Govt to table SSI Bill

The government will place the omnibus small industries Bill in the Budget session of Parliament, which is aimed at cutting down the inspector-raj in the sector.

Mahabir Prasad, minister for small-scale, agro and rural industries, said today, "The draft of the Small Enterprises Development Bill, 2004, has already been circulated among the ministries."

He said the bill proposed to bring all laws governing the sector under a single law. It would address issues relating to registration, credit, marketing and trade protection for the sector.

The minister was speaking at a conference of state ministers to discuss the areas of concern for the SSI sector.

The bill would also reduce the number of inspections needed to certify SSI units. BS Minhas, secretary in the ministry, said over a period of five years there would be only one inspection necessary.

Additional inspections would require approval of higher authorities. The bill also seeks to empower the SSI ministry to decide on the excise concessions to the units and the definition of the SSI unit, he said.

Prasad said his ministry was pursuing with the Reserve Bank of India, finance ministry, the Planning Commission and commercial banks to devise new methods for improving the credit availability to the SSI sector.

Minhas said the ministry had devised a scheme in collaboration with the Indian Banks Association to obtain credit rating for SSI units.

He said this would facilitate the flow of credit to them. He said the government would reimburse the 75 per cent of the cost of the ratings, up to a ceiling of Rs 40,000, from agencies acceptable to banks. At present, the non-performing assets in the SSI sector stands at 37 per cent.

Prasad said the ministry had adopted a strategy of developing clusters of small-scale units dedicated to particular products.

"Apart from five national programmes of cluster development for toys, locks, stone, hand tools and machine tools, action has been initiated to develop seven new clusters during 2004-05," he said.

He said the ministry had identified 60 clusters and submitted a list of it to the Reserve Bank of India for asking the banks to prepare credit plans for them.

"Office of the development commissioner (SSI) has identified 21 clusters for development in consultation with the state governments and will be extending the programme further," he said.

The states complained that rural banks were hesitant to finance because of an adverse risk perception, absence of credit rating and high NPA and transaction cost. The share of net credit from the banks to the SSI sector had slipped from 17.5 per cent in 1998 to 11.1 per cent in 2003 and there was a gap between sanctions and disbursements, Minhas said.