SSI mission meets RBI over sector financing

A delegation of the small scale industry (SSI) sector met the Reserve Bank of India (RBI) officials on Wednesday to discuss the financial problems facing the sector. They were promised timely and adequate finances for the sector. The delegation also sought full banking status for Sidbi.

Vijay Kalantri, president of the All India Association of Industries (AIAI), confirming the meeting said, "This meeting was a follow up to a meeting with Prime Minister Atal Behari Vajpayee and Union minister for SSI, coal and North east region CP Thakur, held in December 2003. A working group comprising Union government, RBI officials and industry representatives has been set up for the purpose."

He added that the delegation has sought an increase in investment limit for the SSI sector from Rs one crore to Rs three crore for small SSI units, Rs five crore for export-oriented SSI units (those units exporting more than 50 per cent of their manufactured goods) and Rs 10 crore for medium SSI units.

Delay in availability of credit leads to cost overruns and the higher cost of credit compared with other countries results into the escalation of cost of production. All these affect the competitiveness of SSI units, he said.

"The sad part is that, at present, there is no clear definition for a large number of medium-size SSI units that are categorised alongside large SSI units. We are seeking timely and adequate financing mechanism to be put in place for the SSI sector. Currently, 20 per cent of working capital is funded by banks (on the basis of total turnover) and 25 per cent credit on total exports is inadequate. Even if these limits are increased, timely availability of finance remains a priority if the SSI sector is to become globally competitive," Kalantri said.

He emphasised that the SSI sector has consistently logged a 13 per cent growth rate over the last few years, despite being plagued by issues of procedural delays, government red tape and harassment by the 'inspector raj'.

A senior state government official commenting on the vexatious issue of inspector raj said, "It is true that though we have issued strict instructions to state government officials against visiting these units and have a government resolution to enforce the new policy, we still get complaints from these units that the inspectors never miss their dates to harass them."