Micro, small and medium industries (MSMEs) in Madhya Pradesh have demanded low interest regime, soft procedures and rework on Credit Guarantee Fund Scheme (CGFS). The industries associations are planning to press for the demands to be met in the forthcoming Budget. Credit to small and medium enterprises in the state, according to various associations, is costlier and insufficient during high inflation situation, ever increasing prices of raw material, labour shortage and highly competitive environment.
“Small industries are frustrated in the state as interest rates are too high (reaching 16-17 per cent) at the time of loan repayment. Central government must work out some formula to bring it down to as low as nine per cent,” Rs Goswami, president, Madhya Pradesh Laghu Udyog Sangh said, adding, “funds are available but after undergoing cumbersome documentation process and are insufficient under various schemes like CGFS”.
CGFS for MSMEs was launched by the Government of India to make available collateral-free credit to the micro and small enterprise sector. The state industrialists have, however, alleged that all bankers either fund a minuscule amount like Rs 5 lakh or demand collateral for higher amounts. “This scheme needs to be reviewed; the collateral-free credit limit under the scheme must be raised to Rs 50 lakh from the existing Rs 25 lakh,” said Gautam Kothari, president of Pithampur Audyogik Sangathan. Pithampur is known for its automobile industries. “Industries are already facing labour problems, high cost of raw material and poor infrastructure, government at least should ensure sufficient funds to make the industries viable in the highly competitive atmosphere.”
Under the fund trust for MSME scheme, state industries have been sanctioned Rs 21.62 crore in Indore, Rs 15.57 crore in Bhopal, Rs 6.48 crore in Jabalpur, Rs 6.25 crore in Ujjain and Rs 4.76 crore in Raisen against the national approval of Rs 3,301.16 crore during April-June 2010.
Kothari also wants the Central government to ensure 20 per cent of the government purchase from MSMEs within two years from now against the Central government’s assurances of starting the process in three-to-four years. The Confederation of Indian Industry (CII) has also pointed that exemptions in excise limit should be done away with and minimum alternate tax must be abrogated. According to the data available with Business Standard, there are 4,095 non-viable units under sick category in the state with an outstanding of Rs 10,932 lakh. Of them 3,693 units are funded under Rs 5 lakh category, 197 units under Rs 5-10 lakh category and 205 units above Rs 10 lakh category.