No unanimity on ways to improve SME technology

Industry chambers hold divergent views on how technology upgrade can be brought about in the Indian small and medium enterprise (SME) sector.

The Federation of Indian chambers of Commerce and Industry (Ficci) has requested the government to consider setting-up of an Global Technology Acquisition Fund (GTAF) for Indian SME manufacturers out of the existing foreign exchange reserves.

"Such a fund would fast-track the development of technology in domestic SME manufacturers and enable them to acquire latest technology without getting into the expensive, risky and long developmental process of technology," said Amit Mitra, secretary general, Ficci.

The GTAF could be formed from the existing foreign exchange reserves, that would not only ensure optimal utilisation of forex reserves but also help the economy manage the growing problem of forex inflows.

The support provided through this fund to Indian SMEs would enable them to acquire high technology or high technology companies abroad, a Ficci release stated.

Regarding the corpus for the fund, Ficci stated that if 2 per cent of SME production is taken as a yardstick for investment in technology, then the fund amount comes to around Rs 5,500 crore or $1.4 billion, which is less than 1 per cent of our existing forex reserves.

The Federation of Indian SMEs (FISME), on the other hand, is of the view that reviving the credit linked capital Subsidy scheme as provided for in the last five year plan, is a more feasible option rather than creating a new fund all together.

FISME in its pre-Budget memorandum to the government has sought extension of the scheme, which expired on March 31, this year.

"The 11th five-year plan does not mention this scheme and we believe that the most feasible way is to revive this scheme, already on paper," Anil Bhardwaj, secretary general, FISME, said.