Registration of an existing or proposed small scale enterprise
is voluntary and not compulsory. It has no statutory basis. But, registration
is beneficial for the enterprise itself because it makes the unit eligible
for availing the benefits given by the Central or State Governments for
the promotion of SSIs. Some of the incentives so obtained by them relate
to credit guarantee scheme; priority sector lending; capital subsidy;
reduced customs duty; ISO-9000 certification reimbursement; power tariff
subsidies; exemptions under tax laws; etc.
Directorate or Commissioner of Industries or District Industries Centres
(DIC's) are the concerned authorities for registration of small scale
units. This registration is both location specific and product specific.
Like in certain State capitals and metropolitan cities, it is granted
to only those units which are located in the designated industrial areas/estates.
A small scale unit is generally subjected to two types
of registration. Initially, a provisional registration is granted for
the proposed enterprise. It is termed provisional because the enterprise
is yet to come into existence. It is granted for a specified period of
time during which the unit is expected to be setup. A 'Provisional Registration
Certificate (PRC)' enables the unit to obtain :- (i) term loans and working
capital from financial institutions, banks under priority sector lending;
(ii) facilities for accommodation, land and other approvals; (iii) no
objection certificates (NOCs) and clearances from regulatory bodies such
as pollution control board, labour regulations, etc.
Once the unit has commenced commercial production, it is
granted permanent registration. It is a life time registration given after
physical inspection of the enterprise and scrutiny of certain documents.
Some of the formalities required to be completed for seeking permanent
registration are :-
- Clearance from the municipal corporation
- State pollution control board clearance
- Sanction from the electricity board
- Ownership/tenancy rights of the premises where unit
- Copy of partnership deed/Memorandum of articles of association
in case of a private limited company
- Sale bill of product manufactured
- Sale bill of each end product
- Purchase bill of each raw material
- Purchase bill of machinery installed
- BIS/QC certificate if applicable
- An affidavit giving status of the unit, machinery installed,
power requirement, etc.
The registration certificate so issued by the concerned
authority is seen as a proof of the unit being a small scale unit. It
enables the unit to get several concessions like :-
- Income tax exemption and Sales tax exemption as per the
State Government policy.
- Incentives and concessions in power tariff, etc.
- Price and purchase preference for goods produced.
- Availability of raw material depending on existing policy.
Though, provisional registration is not compulsory for
getting a permanent registration. But, a provisional certificate enables
the unit to apply to the various departments and agencies for assistance
in setting up of the enterprise.
Such a registration procedures is generally uniform across
the States. However, there may be some modifications done by individual
States. For example, certain States may have a 'SIDO registration scheme'
and a 'State registration scheme'. But, whatever be the registration scheme,
the main purpose is to maintain statistics and a roll of such units for
providing incentives as well as to create nodal centres at the Centre,
State and District levels to promote SSIs. It gives recognition to the
industrial unit and helps in generating a database for policy planning.
A small scale unit may also become liable for de-registration,
if it crosses the investment limits; starts manufacturing any new item
or items that require an industrial license or other kind of statutory
license; or does not satisfy the condition of being owned, controlled
or being a subsidiary of any other industrial undertaking.