Indsutrial Co-operatives

INDSUTRIAL CO-OPERATIVES These were initially started to overcome the difficulties of weavers in the province of Bombay & Madras in the early part of the present century. These provided raw materials, loans, marketing & other facilities. Later on State Govts started providing subsidies to SSI, Cottage & Village Industries & they made some progress.

Objectives Industrial co-operatives were primarily established for providing assistance to the craftsmen & skilled workers engaged in small – scale & cottage Industry. Their broad objectives are 1. To provide financial assistance to members. 2. To provide raw materials, tools & other relevant things. 3. Providing marketing facilities. 4. Secure contract from Govt. or public enterprise & get it implemented with the help of members. 5. Purchase machinery, etc & provide the same to its members on hire. 6. Arranging imports of technical know how & develop the same with the help of members. 7. Borrowing funds.

Kinds of Industrial Co-operatives 1. Workshop Co-operative Activities are carried on at a. b. c. d.

Common workshop where common facilities are provided. Raw materials, etc. are provided to the members by the cooperatives. Desgin & specification are also provided To take up production & marketing of a given product.

2. Industrial Service Co-operatives. These provide only services to the members like raw materials, machine tools, marketing, technical assistance, etc. Industrial co-operatives are organised on the basis of trade/occupation. E.g. weavers, oil crushing, leather, etc.

Structure of Industrial Co-operatives 1. Primary Industrial Co-operatives At village or group of villages level. They provide raw material, fin. assistance & marketing facilities. 2. Central Federation It co-ordinates the work of primaries at district level for marketing & fin. assistance 3. National/Apex Federation Besides providing fin. Assistance & raw material to Central Federation, they provide marketing assistance. They also export or import goods.

Sources of Finance for Industrial Co-operatives a)

State Fin. Corporations/ Industrial Fin. Corporations Functions − Guarantee loans − Underwrite issue of stocks, shares, bonds, etc. − Grant loans − Subscribe to debentures.

b)

SIDBI − It is an apex level refinancing agency. It extends

Assistance to SSI, Co-operatives & small road transport operators, indirectly through state level Institutions & commercial banks by way of refinance of Industrial loans. SIDBI has launched the National Equity Fund Scheme for providing support in the nature of equity to those tiny & small scale industrial units whose manufacturing cost does not exceed Rs. 5 lacs. The scheme is administered through nationalised banks. SIDBI introduced the Single Window Scheme for grant of term loans & working capital assistance to new tiny & small scale units.

Functions of SIDBI 1. Grant direct assistance as well as refinance to primary lending Institutions for financing exports of products manufactured by SSI. 2. Provide services like factoring, leasing, etc. to industrial concerns in SSI sector. 3. Provide financial support to national small industries Corporation for providing leasing, hire purchase & marketing support to industrial units in the SSI sector. 4. Extend seed capital/soft loan assistance under National Equity Fund, Mahila Udyan Nidhi, Mahila Vikas Nidhi and Seed Capital Schemes through specified lending agencies. 5. Extend fin. Support to State Small Industries Dev. Corpn. for providing scarce raw materials & marketing the products of industrial units in small sector. 6. Discount & rediscount bills arising from sale of machinery to or manufactured by industrial concerns in SS sector.

SIDBI has introduced the following liberalised terms of assistance 1. Automatic Refinance Scheme Under this term loans up to Rs. 50 lacs are refinanced up to 50% of the term loans. 2. Single Window Scheme Under this, cash – credit limit is sanctioned up to 70%. Under this proposals for rehabilitation, modernisation & tech. upgradation of existing units are considered. 3. It has setup a Venture Capital Fund to assist entrepreneurs in establishing projects in new technologies. 4. SIDBI has introduced a refinance scheme for resettlement of voluntary retired workers of National Textile Corporations, retired defence personnel, etc.