Small firms to face less red tape: PM

SSI's to get better access to credit, technological and marketing support

Prime Minister Manmohan Singh said the government will announce a set of promotional measures for the small-scale sector as reservation did not protect it from global competition.

In line with the objectives of the National Common Minimum Programme, the government will endeavour to free the small-scale sector from inspector raj and provide better access to credit, technological and marketing support, Singh said in his address at the SSI convention.

"If we are to have more winners from the SSI sector then, technology upgradation, marketing support and improved infrastructure will be critical. Even within these overall concerns, space has to be created to factor in the special requirements of sub sectors such as knowledge based industries or the micro credit requirements of non governmental organisations supporting income generating activities in rural India," he said.

He also announced the United Progressive Alliance (UPA) government's intention to go ahead with a comprehensive legislation for the small-scale sector.

"Policies for technological upgradation, marketing support, credit support, etc must evolve new approaches which are flexible enough to adjust to the requirements of each sector and cluster. They must also work in cooperation with industry associations and encourage the formation of viable public-private partnerships," he said.

Singh added the National Commission for the unorganised sector will also examine the problems facing enterprises in the unorganised sector and review the existing institutional mechanisms for supporting small enterprises.

He added that the SSI sector could play a significant role in employment generation and help in the growth of the manufacturing sector.

Telling banks to streamline their lending to the small-scale sector, he asked them to strike a balance between weighing their commercial judgments and their developmental commitments.

Even though banks were flush with money they were unable to maintain the credit flow to the sector, he said.

"While initiatives like the Credit Guarantee Trust were launched in recent years to help small enterprises, with new credit schemes and higher limits of loan eligibility, and a Credit Linked Capital Subsidy Scheme, the availability of credit still remains a problem," the Prime Minister said.