Business Environment

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By: meco2010 (47 month(s) ago)

Hi ! Manav, I need ur help to offer me this in ppt form. pls help, am available on rahul,nisal@cms.com

By: asbhalla (49 month(s) ago)

hi, manav, this is me, im doing mba from my home town doraha distt. ludhiana punjab. so if i need ur help then i must be contact u.... tc.................. god bless u ........

By: premjangir25 (49 month(s) ago)

Hello, Many thanks for your ppt, its very useful for my studies of MBA but actually i cant open this file as it is a zip file can u please help me how to open with power point

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please contact me at r.manavazhagan@gmail.com

 

By: asbhalla (56 month(s) ago)

hi, this is bhalla student opf MBA, i like ur ppt much then other & its is very helpfull for me to know bout the BE of india

By: manavazhagan (49 month(s) ago)

thank you. where are u doing ur MBA ? U can contact me at r.manavazhagan@gmail.com .

 
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Thank you. You can view other materials also. For any academic help please contact

 

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By: manavazhagan (56 month(s) ago)

Hope you received copies. Thank you for using my slides

 
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Presentation Transcript

Regulatory Role of Government : 

Regulatory Role of Government Module-3 8/5/2009 1 manavazhaganr@bsnl.in

Political System : 

Political System Forms of Political System Democratic – Power is vested with people Totalitarian- Power is vested with one or a group of people Role of Political System Political system in a country Decides Promotes Encourages Shelters Directs and Controls the Business Activity 8/5/2009 2 manavazhaganr@bsnl.in

Role of Individual Constituents of Political System : 

Role of Individual Constituents of Political System Constituents of Political System Legislature Executive/ Government Judiciary 8/5/2009 3 manavazhaganr@bsnl.in

Impact of Government on Business : 

Impact of Government on Business 8/5/2009 4 manavazhaganr@bsnl.in

Industrial Policy 1948, 1956 , 1991 : 

Industrial Policy 1948, 1956 , 1991 Industrial Policy – 1948 Accepted Importance of both Private & Public sectors Divided industries into 4 categories Recognised importance of Foreign Capital Recognised importance of SSIs’ Industrial policy Indicates the relationship between Government & Business It contains guidelines for govt’s administrative action it has no quantitative target It is not passed as a Law Violation of Industrial Policy cannot be challenged in Court 8/5/2009 5 manavazhaganr@bsnl.in

Industrial Policy 1956 : 

Industrial Policy 1956 Industry Classifications Schedule-A: ( 17 industries ) – Govt. Arms , Ammunitions , Defence equipments , atomic energy , iron & steel , Heavy plant &Machinery, Heavy electrical plant , Coal & lignite, mineral oil, mining ,aircraft , air & rail transport, Telecom cables, electricity generation & distribution , ship building Schedule- B: ( 12 industries ) Private & Govt. machine tools , Ferro-alloys , drugs ,fertilizers , synthetic rubber , chemical pulp ,road transport , sea transport , carbonisation of coal , mining of aluminum & non-ferrous metals. Private sector others Objective: Accelerate Economic growth rate Expand public sector Increase employment opportunities Prevent creation of monopoly Expand Cottage,village,SSIs 8/5/2009 6 manavazhaganr@bsnl.in

Industrial Policy 1991 : 

Industrial Policy 1991 Policy Initiatives Industrial Licensing Policy Public sector Policy Foreign Investment Foreign Technology Agreements MRTP Act Objective: Remove regulatory system Incentives for industries in backward areas To Run the PSUs on business lines Encourage Entrepreneurship Link Indian economy to global market Develop indigenous technology Promote productivity & employment generation 8/5/2009 7 manavazhaganr@bsnl.in

Industrial Policy 1991 : 

Industrial Policy 1991 Industrial Licensing - It is required to establish, to manufacture goods at a specific location before 1991. In the new policy licensing requirement was abolished except for 1. Distillation & Brewing of alcoholic drinks 2. Manufacturing Cigarettes & Tobacco substitutes 3. All types of electronic aerospace & Defence equipments 4. Industrial Explosives 5. Certain Hazardous chemicals Exempted factories have to furnish a memorandum to Industries department Location: In the new policy projects can be established at any location except cities . In a city of 1 million population it has to be established 25kms away from city. Industrial Licensing Policy 8/5/2009 8 manavazhaganr@bsnl.in

Industrial Policy 1991 : 

Industrial Policy 1991 Number of Industries reserved for public sector reduced to 8 and then to 2 ( Atomic energy & Railway ) Growth of PSUs in the following Priority sectors 1.Essential infrastructure Goods & Services 2. Exploration & Exploitation of Oil & Mineral resources 3. Strategic Defence equipments 4. Technology development & building of manufacturing capabilities in areas which are crucial for economic development Autonomy through MOU – Navaratnas Bringing down government equity to 26 % in non-Priority sector PSUs Close down PSUs which can not be revived Fully protect the interest of workers Public Sector Policy 8/5/2009 9 manavazhaganr@bsnl.in

Industrial Policy 1991 : 

Industrial Policy 1991 Foreign Investment allowed up to 51 % of Equity capital in FERA companies Foreign Investment allowed up to 26 % of Equity capital in Defence productions sector. Up to 100 % in certain sectors ( real estate ) Stock market opened for foreign investment EXIM Policy liberalised , tariffs reduced , lifted import restrictions Foreign exchange rate policy liberalised , Rupee was made fully convertible on current account and then recently partly on capital account. Foreign Investment 8/5/2009 10 manavazhaganr@bsnl.in

Industrial Policy 1991 : 

Industrial Policy 1991 Foreign technology agreement under automatic route for priority sector Priority sectors are -Infrastructure , Exploration , Defence products Foreign Technology Agreement 8/5/2009 11 manavazhaganr@bsnl.in

Industrial Policy 1991 : 

Industrial Policy 1991 The government will not scrutiny the investment decisions of MRTP companies Prior approval of MRTP companies for expansion not required Restrictions on merger, acquisition and transfer of shares will be replaced MRTP commission will be strengthened to take action against restrictive & unfair trade practice. MRTP commission will be empowered to enquire into the complaints of customers MRTP Act is replaced by Competition Law MRTP Act Monopolies and Restrictive Trade Practices Act 8/5/2009 12 manavazhaganr@bsnl.in

Public Sector : 

Public Sector Public sector enterprise is an undertaking owned & managed by Government. 244 enterprises are public sector enterprises under the control of Central Government Total investment Rs. 4,21,000 Cr. 1100 are State Public sector enterprises with 50,000 Cr. Investment These PSUs accounts for 25% of GDP & One-third of export PSUs accounts for 70 % of workers employed in organised sector 8/5/2009 13 manavazhaganr@bsnl.in

Public Sector : 

Public Sector Objective: Help in rapid economic growth Earn return on investment & generate resources for development Create employment opportunity Assist & develop ancillary & small scale industries Promote redistribution of income & wealth 8/5/2009 14 manavazhaganr@bsnl.in

Public Sector : 

Public Sector Organisation of Public sector Units: Public enterprises are organised in the following forms: Ministry Departmental Undertakings Government Company Public corporation Holding company 8/5/2009 15 manavazhaganr@bsnl.in

Public Sector : 

Public Sector Organisation of Public sector Units: 8/5/2009 16 manavazhaganr@bsnl.in

Public Sector : 

Public Sector Navaratnas: In 1997 govt. granted autonomy to 9 public sector units so as to support them to become global companies. These 9 companies are BHEL, BPCL, HPCL, IOC, ONGC, SAIL, VSNL, NTPC, IPCL. Later GAIL ,MTNL,BEL,HAL were given the navaratna status. These companies are free to decide upon joint venture, capital expenditure, set up PSEs, set up subsidiaries / office in foreign countries, raise funds from capital market, set alliance. They enjoy substantial managerial & operational autonomy 8/5/2009 17 manavazhaganr@bsnl.in

Privatisation : 

Privatisation Privatisation : Privatisation means transfer of ownership and /or management of an enterprise from the public sector to the private sector. Disinvestment: Disinvestment means sale of shares of public sector enterprises to outsiders. It is one of the method of privatisation. Purpose of Privatisation To increase efficiency To reduce the monopoly of govt. To encourage private & foreign investment To reduce the state’s administrative work To encourage wider ownership of public 8/5/2009 18 manavazhaganr@bsnl.in

Privatisation : 

Privatisation Method of Privatisation in India: Disinvestment Route This involves sale of equity shares of public sector units to outsiders. Disinvestment policy was introduced in 1991-92. Up to 20% of equity in select PSUs sold to Public sector Institutional investors like LIC, UTI . In 1993 Disinvestment committee under the chairmanship of C.Rangarajan was set up to advise on the mode of disinvestment. 1996 Disinvestment commission was set up and 58 PSUs were recommended to shift to private management without sale of shares 1999 – PSUs were classified under Strategic & non-Strategic areas for disinvestment purpose. Strategic Sectors – Defence equipments , arms , ammunitions, air crafts, warships, atomic energy , railways. 8/5/2009 19 manavazhaganr@bsnl.in

Privatisation : 

Privatisation Method of Privatisation in India: 1. Disinvestment Route….Cont. Rangarajan Committee Report Recommendations: 1. Industries reserved for PSUs – Up to 49% of equity can be sold 2. PSUs having dominant market share – Up to 74 % can be sold 3. In all other cases equity can be sold up to 100% 4. Best disinvestment method is offering equity to public at a fixed price 5. Once shares of PSUs are traded in Stock market ‘Fixed price ‘ method can be used . Untill such time sale can be made through auction Disinvestment Commission: 1. Was set up in 1996 , to determine extent of disinvestment, to select the PSU to be divestd, to recommend route to disinvestment, to supervise overall sale . As on date 76 PSUs were divested and Rs. 49,000 cr is raised. 8/5/2009 20 manavazhaganr@bsnl.in

Privatisation : 

Privatisation National Investment Fund: Set up in 2005 , into which the sale proceeds of PSUs will be credited. This fund will be used to develop Infrastructure & Education, health, employment generation and in capital projects. 8/5/2009 21 manavazhaganr@bsnl.in

Small & Medium Enterprises ( SMEs) : 

Small & Medium Enterprises ( SMEs) Micro Industries Small Industries Medium Industries THE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006 Enterprise means an industrial undertaking or a business concern or any other establishment, by whatever name called, engaged in the manufacture or production of goods, in any manner pertaining to any industry specified in the First Schedule to the Industries Development and Regulation Act, 1951. 8/5/2009 22 manavazhaganr@bsnl.in

Small & Medium Enterprises : 

Small & Medium Enterprises THE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006 8/5/2009 23 manavazhaganr@bsnl.in

Small & Medium Enterprises : 

Small & Medium Enterprises Role of SMEs’ Dynamic Economy Socio-Economic Development Accounts for 35% – Industrial Production 40% - Export 60% - Employment 8/5/2009 24 manavazhaganr@bsnl.in

Small & Medium Enterprises : 

Small & Medium Enterprises Importance Provide – Increased employment Require Low gestation period Easy to set up in rural & backward areas Need Small market Encourage Local Entrepreneur Influence standard of living of people 8/5/2009 25 manavazhaganr@bsnl.in

Small & Medium Enterprises : 

Small & Medium Enterprises Government Policy Initiatives 1991 Protection  Promotion Aim : Promotion & Strengthening of SMEs’ Changes in Investment Limit 24 % Equity Participation by other Companies Integrated Infrastructure development Encouraging Industry associations Common Testing facility Productivity Training 8/5/2009 26 manavazhaganr@bsnl.in

Small & Medium Enterprises : 

Small & Medium Enterprises Government Policy Initiatives 1999 Aim : Promotion of SMEs’ Changes in Investment Limit De-reservation of items Foreign participation Establishment of Growth centres Export promotion Marketin assistance Incentives for Quality Improvement 8/5/2009 27 manavazhaganr@bsnl.in

Small & Medium Enterprises : 

Small & Medium Enterprises Recent Policy Initiatives 2006 THE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT – 2006 ( MSMED Act – 2006 ) NATIONAL MANUFACTURING COMPETITIVENESS PROGRAMME (NMCP) 3. PACKAGE FOR PROMOTION OF MICRO AND SMALL ENTERPRISES 4 . RESERVATION / DERESERVATION OF PRODUCTS FOR MANUFACTURE IN THE SMALL SCALE SECTOR 8/5/2009 28 manavazhaganr@bsnl.in

Small & Medium EnterprisesRecent Policy InitiativesTHE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006 : 

Small & Medium EnterprisesRecent Policy InitiativesTHE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006 Objective PROMOTION DEVELOPMENT and Enhancement of Competitiveness 8/5/2009 29 manavazhaganr@bsnl.in

Small & Medium EnterprisesTHE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006 : 

Small & Medium EnterprisesTHE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006 PROMOTION DEVELOPMENT and ENHANCEMENT of Competitiveness through Development of skill provisioning for technological upgradation providing marketing assistance or infrastructure facilities Credit Facilities Measures against Delayed payments 8/5/2009 30 manavazhaganr@bsnl.in

Small & Medium EnterprisesTHE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006 : 

Small & Medium EnterprisesTHE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006 PROMOTION DEVELOPMENT and ENHANCEMENT of Competitiveness through Development of skill National Institute for small Industry Extension & Training - Hyderabad ( NISIET) Indian istitute of Entrepreneurship ( IIE ) – Guwahati National Institute for Entrepreneurship & small Business Development – Newdelhi ( NIESBUD ) + 12 other Institutes 8/5/2009 31 manavazhaganr@bsnl.in

Small & Medium EnterprisesTHE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006 : 

Small & Medium EnterprisesTHE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006 PROMOTION DEVELOPMENT and ENHANCEMENT of Competitiveness through provisioning for technological upgradation Small Industries Development Organisation ( SIDO ) National Small Industries Corporation Ltd. ( NSIC National science and technology Entrepreneurship Development Board ( NSTEDB National Productivity Council ( NPC ) 8/5/2009 32 manavazhaganr@bsnl.in

Small & Medium EnterprisesTHE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006 : 

Small & Medium EnterprisesTHE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006 PROMOTION DEVELOPMENT and ENHANCEMENT of Competitiveness through providing marketing assistance or infrastructure facilities Director of export Promotion ( DEP) Director General of Supply & Disposal ( DGSD ) Rural Industrial & Marketing Corporation ( RIMCO ) 8/5/2009 33 manavazhaganr@bsnl.in

Small & Medium EnterprisesTHE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006 : 

Small & Medium EnterprisesTHE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006 PROMOTION DEVELOPMENT and ENHANCEMENT of Competitiveness through Credit Facilities Commercial Banks Counsil of Scientific & Industrial Research Small industries Service Institute National Small industry Corporation 8/5/2009 34 manavazhaganr@bsnl.in

Small & Medium EnterprisesTHE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006 : 

Small & Medium EnterprisesTHE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006 PROMOTION DEVELOPMENT and ENHANCEMENT of Competitiveness through Measures against Delayed payments Micro and Small Enterprises Facilitation Council Arbitration and Conciliation Act 1996 Courts 8/5/2009 35 manavazhaganr@bsnl.in

Small & Medium EnterprisesRecent Policy Initiatives - 2006 : 

Small & Medium EnterprisesRecent Policy Initiatives - 2006 2. NATIONAL MANUFACTURING COMPETITIVENESSPROGRAMME (NMCP) Objective : To support manufacturing enterprises to become Competitive Schemes : 1. Support for Lean manufacturing (Without Waste & implementing flow ) 2. Promotion of ICT in manufacturing ( Information communication Tech ) 3. Setting up Mini Tool Rooms 4. Encouragement for Quality Management Standards & Tools 5. Campaign for investment in Intellectual property 8/5/2009 36 manavazhaganr@bsnl.in

Small & Medium EnterprisesRecent Policy Initiatives - 2006 : 

Small & Medium EnterprisesRecent Policy Initiatives - 2006 3. PACKAGE FOR PROMOTION OF MICRO AND SMALL ENTERPRISES Objective : To Enhance Competitiveness Package : 1. Legislative backup 2. Credit support 3. Tech & Quality up gradation support 4. Marketing support 5. Empowerment of women entrepreneur 8/5/2009 37 manavazhaganr@bsnl.in

Small & Medium EnterprisesIncentives for SMEs’ : 

Small & Medium EnterprisesIncentives for SMEs’ Export Incentives: Import Replenishment Licenses (REP) Importers are eligible for REP to import raw materials and spares which are used to produce export items. Deemed Export Benefits Producers who supply the inputs to final exporters are deemed to be exporters and are eligible for REP Import Export Pass Book Scheme Exportes having good track record are eligible to import duty free raw materials. Excise Concession: Up to 30 Lakhs for Ssis. Incentives for backwrad areas: Investment Subsidy: Category –’A’ Districts – up to 25 Lakhs Category –’B’ Districts – up to 15 Lakhs Category –’C’ Districts – up to 10 Lakhs Tax Holidy: Tax deduction upto 6% of profit – 80J for 5 years from production date EOU, EPZ – exempt fro corporate income tax upto 5 yrs. CST exemption for Khadi & Village industries for 5 yrs. 100% CST exemption for Tiny,small & large scale industries for 3 – 5 yrs. in different zones 8/5/2009 38 manavazhaganr@bsnl.in

Small & Medium EnterprisesIncentives for SMEs’ …….Contd. : 

Small & Medium EnterprisesIncentives for SMEs’ …….Contd. Other Incentives: Interest free loans Price preference Allotment of developed shed, raw material Land & building at concessional rates Subsidy for Artisans, handlooms Buying test equipments Capital investment Interest Market / Feasibility studies Power generation R&D works Transport Technical consultancy Incentives for Handicapped NRIs’ Retired defence personnel Women Entrepreneurs Exemptions from: Income tax Property tax Stamp duty Sales tax 8/5/2009 39 manavazhaganr@bsnl.in

Small & Medium EnterprisesSickness in SMEs’ : 

Small & Medium EnterprisesSickness in SMEs’ Sickness Definition : The definition of sickness in SME sector has been changing over time. The Third Census on SSI Sector Kohli Committee: "A small scale industrial unit is considered as sick when if any of the borrowal accounts of the unit remains substandard for more than six months, i.e., principal or interest, in respect of any of its borrowal accounts has remained overdue for a period exceeding 6 months OR There is erosion in the net worth due to accumulated losses to the extent of 50 per cent of its net worth during the previous accounting year, and The unit has been in commercial production for at least two years." 8/5/2009 40 manavazhaganr@bsnl.in

Small & Medium EnterprisesSickness in SMEs’ : 

Small & Medium EnterprisesSickness in SMEs’ Criteria to identify sickness In the Third Census, the following criteria were adapted to identify sick/ 1. Continuous decline in gross output compared to the previous two financial years; 2. Delay in repayment of loan from institutional sources, for more than 12 months; and 3. Erosion in the net worth to the extent of 50 per cent of the net worth during the previous accounting year. Units satisfying one or more of the above criteria have to be treated as Sick unit 8/5/2009 41 manavazhaganr@bsnl.in

Small & Medium EnterprisesSickness in SMEs’- Causes : 

Small & Medium EnterprisesSickness in SMEs’- Causes Internal Anatomical causes Underestimation of Project cost Old Technology Wrong Site Unwanted investment in Fixed assets Defective Plant & Machinery Operational causes Defective Financial planning No R&D planning Incapable Management External Shortage of supply in inputs Rise in raw material cost Radical change in govt. policy Recession in Industry Foreign exchange fluctuations 8/5/2009 42 manavazhaganr@bsnl.in

Small & Medium EnterprisesSickness in SMEs’ - Symptoms : 

Small & Medium EnterprisesSickness in SMEs’ - Symptoms At Implementation Stage Undue delay in implementation Lack of coordination with various agencies When the project has started operation Increase in level of inventories Increase in rejection rate of finished goods Irregularity in payment of loan Industrial relations Problem Position of cash credit account Cash credit or overdraft account has been overdrawn or frequently drawn Returned unpaid cheques Long pending unpaid bills Pledged stocks are overvalued to obtain fund from government Uninsured stocks 8/5/2009 43 manavazhaganr@bsnl.in

Small & Medium EnterprisesSickness in SMEs’ - Cures : 

Small & Medium EnterprisesSickness in SMEs’ - Cures Discover new Products & Markets Enhance accessibility to market Information More thrust on R & D More Professionalism Planned training Modernising Operation More attention to Marketing Frequent use of advertisement Efforts to collect dues from buyers 8/5/2009 44 manavazhaganr@bsnl.in

Small & Medium EnterprisesSickness in SMEs’ – Role of BIFR : 

Small & Medium EnterprisesSickness in SMEs’ – Role of BIFR Under Sick Industries Companies Act -1985 , Board for Industrial and Financial Reconstruction ( BIFR ) was setup to make the sick companies viable. The BIFR can direct a financial institution to prepare a scheme for revival of sick companies. The scheme could provide for 1. Financial reconstruction of the company 2. Proper management of sick company by change or takeover the management 3. Amalgamation of sick company with other company 4. Sale or lease of the sick company Based on the scheme provided by financial institution BIFR will take action in line with the High court proceedings. 8/5/2009 45 manavazhaganr@bsnl.in

Entrepreneur : 

Entrepreneur A person who creates something new with value and assuming the risk & Reward Something New + Value + Risk + Reward 8/5/2009 46 manavazhaganr@bsnl.in

Some Entrepreneurs : 

Some Entrepreneurs 8/5/2009 47 manavazhaganr@bsnl.in

Types of Entrepreneurs : 

Types of Entrepreneurs 8/5/2009 48 manavazhaganr@bsnl.in

Role of entrepreneurs in Economic Development : 

Role of entrepreneurs in Economic Development Promotion of capital formation. Immediate large-scale employment. Promotion of balanced regional development. Reduced concentration of economic power. Encourages effective resource mobilization. Promotes export trade. 8/5/2009 49 manavazhaganr@bsnl.in