Uttaranchal body seeks FDI in small-scale sector

Ahead of the Union Budget, the Indian Industries Association (IIA), a body of small and medium industries of Uttaranchal, has come out with a slew of suggestions for the growth of the SSI sector and asked the central government to make provisions for inviting foreign direct investments in this sector.

"Make FDI norms more liberal for the SSI sector. This will help generate more jobs and help the SSI sector to technologically upgrade their product quality," IIA chief Pankaj Gupta has said in a letter to Union Finance Minister P Chidambaram.

The IIA, having 400 member-industrialists, also urged the Centre to increase the limit of investment in plant and machinery to Rs 3 crore for the sector. The limit was raised to Rs 1 crore by the previous government, he said.

Gupta also said the Centre should accord full bank status to the Small Industries Development Bank of India (Sidbi), which was specifically catering to the needs of small units. Sidbi should be able to provide working capital, loans, funds and non fund-based loans, he added.

On the venture capital fund, Gupta said it was perceived to be high risk and high gain fund. He also called for simplification of the Credit Guarantee Fund Scheme suggesting that it should be made mandatory for the SSI funding to take cover under this scheme till an entrepreneur in writing refuses that.

"Banks should not be allowed to take collateral up to the extent of limit of this scheme," he said. In this regard, Gupta said some small entrepreneurs were not being given loans for the want of collateral guarantees.

Gupta also expressed hope that the Centre would take steps in the direction of labour reforms including removal of restrictions for closure/retrenchment/layoff for industries employing workers up to 1,000.

Welcoming the value-added tax, Gupta said the new measure should only be implemented after doing away the 4 per cent central sales tax. "If there is the VAT, then there should be no CST," he said.

He also called for revival of state financial corporations and said they should be made more competitive and aggressive in their funding. "The concept of third party appraisal by some outside agency should be introduced by these corporations," he suggested.