Unit 3 Concepts of MSME

• The Micro, Small, and Medium Enterprises (MSME) is one

of the most vibrant sectors of the Indian economy. MSME
are a breeding ground of entrepreneurship at the grassroots level.
• MSME provide ancillary support to large enterprises, promote
balanced industrial growth, protect Indian handicraft and cultural
products, provide local flexibilities, and promote regional and
backward area development.
• The Government of India supplements the development of the
MSME sector through the Ministry of MSME.
• The Government of India has laid special emphasis on the growth and progress of
this sector through the enactment of the MSMED Act 2006.
• Some examples are artisans, village handicrafts, handlooms, small
machine shops, entertainment, drugs and pharmaceutical, retail outlets,
and hightech software firms
• According to the Economic Survey 2009–10, MSME contribute about 29.15
percent to the GDP of India, 45 percent to the manufactured output, and about 40
percent to exports. There are more than 8,000 products—ranging from traditional
to high-tech—being manufactured by MSME in India. In 2008, MSME employed
600 lakh people, created 13 lakh jobs, and provided maximum opportunities, after
the agricultural sector, for both self-employment and otherwise in India.4 As a
 Definition of MSME
• According to the new definition, a microenterprise is a
unit where the annual turnover does not exceed
INR. 5 crore, a small enterprise is one where annual
turnover is between INR. 5 crore and INR. 75 crore,
and a medium enterprise is where the turnover is
more than INR. 75 crore but does not exceed INR.
250 crore.
 Micro, Small and Medium Enterprises Development (MSMED)
Act, 2006

• 1. Micro, Small and Medium Enterprises Development

(MSMED) Act, 2006: The MSMED Act is a comprehensive
legislation for the promotion, development, and enhancement of
the competitiveness of the MSME sector.
• The salient features of the Act are the following:
1. The act in response to the changing economic scenario, provides
separate definitions for micro, small and medium enterprises,
based on their annual revenue, replacing the definition that
relied on self-declared investment on plant and machinery.
 Micro, Small and Medium Enterprises Development (MSMED)
Act, 2006:

2. The Act has simplified the process of registration as well as the closure of business in
all the three categories of enterprises. The Act introduced schemes to facilitate such things as
timely payments to MSME and credit and specific funds for the promotion, and development.

3. The Act has been responsible for bringing about some much-needed initiatives, such as
the establishment of a statutory board for MSME called the National Board for Micro,
Small, and Medium Enterprises, which replaced the non-statutory Small Scale Industries
Board. The Act also has been responsible for the establishment of an advisory committee to assist

4. Introduction of public procurement policy by giving preference in government procurements to

products and services of MSMEs and enhancement of competitiveness of MSME.
 GOVERNMENT POLICY INITIATIVES FOR MSMEs

• 1. Ease of Registration Process: To enable speed and ease of

registration of MSMEs, a simple one page registration form for on-line
filing of “Udyog Aadhaar Memorandum” (UAM) is introduced. UAM is a
one-page registration form which constitutes a self-declaration format
under which the MSME will self-certify its existence, bank account
details, promoter/owner’s Aadhaar details and other minimum
information required. There shall be no fee for filing the Udyog Aadhaar
Memorandum. On submission of the form, Udyog Aadhaar
Acknowledgement shall be generated and mailed to the email address
provided in the Udyog Aadhaar Memorandum which shall contain
unique Udyog Aadhaar Number(UAN).
 GOVERNMENT POLICY INITIATIVES FOR MSMEs

• 2.RBI guidelines: Meanwhile, in another positive development, the RBI gave MSMEs an extension of
up to 180 days to clear their loans to banks.
• 3. Public Procurement Policy: The objective of Policy is promotion and development of Micro and
Small Enterprises by supporting them in marketing of products produced and services rendered by
them.
• 4. Make-in-India Policy: The Make-in-India Strategy adopted by the Indian Prime Minister Shri
Narendra Modi aims to facilitate investment, foster innovation, enhance skill development and
build a sustainable eco-system for the manufacturing infrastructure in the country. These
measures have succeeded in raising the business confidence in India. The stage has been set through
these industry and MSME interventions for a larger share of global business in India which presents
opportunities for MSME integration in almost all industry sectors. The Indian MSME sector is poised
for rapid growth and integration with major global value chains. The Make-in-India has twenty five
major focus area and four major policies under make in India initiative are: It is a new
initiative; Allows Foreign Direct Investment; Protection of Intellectual Property rights and formation of
National manufacturing policy.
CURRENT GOVT SCHEMES FOR MSME- VIMP

• The objectives of the Ministry of Micro, Small, and Medium Enterprises include 7
supporting and developing existing MSME and creating new enterprises and providing
support to Khadi, village, and coir industries. These objectives can be met by creating
an ecosystem that supports entrepreneurship and skill development in MSME.
1. Prime Minister’s Employment Generation Programme (PMEGP): It is a credit
linked subsidy programme administered by the Ministry of Micro, Small and Medium
Enterprises, Government of India. Khadi & Village Industries Commission (KVIC),
is the nodal agency at national level for implementation of the scheme. At state
level the scheme is implemented through KVIC, KVIB and District Industries center. The
scheme is applicable to all viable (technically as well as economically) projects in rural
as well as urban areas, under Micro enterprises sector. The objective of the scheme is
to generate employment opportunities in rural as well as urban areas through
setting up of self-employment ventures. The scheme provide continuous and
sustainable employment to a large segment of traditional and prospective artisans and
unemployed youth, so as to help arrest migration of rural youth to urban areas.
 CURRENT GOVT SCHEMES FOR MSME- VIMP

2. Start-up India Scheme: Start-up India scheme that aims to enable an

eco-system to promote and nurse entrepreneurship across the country.
A startup is an entity, private, partnership or limited liability partnership (LLP)
firm that is headquartered in India, which was opened less than five years ago
and have an annual turnover less than INR. 25 crore.
To be eligible for considering as startup, the entity should not be formed by
splitting up or reconstruction and its turnover should not have crossed INR.
25 crore during its existence.
The benefits of this scheme includes self-certification and a three-year
exemption from inspections, an online portal and mobile app, an 80%
in the patent application fee and a single-point hub for hand-holding.
3. Pradhan Mantri MUDRA Yojana (PMMY): It is a scheme launched by
the Hon’ble Prime Minister on April 8, 2015 for providing loans upto 10
lakh to the non-corporate, non-farm small/micro enterprises. These
loans are classified as MUDRA loans under PMMY. These loans are
given by Commercial Banks, RRBs, Small Finance Banks, Cooperative
Banks, MFIs and NBFCs. The borrower can approach lending institutions
or can apply online through this portal. Under the aegis of PMMY, MUDRA
has created three products namely ‘Shishu’, ‘Kishore’ and ‘Tarun’ to
signify the stage of growth/ development and funding needs of the
beneficiary micro unit/ entrepreneur and also provide a reference point
for the next phase of graduation/ growth.
4. Credit Linked Capital Subsidy Scheme for Technology
Upgradation:
The scheme aims at facilitating technology up-gradation by
providing 15% up front capital subsidy to MSEs, including
tiny, khadi, village and coir industrial units, on institutional
finance availed by them for induction of well-established
and improved technologies in specified sub-sectors/products
approved under the scheme. Micro and Small Enterprises (MSEs)
having a valid UAM number are eligible to apply for this scheme.
5. National Manufacturing Competitiveness Program:
The objective of this program is to support the Small and
Medium Enterprises (SMEs) in their endeavor to become
competitive and adjust the competitive pressure caused by
liberalization and moderation of tariff rates.
• 6. Credit Guarantee Fund Scheme: This scheme for Micro
and Small Enterprises (CGS) was launched by the Government of
India (GoI) to make available collateral-free credit to the micro
and small enterprise sector. Both the existing and the new
enterprises are eligible to be covered under the scheme.
• The Ministry of Micro, Small and Medium Enterprises, GoI and Small
Industries Development Bank of India (SIDBI), established a Trust
named Credit Guarantee Fund Trust for Micro and Small
Enterprises (CGTMSE) to implement the Credit Guarantee
Fund Scheme for Micro and Small Enterprises.
7.Zero Defect and Zero Effect (ZED) Certification
Scheme: The scheme is an extensive drive to create proper
awareness in MSMEs about ZED manufacturing and
motivate them for assessment of their enterprise for ZED
and support them. After ZED assessment, MSMEs can
reduce wastages substantially, increase productivity,
expand their markets, become vendors to Public Sector
Undertakings, have more Intellectual Property Rights and
develop new products and processes.
8. Marketing Assistance Scheme: The Ministry of MSME,
through the National Small Industries Corporation (NSIC),
provides marketing support to MSME under the marketing
assistance scheme. MSME can get subsidies to organize
and participate in domestic and foreign trade
exhibitions and also buyer–seller meets. This would help
MSME to develop contacts and venture into international
markets.
9. Credit Rating Scheme: The credit rating scheme for
this sector has been formulated in consultation with the
Indian Banks’ Association and rating agencies. The NSIC
has been appointed as the nodal agency for the
implementation of this scheme through various empanelled
agencies. Eligible enterprises get a subsidy of up to 75
per cent for getting themselves rated by a credit
rating agency under the Performance and Credit
Rating Scheme of NSIC.
 ROLE OF CLUSTERS IN PROMOTING MSME

• The United Nations Industrial Development Organization

(UNIDO) is the main promoter of cluster-based economic
development.
• A cluster may be defined as a local agglomeration of
enterprises which produce and sell a range of related and
complementary products and services.
• Clusters are sectoral and geographical concentrations of
enterprises, in particular, micro, small, and medium enterprises
(MSME), faced with common opportunities and threats.
 Role of Clusters in developing MSMEs

Clusters provide the economies of scale for firms for becoming

competitive, which MSME cannot achieve individually.
Clusters provide conducive eco-systems for the development of
MSME by providing institutional support for promoting research
and development, skill development, pooled resources, and
logistics support.
Clusters promote higher productivity, innovation, and
competitiveness for MSME and build a strong community feeling
in the region.
 Cluster development process

cluster initiation phase,

the cluster analysis phase,
the cluster planning phase,
the cluster execution phase, and
the cluster sustainability phase.
 Cluster development process

1. The cluster initiation phase deals with the setting up of a joint task force
by various organizations to conduct a preliminary analysis and identify a
location and the appropriate industry sector for the cluster.
2. The cluster analysis phase deals with conducting detailed analysis and
justification for setting up an appropriate industrial cluster.
3. The cluster planning phase deals with identifying stakeholders and the
forming of groups of related businesses.
4. The cluster execution phase deals with the actual setting up of business
within the cluster.
5. The cluster sustainability phase should ensure continuous nurturing by
the management and deploy growth strategies to ensure the vibrancy of
the cluster.
 Examples
The diamond processing cluster in Surat (Gujarat),
The auto components cluster in Faridabad (Haryana),
The food processing cluster in Kullu (Himachal Pradesh),
The electronics cluster in Bangalore (Karnataka),
The silk cluster in Mysore (Karnataka),
The sea food processing cluster in Kochi (Kerala),
 PROBLEMS FACING THE MSME
SECTOR
• Lack of availability of adequate and timely credit: Despite their dominant
number, high growth potential, and importance in job creation, MSME face
difficulty in obtaining adequate and timely equity capital on
competitive terms. This is the most critical problem faced by this sector.
• The major reason for this problem is the high risk perception among
the banks with regard to this sector and the high transaction costs
for loan appraisal. The level of non-performing assets is also very
high in this segment. Hence, banks are reluctant to provide credit to
MSME. As MSME find it difficult to furnish collaterals, they have to pay
higher interest rates. These companies face obstacles in raising funds for
their expansion and meeting their working capital needs.
 PROBLEMS FACING THE MSME
SECTOR
• Inadequate infrastructural facilities: MSME, along with the
industry in general, suffer from an underdeveloped supply
chain and the lack of logistical infrastructure in the country.
MSME may be located in industrial estates, urban areas, or in an
unorganized way in rural areas. The infrastructural facilities,
including power, water, and roads, in such areas are often poor
and unreliable, which can lead to problems like difficulties in
reaching the target markets in an efficient and profitable manner.
Poor physical infrastructure hurts the productivity and
competitiveness of Indian MSME vis-à-vis imports.
 PROBLEMS FACING THE MSME
SECTOR
• Technological backwardness and lack of product
innovation: In order to survive and to be competitive in the
present global environment, it is critical to use the latest
technology and invest in research and development (R&D)
for product innovation. The knowledge gap of MSME will
increase with the digital divide and rapid changes in technology.
Due to their small scale of operation, MSME have limited
access to R&D and cannot invest much in acquiring
modern technologies. This is a major hindrance in scaling
up their operations.
 PROBLEMS FACING THE MSME
SECTOR
• Lack of access to market: MSME often do not have adequate
resources to link to diverse markets beyond their immediate
vicinity. The limited access to larger markets in terms of market
linkages, transport, and information exchange seriously
undermines the demand for their products. This is a limitation and
a constraint to profitability and growth. Marketing efforts are
required to increase demand for the products/services of MSME.
Finding a differentiator for the product or service on offer, finding
customers, and creating a brand are some challenges that MSME face.
In the absence of large marketing budgets, most MSME cannot opt for
television and media advertisements.
 PROBLEMS FACING THE MSME
SECTOR
• Difficulty in finding and retaining human resources:
Although India has the advantage of a large pool of
human resources, MSME continue to face a deficit in
manpower with the right skill set for specific areas like
manufacturing, service, and marketing. The human
resource problem is further exacerbated by the low
retention rate as MSME are generally unable to match
large enterprises in terms of work environment and
remuneration.
 PROBLEMS FACING THE MSME SECTOR

• Impact of WTO compliance and regulatory systems: MSME are

adversely impacted by complicated mechanisms of adapting to
technical standards, approvals, and permits which imply
additional costs. MSME are vulnerable to the impact of WTO
regulations as they are now in direct competition with companies in
Southeast Asian countries and China, which can manufacture goods
at a lower cost. MSME will face greater competition from imports.
Large companies in India have the option of procuring from overseas
suppliers and this may put Indian MSME in a disadvantageous
position. Tighter patent laws also put MSME at a disadvantage.
 Rural
Entrepreneurship
• Any industry located in rural area, village or town,
with a population of 20,000 or below and an
investment of rupees 3 crore in plant and machinery
is classified as a village or rural industry.
All the village industries have been grouped into seven categories
which are as follows:
• Mineral-based industry,
• Forest-based industry,
• Agro-based industry,
• Polymer and chemical-based industry,
• Engineering and non-conventional industry,
• Textile industry, and Service industry
 Need for Rural
Entrepreneurship
 Creation of jobs,
 Income generation and prosperity - Rural entrepreneurship would mean income generation
and prosperity in rural areas. This would help alleviation of poverty, improve standard of living
in villages and reduce disparities in income between rural and urban

 Curb on migrations - The higher standards of living and prosperity would curb migrations to
urban areas as rural youth with comfortable living will no longer aspire to shift to cities in
search of employment. This in turn would check growth of slums, crimes, tension and pollution
in big cities.

 Optimum use of local resources - compared to cities, a vast number of industries are more
suitable to be established in rural areas. These include animal husbandary, bee-keeping, seri
culture, sugar industries, fisheries, solar and wind energy, small tool manufacturing, spice
processing, packaging and marketing, hand embroidery and handmade paper production.Local
resources and skills can be optimally utilised in these industries .
 Balanced regional development - Promotion of rural
entrepreneurship causing dispersal of economic activities would
bring about a balanced regional development of the country,

 Eco-friendly nature - As most of the rural industries are labour

intensive and rely more on greener technologies, they lead to
development without environmental harms.
 Pre-condition for national development.
 Rural Industrialisation in Retrospect

• First Five-Year Plan (1951– 1956) focused on creation of

employment opportunities to raise standard of living of rural
population.
• Second Five-Year Plan (1956– 1961) formulated 26 Pilot
Industrial Projects for development of rural industries
• Third Five-Year Plan (1961– 1966) stressed increased production
and employment creation by village and small industries
• Fourth Five-Year Plan (1969– 1974) adoption of ‘backward area
development programmes for dispersal of industries in such areas.
 Rural Industrialisation in Retrospect

• Fifth Five-Year Plan (1974– 1979) setting up of DICs to provide required

services under one roof
• Sixth Five-Year Plan (1980– 1985) redefined SSIs to include
manufacturing and repairing units with an investment of ` 20 lakhs or less
• Seventh and Eighth Five-Year Plans (1985– 1990) and (1992– 1997)
accorded special importance to the role of marketing, credit and
technology in promoting rural industrialization
• Ninth Five-Year Plan (1997– 2002) provided for special incentives
including credit facilities through financial institutions. Investment limit
for SSIs revised to ` 3 crores;
• Tenth, Eleventh and Twelfth Five-Year Plans (2002– 2007),
(2007– 2012) and (2012– 2017) promotion of cooperatives
and SHGs, generation of employment and development of
industries with greater job potential such as micro and
small industries.
 Problems in Rural Entrepreneurship

Financial Problems
• Shortage of funds: The rural entrepreneurs fail to arrange
external funds due to absence of sufficient collateral to
offer. Long and cumbersome loan-related procedures also
discourage them to apply for loans.
• Demand constraint: As rural entrepreneurs tend to sell a large
proportion of their output in local areas with low purchasing
power, they are unable to generate enough demand. This results
in insufficient sales and smaller amount of cash in hand.
 Financial Problems

• High interest rates: Regional banks and local money lenders are
few sources of funds available to rural entrepreneurs, but the rate
of interest charged by them is usually very high.
• Problem of dealing with government agencies: The
assistance granted in the form of concessional loans is
much lesser as compared to the need. Thus there is a general
practice to ration this out. In the process of rationing, there is
ample scope discrimination and misuse of government rules and
regulations. Moreover, there are delays due to red-tapism.
Problems in Rural Entrepreneurship - Marketing Problems

1. Competition with big players: Rural entrepreneurs have to compete

with larger urban counterparts. These competitors are better positioned
which puts them in huge competitive disadvantage resulting in—
• Higher publicity costs due to lower access and demand.
• No or little access to online publicity.
• Problems in brand creation and identification.
2. Exploitation by middlemen: In the absence of sufficient storage and
transport facilities, the rural entrepreneurs have to depend heavily on
middlemen for marketing their products. These middlemen dictate
unreasonable terms and charge heavily for services.
• Other marketing problems: These include little scope
for print media due to low literacy levels and language
constraints because of inability to understand english. The
handicap arising out of knowledge of english also rules
out the possibility of exports.
 Problems in Rural Entrepreneurship- Management Problems

• Lack of technical knowledge: Training facilities being

inadequate in rural areas, the entrepreneurs always lag
behind in technical knowledge and skills. Therefore, they
have to rely on internal linkages based on personal
contacts for all business-related activities such as
production, marketing and finance. This drastically
reduces the scope for establishing sufficient business
linkages.
Problems in Rural Entrepreneurship-
Management Problems
• Poor quality products: Lack of technical know-how also effects quality of
products. Machines, tools and equipments are inferior and production process is
backward. Low quality of production is also reflected in packaging, warranty and after
sales service.

• Problems related to procurement of raw materials: Poor quality of raw materials

and supplies, non-availability or shortages of inputs and high storage and processing
costs pose serious marketing constraints.
• Problem of power: Shortage of power supply is widespread in rural areas. However,
large scale industries can manage this problem with their private power back up
arrangements, but the productivity of small enterprises suffers. As the power supply is
only for few hours, their production capacity remains underutilised.
 Measures to Enhance the Scope of Rural
Entrepreneurship

The following measures can enhance the scope of

entrepreneurship across Indian villages:
• Imparting entrepreneurial education and training through
improving school and university curriculum. This will help in
stimulating achievement motivation and develop
entrepreneurial attitude among students.
• There is a clear need for intensive entrepreneurship training.
EOPs, SGSY and TRYSEM are important tools for nurturing
entrepreneurial talent among rural youth.
 Measures to Enhance the Scope of Rural
Entrepreneurship

• Past experience shows that rural enterprises with ample employment potential could
not be sustained due to non-availability of raw materials and supplies. Therefore,
there is an urgent need for strengthening the raw material base in rural
areas.
• Government sector purchases, from rural industries, wherever possible should be
made compulsory. Further, common production-cum-marketing centres with
adequate infrastructural facilities should be set up. Such initiative would help rural
entrepreneurs promote the domestic and international marketing of their products.
• The network of government and NGOs engaged in promoting rural
entrepreneurship should be widened. Government agencies involved in this
activity must co-opt and collaborate more with them to reach the lower rungs of the
society.
 Khadi and Village Industries Commission (KVIC)

The Commission was established in 1957 by an Act of Parliament.

KVIC functions under the administrative control of the Ministry of

Micro, Small, and Medium Enterprises, Government of India.
The primary objective of KVIC is to provide employment to rural
artisans through production of saleable products and to create
selfreliance in order to build a strong rural community
The main objectives of KVIC are:
To generate employment for rural unemployed
through its different schemes such as Gramodyog
Rojgar Yojana.
To develop entrepreneurial ability among the rural
unemployed youth.
To promote rural industrialisation.
 Functions of KVIC
1. KVIC has been promoting the use of ecofriendly organic cotton and natural dyes.
2. It deals with traditional rural industries such as pottery, leather, hand-made paper, non-
edible oil, soap, and the processing of cereals and soaps.
3. Due to the rigorous efforts of KVIC, khadi, which was seen as a cloth worn by the common
man, has become glamorous.
4. The KVIC is entrusted with the task of planning, organizing, implementing, and promoting
various programmes for the development of khadi and other village industries in rural areas.
5. The Commission provides financial assistance to institutions and individuals for the
development of these industries and for guiding them through the supply of designs,
prototypes, and other technical information.
6. It also creates common service facilities for the processing of raw materials and facilitates
the marketing of the products through cooperative efforts.
 Functions of KVIC
• The Khadi Karigar Janashree Bima Yojana (JBY), a group insurance
scheme, aims at enhancing the productivity and competitiveness of the
khadi industry and artisans.
• The Workshed Scheme for Khadi Artisans is an attempt to facilitate the
development of khadi artisans by providing them financial assistance on
a pilot basis for the construction of worksheds.
• KVIC has promoted cluster development to meet market demands and the
taste of all classes of consumers within and outside the country.
• During the Eleventh Five-Year Plan, ending 31 March 2012, KVIC has
granted funds to selected clusters for the regeneration of village industries.
 Various Initiatives by KVIC

• KVIC has embarked on various initiatives to promote khadi and village

industries in rural India. Some of these are the
 Prime Minister’s Employment Generation Programme (PMEGP);
 Rural Employment Generation Programme (REGP)
 Scheme of Fund for Regeneration of Traditional Industries
(SFURTI)
 Rural Industry Service Centres (RISC)
 the export incentive scheme; and
 the interest subsidy scheme.
 About Khadi & Village Industries

• Mahatma Gandhi started khadi and village industries to

rejuvenate the rural economy as part of the freedom struggle.
• Khadi products are hand-spun and hand-woven. The spinning
and weaving process creates opportunities for employment for
a large number of spinners and weavers in rural India.
• More than 80 per cent among them are women.
 :
ENTREPRENEURSHIP
DEVELOPMENT PROGRAMMES
 Entrepreneurial Development
Programme (EDP)
• An Entrepreneurial Development Programme (EDP) is a
programme to develop entrepreneurial abilities among
people. It refers to incubation, development and polishing
of entrepreneurial skills of a person to enable him to start
and successfully run his enterprise.
• According to National Institute of Small Industry
Extension Training, Hyderabad, an EDP is an attempt to
develop a person as entrepreneur through structured
training.
 Evolution of EDP in India
 The finding of Kakinada experiments prepared the ground for Entrepreneurial Development
Programmes in India.
 Kakinada experiments made people appreciate the need for entrepreneurial training to
induce motivation and competence among prospective entrepreneurs.
 Based on this, the Gujarat Industrial Investment Corporation (GIIC), for the first time, in late
sixties, started a three-month training programme on entrepreneurship development.
Impressed by the results of GIIC’s training programme, the Government of India, in 1971
embarked on a massive programme on entrepreneurial Development.
 Since then, there is no looking back and by now there are 686 all India and State level
institutes engaged in conducting Entrepreneurial Development Programmes.
 Till now, 12 State Governments have established state-level Centres for Entrepreneurship
Development (CED) or Institute of Entrepreneurship Development (IED) to develop
entrepreneurship.
 Objectives of Entrepreneurship Development Programmes (EDPs)

The basic objective of Entrepreneurial Development Programmes is to provide clarity,

orientation and awareness relating to various managerial and operational aspects of a
business.
 To assist the trainees in analysing environment of entrepreneurship relating
to micro and small businesses and in selecting the right product.
 To help the incumbents understand the process involved in setting up a
small enterprise.
 To impart knowledge regarding the sources of various financial and non-
financial support available for starting a small industry.
 To train people acquire necessary managerial skills required to establish and
run a small scale business.
Objectives of Entrepreneurship Development Programmes (EDPs)

To help trainees know the advantages and limitations of

becoming an entrepreneur and also understand and appreciate
the need for observing discipline.
To prepare incumbents independently draft the business
objectives and strive for their realisation.
To make trainees learn importance of compliance with law while
setting up and running the business.
To develop in them passion for integrity, honesty and ethical
attitude.
 Entrepreneurship Development Programme Model

• Ideally, an EDP is conducted for four to six weeks and the

curriculum adopted by the above institutes is also
uniform. The EDP group normally consists 35– 40
trainees, all at the age of 18 years or above.
• The EDPs are generally conducted in ITIs, Polytechnics
and other technical institutions.
Entrepreneurship Development Programme (EDP) Curriculum

• Introduction to essentials of entrepreneurship

• Survey of the prevalent socio-economic conditions
• Identification of business opportunities
• Support system and procedure: The trainees are explained the policies
and procedures of the government, special services agencies and financial
institutions regarding procurement of financial and non-financial support.
• Project feasibility study: Inputs on feasibility study, market survey,
technical and commercial viability analysis, project appraisal, etc. are
provided to the trainees.
Entrepreneurship Development Programme (EDP) Curriculum

• Achievement motivation training (AMT): During this training

session an attempt is made to stimulate and strengthen trainees’
achievement need, imagination, self-awareness, self-confidence, self-
respect and other entrepreneurial traits.
• Enterprise management training: The incumbents are provided
sufficient understanding of functional areas of management like
production, marketing, finance and human resource.
• Study of technological aspects: Industrial trips help the
participants gain first hand knowledge and exposure regarding the
problems and prospects of a business.
 ROLE OF GOVERNMENT IN ORGANISING ENTREPRENEURSHIP
DEVELOPMENT PROGRAMMES (EDPs)

• National Institute for Entrepreneurship and Small Business

Development (NIESBUD)
• Micro, Small and Medium Enterprise-Development Institute (MSME-DI)
• National Institute for Micro, Small and Medium Enterprises (NIMSME)
• Entrepreneurship Development Institute of India (EDI)
• National Science and Technology Entrepreneurship Development Board
(NSTEDB)
• Institutes of Entrepreneurship Development (IED) and Centres for
Entrepreneurship Development (CED) in different states
 Financial Support Provided by the
Government, Development Banks and
Nationalised Public Sector Banks

• The union and state governments, various financial institutions like

IDBI, IFCI, ICICI, SIDBI and public sector commercial banks have
been continuously assisting the organisations that conduct EDPs.
• Government plays a crucial role in organising EDPs by:
 Granting funds to organise seminars and workshops to aware the
entrepreneurs of various incentives and benefits envisaged in the
Industrial Policy Resolutions.
 Sanctioning funds to organisations for conducting industrial
potential survey of different areas.
National Institute of Entrepreneurship and Small Business
Development (NIESBUD)
 National Institute of Entrepreneurship and
Small Business Development (NIESBUD)

• The National Institute for Entrepreneurship and Small Business Development is a

premier organization of the Ministry of Skill Development and Entrepreneurship,
engaged in training, consultancy, research and publication in order to promote
entrepreneurship and Skill Development.
• The head office of the Institute is situated in Noida, Uttar Pradesh.
 Major Activities of NIESBUD

• Training: The training programmes being organized by the Institute inter-alia include Trainers’
Training Programmes (TTPs); Management Development Programmes (MDPs); Orientation
Programmes for Head of Departments (HoDs) and Senior Executives; Entrepreneurship
Development Programmes (EDPs); Entrepreneurship-cum-Skill Development Programmes
(ESDPs) and specially designed training activities for different target groups.
•
Research/Evaluation Studies: Besides the primary/basic research, the Institute has been
undertaking review/evaluation of different government schemes/programmes, training need
assessment, Skill Gap studies, industrial potential survey etc.
 Major Activities of NIESBUD

• Development of Course Curriculum/Syllabi: The Institute has been

designing, developing and standardizing Course Curriculum for
Entrepreneurship and Skill Training Programmes.
•

Training-cum-Incubation Centres: The Institute is running 5 Training-

cum-Incubation Centres in the name of Livelihood Business Incubations at
its premises in the areas of Fashion Designing , Beauty & Wellness, Mobile
Repair, Food Processing, and Electrical and Home Appliances.
 Major Activities of NIESBUD

• International Activities: The Institute conducts 5 to 8 weeks’ training

programmes under the Fellowship of the Ministry of External Affairs - ITEC
Plan for the participants from different countries. Besides, the Institute also
designs and conducts special training programmes for overseas agencies and
has been assisting other countries through consultancy assignments for
promotion and development of entrepreneurship.

• Consultancy Services (National and International): The institute offers

consultancy services in the area of entrepreneurship especially for MSMEs.

• Pilot Project on Entrepreneurship Development in Holy Cities:

NIESBUD is implementing the Pilot Project on Entrepreneurship Promotion
and Mentoring of Micro and Small Businesses in Varanasi, Haridwar and
 Initiatives by NIESBUD
• SANKALP Project: The Institute with the support of Skill Acquisition and Knowledge
Awareness for Livelihood Promotion (SANKALP) Programme of the Ministry of Skill
Development and Entrepreneurship (MSDE) has undertaken project for creating,
fostering and promoting the spirit of entrepreneurship among the various target groups
through Capacity Building, Incubation Support, Mentoring and Handholding. Under this
initiative, NIESBUD will train a total of 24,600 beneficiaries and provide them
mentoring and handholding support to start their enterprises/ scale up business activities/
linking them with wage employment.
• Entrepreneurship Development among Jail Inmates : NIESBUD is implementing a
project for “Promoting Entrepreneurship Development among Jail Inmates; value added
skill up gradation, product innovation & development; and Strengthening of Livelihood
Business Incubation Centre at Jails of Uttar Pradesh” with the support of Ministry of
Skill Development and Entrepreneurship, for Creating, fostering and promoting the spirit
of entrepreneurship among the Jail Inmates through Capacity Building, Mentoring,
Handholding and Incubation Support. The programmes are being undertaken in the Nari
Bandi Niketan, Lucknow; Model Jail, Lucknow; and Varanasi Jail.
• Workshops In Artisan Melas And Haats: The institute with the support of Ministry of
Skill Development and Entrepreneurship is implementing a project for organising
capacity building workshops for providing entrepreneurial knowledge to the artisans
during Melas and Haats based on the gap analysis in order to help them in scaling up
their business activities.
• National Level Content Development: The institute is developing National Level Content on
Entrepreneurship Education with the support of Ministry of Skill Development and
Entrepreneurship in order to bring in uniformity in Entrepreneurship Development and have
measurable learning outcomes.
• Training Programmes for retired/ retiring defense personnel: The institute is
associated with the Ministry of Defense, through the Directorate General Resettlement
(DGR) for organizing Entrepreneurship Development Programme and Entrepreneurship
cum Skill Development Programme for retired/ retiring Armed Forces personnel to
enhance their qualifications/skills so as to enable them to start their enterprises and seek
suitable employment after their retirement.

PM-Udyami Talks: NIESBUD has launched a youtube channel in the name of PM-
Udyami talks to create awareness about entrepreneurship and also showcase the
entrepreneurial journey of beneficiaries under various programmes run by NIESBUD.
An overview of UNCTAD’s Entrepreneurship Policy
Framework
 UNCTAD’s Entrepreneurship Policy Framework

Many developing countries and economies in transition encounter challenges in

the design and implementation of entrepreneurship policies.
To assist policymakers in this endeavour, UNCTAD has developed the
Entrepreneurship Policy Framework.
The Framework aims to support developing-country policymakers in the
design of initiatives, measures and institutions to promote
entrepreneurship
Experts from more than 100 countries helped develop the Framework during the
series of Multi-Year Expert Meetings on Enterprise Development and Capacity-
building on Science, Technology and Innovation, held in Geneva from 2009 to
2012.
Key components of the UNCTAD
Framework
 Key components of the UNCTAD
Framework
An overview of the six priority areas of the Framework is provided
below.
A. Formulating national entrepreneurship strategy
National entrepreneurship strategies should be tailored to each
country’s specific conditions. It is therefore important to clarify
how entrepreneurship is expected to contribute to overall national
development objectives and where policies and institutions should
intervene to achieve these objectives. See table 1.
Study the table 1 in page 6
 Key components of the UNCTAD
Framework
B. Optimizing the regulatory environment
The regulatory environment should encourage people to set up their own business,
try new business ideas and take on calculated risks, keeping administrative burdens to the
minimum required to support public policy and sustainable development objectives. At the
same time, entrepreneurship development requires rules and regulations to ensure standards
that society as a whole deems necessary, such as inclusive and sustainable development.
These standards relate to health, security, the environment, employment and any other
standards that society as a whole deems necessary to ensure inclusive and sustainable
development.
Study the table 2 in page 7
 Key components of the UNCTAD
Framework
C. Enhancing entrepreneurship education and skills
development
Entrepreneurial skills centre around attitudes (soft skills), such as persistence, networking and self-
confidence on the one hand, and enabling skills (hard skills) on the other, including basic start-up
knowledge, business planning, financial literacy and managerial skills. Effective entrepreneurship
education policies and programmes focus on developing these entrepreneurial competencies and
skills, which are transferable and beneficial in many work contexts.
Government policies on entrepreneurship can ensure that it is embedded in the formal educational
system and offered as a formal subject through community, rural and apprentice training programmes.
Study the table 3 in page 8
 Key components of the UNCTAD
Framework
D. Facilitating technology exchange and innovation
Entrepreneurship, technology and innovation are mutually supportive.
Technology provides entrepreneurs with new tools to improve the efficiency and
productivity of their business, or with new platforms on which to build their
ventures. In turn, entrepreneurs fuel technological innovation by developing
new or improving existing products, services or processes and ensuring
commercialization. In developing countries, both angles are important to
varying degrees, depending on the level of local economic development, the rate
of adoption of technologies in use internationally and the innovation capabilities
of local firms or research institutions.
Study the table 4 in page 9
 Key components of the UNCTAD
Framework
E. Improving access to finance
Inadequate access to finance remains a major obstacle for many
aspiring entrepreneurs, particularly in developing countries. As recent
studies confirm, the global financing gap for micro-, small- and medium-
sized enterprises (MSMEs) remains enormous. Entrepreneurs of all
types and sizes require a variety of financial services, including facilities
for making deposits and payments as well as accessing credit, equity
and guarantees. Many entrepreneurs in developing countries can
benefit from targeted capacity-building in financial literacy and
innovative delivery mechanisms using modern banking technologies.
Study the table 5 in page 10
 Key components of the UNCTAD
Framework
F. Promoting awareness and networking
Negative sociocultural perceptions about entrepreneurship can act as
significant barriers to enterprise creation and undermine the impact of
policy intervention in support of entrepreneurship. The impact of
regulatory reforms in support of start-ups or to facilitate access to
finance for entrepreneurs will be less than optimal if large sections of
the population do not consider entrepreneurship to be a viable and
rewarding option, that is, if they would only consider entrepreneurship
if forced, or out of necessity.
Study the table 6 in page 11
• What is the mode of initiating a Training Programme for
EDP? Explain the integrated approach of project
implementation through EDP.
• Describe the phases in Entrepreneurship Development
Programme.