IIA keen on policy measures for SSI growth

The Indian Industries Association, a representative body of the small and medium industry in UP, wants the state to modify the incentive and tax structure in such a manner as to make it conducive for large marketing companies to buy material from smaller companies, and then sell them.

In a two-day workshop organised by the Directorate of Industries and the Institute of Entrepreneurship, a spokesperson of IIA said, "Large companies, with deep pockets and a wide reach, expertise and experience, are better suited for the marketing function, and support of manufacturing activities of small units through the provision of raw materials, technology, design, packaging, quality control, etc. Such a situation can bring about the advantage of scales of economy, by aggregating production in a large number of small units."

The Association wants suitable monetary and fiscal incentives to be worked out, for such companies in the handicrafts, food processing and engineering sectors.

UP's industrialisation is primarily based on the small-scale sector. It is mainly the local entrepreneur who plays the primary role, since there is no or very little capital coming from outside the state for investment. Therefore industrialisation and consequently job creation is based on the growth and maintenance of this sector.

However, in the past, sickness and SSI have gone together. The 3rd All India Survey of SSIs conducted by the Union government revealed that of the 2,89,569 registered SSI units, 1,16,300 were closed, which accounted for 40.16 per cent of SSIs.

As per the IIA estimate, an almost equal number of SSIs were either sick, or in a state of incipient sickness.

The directorate of industries estimates placed the number of closed units at 1,22,282. It further stated that up to March 2006, the number of registered SSI units was 5,21,835.

This figure includes units that were closed, which were covered by the survey. IIA said due to the removal of international trade barriers and reduction of concessions for SSIs, it was necessary that the turnaround strategies for SSIs were worked out.

To achieve this, it felt that the body for resolving these problems, Udyog Bandhu, was taking a very long time to take a decision and that the industry could not wait for such a long time.

The Association said the policies adopted were very good on paper, but failed at an implementation level. It cited the example of government departments and corporations not implementing the purchase and price preference policy for SSI products. Therefore it wanted policy implementation to be done in a transparent manner.