Government Incentives: The following are the incentives available to the small units:
1. Subsidy relating to Investment: Government has initiated a different scheme of investment subsidy for the benefits of entrepreneurs so that they many be encouraged to establish more and more SSI units. These schemes are capital investment subsidy, transport subsidy, power generations subsidy, special investment scheme for women entrepreneurs, provision for seed capital, subsidy for technical/feasibility study etc. SIDBI, besides being an apex bank for the SSI sector, is also arranging equity type assistance, venture capital scheme etc. to accelerate the pace of investment in the small-scale sector.
2. Export/Import Subsidies and Bounties: 100% export-oriented units (EOUs) and units in the export processing zones (EPZs) enjoy a package of incentives and facilities, which include duty-free imports of all types of capital goods, raw materials, and consumables in addition to tax holidays against exports.
3. Subsidy relating to Research and Development: To encourage continuous research and development activities in the small-scale sector, the government provides subsidy by keeping aside a certain amount of money toward research so that more encouragement is given to small-scale entrepreneurs.
4. Subsidy relating to Taxes: The Central Government, as well as the State Government, is trying to encourage entrepreneurs through tax subsidy schemes enabling them to accelerate the pace of establishment of industrial units. These 115 are an exemption from estate duty, tax relief to NRIs, rebate in income-tax, interest-free sales tax loan, sales tax subsidy, exemption from sales tax etc.
5. Subsidy relating to Resources: small industries are given a lot of subsidies relating to resources such as purchase of testing tools, subsidy for industrial estates and parks, allotment of land and buildings at concessional rates, supply of water at concession rates, arrangement of developed or constructed production sheds, arrangement of raw materials at concessional/ controlled rates etc.
6. Capital Subsidy Scheme for Technology Up gradation: This scheme facilities technology by induction of proven technologies in respect of specified products/sub-sectors. This would apply to the introduction of the latest technology, improvement of productivity, quality of production and environmental conditions and installation of improved techniques as well as anti-pollution measures and energy conservation. However, for availing this scheme, the entrepreneur has to fulfill certain conditions such as the replacement of the existing equipment/technology with a new one. The same equipment or technology would not qualify for the scheme and it is also not applicable to units going for the up gradation with second-hand machinery