Question

Why does small scale industry need Government support? ​

Answer 1

Small businesses contribute tremendously to the economy and are often termed as engines of job creation. They account for a huge chunk of the workforce in India. It becomes imperative for the government to support and provide the necessary resources to help them grow and sustain themselves. With this perspective, the government of India provides various opportunities through its ministries, bodies and programmes. Few of these are listed below.

Public Sector Banks: Banks are the most accessible source for financial support for SMEs. They offer a range of services and schemes including loans and credit facilities for various business needs. Some of these cover: Working capital finance available to all segments of industries and services; Corporate term loans for new ventures and also for expansion or renovation of existing businesses; Term finance and Deferred payment guarantee for capital expenditure or acquisition of fixed assets.

National Bank for Agriculture and Rural Development (NABARD): NABARD works towards integrated rural development. It helps promote rural businesses and small industries, agriculture and cottage industries. NABARD offers various training and development and consultancy services as well as credit facilities to support these businesses.

National Small Industries Corporation Limited (NSIC): Established with the objective to boost small scale industries in India, NSIC helps import machines on easy hire purchase terms; procure and distribute imported raw materials; export products from small scale industries, etc. NSIC has also started a new scheme to help small businesses understand credit ratings and the importance of maintaining a good financial track record

Small Industries Development Bank of India (SIDBI): As the name suggests, SIDBI was primarily set up to provide financial assistance to small scale industries in India. It is one of the leading government bodies that provides various financial schemes across a range of industries and services. Some of the schemes are Direct Assistance Scheme, Indirect Assistance Scheme, Promotional and Development Activities, National Equity Fund Scheme, Technology Development and Modernisation Fund Scheme, Single Window Scheme, Mahila Udyam Nidhi (MUN) Scheme and Equipment Finance Scheme.

National Commission for Enterprises in the Unorganized Sector (NCEUS): This Commission was constituted for the welfare of enterprises in the unorganised and informal sector. Their primary role is to generate business and employment opportunities in the unorganised sector. One of the provisions also includes providing micro-credit access to unorganised entrepreneurs.

Rural and Women Entrepreneurship Development (RWED): This programme is focused on encouraging entrepreneurship among women and the rural population. It supports various business and entrepreneurial initiatives by providing timely advice and counselling, initiating training and development programmes and helping secure credit opportunities.


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Answer 2

Small scale industries need government support due to following reasons.

1. They don't have any financial support and their livelihood totally depends on their production.

2. They also face some stiff competition from large scale industries and foreign imports.