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Page 1: Odisha MSME Development Draft for Discussion - Odisha MSME Dev Policy...home to some of the leading public sector enterprises like HAL, and private companies like Tata Steel, Vedanta

Odisha MSME Development Policy 2015 – Draft for Discussion

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Table of Contents

1.1. Preamble 3

1.1.1. Odisha – An introduction 3

1.2. Objectives 4

1.3. Strategy 4

1.4. Enabling framework 5

1.4.1. Ease of doing business 5

1.4.2. Capacity building & Skill Development 6

1.4.3. Cluster development 6

1.4.4. Revival of sick units 7

1.5. Supporting framework 8

1.5.1. Land and Infrastructure development 8

1.5.2. Support for downstream industries 8

1.5.3. Marketing Assistance in MSME Promotion 9

1.5.4. Export promotion 10

1.5.5. Raw material procurement 11

1.5.6. Technology up gradation 11

1.6. Financial support framework 12

1.6.1. Corpus fund for sick units 12

1.6.2. Capital Investment Subsidy : 12

1.6.3. Credit 13

1.7. Miscellaneous 13

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1.1. Preamble

1.1.1. Odisha – An introduction

1. Odisha located in the east of India, has a traditional past, a vibrant present and a large potential for MSME

industries. Prominent for its culture, tradition and architecture, the State is also a treasure trove for natural

resources. In addition, access to global markets, presence of qualified human resources, superior logistics,

robust infrastructure and a positive business environment makes Odisha a favored destination for

investors.

2. The Industry and Services sectors have emerged as main drivers of growth during the past decade. Odisha

economy exhibited an average annual growth rate of 8.82 percent during the 10th Plan period against a

target of 6.20 percent. The economy grew in real terms at the rate of 7.05 percent during the 11th Plan As

per the Odisha Economic Survey 2014-15, the state is set to grow at 8.78 percent.

3. Odisha is ranked first in total FDI proposals attracting investments of USD 15,400 million in the period of

January to December 2013 (18% of the overall share of FDI proposals in India). The exports from the State

were USD 2,960 million in 2013-14 which increased at 10 % CAGR between 2009-10 and 2013-14.

4. Odisha ranks highest in the country in terms of total value of mineral output. Odisha is the largest producer

of Chromite (98% share), Bauxite (59% share), Nickel (93% share), Graphite, Dolomite and Manganese,

fourth largest producer of Coal and fifth largest producer of iron-ore in India. Odisha has large reserves of

45,000 MT power grade coal deposits in Mahanadi Coal Field and Talcher Coal Field area. Odisha is the

home to some of the leading public sector enterprises like HAL, and private companies like Tata Steel,

Vedanta Aluminum, Aditya Birla, Jindal Steel etc . Odisha receives unprecedented investments in steel,

aluminum, power, refineries and port. This opportunity a perfect platform and presents a huge opportunity

for downstream and ancillary industries and for the MSME sector.

5. MSME sector has emerged as a highly vibrant and dynamic sector of the Indian economy over the last five

decades. MSMEs contribute to nearly 8% of the country’s GDP, 45% of the manufacturing output and 40%

of the exports. MSMEs provide the largest share of employment after agriculture and hence, development

of MSME sector can contribute enormously to the socio-economic development of the country. MSME

sector underscores entrepreneurship and innovation. Moreover, MSMEs are complementary to large

industries as ancillary units. Micro Small Medium Enterprises Development (MSMED) Act, 2006 seeks to

facilitate the development of these enterprises, enhance their competitiveness and provides a legal

framework for recognition of both manufacturing and service entities in the concept of “enterprise”

6. The MSME sector in Odisha has made substantial contribution to the economic development in general and

generation of employment and contribution to the exports in particular and has positioned itself only next

to the agricultural sector in the State in terms of employment generation. MSME in Odisha has witnessed

an increasing trend in respect of number of MSME units set up, quantum of investment made and

employment generation over a period of time

7. The inherent strengths of the State of Odisha in terms of abundant natural resources, human resources and

an enterprise enabling policy need to be leveraged to realize the full potential of the Micro, Small & Medium

Enterprise Sector of the State. The new wave of industrialization being witnessed in Odisha today,

especially in the metal, power, cement, petrochemical, IT, tourism sector and the current growth in the

services sector provide enormous opportunity for the growth of Micro, Small & Medium Enterprises in the

State.

8. The Micro, Small & Medium Enterprises play a major role in broad basing the industrial growth and

augmenting employment opportunities, revenue exports and economic growth. To develop the sector and

to address the specific requirements of MSME sector and drive their growth, Government of Odisha has

formulated the “Odisha MSME Development Policy, 2015”.

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1.2. Objectives

1. The Policy takes into cognizance the other relevant policies of the state such as the ease of doing business

initiatives taken up under Make in India program, IPR 2015, Odisha Food Processing Policy 2013, Draft

Entrepreneurship Development Policy 2015, Odisha Procurement Preference Policy etc. The policy

framework is formulated to complement the existing policies.

2. The IPR-2015 targets some of the fiscal incentives towards MSME’s such as providing land at concessional

rates, interest subsidy, exemption on stamp duty, exemption on electricity duty, special incentives for non-

conventional energy, renewable energy, energy audits, VAT reimbursement, entry tax reimbursement,

reimbursement on expenditure, on account of contribution towards ESI and EPF scheme, incentives for

patent registration, quality certification, assistance for technical knowhow, incentives for setting up

environment protection infrastructure, capital grant for developing infrastructure in cluster format,

incentives to early birds on land cost and additional VAT reimbursement, and marketing support to

industry associations.

3. This policy aims to attract new investments and provide support to the existing enterprises and accordingly,

the framework of the policy has been divided into an Enabling Framework, Supporting Framework and

Incentive Framework. The policy also aims to make the MSME’s in Odisha competitive, thereby enabling

them to compete on a global scale

4. Odisha MSME Development Policy, 2015 has been formulated through an elaborate consultative process

involving all stake-holders including Industries Associations, Financial Institutions, Experts and

Government Departments concerned.

5. The emphasis of this policy is to make Odisha “a destination of choice” for MSME enterprises. The

objectives of the policy is to:

a) Enhance competitiveness of MSME sector in the state.

b) Provide a conducive eco-system to encourage MSMEs and attract new investments into the sector

c) Broad base the growth of MSME in all potential sectors of economy.

d) Provide opportunities to local entrepreneurial talent and encourage entrepreneurship.

e) Make focused effort for sustainable and inclusive industrial growth aiming at sustainable and balanced

regional development

f) To enhance the contribution of MSMEs in manufacturing and services sector of the State’s economy.

1.3. Strategy

1. To achieve each of the objectives mentioned above, the following strategies have been designed:

a) Setting up a single window facilitation cell at DIC’s, which will assist the investors in setting up

business , and handhold the entrepreneurs for the complete project cycle.

b) Enhance competitiveness of MSMEs through cluster development. Promoting cluster based

development of MSMEs either on their own or with mother industries for bringing about more

production efficiencies, branding and bringing about economies of scale

c) Facilitate setting up of ancillary & downstream units of existing and upcoming Large & Mega

Industries.

d) Facilitate enhanced flow of credit to MSMEs.

e) Establish Industry-Institution linkages

f) Thrust to entrepreneurship development programme

g) Convergence of schemes and resources

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h) Strengthening of the institutional support mechanism for MSMEs

i) Developing the internal capacities of the DICs, so that their practices and capabilities are on par or

above the corporate practices.

j) Identification and revival of sick units, including prevention of sickness by developing a district level

monitoring system

2. For better administration of the policy, the policy has been distinguished into

1. Enabling Framework: The objective is to create an enabling environment which shall promote

healthy and sustainable development of MSME and improve facilitation of new investments to make

the whole process streamlined for ease of doing business in the state.

2. Support Framework: This section explains the policy interventions which support development of

MSME through facilitating Land and Infrastructure development, Support for downstream industries,

Marketing Assistance in MSME Promotion, Export promotion, Raw material procurement and

Technology up gradation.

3. Incentive framework: The section briefs the incentives proposed in the policy to promote the MSME

sector and the handholding support to access credit to the sector.

1.4. Enabling framework

1.4.1. Ease of doing business

The focus shall be to streamline and smoothen the process for MSME to invest and conduct business in Odisha.

Under this component, the following activities will be undertaken:

1. Nodal Agency: DICs shall be the nodal agency for all MSME Development in the state and shall assist and

handhold the investors in setting up business and handhold the entrepreneurs/investors in approvals and

clearances before, during and after project implementation.

2. A District Level Facilitation Cell shall be set up at the respective RICs/DICs and chaired by the GM,

RIC/DIC and meet on a monthly basis on a fixed day to assist and guide investors, follow up on approvals

and assess the project requirements. The DLFC shall be represented by the senior officers of IDCO,

Pollution Control Board, Factories and Boilers to process the project approvals as per the timelines

specified in OIFA (Rules)-2015

3. While the above measures will help in easing the procedures to set up an enterprise, the following measures

will be undertaken to improve conducting business for existing enterprises.

a) The DICs shall be strengthened and revitalized to eliminate the existing bottlenecks and facilitate

smooth functioning to address the needs of the investors.

b) Online disbursement of incentives mechanism shall be developed and the applicable incentives

shall be disbursed in time bound manner.

c) An online platform shall also be facilitated for the investors to lodge grievances. A team at the state

level headed by the Secretary, MSME Department shall monitor all the grievances lodged, and the

action taken on the grievances.

4. Central Inspection Framework: As part of “Ease of Doing Business” framework, improving the

inspection framework has become a critical parameter in ensuring clarity on inspections, frequency of

inspections, and reducing duplications. A Central Inspection Co-ordination Group (CICG) has been created

to simplify business regulations and bring in transparency and accountability in inspections. The functions

of CICG are as follows

a) Develop transparent checklists and procedures

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b) Ensure synchronized inspections of Factories & Boilers, Labour Department and Odisha State

Pollution Control Board (OPCB)

c) Establish the framework for risk based inspections

d) Develop modalities for conducting surprise inspections

e) Empanel third party inspector, wherever applicable

f) Undertake capacity building initiatives.

5. The CIGG shall also be responsible for monitoring the performance of field offices and collecting regular

reports at suitable intervals, and then aggregating these reports to determine benchmark achievements

against plans.

1.4.2. Capacity building & Skill Development

MSME Development Policy shall emphasize on internal and external capacity development all the concerned

stakeholders in MSME development.

1. Skilled Manpower: Government of Odisha shall create a model for development of skilled manpower

and for improving employability in the State. Under this model, State shall identify the requirement of

skilled manpower, identify industry specific skill sets required and provide courses at different levels of

education. The skill training objectives shall be aligned with the National Skill Development Mission for

better integrity.

2. The recent growth of industries in Odisha has necessitated accelerated growth in availability of trained

quality manpower. The State Government shall take steps to augment the capacity of the technical training

institutes. This shall be done by encouraging setting up of new institutes wherever necessary and by

upgrading the capacity of existing technical institutes.

3. Specialized Industrial Training Institutes (ITIs) shall be set up at locations having heavy concentration of

specialized workmen in a PPP model with support from the local industries and associations.

4. Reimbursement of training expenditure: Government of Odisha shall reimburse 50% of the cost

involved in skill up gradation and training the local manpower limited to Rs. 3000 per person for a

maximum of 10 persons in micro and 20 persons in small and medium industries. The reimbursement to

the training shall be made directly to the training institute on submission of the required documents to the

respective DICs. Thrust will be given for skill development amongst women to enhance their employability

and an additional training cost of Rs. 1000 shall be reimbursement.

5. Entrepreneurs heading MSMEs who wish to participate in higher training programme shall be assisted with

30% of the training cost with a maximum of Rs. 5000 per enterprise once in a year. The reimbursement to

the training shall be made directly to the training institute on submission of the required documents to the

respective DICs.

6. Industry-Institution Linkage: The department shall strive to maximize Industry- Institution linkage by

encouraging industries to adopt existing technical institutions and also to set up new institutions wherever

feasible.

7. To promote setting up of new Institutes for skill upgradation, the State Government shall endeavor to lease

out suitable Government land as per NCVT norms to entrepreneurs so as to motivate them to come forward

to set up quality ITCs

1.4.3. Cluster development

1. Cluster Approach: Cluster approach is the proven successful approach for sustainable growth of MSMEs.

In an increasingly globalizing competitive industrial economy, it is observed that wherever MSMEs have

come up in clusters and have evolved sufficient social capital amongst themselves in such clusters, they

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have been successful. The State Government therefore shall adopt the Cluster Development Approach for

promoting Micro, Small & Medium Enterprises.

2. A Cluster Development Cell headed by an officer not below the rank of Joint Director of Industries has

been set up in the Directorate of Industries to intensify cluster development. This cell shall undertake

studies of all the existing MSME clusters in the State and shall develop suitable cluster development action

plans for making focused efforts to develop the enterprises in such clusters in a sustainable manner. The

schemes and programmes of cluster development launched by the Government of India, State Govt. and

Development / Consultancy Agencies shall be implemented in Odisha through this cell. This cell shall

develop partnership with other likeminded agencies and institutions working in the field of industrial

cluster development. It shall also converge resources and dovetail available funds, schemes and Programme

so as to evolve a unified strategy for cluster development in the State of Odisha.

3. Special focus will be given towards developing specific industrial estates, where all the units

will be working together to manufacture similar products, thereby enabling the units to

enjoy the benefits of economies of scale at various stages of their operations. Through this

approach, efforts will also be made to make districts and clusters synonymous with a certain

product.

4. Apart from identifying and promoting existing clusters of MSMEs new clusters of ancillary & downstream

units shall be promoted at major industrial hubs such as Kalinganagar, Paradeep, Dhamra, Gopalpur,

Angul, Dhenkanal, Sambalpur, Jharsuguda and Keonjhar, etc.

5. Special Purpose Vehicles: To promote the development of Micro, Small & Medium Enterprises in

cluster mode, the respective Associations/Groups of units in clusters shall be encouraged to form Special

Purpose Vehicles (SPVs) for undertaking cluster development work in partnership with Govt. and other

development agencies. To promote SPVs. in MSME clusters, the SPVs. shall be given the status of new

small scale industrial units for the purpose of availing fiscal and non-fiscal incentives under this policy as

well as under IPR 2015.

1.4.4. Revival of sick units

1. The recent intensification of industrial activities in the State provides significant growth opportunities for

the existing industries, especially in the MSME Sector, including those, which have become sick for various

reasons. The State Government shall undertake a comprehensive district wise drive through Directorate of

Industries for identification of potentially viable sick units. Such industries shall be placed on a fast track

mode for consideration of rehabilitation assistance by Government and all agencies concerned.

2. General Manager of DICs will hold regular facilitation meetings in association with all the concerned

departments every month in each Industrial estate/Cluster, to understand the issues faced by MSMEs in

running their industry. Such issues will be brought to the notice of DI/MSME Department for resolution

through monthly reports. The issues which require Government intervention, are to be forwarded to the

Director of Industries

3. The SLIIC shall be empowered to extend need based incentives as available under the extent IPR for this

purpose. The industries so assisted will be treated at par with new industrial units for determining the

maximum level of incentives that could be sanctioned by SLIIC.

4. The Empowered Committee on SMEs constituted by the Reserve Bank of India, Bhubaneswar shall review

the performance of Banks and financial institutions in implementing the decisions of SLIIC / Sub-SLIIC /

DLC and shall provide suitable direction to Banks wherever necessary to ensure compliance on such

decisions.

5. The State Govt. shall liaise with the Govt. of India to set up a State level body on the lines of BIFR for revival

and rehabilitation of sick MSMEs

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1.5. Supporting framework

1.5.1. Land and Infrastructure development

1. Priority land allotment: The existing land allotment of minimum 20% of the area in all industrial

estates, industrial parks, industrial corridors and land banks for MSMEs will be continued. Wherever land

is provided for setting up of large & Mega Industries, 20% of such land subject to an upper limit of 300 Ac.

shall be earmarked for setting up of ancillary and downstream MSMEs. preferably in cluster mode.

2. Govt. will facilitate land identification/allotment/acquisition to establish MSME Industrial estates and will

provide shall support for the complete project cycle.

3. Mini Industrial Park: OSIC shall establish dedicated MSME Mini Industrial Parks up to an extent of 25

acres with common infrastructure like roads, industrial water supply, power, effluent treatment plant.

These MSME Parks shall be established across all districts in a phased fashion depending upon sectoral

assessment

4. Special focus will be given to encourage setting up of mini food parks to achieve the target of one Food Park

per district.

5. Government will support quality infrastructure in the form of a capital grant to industrial parks / cluster

parks promoted by private sector or industry association or user units in a cluster format in a minimum

area of 25 acres, with a grant of 50% of the infrastructure cost with a ceiling of Rs.15 crore per park or

cluster.

6. In the case of upgradation of the existing parks / clusters the government will provide a similar support of

50% of total cost with a ceiling of Rs.2.5 crore provided the park / estate / cluster is user- managed.

7. The infrastructural requirements of MSMEs relating to water, power, waste management, environment

management, testing laboratories, R. & D. institutions and civic amenities shall be addressed on priority.

8. IDCO shall be encouraged to develop Dedicated Industrial Parks for Women Entrepreneurs at suitable

locations

1.5.2. Support for downstream industries

Government of Odisha has also been promoting downstream and ancillary industries as priority sector. The

State has focused on value addition in the minerals sector. Consequently, Odisha is emerging as the mining,

metal, and manufacturing hub of the country. Investment in this sector has created vast opportunities for

ancillary and downstream industries in the Micro, Small and Medium sectors in the State.

A policy for promotion of ancillary and downstream industries is being prepared by Government of Odisha to

facilitate development of downstream and ancillary industries in the state. The State Government shall

1. Encourage linkage between MSME and Large industries and make focused efforts for development of

ancillary and downstream industries.

2. Facilitate availability of feedstock from the mother industries to the MSMEs.

3. Encourage and recommend preferential allotment of land in IDCO promoted industrial estates.

Infrastructure to the estates where downstream industries are located shall be developed on a priority basis

4. Sector specific Ancillary & Downstream industrial parks shall be set up by IDCO preferably in association

with mother plants

5. The DICs and District Level Facilitation Cell shall extend all necessary support to facilitate applicable

incentives of IPR 2015 and any other policies for the development of downstream and ancillary industries

in the state.

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6. As per the IPR 2015, IDCO will aim to aggregate government land suitable for establishment of industry to

create Land Banks to meet the requirements of Large, Micro, Small and Medium Units. 10% of the land for

large projects subject to an upper limit of 300 Acre shall be earmarked for setting up ancillary and

downstream industrial park. The establishment of these parks shall enable maximum value addition within

the State and generate high employment through promotion of Micro & Small Enterprises.

1.5.3. Marketing Assistance in MSME Promotion

MSME promotion activities shall be taken up on a priority basis to provide wider reach of MSME products in

the National and International markets through a wide variety of channels and activities. Emphasis shall be

made on promoting the MSME products online. On ground activities will also be taken up for robust trust

building among sellers and buyers.

1. The Govt. shall endeavor to promote marketing of goods and services produced by the MSMEs both in

domestic and overseas markets by providing necessary policy, institutional and fiscal support wherever

necessary.

2. MSME E-Bazaar: An online MSME Bazaar shall be developed as a platform where entrepreneurs can

showcase their products and directly connect to buyers. The website will also facilitate marketing of cluster

products, thereby enabling the clusters to gain global reach. MSME Bazaar will be aimed at providing

Odisha manufacturers access to the national and global market, thereby helping in the MSME

development. Social media handles and marketing mechanisms will also be included with the website.

3. MSME trade fairs/ Melas shall be conducted every year by the respective DICs in each districts to

showcase the products from the district. Local enterprises shall be encouraged to participate in the trade

fairs. Participation fee for the first time entrepreneurs shall be subsidized to a maximum of 50% of the

participation fee.

4. Awards shall be given on an annual basis during the MSME trade fair/Mela in various categories to

facilitate the leaders of MSME and also to create awareness on the growth MSMEs creates and the service it

provides to the nation.

5. MSMEs shall be encouraged to participate in national and international trade fairs.

6. Local MSMEs having EM II registration can avail tenders floated by State Government Departments and

Agencies, at free of cost and are exempted from payment of earnest money deposit. In the event of a

successful bid, the MSMEs shall pay 10% of the prescribed security/performance deposit, in the form of

bank guarantee.

7. .

8. Nodal agency: Directorate of Export Promotion & Marketing will be the nodal agency for issue of detailed

guidelines for implementation of the above facilities extended to local industries. Director, Export

Promotion & Marketing or his nominee will be a member of the Purchase Committee constituted at levels

above the District level in State Government Departments and Agencies under the control of State

Government. General Manager / Project Manager, DIC or his representative will be a member of Purchase

Committee constituted at District level or below.

9. Director, EP&M will have the power to draw samples and test the quality of products of local industries

from time to time and shall have powers to blacklist and deregister industries supplying products not

conforming to prescribed quality and specifications. He shall have the power to blacklist local industries for

trading in the store items instead of manufacturing

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10. Marketing Support to Micro & Small Enterprises (MSEs) in Government Procurement— (a) The State Govt.

will ensure that requirement of goods and services by Government Departments and Agencies under its

control are procured1 from MSEs located within the State through the following procedure.

11. Rate Contract:

a) List of goods and services to be reserved for procurement from MSEs. via Rate Contract System shall be

prepared by the Director, Export Promotion & Marketing (DEP&M) taking into account the quantity

and quality of goods being manufactured and services being provided by the local MSEs and their

requirement by Govt. Departments and Agencies under their control.

b) Any goods or services for which subsisting rate contract exists shall be mandatorily procured following

the rate contract system and shall not be procured by any other means.

12. Purchase from Exclusive List

a) List of goods and services reserved for exclusive purchase from MSEs located within the State of Odisha

will be prepared from time to time keeping in view the production capacity of the local MSEs. and

requirements of State Govt.

b) Departments and Agencies under its control. This list shall consist of items for which sufficient

production capacity exists within the State of Odisha so as to meet the entire demand of the Govt.

Sector. Such list shall be prepared and notified by the Director, EP&M.

c) The State Govt. Departments and Agencies under their control will have to procure their requirement of

these items exclusively from local MSEs. with ISO / ISI / EPM certification for the items by inviting

limited competitive quotations from such local MSEs. only. Efforts will be made to distribute the

purchase order equitably among the participating enterprises prepared to accept lowest negotiated rate

keeping in view their production capacity.

13. Purchase by Open Tender:

a) Goods and services other than those in the rate contract list or exclusive purchase list may be purchased

by the State Govt. Departments and Agencies under the control of State Govt. through open tender.

Local Micro & Small Enterprises and Khadi & Village Industrial Units including Coir, Handloom and

Handicrafts, competing in the open tender shall be entitled to price preference of 10% vis-avis local

medium and large industries as well as outside industries. Local Micro & Small Enterprises having ISO

or ISI certification for their product shall get an additional price preference of 3% as per provisions of

IPR.

b) Notice inviting tenders shall stipulate the condition that the participants to the tender must be

registered under Odisha VAT or CST Act. While preparing comparative price statement for evaluation

of tender papers, the VAT payable in Odisha shall be excluded and price comparison shall be made only

on the basic price. However, any tax payable outside Odisha shall be added to the basic price for such

price comparison.

1.5.4. Export promotion

1. In order to realize the export potential of the MSMEs of the State, concerted efforts shall be made for

creation of awareness about overseas markets and the identification of products of local MSMEs having

export potential.

a) 1 The procurement norms shall not apply for purchases under D G S & D Rate contract system

and in cases where there are separate procurement guidelines prescribed by international/

national funding agencies.]

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2. The Directorate of EP&M shall prepare and update a product country matrix for the MSMEs of Odisha

identifying the products which have potential export market in specific overseas markets.

3. The Directorate of EP&M shall conduct regular sensitization programmes for the MSMEs about the export

documentation procedure and logistic in association with FIEO, ECGC and other Export Promotion

Councils of India.

4. The Directorate of EP&M shall publish an annual catalogue of products of MSMEs of Odisha having export

potential.

1.5.5. Raw material procurement

The State of Odisha has rich resources of varied raw materials required by cross-section of MSMEs. It shall be

the endeavor of the Government that the MSMEs are enabled to source their required raw materials in an

efficient and cost effective manner.

1. Nodal agency: The Odisha Small Industries Corporation Ltd. (OSIC)) shall act as the Nodal Agency for

sourcing and supplying of raw materials required by MSME units/Industrial park and cluster parks in the

state. The MSMEs OSIC / NSIC shall set up Raw Material Banks to provide such support.

2. The Directorate of EP&M and OSIC shall organize annual Buyer & Seller Meet and Vendor Development

Programmes amongst the large & mega industries and the Micro, Small & Medium Enterprises in

association with IPICOL, Director of Industries, MSME DI, NSIC and Apex Industry Associations

3. PPP model: OSIC shall encourage setting up of Raw material banks in PPP mode with local

industries/associations. Government of Odisha shall provide capital subsidy upto 50% of the project cost

not exceeding Rs. 1 Crore for setting up Raw material bank in PPP mode operated by a Special Purpose

Vehicle (SPV).

4. While acting as a consortium leader of local MSMEs, OSIC shall be entitled to service charges not exceeding

1% of the order value from the concerned units.

5. The PSUs shall accord priority in supplying raw materials to OSIC / NSIC acting as the Nodal Agency for

MSMEs and shall do so at the lowest rate as extended to any other buyer of the same material inside or

outside the State

6. Appropriate steps shall be taken to establish linkages amongst MSMEs. and Central /State Public Sector

Undertakings (PSUs) for sourcing of crucial raw materials. The G.M., DICs shall be the competent authority

to assess the requirement of raw materials of MSMEs located within their jurisdiction and for

recommending the same to competent authorities of the relevant Central / State PSUs and Govt.

Departments through the Director of Industries, Odisha. It shall be incumbent upon the Odisha based PSUs

to accord priority in allotment of raw materials to the MSMEs located within the State of Odisha at the

lowest rate as extended to any other buyer of the same material inside or outside the State.

1.5.6. Technology up gradation

1. MSMEs shall be encouraged to undertake quality improvement interventions such as relevant upgrade of

existing technologies and installing of new technologies for quality control, cleaner environment friendly

production, water, energy audits, quality certifications etc.

2. MSME Technology Upgradation Scheme shall be launched to support the MSMEs for technological

upgradation. The scheme shall be utilized for providing subsidized credit support to MSMEs for

undertaking modernization and technological upgradation.

3. As per IPR 2015, new industrial units in Micro, Small & Medium Enterprises and Priority sector shall be

eligible for reimbursement of 100% of cost of purchase of technical know- how up to one lakh rupees (Rs.1

lakh) in case of indigenous technology and up to four lakh rupees (Rs.4 lakhs) in case of imported

technology.

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4. As per IPR 2015, New & existing industrial units setting up Captive Power Plant with non-conventional sources & bio-fuel shall be exempted from payment of 100% Electricity Duty for a period of 5 years from the date of commissioning as Green Energy Subsidy.

5. Clean Technology: The State Govt. shall endeavor to promote adoption of Clean Development

Mechanism (CDM) and related technologies by the MSMEs. The Govt. shall subsidize consultancy services

for adoption of CDM by the MSME to the extent of 50% of the charges or Rs. 25,000 whichever is less.

6. Concerted efforts shall be made to increase awareness about the programmes and schemes of Government

of India meant for incentivizing the adoption of cutting edge technology by MSMEs such as CLCSS, QMS

(Quality Management Standards), QTT (Quality Technology Tools). The progress of credit delivery under

such schemes shall be closely monitored and corrective steps initiated wherever necessary.

1.6. Financial support framework

The IPR-15 provides for wide ranging fiscal support measures for MSMEs. Efforts shall be made to increase

awareness about these support measures amongst the entrepreneurs and the institutional framework necessary

to translate such support measures into actual practice shall be streamlined. Adequate budgetary provision

shall be made so as to enable the MSMEs to fully utilize the fiscal incentives available in the IPR-15. Apart from

the fiscal incentives provided in IPR-07, the following incentives shall also be provided to eligible new units.

1.6.1. Corpus fund for sick units

1. It is proposed to set up a corpus fund of Rs. 100 crore for sick unit revival. A committee shall be formed at

the district level under the Chairmanship of The Collector with the relevant departments to accord approval

for disbursement of fund from the corpus fund. The fund will be dedicated for the revival of sick units and

will be utilized through a variety of mechanisms such as

a) Reimbursement of 50% cost towards preparation of diagnostic studies of sick units with a maximum of

Rs. 25,000.

b) Interest rebate to Banks/Financial Institutions: 4% interest subsidy will be provided to all

identified/eligible sick units, subject to maximum of Rs. 1 lakh per year for a maximum period of three

years

c) Collateral free loans for increasing marketing expenditure

d) Relief in Energy Charges

2. Stakeholder consultations will be conducted to gather more views on the operational guidelines for

utilization of the fund.

1.6.2. Capital Investment Subsidy

1. New Industrial Units belonging to Micro and Small Enterprise sector shall be entitled to capital investment

subsidy of 25% of fixed capital investment subject to an upper limit of Rs. 1 crore only.

2. SC, ST, PH, Women and Technical (Degree / Diploma holding) entrepreneurs and units coming in

backward region shall be entitled to capital investment subsidy of 12% of fixed capital investment subject to

an upper limit of Rs.10 lakhs.

3. The capital investment subsidy shall be governed as per rules and guidelines to be notified in due course.

The terms and conditions and eligibility for availing subsidy under the scheme shall be devised so as to

ensure proper targeting of genuine enterprises who shall be recommended by a State Level Apex

Committee, to be constituted for the purpose.

4. Women entrepreneurs setting up new MSE shall be entitled to additional two (2) years fiscal incentives

relating to VAT under IPR-15 subject to being otherwise eligible for the said incentive and also subject to

the overall absolute limits prescribed for the said incentive under IPR-15

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1.6.3. Credit

1. Adequate institutional credit is a major enabler for survival and growth of MSMEs. Concerted efforts shall

be made for ensuring adequate flow of institutional credit to Micro, Small & Medium Enterprises.

2. A suitable mechanism shall be devised in the Government for monitoring the flow of credit to the MSME

sector. Further, the existing institutional set up of District Co-ordination Committee (DCC),

3. State Level Bankers’ Committee (SLBC) and Empowered Committee of RBI shall be utilized effectively for

the purpose.

4. Credit Monitoring Group shall be constituted to monitor and facilitate the flow of institutional credit to

MSMEs.

5. Commercial Banks and Financial Institutions shall be encouraged to set up dedicated branches for MSMEs

in the industrial hubs of the State. Infrastructure facilities including land for such branches shall be

provided on priority basis at concessional industrial rate.

6. The schemes and programmes launched by Govt. of India / Govt. of Odisha for enhancing flow of credit to

MSMEs such as Credit Guarantee Fund Trust for Micro & Small Enterprises (CGTMSE), Credit Linked

Capital Subsidy Scheme (CLCSS), Technology Upgradation Fund (TUF) and National Equity Fund (NEF)

and Interest Subsidy Scheme of IPR-2015 shall be effectively implemented with active assistance of Banks

and Financial Institutions.

7. The Odisha State Financial Corporation (OSFC) shall revive its operations and resume lending to MSMEs

so as to substantially improve the flow of credit to MSME sector.

8. The MSMEs shall be encouraged to increasingly adopt credit rating by reputed agencies such as SMERA. A

specific scheme to reimburse / subsidize the rating fees shall be launched by the Govt. in due course.

1.7. Miscellaneous

1. This policy shall be read in conjunction with IPR-15 and Draft Entrepreneurship Development Policy.

2. For the purpose of this policy all terms, definition and interpretation shall be as per IPR-15.

3. Doubts relating to interpretation of any term and / or dispute relating to the operation of any provision

under this policy shall have to be referred to the Industries Department, Government of Odisha for

clarification / resolution and the decision of Government in this regard shall be final and binding on all

concerned.

4. The units as enshrined in Annexure-II, Schedule-Point (3) of IPR- 2015 shall not be eligible for fiscal

incentives under this policy, but shall be eligible for investment facilitation, allotment of land under normal

rules and recommendations to the financial institutions for term loan and working capital and for

recommendation, if necessary, to the Power Distribution Corporation.

5. No right or claim for any incentive under this policy shall be deemed to have been conferred merely on the

ground of provision in this policy. Implementation of various provisions covering the incentives,

concessions etc. will be subject to the issue of detailed guidelines / statutory notifications, wherever

necessary in respect of each item by the concerned Administrative Department.

6. This policy shall remain in force from the date of its notification until substituted by another policy.

7. The State Government may at any time amend any provision of this policy.