An autonomous research institute under the Ministry of Finance


Central Fiscal Incentives and Concessions to Small Scale Industries: Impact on Growth and Structure

Publication date

Jan, 1996


Report submitted to the Ministry of Industry, Government of India.


Charu C. Garg, S. K. Sanyal, S. T. Nagarathinam and K. R. Pandit


The objective of the study was to enquire whether the Central fiscal incentives provided to the small scale industry are rational and well defined, and till what point the support is rational and justified. The study involved exploring the existing data sources as well as ascertaining the impact of the central fiscal incentives through a sample survey of registered 551 units. The major findings of the study are that SSIs may require selected incentives to survive and grow as they are not only at a disadvantage vis-a-vis other industries but also show reasonably good performance in terms of productivity indicators. It is emphasized that in the short run some tax incentives need to continue, but over the long run non tax incentives like infrastructural development and initial finance should be the focus. Emphasis should be on developing strong horizontal and vertical linkages.

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