M A I N   N E W S

PM announces sops for small units
Excise duty exemption limit doubled
Tribune News Service

NEW DELHI, Aug 30 — Amidst clouds of WTO agreements looming large over the small scale industry, the Prime Minister, Mr Atal Behari Vajpayee, today announced several incentives to this sector to face the challenge posed by globalisation.

The incentives include increase in the Excise Duty exemption limit from Rs 50 lakh to Rs 1 crore, financial package of Rs 447 crore to the handloom sector and the measures to dismantle ‘‘inspector raj’’.

‘‘You must accept the challenges of globalisation and improve your product’s quality to effectively deal with the forces of competition,’’ the Prime Minister said addressing the first National Conference on Small Scale Industries here.

The Union Minister of State for Small Scale Industries and Agro and Rural Industries, Ms Vasundhra Raje, said the small units located in the rural and semi-urban areas of the country mainly manufacture products, which cater to the demands of the local markets.

‘‘These units, to my mind, would not, largely, be affected by the impact of globalisation and liberalisation,’’ Ms Raje said.

The Minister observed that there had been no surge in imports despite the removal of Quantitative Restrictions.

However, to protect the domestic industry, Ms Raje said ‘‘we have the means at our command by way of enhancing the applied tariff to the bound rates, using safeguard measures, imposing anti-dumping duties and even re-imposing Quantitative Restrictions.’’

Following the WTO panel ruling against India, the country has through a bilateral agreement with the USA agreed to remove QRs from 1429 items. 715 items have been already put on OGL, rest to be on free list by 2001.

The free list include 576 of 812 items already reserved for SSIs, the balance 140 items to be on free list by 2001. This will affect all consumer goods including food, clothing, household appliances and canalized products as agriculture and petroleum products.

The Prime Minister said the small scale sector had suffered due to inadequate access to credit availability and announced the ‘‘raise in limit for composite loan from Rs 10 lakh to Rs 25 lakh.’’

This, he said, would help entrepreneurs to secure term loans and working capital from the same agency and industry related service and business enterprises with a maximum investment of Rs 10 lakh will qualify for priority lending.

Announcing a capital subsidy of 12 per cent for investment in technology in select sector, he said an inter-ministerial committee of experts would be set up to define the scope of technology upgradation and sectoral priorities.

Mr Vajpayee said measures to streamline the inspections would be undertaken and a fresh census carried out and would throw light on the incidence of sickness and its causes.

Encouraged by the response of the SSI units to the ISO 9000 certification, he said the government would continue with it for another six years and would continue to give Rs 75000 to those units which comply with quality management standards.

About the Khadi and Village Industries, Mr Vajpayee said the government was committed to further strengthening the viability of this sector.

Stating the rebate on sale of Khadi products would continue, he announced the provision for 20 per cent of projected annual turnover to be given as working capital loan, continuation of concessional lending facilities and preference for loans for technology upgradation.

The Handloom sector, needs to be protected and promoted, the Prime Minister said the government had approved a Deendayal Hathkargha Protsahan Yojana aimed at supporting the handloom sector through finance, design and marketing inputs.

The scheme, to be implemented by the Centre and States, has total financial implication of Rs 447 crore. This scheme provides comprehensive financial and infrastructural support to weavers and handloom organisations that will substantially strengthen this sector, he said.

Stating that the SSI should ‘‘achieve an export growth of nine to 10 per cent’’, the Union Minister said during the decade the SSI sector grew at 8.2 per cent compared to overall growth rate of 6.1 per cent of the industrial sector.

The SSI sector constitutes 40 per cent of all manufacturing, offering more than 7500 products and providing 172 lakh jobs through 32 lakh units.

UNI: Trade and industry chambers today welcomed the steps to stengthen the SSI sector under the WTO regime, stating that the innovative scheme proposed on technology upgradation, financial package and marketing would help the revival of the sector.

Assocham president Shekhar Bajaj said the financial packages such as composite loan scheme, no collateral security for loans, earmarking of credit for tiny sector, specialised SSI bank branch in each district and SSI cluster, credit guarantee scheme launched through SIDBI for securitising loans, announcement of support from national equity fund and extended operation of technology development and modernisation fund would greatly associate the revival of sagging SSI sector.

However, Mr Bajaj said, the fiscal benefits available to SSIs for marketing should be extended to the branded marketing products.

The FICCI also welcomed the announcement made by the Prime Minister regarding the raising of the limit of excise exemptions to Rs one crore from the existing level of Rs 50 lakh.

The chamber also appreciated the decision taken by the PM towards reviewing the labour laws and customs duties for the development of the SSIs. ‘‘Many of the provisions of labour laws have become outdated and need a review. Trade unionism in the sector has been hurting the small units. In order to protect the interests of the SSIs and enable them to undertake modernisation and technological upgradation there is an urgent need to review the labour laws.’’

The FICCI stated that government should aim at raising the amount initially to at least Rs 750 crore and later on to Rs 1000 crore to meet the growing needs of the sector.

The All India Association of Industries (AIAI) also hailed the various sops and said these will boost and make small scale sector more competitive.

Highlights

• Raising excise duty exemption limit from Rs 50 lakh to Rs 1 crore.
• Capital subsidy of 12 per cent for investment in technology in select sectors. An inter-ministerial committee of experts to define scope of technology upgradation and sectoral priorities to be set up.
• Government to go in for fresh census on SSI after 12 years to cover, among other things, incidence of sickness and its causes.
• Government to continue for next six years granting Rs 75,000 to each unit that obtains ISO-9000 certification.
• Provision of 20 per cent of projected annual turnover to be given as working capital loan for khadi and village industries.
• A Rs 447 crore scheme for the handloom sector to be implemented jointly by the Centre and State governments.
• A group to be set up to recommend within three months means of streamlining inspections.
• Limit of composite loan raised from Rs 10 lakh to Rs 25 lakh. Entrepreneurs will now be able to secure term loans and working capital from the same agency.
• Credit guarantee scheme with corpus fund of Rs 125 crore for small entrepreneurs.