SSI sector has nothing to cheer about

There is nothing much for the small scale sector to cheer about and neither has there been any damage. It is good that the exemption limit for excise duty for SSIs at Rs 1 crore has been kept intact," said B Yerram Raju, director, Indian Institute of Economics and board member, The Federation of Andhra Pradesh Chambers of Commerce and Industry (Fapcci).

The industry was looking forward to the enactment of the pending Small and Medium Enterprises (Development) Bill 2005 besides institutional credit and fiscal concessions in the Budget.

The SSI sector, especially pharma SSIs thriving on contract works, had sought revision of the excise duty exemption limit from Rs 1 crore to Rs 5 crore, raising of loans under capital subsidy scheme from the existing Rs 40 lakh to Rs 1 crore and bringing down the customs duty from 16 per cent to 8 per cent.

The introduction of the MRP-based excise duty brought many of the pharma SSIs out of the ambit of the excise duty exemption limit of Rs 1 crore.

Selective reduction of customs duties has given fillip to certain sectors. "The reduction in customs duty on bulk plastics would pass on the benefit to the SME segment and the end consumer," said Ravindra Babu, former president of AP Plastic Manufacturers Association.

The reduction would bring down the cost of raw material by about Rs 2 per kg, he said. There are about 1,200 manufacturing units in the state, 90 per cent comprising the SME segment, consuming more than 2.5 lakh tonnes of plastic annually.

"A strong foundation has been laid and fillip given to employment in the auto, textile and leather sectors. The reduction of duties has brought tremendous opportunity for the SSIs to thrive," Raju said. The small car industry alone thrives on about 21,000 small components, a major avenue for employment generation, he said.

M Gopalakrishna, chairman, Andhra Pradesh State Financial Corporation (APSFC), said that the enactment of the SME Bill was expected to be proposed in this year's Budget but was not made.