National Programme for Rural Industrialization (npri)

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Ministry of Rural & Industry
National Programme for Rural Industrialization (NPRI)


The setting up of rural industrial units is primarily the concern of private entrepreneurs. However, the Central Government has formulated many schemes for the development and promotion of such units throughout the country. The Finance Minister in his Budget Speech for 1999-2000 announced the National Programme for Rural Industrialization (NPRI) to promote clusters of units in rural areas aiming to set up 100 rural clusters in each year. Ministry of Agro & Rural Industries has been designated to coordinate the programme with various Ministries/agencies engaged in similar programme. Small Industries Development Bank of India (SIDBI), National Bank for Agriculture and Rural Development (NABARD), Khadi & Village Industries Commission (KVIC) and states are the major implementing agencies of the programme.


The implementation of the programme is being done at district level by the District Level Implementing Committee (DLIC) under the Chairmanship of District Collector and at state level by State Level Implementing Committee (SLIC) under the Chairmanship of Secretary, Industrial/Rural Development. The programme is being monitored at national level by the Inter Ministerial Task Force under the Chairmanship of Secretary (SSI&ARI).


Ion order to facilitate the implementation of the programme a scheme has been formulated on NPRI, which has a provision for extending financial assistance up to Rs. 5 lakhs for interventions in the cluster. The purpose of this financial assistance is to fill the certain gaps in the development of the clusters and does not constitute the entire amount required for such development. There is budget provision of Rs. 5 Crore in the 10th Plan under the scheme.


Integrated Infrastructural Development (IID) Centres :


Besides this, Central Government formulated another Scheme for setting up Integrated Infrastructural Development (IID) Centres in rural and backward areas of the country since the 8th Five Year Plan Period. During the 8th Five Year Plan a target of 50 such IID Centres were set.


During the 9th Five Year Plan also the scheme has been allowed to continue. Under this scheme, the Central Government provides aid in the form of grant up tp Rs. 2.00 crores (Rs. 4.00 crores in case of North-East Regions) for a project with an investment of Rs. 5.00 crores excluding the cost of land to State Governments for setting up IID Centres, there is a provision of loan from SIDBI upto Rs. 3.00 crores. A project of 15 to 20 hq. is expected to accommodate about 400 Small Industrial Units in rural and backward areas. The cost over and above Rs. 5.00 crores is borne by the State Government who are expected to select appropriate site for the project and implement through an Implementing Agency of their own. A statement showing the IID Centres which have already been sanctioned so far, is enclosed.




The setting up of rural industrial units is primarily the concern of private entrepreneurs. However, the Central Government have formulated many schemes for the development and promotion of such units throughout the country.


Assistance given by KVIC for setting up units in rural areas


Up to 1994, KVIC was assisting for establishment of rural industrial units for the selected number of industries under the purview of KVIC from the budgetary sources. Under the pattern approach, there was liberalised patter of assistance with higher grant for hill, border, tribal and weaker section areas. As per the recommendations of High Power Committee, constituted under the chairmanship of the then Prime Minister, from 1.4.1995 KVIC has switched over to project approach and KVIC is providing margin money grant for establishment of industrial units in the rural areas. The grant component is 25% of the project cost in normal cases however in NE region, Andaman & Nicobar and Sikkim state this grant component of margin money is 30%.


Bamboo & Cane industry


KVIC took over the development of bamboo and cane industry in 1968-69 and emphasis was laid on manufacture of fancy, value added articles in addition to traditional items which would fetch relatively better income for artisans.


The activity of this industry is prominent in the states of Maharashtra, U.P., Rajasthan, J&K, West Bengal, Punjab and A.P.


The KVIC’s developmental activities emphasises in bringing of scattered artisans under the institutional framework of cooperative and registered institutions by providing them finance, improved tools and equipments and marketing facilities.


During the year 1998-99, various cluster development programme to facilitate the surrounding scattered units with technical and financial assistance were identified. Rs. 24.15 crores is outstanding loan under this industry as on 31.03.99 through the budgetary source.


The industry has good potential to provide employment to scheduled castes, scheduled tribes and weaker sections of the community which accounts for 44% of the employment under cane and bamboo. Women’s participation is around 40%.


Mat Weaving (Fibre) industry


This industry under the purview of KVIC has grown consistently during the past years.


The development strategy of the KVIC envisages introduction of different improved tools for processing different fibres so as to make the product competitive in quality and finish. Some of the other objectives of the KVIC are identification of new sources of raw materials and development of improved methods of extraction of fibres. Scope for introduction of power loom in kora mat weaving for increasing productivity and wages was explored. Study was also conducted for manufacturing of design mats out of kora grass for improving marketability and value addition.


Prominent states under this industry are U.P., Maharashtra, Rajasthan, Punjab and West Bengal.


About 43% of the employment under fibre industry is shared by SC and ST. The women’s participation is around 56%.


An amount of Rs.24.26 crores is outstanding as on 31.03.1999 under this industry.


A developmental unit is functioning at Srikariyam, Thiruananthpuram (Kerala) where new designs of different articles are developed, case studies of different items under fibre industry are undertaken. So far, 650 new designs (in addition to 36 designs during 1998-99) and 36 case studies have been done by the centre for development of the industry.


Assistance provided by Coir Board


The board has taken several steps for the development of coir industry in India through implementing various schemes under the following activities:-


  •         Science & technology and training.

  •         Domestic market development.

  •         Export promotion and trade information service.

  •         Welfare measures.

  •         Quality improvement.

  •         Development of brown fibre sector.

  •         Mahila coir yojana under targeted programme for coir development.

  •         Integrated coir development project under co-operativisation scheme.


The thrust of research and development efforts under the science and technology is on modernization of production infrastructure, elimination of drudgery in spinning and weaving, improving productivity and efficiency. Development of motorized ratt and automatic spinning machine for spinning coir yarn and sem automatic loom and fully automatic loom for weaving coir matting motivated the entrepreneurs to set up units for spinning coir yarn and weaving mats and mattings. To meet the requirement of trained manpower Coir Board runs its training institutions located in Kerala, Taminadu, Karnataka, Andhra Pradesh, Orissa and Assam.


Financial assistance


The financial assistance scheme an entrepreneur is eligible for a one-time subsidy of 25% of the cost of equipment and infrastructural facilities with a ceiling limit of Rs.1.5 Lakhs to set up a coir unit. For renovation/modernization of the existing units, the board provides financial assistance to the tune of 25% of the cost subject to a maximum of Rs.0.50 Lakhs. The financial assistance to coir industrial units is not granted on the basis of any state wise allocation.

A total outlay of Rs.657.54 Lakhs has been provided for extending financial assistance to set up coir units during IX five year plan. For the current financial year (1999-2000) an outlay of Rs.75 Lakhs has been provided for this purpose.


Assistance provided by the office of the DC(SSI)


Integrated Infrastructural Development Scheme


The scheme of Integrated Infrastructural Development (IID) for small scale industries facilitates setting up of industries in the rural/backward areas. The scheme covers backward districts/rural areas which were not covered under the Growth Centres Scheme


The objective of the IID scheme is to create and develop infrastructural facilities like developed sites, power distribution network, water, telecommunication, drainage and pollution control facilities, roads, banks, raw materials, storage and marketing outlets, common service facilities and technological back up services. Under the scheme, the concerned State Governments are required to select suitable sites in the rural/backward areas, firm up the project proposals and get the project appraised from SIDBI. The estimated cost to set up an IID Centre is Rs. 5 crores (excluding cost of land) which is shared between the Government of India and the Small Industries Development Bank of India (SIDBI)in the ration of 2:3. For North-East Region the share basis is 4:1.


Funds allocated for 1997-98 were Rs. 15 crores, for 1998-99 Rs. 24 crores and Rs. 15 crores for 1999-2000. As on date 52 IIDs have been sanctioned, out of which 5 have been official abandoned, 47 IIDs are at various stages of implementation. So far a sum of Rs.2725.28 Lakhs has been released as government grant for this purpose.


Other measures


The Finance Minister in his Budget Speech for 1999-2000 announced the National Programme for Rural Industrialisation (NPRI) to promote clusters of units in rural areas aiming to set up 100 rural clusters in each year. Office of the Development Commissioner (SSI) has been designated to coordinate the programme with various Ministries/agencies who are also engaged in similar programme. No separate budgetary allocation were made for the purpose. It was, therefore, decided to coordinate and synergies the efforts being made by various Ministries/Departments/organizations and the State Governments so as to have a concerned effort towards setting up rural clusters. Khadi and Village Industries Commission has taken up 50 rural industrial clusters for development during the year 1999-2000. SIDBI also has selected 25 clusters for development. The rest have been taken up by Office of the DC(SSI), NABARD and the States. The implementation of the programme is being done at the district level by an implementing committee under the Districit Magistrate with members from other related Ministries/agencies. A state level committee has also been constituted under the Chairmanship of Secretary, Industrial/Rural Development to oversee the implementation of the programme. A third committee at national level has been constituted under the chairmanship of Development Commissioner (SSI) to formulate policy and guidelines, set up target for the year and coordinating among the heads of the various Ministries/agencies. The identification of cluster has already been completed and diagnostic studies taken up for identifying the needs of the cluster. On the basis of the diagnostic studies, implementation strategy will be drawn up. In some cases, implementation is already under way. The resources/funds needed for the programme are being pooled from various Ministries/agencies.



In order to develop Khadi and Village Industries (KVIs) for generation of additional employment for 2 million persons as recommended by the High Power Committee (HPC) under the Chairmanship of the then Prime Minister in 1994, the Khadi and Village Industries Commission(KVIC) has launched a programme known as the Rural Employment Generation Programme(REGP). In addition to normal programme, more focused special programmes were also started which were subsequently merged with normal programme. These special programmes were:-


  •         District Special Employment Programme(SEP)

  •         125 Block Development Programme.

  •         National projects on selected village industries


  •       District Special Employment Programme :


SEP was launched in 1992-1993.The programme envisages employment generation of 10,000 persons per districts over a period of time. So far 71 backward districts spread over in 24 States in the country have been identified for launching the programme. As on 31.03.98, a total of 46 districts have been covered under this programme and the programme is fully operational in 16 districts.


The names of the 16 districts where SEP is fully operational as on 3.03.98 is as follows:-


1. Adilabad(AP) 2. Kurnool(AP) 3. Kohima(Nagaland)

4. Banaskantha(Guj) 5. Ambala(Haryana) 6. Chamba(HP)

7. Alleppy(Kerala) 8. Thrissur(Kerala) 9. Sarguja(MP)

10. Kalahandi(Orissa) 11. Dausa(Rajasthan) 12. Aizwal(Mizoram)

13. Tirunelveli(TN) 14. Ramananthapuram(TN) 15. MAU(UP)

  1. 16.              Kolar(Karnataka)


(Fully operational means where the implementing agencies have been identified, targets and funds have been approved, funds released, infrastructure created and from where progress reports on employment generation are being received) SEP was sanctioned to 226 institutions in 30 districts for the year 1997-98. When it becomes fully operational in 30 districts, 56872 persons will be provided jobs under KVI sector. Types of village industries units being set up under this programme are:- carpentry and blacksmithy, alluminium, leather, fruit processing, cane and bamboo, medicinal plants, honey processing, stone crushing, detergent soap, brick bhatta etc.


  •       125 Block Develoment Programme :


This programme was initiated in 125 backward blocks in the country to commemorate the 125th Birth Anniversary of Mahatma Gandhi. It was launched on 2nd October,1994 targetting minimum sustainable employment of 1000 per block. So far 171 institutions have been identified under this programme.


The High Power Committee recommended creation of additional two million jobs in the remaining years of 8th five year plan i.e. 1994-95 to 1996-97 through Khadi and Village Industries programme including the SEP and 125 Blocks Development Programme and in the Industry Minister’s Conference held on 24.08.1986, it was decided to allocate funds to the State Khadi and Village Industries Boards for this purpose and a sum of Rs.74 crores was released to Khadi and Village Industries Boards. Since the Khadi and Village Industries Boards were not able to utilise the funds in the selected districts and blocks, they were allowed to utilise the funds for creation of additional jobs anywhere in the State. With the introduction of Margin Money Scheme in village industries from 1995-96, since there was no special incentives for selected districts and blocks, the Special Employment Programme and the 125 Blocks Development Programme were merged into the Rural Employment Generation Programme.


  •       National Projects on Village Industries :


  •         Handmade paper (HMP) Industry :


Under the handmade paper industry, it is proposed to set up 460 new HMP units providing employment to 40,000 persons. One registered institution at Faridabad has been identified under this programme.In addition to this, five traditional handmade paper units have been given financial assistance for revival. Under this programme, two cluster programme have been financed in Rajasthan involving 19 individual entrepreneurs.


  •         Leather Industry :


This programme envisages for setting up of 200 projects all over the country. Four projects have been sanctioned and implemented, one each at Kalyani (WB), Ambala (Haryana), Jalandhar (Punjab) and Agra (UP). In Agra, a Common Facility Centre for footwear units has been set up. Under the Leather Technology Mission,a KVIC/UNDP Joint Programme, a project has been taken up at Kalyani(WB). So far 498 artisans have been trained under this programme.


  •         Beekeeping Industry :


This programme proposes to generate employment of about 50,000 persons by the end of the 9th Five Year Plan by implementing 99 National Projects all over the country. The KVIC in colloboration with the North Eastern Council has established a Regional Project at Boko in Assam for development of apiculture in the North Eastern Region.


Budgetary Support


The REGP was introduced in 1995-96 with allocation of Rs. 130 crores . During 1996-97, 1997-98 and 1998-99, Rs. 74.20 crores, Rs. 105 crores and Rs. 46.65 crores respectively were released to the KVIC for REGP. During the current financial year, there is a provision of Rs. 140 crores under this head.




In order to ensure that the Programme achieves its intended objectives, it is monitored at three levels:-


1. At the National level, the Monitoring Committee is headed by the Secretary, SSI&ARI. The other Members include AS&FA, Joint Secretary, (SSI&ARI) ,Joint Secretary(Rural Development), Representative of Planning Commission (not below the rank of Joint Advisor) and Chief Executive Officer, KVIC .The last review meeting was taken by Secretary, SSI&ARI on 22nd October, 1998 at Udyog Bhavan, New Delhi with the Industry Secretaries of State Govts, the KVIC, CEOS of KVIBs, representatives of RBI,NABARD, and other Banks.


2. The Monitoring Committee at the KVIC level consists of CEO, KVIC, FA-KVIC, Joint CEOs and State Directors of the KVIC to ensure effective coordination with the implementing agencies.


3. At the District level, the Project Monitoring Committee works under the Chairmanship of the District Collector and includes representatives from the KVIC, DRDA, Banks and implementing agencies.



Tiny enterprises currently defined as those having investment in plant and machinery up to Rs. 25 lakhs constitute about 95% of the small scale sector. . The policy measures for the promotion of small, tiny and village industries announced in August, 1 991 envisaged a separate package of facilities and incentives for the promotion of tiny industries something distinct as compared to the large small scale units.


Government has taken various steps for the promotion of the tiny enterprises. These steps include earmarking of 60% of credit flowing to SSI sector under priority sector lending programme of banks for tiny units (40% for tiny units having investment in plant and machinery up to Rs.5 lakhs and 20% share to units having investment in plant and machinery between Rs. 5 lakhs to Rs. 25 lakhs).


Tiny enterprises, a large number of which are unregistered units, have been made eligible for same rate of excise exemption as available to registered units since 1 994-95. Excise exemption limit for SSIs including tiny units has been enhanced from Rs. 30 lakhs to Rs. 50 lakhs. This will give inducement to the tiny units for increasing their production.


Government has decided to adopt additional measures for the promotion of Tiny Enterprises by earmarking facilities for Tiny Units under the Integrated Infrastructural Development (IID) Scheme. The NSIC would earmark 40% of the assistance to the tiny units under various schemes viz., supply of machinery on hire purchase, marketing support, technology assistance, training facilities etc. In order to ensure flow of credit to tiny units, a consistent and higher flow of credit to tiny units, the SIDBI will endeavor that up to 60% of its refinance flows to tiny sector.
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