Unit 4: Role of Support Institutions
Role of government in promoting entrepreneurship
No entrepreneur can succeed in a vacuum. They require a supportive "ecosystem." The government plays the most critical role in creating this ecosystem.
The government's role is not to run businesses, but to act as a facilitator and regulator.
- Policy Formulation: Creating policies that encourage new ventures (e.g., tax holidays, simplified regulations).
- Financial Support: Providing capital through government banks, loan guarantee schemes, and subsidies.
- Infrastructural Support: Building roads, ensuring power supply, and creating "industrial estates" or "incubation centers" where new businesses can get plug-and-play facilities.
- Training and Development: Establishing institutions (like NIESBUD) to provide entrepreneurship training and skill development.
- Marketing Support: Helping SSIs and Start-ups sell their products, both domestically and internationally (e.g., through trade fairs, government procurement).
- Simplified Regulation: Reducing "red tape" and creating a "single-window" system for approvals to make it easier to start and run a business.
Start up India
Start up India is a flagship initiative launched by the Government of India in 2016. Its primary objective is to build a strong ecosystem for nurturing innovation and entrepreneurship in the country.
Key Pillars of the Start-up India Action Plan:
- Simplification and Handholding:
- Simple Registration: A single, simple online registration process.
- Self-Certification: Start-ups can self-certify compliance with various labor and environmental laws, reducing the regulatory burden.
- Funding Support and Incentives:
- Fund of Funds (FoF): A ₹10,000 Crore fund, not to invest directly in start-ups, but to invest in *Venture Capital (VC) funds* that in turn fund start-ups.
- Tax Exemption: Income tax exemption for the first 3 years of operation (if eligible).
- Industry-Academia Partnership and Incubation:
- Creating a network of incubation centers and "tinkering labs" in universities to provide physical space, mentorship, and resources to new ideas.
Central Level Support Institutions
These are institutions established by the Central Government to support entrepreneurship across the country.
SIDO (Small Industries Development Organisation)
- Role: SIDO is the apex policy-making body for the small-scale sector.
- Functions:
- Advises the government on all policy matters related to SSIs.
- Coordinates the activities of all state-level agencies.
- Monitors the implementation of SSI-related policies.
NSIC (National Small Industries Corporation)
- Role: To promote and foster the growth of MSMEs by providing integrated support.
- Functions:
- Marketing Support: Helps SSIs participate in government tenders (Consortia and Tender Marketing).
- Financial Support: Provides equipment leasing and financing.
* - Technology Support: Helps with technology upgradation and setting up new plants.
NIESBUD (National Institute for Entrepreneurship and Small Business Development)
- Role: An apex institute for training and development in entrepreneurship.
- Functions:
- Conducts "Training of Trainers" (ToT) programs.
- Develops training materials and courses for entrepreneurs.
- Conducts research in entrepreneurship.
- Provides advisory and consultancy services.
State Level Support Institutions
These institutions implement state-specific policies and provide direct, on-the-ground support to entrepreneurs.
SIDC (State Industrial Development Corporation)
- Role: To promote industrial development within a specific state. (Also called SIDC, SIIC, etc., depending on the state).
- Functions:
- Develops industrial infrastructure (e.g., industrial parks, estates, and SEZs).
- Provides financial assistance in the form of loans and equity, often to medium and large-scale units.
SDIC (State Development and Investment Corporation)
- Role: Similar to SIDC, these are state-level corporations focused on attracting investment and financing industrial projects within the state. (Note: The functions of SIDC and SDIC often overlap).
SIDBI (Small Industries Development Bank of India)
- Role: This is the Principal Financial Institution (Apex Bank) for the promotion, financing, and development of the MSME sector in India.
- Note: While listed under "State Level" in the syllabus, SIDBI is an All-India institution. Its key function is to *support* state-level institutions.
- Functions:
- Refinancing: It does not typically lend directly to entrepreneurs. It *refinances* the loans given by state-level institutions (like SFCs) and commercial banks.
- Provides direct credit and venture capital to MSMEs.
- Coordinates the functions of all institutions engaged in financing MSMEs.
SISI (Small Industries Service Institutes)
- Role: A network of state-level institutes (run by the central SIDO) to provide direct technical and managerial support to SSIs.
- Functions:
- Provides technical consultancy on machinery, technology, and quality.
- Conducts Entrepreneurship Development Programmes (EDPs).
- Provides testing facilities and technical training.
- Acts as the "ground-level" support agency for small entrepreneurs.