tamilnadu For SSI Support: Tamil Nadu state is the second-largest contributor to the Indian Gross Domestic Product

(GDP). It ranks the second most industrialized state in India. A Good infrastructure backed by the easy availability of skilled or unskilled manpower. This makes Tamil Nadu an ideal State for setting up manufacturing units or service units. In order to attract Foreign Direct Investment (FDI) and boost domestic investment in businesses, the Tamil Nadu Government has announced various subsidies and schemes. In this article, we cover a list of business subsidies and schemes popular in Tamil Nadu. The following subsidies are only available for Small Scale Industry (SSI) units or Micro, Small and Medium Enterprises (MSME) units. To know more how to obtain SSI Registration or MSME Registration, visit the following:

➢ MSME Registration in India

➢ How to obtain online SSI Registration Capital Subsidy

All Micro Manufacturing units or Micro SSI units that are set up anywhere in the state of Tamil Nadu and investing in capital assets (plant and machinery) are eligible to receive a capital subsidy of 15% on eligible plant and machinery, subject to a maximum of Rs.30 lakhs. Micromanufacturing units are those manufacturing units having less than Rs.25 lakhs of investment in plant and machinery.

In 251 blocks notified as backward areas and industrial estates promoted by the Government and Government Agencies like SIPCOT, SIDCO, etc., (excluding industrial estates located within the radius of 50 Kms from Chennai city centre) the capital subsidy will be available for all SSI Units, Micro, Small and Medium. Further, an additional capital subsidy of 5%, subject to a maximum of Rs.2 lakhs will be given to enterprises set up by Women, SC or ST, Physically disabled and Transgender entrepreneurs.

An additional capital subsidy of 25% is also available on the value of plant and machinery installed to promote cleaner and environment-friendly technologies, subject to a maximum of Rs.3 lakhs and certification by Tamil Nadu Pollution Control Board that the equipment installed serve such a purpose. Employment Intensive Business Subsidy

For those units setup in Backward Blocks of industrial estates promoted by the Government, an additional capital subsidy of 5% subject to a maximum of Rs.5 lakhs will be granted if at least 25 workers have been employed for a minimum period of 3 years within the first five years from the date of commencement of production. The evidence for the employment of workers would be the related statutory returns such as the returns filed under the Employees Provident Fund Act, etc., Agriculture Subsidy

Capital subsidy and Employment Intensive Business subsidy are available for the agricultural business. This is available for setting up of the agricultural business in all blocks in Tamil Nadu state.New Entrepreneur Enterprise Development Schemes [NEEDS] Scheme

https://www.indiafilings.com/msme-registration

https://www.indiafilings.com/learn/how-to-get-online-ssi-registration/



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The Government announces the NEEDS scheme to assist the educated youth of Tamil Nadu to become first-generation entrepreneurs. Educated youth with any Degree, Diploma, ITI or Vocational Training from a recognised institution and in the age group of 21 to 35 years under General Category and 21 to 45 years under Special Category aspiring to become entrepreneurs would be eligible for assistance under this scheme. The project cost shall not exceed Rs. 1 crore. Capital subsidy of 25% of the project cost up to a maximum of Rs. 25 lakhs. This will be provided by the State Government. Interest Subsidy Scheme [Interest Subvention Scheme]

All term loans sanctioned from 03.09.2012 by Tamil Nadu Industrial Investment Corporation Limited [TIIC] for SSI units or MSME both manufacturing and service sectors, under various types of schemes like General Term Loan, Term Loan for Windmill, Working Capital Term Loan, Open Term Loan, etc. are eligible for the 3% interest subsidy. An individual beneficiary can avail maximum interest subvention of Rs.30.00 lakhs under this scheme irrespective of the number of loans. Back-ended Interest Subsidy

A 3% back-ended interest subsidy is provided to a maximum of Rs. 10 lakhs over a period of five years on loans up to Rs.100.00 lakhs for MSME under specific schemes. Generator Subsidy

Tamil Nadu government provides a subsidy of 25% of the cost of Generator up to the capacity of 320 KVA (kilo-volt-ampere) purchased on or after 11.11.2008 by all new and existing Micro, Small and Medium manufacturing enterprises for their captive use subject to a maximum amount of Rs. 5 lakhs. STATE LEVEL FINANCIAL CORPORATIONS: India’s State Finance Corporations:

The State Finance Corporations (SFCs) are the integral part of institutional finance structure in the country. SEC promotes small and medium industries of the states. Besides, SFCs are helpful in ensuring balanced regional development, higher investment, more employment generation and broad ownership of industries.

At present there are 18 state finance corporations (out of which 17 SFCs were established under SFC Act 1951). Tamil Nadu Industrial Investment Corporation Ltd. established under Company Act, 1949, is also working as state finance corporation. Organization and Management:

The State Finance Corporations management is vested in a Board of ten directors. The State Government appoints the managing director generally in consultation with the Reserve Bank and nominates three other directors.

The insurance companies, scheduled banks, investment trusts, co-operative banks and other financial institutions elect three directors. Thus the majority of the directors are nominated by the government and quasi-government institutions. FUNCTIONS: The important functions of State Finance Corporations are:

(i) The SFCs grant loans mainly for acquisition of fixed assets like land, building, plant and machinery.



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(ii) The SFCs provide financial assistance to industrial units whose paid-up capital and reserves do not exceed Rs. 3 crore (or such higher limit up to Rs. 30 crore as may be specified by the central government).

(iii) The SFCs underwrite new stocks, shares, debentures etc., of industrial concerns. (iv) The SFCs provide guarantee loans raised in the capital market by scheduled banks,

industrial concerns, and state co-operative banks to be repayable within 20 years. Working of SFCs:

The government of India passed the State Financial Corporation Act in 1951 and made it applicable to all the States. The authorised Capital of a State Financial Corporation is fixed by the State government within the minimum and maximum limits of Rs. 50 lakh and Rs. 5 crore and is divided into shares of equal value which were taken by the respective State Governments, the Reserve Bank of India, scheduled banks, co-operative banks, other financial institutions such as insurance companies, investment trusts and private parties.

The shares are guaranteed by the State Government. The SFCs can augment its fund

through issue and sale of bonds and debentures, which should not exceed five times the capital and reserves at Rs. 10 Lakh. State level Financial Corporations - schemes and programmes

When it is about institutional finance to entrepreneurs , State Level Financial Corporations play a crucial role. Here you can access information and links to leading State Financial Corporations that offer specialised SSI (Small Scale Industry) schemes for your startups. This list of Financial Corporations includes Delhi Financial Corporation (DFC), Karnataka State Financial Corporation (KSFC), Rajasthan Financial Corporation (RFC), among others.

Andhra Pradesh State Financial Corporation (APSFC)

Andhra Pradesh State Financial Corporation (APSFC) is a term lending Institution established in 1956 for promoting small and medium scale industries in Andhra Pradesh under the provisions of the Sate FInancial Corporation' Act,1951.The corporation has many entrepreneur - friendly schemes to provide term loans,working capital term loans,special and seed capital assistance to suit the needs of various categories of entrepreneurs.The Corporation has 45 years of expertise in industrial financing engaged in the business of financing tiny,small and medium scale sector units and thriving for balanced reginal development of the state.

Arunachal Pradesh Industrial Development and Financial Corporation (APIDFC)

Arunachal Pradesh Industrial Development and Financial Corporation (APIDFC) was incorporated in the year 1978 as company under Companies Act, 1956 for promotion of industries in Arunachal Pradesh. It is performing the twin role of State Industrial Development Corporation and State Financial Corporation.

Assam Financial Corporation (AFC)

The Assam Financial Corporation was established as a Joint State Financial Corporation under Section 3(A) of the SFC’s Act 1951 way back in 1954 covering the erstwhile-undivided Assam with two union territories of Manipur and Tripura and operating in this North-East Region for more than last four decades. As the premier most Financial Institution(F.I.) in the North-East Region, it has an incomparable out reach of the grass root level compared to other Financial Institutions(FIs) and Banks.

http://www.apsfc.com/

http://www.cosidici.com/newslettmay-dec/newlettjan-feb/APIDFC.html

http://www.afconline.gov.in/



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Bihar State Financial Corporation (BSFC) Bihar State Financial Corporation was established in the year 1954 under SFC's Act, 1951

to promote Small and Medium Scale Industries by way of providing financial assistance. Since then it is playing major role in growth of tiny, small and medium industries in the erstwhile State of Bihar (Presently Bihar and Jharkhand).

It has contributed significantly to the growth of various Sectors defined as Industrial

concern under SFC's Act, 1951 (as amended from time to time). From early 70's it has also provided liberal financial assistance under special schemes like educated unemployed, composite loans to small artisans, Mahila Udyog Nidhi,Semfex etc. for creating self-employment opportunities to artisans, educated unemployed, women entrepreneurs and ex-service men. It has also provided financial assistance for setting up Hotels/Motels including Marketing Complex, Nursing Homes and also for Electro Diagnostic Equipments etc.

Delhi Financial Corporation (DFC)

The Delhi Financial Corporation has been rendering yeoman service to small scale entrepreneurs in Delhi and Chandigarh. It has made finance available to existing and prospective entrepreneurs at very reasonable terms.The corporation has devised suitable schemes for catering the needs of different categories of entrepreneurs

Gujarat State Financial Corporation (GSFC)

Gujarat State Financial Corporation (GSFC) incorporated under the State Financial Corporations Act of 1951, is a trend setter and path breaker in the field of industrial finance. It plays a major role in the development and industrialization of Gujarat by extending credit assistance to suit individual requirements.

Gujarat State Financial Corporation established with main object for development activities to contribute to social upliftment, regional dispersal of industrial activities and to adding to Gross Stock Domestic Products. Also for promoting economic growth, balanced regional development and widening of entrepreneurial base by financing small enterprises.GSFC a premier, regional development bank set up by Government of Gujarat, to provide finance to new industrial units, for acquisition of Fixed Assets, Expansion, Modernization, Diversification, Renovation etc. The Industrial concern must set up in the state of Gujarat and the Union Territories of Diu, Dadra and Nagar Haveli.

Haryana Financial Corporation (HFC)

Haryana Financial Corporation has been set up under an Act of Parliament known as State Financial Corporation's Act 1951 and the working is governed by this act. The Head Office of the Corporation is at Chandigarh and Branch Offices at each District Headquarter of the State. HFC meets the credit needs of small/medium scale industrial units by advancing term loans. The loans are advanced primarily for acquiring fixed assets such as land, building, plant & machinery etc.

Himachal Pradesh Financial Corporation (HPFC)

Himachal Pradesh Financial Corporation (HPFC) was established in the State under the Central Act, viz. The State Financial Corporations Act, 1951, with the basic objective of promoting and developing small scale and medium scale industries in the State with a special focus on spreading industrial culture in the rural, semi-urban and backward areas of the State. The Corporation is owned by the State Government jointly with SIDBI and is functioning under

http://bsfc.bih.nic.in/

http://www.dfcdelhi.nic.in/profilef.htm

http://gsfc.gujarat.gov.in/

http://www.hfcindia.org/

http://www.hpfc.nic.in/welcome.html



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the administrative control of the State Government.

Jammu & Kashmir State Financial Corporation (J&KSFC)

The Jammu & Kashmir State Financial Corporation (J&KSFC) was established to act as a Regional Development Bank with the aim of boosting economic development in the State for providing financial assistance in the shape of loans to prospective entrepreneurs for development of Industries. It was incorporated under The SFCs Act 1951 on 2nd December 1959 as a Development Bank for promotion of Small Scale Industries, hotels, houseboats and transport sector in Jammu & Kashmir.

The Board of J&K SFC is headed by Honourable Finance Minister, Shri Mohd. Shafi. The Board has been from time to time assessing the performance of institution with a view to achieve the objectives for which it was instituted.

Karnataka State Financial Corporation (KSFC)

KSFC gives financial asssistance to set up tiny, small, medium and large scale industrial units in the Karnataka State. The Corporation extends term loans to new & existing units upto Rs. 500 lakhs for corporate bodies and registered co-operative societies. Term loans upto Rs. 200 lakhs are sanctioned to proprietary, partnership and joint hindu undivided family concerns.KSFC extends lease financial assistance and hire purchase assistance for acquisition of machinary/equipment/transport vehicles. KSFC has a merchant banking department and is approved as a category I merchant banker by SEBI. Under this activity it does management of public issues, under-writing of shares, project report preparation, deferred payment guarantee, syndication of loans, bill discounting etc.The fund based activities like subscription to non-convertible debentures, actoringservices are also considered.

Kerala Financial Corporation (KFC)

Kerala Financial Corporation (KFC) incorporated under the State Financial Corporations Act of 1931, is a trend setter and path breaker in the field of industrial finance to service sector projects. It plays a major role in the development and industrialization of Kerala by extending financial assistance to suit the requirementsof the entrepreneurs.

The Economic Development Corporation (EDC) of Goa

The Economic Development Corporation (EDC) of Goa, established in 1975 has been the State Financial Institution. It has been incorporated as an SIDC and a limited company . However, it has also been accorded twin status of SFC by IDBI/SIDBI.

Madhya Pradesh Financial Corporation (MPFC)

Madhya Pradesh Financial Corporation (MPFC) is the premier institution of the State engaged in providing financial assistance and related services to small to medium sized industries. Also, it is registered as Category-I Merchant Banker with Securities Exchange Board of India and setup a separate Merchant Banking Division in the name of MPFC Capital Markets.

Incorporated in the year 1955, under the State Financial Corporation Act, 1951 (No. LXIII of 1951), it works under the control of the Board of Directors, consisting of representatives from State Government, Industrial Development Bank of India, Small Scale Industrial Development Bank of India, Reserve Bank of India, Scheduled Banks, Insurance Companies, Co-operative Banks and other shareholders.

MPFC is a well knitorganisation with its head quarters at Indore - the industrial hub of

http://www.obcindia.co.in/index.asp

http://www.ksfc.in/

http://www.kfc.org/

http://www.edc-goa.com/

http://www.mpfc.org/



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Madhya Pradesh. It has zonal offices at Raipur, Jabalpur, Bhopal, Gwalior, Indore, Satna, and various branches at different places; making a total of eighteen offices throughout Madhya Pradesh.

Orissa State Financial Corporation (OSFC)

The Orissa State Financial Corporation (OSFC) is the primary state level financing institution incorporated in the year 1956 under the State Financial Corporations Act, 1951. The Corporation extends term loan upto a maximum of Rs. 150.00 lakhs for acquiring fixed assets like land, building, plant and machinery, equipment and margin money for working capital for setting up of industries. OSFC also provides working capital assistance under Single Window Scheme. Priority is given to small and tiny sector industrial units in backward areas.

Punjab Financial Corporation (PFC)

Punjab Financial Corporation a premier leading institution of Punjab, is a body incorporated under the State Financial Corporations Act 1951. The Corporation came into existence on Ist February,1953. To perform the role of a Development Bank in the State of Punjab, Corporation was established with an objective of granting loans for the establishment of new industrial concerns, modernisation, expansion/diversification of existing activities etc.

Rajasthan Financial Corporation (RFC)

The Rajasthan Financial Corporation (RFC) was constituted under a notification of the State Government dtd. 17 January, 1955 under the SFCs Act, 1951, for providing long term financial support to tiny, small scale and medium scale industries in the State of Rajasthan.

The Corporation is continuing to work as a Catalyst of development for translating into practice the industrial policies and priorities of the Central and the State Governments as also for providing and improving upon immediate assistance in the planned and balanced development of industries in the State, particularly in the small and tiny sectors.

The Maharashtra State Financial Corporation (MSFC)

The Maharashtra State Financial Corporation (MSFC) has been set up under the 'State Financial Corporations Act, 1951. The Corporation operates in State of Maharashtra from 1962 and in State of Goa and Union Territory of Daman & Diu since 1964.

Uttar Pradesh Financial Corporation (UPFC) Uttar Pradesh Financial Corporation (UPFC ) was established in 1954 under the State

Financial Corporation Act, 1951 with its Head Office at Kanpur. The UPFC took a humble step for the industrial development of the State of Uttar Pradesh by providing term loan assistance to small and medium scale units. Several units nurtured by UPFC have now become large enterprises.

West Bengal Financial Corporation (WBFC)

West Bengal Financial Corporation is a State level financial institution to help the small, medium and tiny sector enterprises to implement their new/ expansion/ modernization or technological upgradation schemes.

Corporation has been devoting itself to the task of promotion and development of the SSI sector of the State for the last 50 years. Despite all odds, the Corporation has been marching ahead by registering increases in the amount of sanction, disbursement and recovery. The

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Corporation always acts in close coordination with the State level promotional and development agencies, commercial banks, the Government and others.

TAMILNADU SMALL INDUSTRIES DEVELOPMENT CORPORATION LTD (SIDCO)

The Tamil Nadu Small Industries Development Corporation Limited (SIDCO) was established on 16.3.1970 by the Government of Tamil Nadu with the main objective of assisting and promoting the interests of Micro, Small and Medium Enterprises in the State.

Activities of SIDCO

1) Formation and maintenance of Industrial Estates.

2) Raw Materials Distribution.

3) Assistance in Marketing through Marketing Assistance Scheme.

4) Formation of Clusters and Common Facility Centres

Establishment of Industrial Estates:

Suitable lands are identified taking into consideration the various factors such as location, availability of power and water, transport facilities etc., for the formation of new Industrial Estates.

The lands are either acquired if they are private patta lands or alienated if they are Government lands.

Basic infrastructure facilities such as roads, streetlights, water supply system, storm water drainage, sewage system etc., are provided in the lands taken over and new industrial estates are formed.

Government of Tamilnadu have established 35 Industrial Estates initially through Directorate of Industries and Commerce and the administrative control of these industrial estates were transferred to SIDCO on agency terms in 1974.

SIDCO has developed 59 Industrial Estates on its own since its establishment in 1970 and totally 94 industrial estates (Annexure- IV) are functioning under the control of SIDCO at present. Special Features:

Tiny Plots measuring 5 cents to 15 cents are developed and allotted exclusively for Micro Enterprises.

Now Industrial plots measuring 0.25 acre to 1 acre and above are allotted to Micro, Small and Medium Enterprises depending on their project requirement as entrepreneurs preferred to have their own sheds to suit their requirements.

Multistoried industrial complexes with modules of area 500 sq.ft, 1000 sq.ft and 1500 sq.ft have been constructed and allotted to Electronic and Readymade Garment industries in Thiru-vi-ka Industrial Estate, Guindy.

To encourage women entrepreneurs, Women Industrial Parks have been developed in 5 places.

Karuppur (Salem Dist.)

Valavanthankottai (Trichy District)



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Thirumullaivoyal (Thiruvallur District)

Thirumudivakkam (Kancheepuram District)

Kappalur (Madurai District)

30% of the saleable area of New Industrial Estates are earmarked for Micro Enterprises as per G.O.Ms.No.7 MSME.Dept. dated 31.01.2009 and allotted to Micro Enterprises.

To ensure participation of all sections of the society in the industrial development of the State, priority is given in allotment as follows.

30% for Women Entrepreneurs

10% for Ex-servicemen

10% for SC/ST and Transgender

Allotment Procedure

➢ Advertisements are released in News Papers notifying the availability of plots and sheds every year.

➢ Application for allotment can be had either from 19 branch offices in various districts or from Corporate Office. Application can be downloaded from.

➢ The application shall be filed with the Branch Manager of the respective district under whose jurisdiction Industrial Estate falls.

➢ A Screening Committee constituted with the Officials of SIDCO, Directorate of Industries and Commerce, Tamilnadu Industrial Investment Corporation Ltd. and representatives of TANSTIA scrutinizes the applications and selects the eligible entrepreneurs.

➢ The selected entrepreneurs are allotted plots by way of “LOT” system conducted in a transparent manner.

➢ Allotment orders are issued by CMD, SIDCO, for all plots in respect of SIDCO Industrial Estates and in respect of Government Industrial Estates where the plot extent is less than 5000 sq.ft.

➢ In respect of plots measuring more than 5000 sq.ft., in Government Industrial Estates, the plots will be allotted after getting prior permission of Government, as per G.O.Ms.No. 877, Industries Department, dtd01.07.1982.

Infrastructure Facilities in Industrial Estates:

The basic infrastructures like, Roads, Street lights, Water supply system, Storm Water Drainage, Sewage System are created in new Industrial Estates and upgraded in existing Industrial Estates.

Canteen, Banks, Post & Telegraph Office, Telephone Exchange, Fire Station, Police Station, Parks, Dispensary and Common Creche for children are also made available in the Industrial Estates for the benefit of entrepreneurs and employees.

Infrastructure facilities are created upgraded in Industrial Estates under various schemes implemented by Central as well as State Government.

i. Micro Small Enterprises-Cluster Development Programme MSE-CDP (ID) Scheme ii. Industrial Infrastructure Upgradation Scheme (IIUS) iii. Aid to States for Infrastructure Development of Export and Allied

Activities.(ASIDE)



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iv. Part-II scheme of Government of Tamilnadu.

Other allied schemes and programmes in Tamilnadu.

1. To support the sustainability and growth of MSEs by addressing common issues such as improvement of technology, skills and quality, market access, access to capital etc.

2. To build capacity of MSEs for common supportive action through formation of self help groups, consortia, Up gradation of associations etc.

3. To set up common facility centres (for testing, training centre, raw material depot, effluent treatment, complementing production processes, etc.)

SIDCO has been nominated as the implementing Agency for Establishing Common Facility Centres in Tamil Nadu under MSE-CDP scheme vide G.O.Ms.No.24(MSME) Dept. dated 09.08.11. In total, 50 Projects have been identified in Tamil Nadu for implementation. Out of these, 15 projects at a total project cost of Rs.57.39 Crores have been sanctioned by the Government of India with a maximum of 70% grant for a sum of Rs.36.89 Crores.

The Government of Tamil Nadu has sanctioned a grant of (maximum 10%) Rs.4.97 Crores. Out of the above 15 projects, 7 projects have already been completed. The remaining 8 Common Facility Centres are under implementation. The expected total employment generation from the 50 clusters will be 10,000.

In 2012-13, SIDCO has proposed to take up 20 CDP’s. This will be the highest number ever to be taken up for implementation.

The Tamil Nadu Small Industries Development Coiporation Limited, popularly known as SIDCO, was started in 1970. This was converted into a public limited company in 1971, with the specific object of promoting and developing SSIs in Tamil Nadu and to proliferate SSIs in backward and underdeveloped areas of the state.

SIDCO has been implementing a number of schemes for the promotion of small scale industries, particularly with a view to generate self employment.

The main objective of this corporation is to stimulate development of industries in the small scale sector with various promotional activifies like the creation of infrastructural facilities, provision of work sheds, distribution of key / scarce raw materials, provision of marketing assistance and bill discounting assistance, export marketing assistance and captive power plants, SIDCO has developed 41 Industrial Estates and manages 35 Government Industrial Estates on agency terms.

So far, SIDCO has developed 4.972 Plots and constructed 4,222 Sheds. Further, 1,841 Tiny Sheds with sizes of 200 Sq. ft. to 600 Sq. ft. have also been constructed. SIDCO also waives the processing fee for the women entrepreneurs. SIDCO has also reduced the administrative charges from 15 per cent to 10 per cent on the land cost for these parks, except in estates in and around Chennai. Two new Industrial Parks for women entrepreneurs at Thirumullaivoyal near Chennai and Vazhavanthankottai near Tiruchirappalli have been completed and allotments are being made to women entrepreneurs.



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UNIT - V PROGRAMMES AND SCHEMES

District Industries Centre (DIC)

District Industries Centres (DICs) was launched by the Government of India, to be operational from 1st May 1978. The programme provided for setting up a DIC in each district of the country, in a phased manned in order to make the district headquarters a focal point for the development of small-scale and cottage industries, to shift the emphasis from cities and state capitals to the district headquarters and to provide under a single root, all services and support needed by small and village entrepreneurs. Accordingly the Government ofIndia issued guidelines to the State Government for setting up DIC in each district of the state. In the State of Maharashtra, District Industries Centre have been set up in the 34 districts. At present 34 districts of Maharashtra DICs have been functioning.

The main objects of the DIC programme are firstly to make available various assistance and clearance required under one roof and secondly to promote rural industries.

Following are the schemes under District Industries Centre (DIC):

1. Prime Minister’s Employment Generation Program (PMEGP)

The objective of this centrally sponsored scheme of Ministry of Micro, Small & Medium Enterprises and Government of India being implemented since October, 2008 is to provide gainful employment and self-employment opportunities to educated unemployed persons through activity of industry, service and business.

2. Seed Money Scheme

The objective of the scheme is to encourage an unemployed person to take up self-employment ventures through industry, service and business, by providing soft loans to meet part of the margin money to avail institutional finance.

3. DIC Loan Scheme

The objective of the scheme is to generate employment opportunities including self-employment to tiny units located in towns and rural areas having population of less than 1 lakh and with investment in plant & machinery below ₹ 2 Lakhs. Such identified tiny units falling within the purview of the Small Scale Industries Board and Village Industries, handicrafts, handlooms, Silk & Coir Industries are covered for financial assistance in the form of margin/seed money under the Scheme.

4. Entrepreneurship Development Training Program

This scheme was introduced with the objective of training educated unemployed persons to take up self-employment ventures or skilled wage employment. Entrepreneurs are given guidance related to industry/service/business activities & skill upgradation. Entrepreneurs are also guided in respect of choice of activity, necessities of land, project report, obtaining various no objection certificates, licences and marketing strategy.

5. District Award Schemes

In order to encourage entrepreneurs establishing small scale ventures and also to acknowledge them for their success and achievements, the State Government has started honouring such entrepreneurs with District Award Scheme at the district level. Proprietors / Partner’s / Directors of enterprises who have obtained EM registration with the concerned District Industries Centre at least three years earlier and in production for two



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continuous years are eligible for the award. Administration

All the MSMEs are offered various services and support under the single roof of the District Industries Centre. The General Manager is the head of the District Industries Centre functioning in 31 districts and Chennai district is headed by Regional Joint Director. The post of General Manager is of Joint / Deputy Director Level. The General Manager is assisted by the Project Manager, Manager (Credit), Manager (Economic Investigation)/ Manager (Village Administration) and an office Superintendent. MonitoringofDICs The functioning of DICs and their performance is monitored by the Principal Secretary/ Industries Commissioner & Director of Industries & Commerce. The review of the General Managers is organized periodically to evaluate the performance and also help in resolving difficulties in implementation of various schemes. Incentive schemes

The following incentives are being extended to Micro, Small and Medium Enterprises in the State through DICs

1. Subsidy schemes for micro manufacturing enterprises 2. Subsidy schemes for Small and Medium manufacturing enterprises establishing in

251 Industrially Backward Blocks 3. Susidy schemes for Agro based Small and Medium manufacturing enterprises

established in all the blocks of the State. 4. Special Capital Subsidy for Thrust Sector Enterprises 5. Generator Subsidy 6. Back-ended Interest Subsidy

Implementation of Self Employment schemes The following Schemes are being implemented in the State through DICs 1. Prime Minister's Employment Generation Programme (PMEGP) 2. Unemployed Youth Employment Generation Programme (UYEGP) 3. New Entrepreneur-Cum- Enterprise Development Scheme (NEEDS)

Enforcement of Quality Control orders

The Quality Control Order Enforcement Centre for Domestic Electrical Appliances functioning under the Commissionerate of Industries and Commerce is engaged in creating awareness among consumers in Tamil Nadu to use quality electrical products. The electrical and electronic wing of the Commissionerate implements the Household Electrical Appliances (Quality Control) Order, 1981 and the Electrical Wires, Cables, Appliances, and Protection Devices and Accessories (Quality Control) Order, 2003. Contravention of the first Order is punishable under the Essential Commodities Act, 1955. The second Order prohibits manufacture / storage for sale or distribution of specified items without the Bureau of Indian Standard marking. Contravention of this order attracts penal action under Bureau of Indian Standards Act.

The General Manager, District Industries Centre of the concerned district and the Deputy Director (E&E), Quality Control Order Enforcement Centre, Chennai has been designated as the "Appropriate Authority" for the implementation of the provisions of these Orders.

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are issued from the offices of Deputy Director (E&E), Quality Control Order Enforcement Centre, Chennai and various other regional offices. Steel & Steel Products (Quality Control) Order 2012

The Ministry of Steel, Government of India have notified Steel and Steel Products (Quality Control) Order, 2012 and Steel and Steel Products (Quality Control) Second Order, 2012 to ensure that quality steel products reach the consumers. These orders cover 16 Steel products under Mandatory Bureau of Indian Standards Certification.

As per these orders "No person shall by himself or through any person on his behalf

manufacture or Store for sale, Sell or Distribute any Steel and Steel Products specified in the schedule which do not conform to the specified standards and do not bear standard mark of the Bureau of Indian Standards. In the said order, the General Managers, District Industries Centres have been designated as the "Appropriate Authority" for implementation of the provisions of these orders.

In order to create awareness among the Manufacturers and Consumers about the

notification issued by the Government of India for implementation of Steel and Steel Products Quality Control Order, the General Managers of District Industries Centres are taking action by giving wide publicity through Newspapers and also through Association Magazines. Rehabilitation of Sick MSMEs

In order to provide a simpler and faster mechanism to address the stress in the accounts of MSMEs and to facilitate the promotion and development of MSMEs, the Ministry of Micro, Small and Medium Enterprises, Government of India, vide their Gazette Notification dated May 29, 2015 had notified a ‘Framework for Revival and Rehabilitation of Micro, Small and Medium Enterprises’. RBI in consultation with the Ministry of MSME made certain changes so as to make it compatible with the existing regulatory guidelines on ‘Income Recognition, Asset Classification and provisioning pertaining to Advances’ issued to banks by RBI. Accordingly, a revised Framework along with operating instructions has been put in place by the banks and is in operation .

The action pursued by Banks as per the framework for revival/rehabilitation of MSMEs

are reviewed in the Empowered Committee for MSMEs on a quarterly basis, being conducted by RBI, Chennai.

The State Level Rehabilitation Committee (SLRC) under the Chairmanship of the

Secretary to Government, Micro, Small and Medium Enterprises Department look into the problems and the extent of sickness of MSMEs so as to suggest measures for their rehabilitation. The Committee meets on quarterly basis to review and monitor the implementation of the Rehabilitation of sick MSMEs in the State.. Micro Small Enterprises Facilitation Council

The Government of Tamil Nadu have constituted four Regional Micro and Small Enterprises Facilitation Councils at Chennai, Tiruchirappalli, Madurai and Coimbatore to facilitate speedy settlement of the payments of dues with respect to the goods supplied to major industrial undertakings by the micro and small enterprises in accordance with the Micro, Small and Medium Enterprises Development Act 2006.



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Local Commercial Banks A commercial bank is a type of financial institution that accepts deposits, offers checking

account services, makes various loans, and offers basic financial products like certificates of deposit (CDs) and savings accounts to individuals and small businesses. A commercial bank is where most people do their banking, as opposed to an investment bank.

Commercial banks make money by providing loans and earning interest income from those loans. The types of loans a commercial bank can issue vary and may include mortgages, auto loans, business loans, and personal loans. A commercial bank may specialize in just one or a few types of loans.

Customer deposits, such as checking accounts, savings accounts, money market accounts, and CDs, provide banks with the capital to make loans. Customers who deposit money into these accounts effectively lend money to the bank and are paid interest. However, the interest rate paid by the bank on money they borrow is less than the rate charged on money they lend. Deposits

The largest source by far of funds for banks is deposits; money that account holders entrust to the bank for safekeeping and use in future transactions, as well as modest amounts of interest. Generally referred to as "core deposits," these are typically the checking and savings accounts that so many people currently have. In most cases, these deposits have very short terms. While people will typically maintain accounts for years at a time with a particular bank, the customer reserves the right to withdraw the full amount at any time. Wholesale Deposits

If a bank cannot attract a sufficient level of core deposits, that bank can turn to wholesale sources of funds. In many respects these wholesale funds are much like interbank CDs. There is nothing necessarily wrong with wholesale funds, but investors should consider what it says about a bank when it relies on this funding source. Loans

For most banks, loans are the primary use of their funds and the principal way in which they earn income. Loans are typically made for fixed terms, at fixed rates and are typically secured with real property; often the property that the loan is going to be used to purchase. While banks will make loans with variable or adjustable interest rates and borrowers can often repay loans early, with little or no penalty, banks generally shy away from these kinds of loans, as it can be difficult to match them with appropriate funding sources. Consumer Lending

Consumer lending makes up the bulk of North American bank lending, and of this, residential mortgages make up by far the largest share. Mortgages are used to buy residences and the homes themselves are often the security that collateralizes the loan. Mortgages are typically written for 30 year repayment periods and interest rates may be fixed, adjustable, or variable. Although a variety of more exotic mortgage products were offered during the U.S. housing bubble of the 2000s, many of the riskier products, including "pick-a-payment" mortgages and negative amortization loans, are much less common now.

The Challenge of Micro-finance for Commercial Banks

Many commercial banks in developing countries are beginning to examine the micro-finance market. During the last five years, their exploration of this new market has been

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facilitated by donor-funded loan guarantees, central-bank rediscount lines, and specialised technical assistance. Although the initial resources for loans frequently came from donor-funded credit programs, commercial banks in time began to draw on their own deposit sources for a growing share of their total funds for micro-loans.

At the same time micro-enterprise lending NGOs with heavy case loads have begun to transform themselves into regulated banks or specialised financial institutions offering micro-deposit facilities as well as micro-loans.

The U.S. Agency for International Development (USAID) has been concerned with the question of how to expand services to micro-enterprises on a sustainable basis, and in November of 1996 it sponsored a conference with 17 regulated financial intermediaries from 16 countries. The event was a first attempt to convene bankers involved in micro-finance to share their experiences, learn best practices from one another, and discuss obstacles to further expansion.

Non - governmental Financial Companies in the Entrepreneur development growth process.

Financial Bootstrapping

Financial Bootstrapping is a term used to cover different methods for avoiding using the financial resources of external investors. It involves risks for the founders but allows for more freedom to develop the venture. Different types of financial bootstrapping include Owner financing, Sweat equity, Minimization of accounts payable, joint utilization, minimization of inventory, delaying payment, subsidy finance and personal debt.

External Financing

Businesses often need more capital than owners are able to provide. Hence, they source financing from external investors: angel investment, venture capital, as well as with less prevalent crowdfunding, hedge funds, and alternative asset management. While owning equity in a private company may be generally grouped under the term private equity, this term is often used to describe growth, buyout or turnaround investments in traditional sectors and industries.

Business Angels

A business angel is a private investor that invests part of his or her own wealth and time in early-stage innovative companies. It is estimated that angel investment amounts to three times venture capital. Its beginnings can be traced to Frederick Terman, widely credited to be the "Father of Silicon Valley" (together with William Shockley), who invested $500 to help starting up the venture of Bill Hewlett and Fred Packard.

Venture Capital

Venture capital is a way of corporate financing by which a financial investor takes participation in the capital of a new or young private company in exchange for cash and strategic advice. Venture capital investors look for fast-growing companies with low leverage capacity and high-performing management teams. Their main objective is to make a profit by selling the stake in the company in the medium term. They expect profitability higher than the market to compensate for the increased risk of investing in young ventures. In addition to this, there are also corporate venture capitalists (Corporate venture capital) that strongly focus on strategic benefits.[1]

Buyouts

Buyouts are forms of corporate finance used to change the ownership or the type of ownership of a company through a variety of means. Once the company is private and freed

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from some of the regulatory and other burdens of being a public company, the central goal of buyout is to discover means to build this value. This may include refocusing the mission of the company, selling off non-core assets, freshening product lines, streamlining processes and replacing existing management. Companies with steady, large cash flows, established brands and moderated growth are typical targets of buyouts.

There are several variations of buyouts:

1. Leveraged buyout (LBO): a combination of debt and equity financing. The intention is to unlock hidden value through the addition of substantial amounts of debt to the balance sheet of the company.

2. Management buyout (MBO), Management buy in (MBI) and Buy in management buyout (BIMBO): private equity becomes the sponsor of a management team that has identified a business opportunity with a price well above the team's wealth. The difference is in the position of the purchaser: the management is already working for the company (MBO), the management is new (MBI) or a combination (BIMBO).

3. Buy and built (B&B): the acquisition of several small companies with the objective of creating a leader (highly fragmented sectors such as supermarkets, gyms, schools, private hospitals).

4. Recaps: re-leveraging of a company that has repaid much of its LBO debt.

5. Secondary Buyout (SBO): sale of LBO-company to another private equity firm.

6. Public-to-private (P2P, PTOP): takeover of public company that has been 'punished' by the market, i.e. its price does not reflect the true value.

Non - governmental Financial Companies in the Entrepreneur development growth process. Non government institutional support: There arethree national associations representing all type ofindustries, small and large. They are

1. Federation ofIndian Chambers of Commerce and Industries(FICCI).

2. Confederation of Indian Industries(CII) and

3. Association of Chambers of Commerce andIndustries (ASSOCHAM). These associationsrepresent mainly the interests of large scaleindustries. However,

these associations havemembership of small sector as well and representmainly the policy related interests of SSI sector. Theexclusively small industry related associations are diversified geographically and sectorally and aresupposed to have been linked with 'Federation of AllIndia Small Scale Industries' (FASSI), 'Federation of Small and Medium Industries' (FOSMI) and alsoIndian Council of Small Industries (ICSI).

Howeverthese institutions are weak in character due to theirworking for cross purposes

and lack of dynamicperspective for small scale sector growth. They havevirtually no linkages with the small industry in general and their local associations in specific. Another institution that is concerned with the small and medium enterprises is 'World Assembly of Small and Medium Enterprises' (WASME). There are only a few of the local associations that are involved in providing specific individual level services to the small industry.However, all the associations are involved in lobbying with the government to provide one or the other facilities or benefits to the sector.

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The analysis of modern capitalism is an analysis of economic, occupational and social dynamics, which are inherent to capitalism and which give color and contribute to the speed of economic development. New terms and semantics diffuse into our vocabulary, such as economy, world, iConomy, or cloud working, which transport ideas of economic and social progress and prosperity.

These terms are closely linked to thought about entrepreneurship and individual

entrepreneurs in changing world. Entrepreneurial actors in particular seem to be viewed in the glamorous light of adventurers pioneering new ways to achieve individual and social sustainability. This kind of reasoning reflects real phenomena of social upward mobility as well, as it continuously oscillates into a general principle for which the Horatio Alger myth of the American dream issignificant.Especially in recent years, entrepreneurship has tended to evolve as an indefinite all-purpose word, the meaning of which is not entirely clear to many contemporaries who attempt to come to grips with it.

The term covers a diversity of social and economic actors, processes and situations. In the history of economic theory in the area of entrepreneurship, we also find changing andpartly competing interpretations of the term entrepreneurship. Among the many links and implications the discussion about entrepreneurship has, market competition, innovation and growth are certainly dominant. In some respects, entrepreneurship is regarded as the essence of dynamics in modern capitalism, so that authors are already referring to an entrepreneurial society.

Competition is one of the keywords of market capitalism in the public discussion of economic affairs, and it is regarded as a driving force of economic dynamics, which leads to wealth and prosperity. According to the idea of perfect capitalism, the institutions of market and competition go hand in hand as two sides of the same medal. Different agents compete through different mechanisms, and these mechanisms can consist—among others—of price, product or process innovations. The classic idea already provided by Adam Smith is that individual companies and the global economy both profit when individual companies try to realize competitive advantages by following their own aims.

The analysis of modern capitalism is an analysis of economic, occupational

andsocialdynamics, which are inherent to capitalism and which give color and contribute to the speed of economic development. New terms and semantics diffuse into our vocabulary, such as economy, world, iConomy, or cloud working, which transport ideas of economic and social progress and prosperity. These terms are closely linked to thought about entrepreneurship and individual entrepreneurs ina changing world. Entrepreneurial actors in particular seem to be viewed in the glamorous light of adventurers pioneering new ways to achieve individual and social sustainability. This kind of reasoning reflects real phenomena of social upward mobility as well, as it continuously oscillates into a general principle for which the Horatio Alger myth of the American dream is significant.

Especially in recent years, entrepreneurship has tended to evolve as an indefiniteall-

purpose word, the meaning of which is not entirely clear to many contemporaries who attempt to come to grips with it. The termcovers a diversity of social and economic actors, processes and situations. In the history of economic theory in the area of entrepreneurship, we also find changing and partly competing interpretations of the term entrepreneurship.

Among the many links and implications the discussion about entrepreneurship has,

market competition, innovation and growth are certainly dominant. In some respects,



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entrepreneurship is regarded as the essence of dynamics in modern capitalism, so that authors are already referring to an entrepreneurial society. Competition is one of the keywords of market capitalism in the public discussion of economic affairs, and it is regarded as a driving force of economic dynamics, which leads to wealth and prosperity. According to the idea of perfect capitalism, the institutions of market and competition go hand in hand as two sides of the same medal. Different agents compete through different mechanisms, and these mechanisms can consist—among others—of price, product or process innovations. The classic idea already provided by Adam Smith is that individual companies and the global economy both profit when individual companies try to realize competitive advantages by following their own aims. Non-intentional consequences of egotistical strategies to maximizeprofit lead economy and society towards a “win-win situation”, increasing the levelof productivity and enhancing the level of wealth, at the micro level of individualcompanies and at the macro level of the global economy.

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