BUSINESS STUDIES MASTER

Government Support for Small Scale Industries

Case Study 1: Role of NSIC

Amit, a skilled artisan from Ranchi, wanted to launch a small-scale manufacturing unit to produce high-quality, eco-friendly paper packaging. While he possessed the technical expertise, he was severely constrained by a lack of capital to purchase the specialized automatic machinery required for mass production. Furthermore, sourcing raw materials like recycled pulp in bulk was difficult because large suppliers offered better rates only to established firms. Following the advice of a local consultant, Amit approached a central government organization established in 1955. This agency provided him with the necessary machinery on an easy hire-purchase basis, which allowed him to pay in manageable installments. It also helped him procure raw materials at subsidized rates and offered assistance in marketing his finished products. Amit’s unit is now thriving, proving that this agency is vital for helping small businesses overcome infrastructure and raw material barriers, thereby allowing them to compete effectively with larger industrial players in the modern market.

Questions:

(a) Identify the government agency that assisted Amit in his venture.
(b) State any two functions of this agency as highlighted in the case.
(c) In your opinion, how does the "Hire-Purchase" scheme help a new entrepreneur?

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Answer:

(a) National Small Industries Corporation (NSIC): It was set up by the government to promote, aid, and foster the growth of small business units in India.

(b) Functions mentioned:
1. Machinery Supply: It provides machinery on easy hire-purchase terms to small units.
2. Raw Material Assistance: It helps in the procurement and distribution of raw materials at competitive rates.

(c) Benefit of Hire-Purchase: This scheme is excellent for new entrepreneurs because it reduces the initial heavy capital requirement. Instead of paying the full price upfront, the owner can use the machine to generate income and pay for it through installments.

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Case Study 2: Role of DIC

Priya lives in a remote, backward district of Jharkhand, characterized by high unemployment and a lack of large industries. She decided to use the abundant local bamboo resources to start a small-scale handicraft and furniture unit. However, Priya was overwhelmed by the complex administrative hurdles involved in getting business registration, permanent power connections, and bank credit. She visited a specialized center located at the district level, established under the 1977 Industrial Policy. This organization acted as a "Single Window" service for her. The center’s officials helped her identify a viable project, provided the necessary provisional registration, and assisted her in securing a low-interest loan under a government subsidy scheme. They also provided technical guidance on modern bamboo treatment techniques. Priya realized that this district-level body is the most essential link for rural entrepreneurs, as it brings all necessary support services under one roof, specifically targeting the industrialization of backward and rural areas to ensure balanced regional growth.

Questions:

(a) Identify the district-level organization that provided comprehensive support to Priya.
(b) Explain the "Single Window" concept as discussed in the scenario.
(c) List any two other services provided by this organization to rural small-scale industries.

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Answer:

(a) District Industrial Centre (DIC): These centers were established to provide all services and facilities to entrepreneurs at the district level for setting up small and village industries.

(b) Single Window Concept: It refers to a system where all information, registrations, and support facilities are available at a single point or office, saving the entrepreneur from visiting multiple government departments.

(c) Other Services:
1. Project Identification: Assisting entrepreneurs in choosing viable business projects based on local resources.
2. Credit Linkage: Coordinating with banks to provide loans and acting as a liaison for government subsidies.

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Prepared by Rathin Kumar Bardhan | CBSE Class 11 Series