SSIs submit Budget wishlist

RUN UP TO THE BUDGET

The small-scale sector wants the government to enhance the excise exemption limit for small-scale industries (SSIs) to Rs 1.5 crore from the present Rs 1 crore and restore some of the items that were taken off the reserved list.

The Laghu Udyog Bharti, the apex body of the SSI sector, has in its pre-Budget memorandum also said interest rates for the sector should be brought down to between 8 and 9 per cent.

It has also welcomed the Left parties proposal for putting back certain items of interest on the list reserved for the SSI sector.

The industry body has sought an increase in the excise exemption limit from Rs 1 crore to Rs 1.5 crore as there has been an increase in the cost of all inputs, including wages.

Sources at the Laghu Udyog Bharti said costs of electricity and raw materials were up, but prices of products had remained stable, even as efficiency managed to keep pace.

It has also called for the abolition of the central excise duty on SSI units and suggested a change in the slab structure.

It has further suggested changes in the tariff schedule by making it 5 per cent up to Rs 2 crore and 10 per cent between Rs 2 and 5 crore.

"The taxable items produced by SSI units should be withdrawn from the scope of the MRP-based (maximum retail price) excise duty to save them from the licensing regime," Balwant Rai Gupta, chairman of the Laghu Udyog Bharti, told Business Standard.

"We are also against the move to accommodate medium scale enterprises under the SSI sector as this will allow big industries to take undue advantage of the sops given to SSIs," he said.

Gupta said the government must simplify regulations for the SSI sector.

Typically an entrepreneur in the SSI sector has to get a registration, submit a project report, produce a certified pollution document and a no-objection certificate.

Despite the fact that nearly 5 crore jobs are created in the SSI sector annually, only around 3.2 million units are registered as SSI units, while more than one crore are operating without registration, he said.

Another area of concern is the complicated tax regime in the sector.

"The sales tax structure should be simplified. While the Laghu Udyog Bharti is not against the value-added tax (VAT) per se, we want easier tax norms that facilitate greater tax recovery and minimise the loopholes for non-compliance," Gupta said.

"SSIs are the biggest contributor to Indian exports. It makes up 32 per cent of all Indian exports directly. The popular misconception which discredits the goods produced by SSIs as substandard is unwarranted," Gupta added.