SSIs may face fewer inspections

The government is expected to announce soon measures to reduce multiple inspections in the small-scale sector through the Small and Medium Enterprises Development Bill, 2005.

The Bill is expected to make it mandatory for inspectors to give 15 days' notice prior to inspection. It also recommends that routine inspection be carried out only once in five years.

At present, different central labour Acts cover inspection norms for the small-scale sector. Officials said the Bill would cover all inspection-related norms within its ambit.

"There will be simplification of inspection for the sector, reducing the burden of inspector raj," an official told Business Standard.

The Bill also defines a separate investment limit for medium enterprises, and recommends setting up of a permanent committee likely to be called the National Small Enterprises Board, to suggest measures for the small and medium enterprises (SME) sector.

The board will recommend measures for improving the marketing of products and services of both small and medium enterprises in the country and abroad.

It will also help these sectors enhance their export abilities, successfully tackle competition from imports, and provide measures for adjustments of Customs rates and limitation of imports.

In addition, the Bill will also include legal provisions pertaining to credit due to the small-scale sector. "At present, there is a separate legal provision for credit due to the SSI sector under the Interest on Delayed Payments Act of 1992. This will now be incorporated within the SME Development Bill," the official said.

The Bill is also likely to contain guidelines for credit facilities. The Reserve Bank of India will specify guidelines relating to norms regarding quantum, proportion, method of computation, completion of formalities, revival packages, margins, collateral security and timely disposal, that will ensure easy flow of credit and working capital to the small enterprises, an official said.

Powering reform

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• The Bill, which is scheduled to be considered by the Cabinet soon, is expected to make it mandatory for inspectors to give a notice of 15 days prior to the inspection
• It also recommends that no routine inspection should be carried out more than once in five years
• At present, the inspection norms in the small scale sector are contained in different central labour laws
• The Bill also defines a separate investment limit for 'medium enterprise' along with the small scale and setting up of a permanent committee likely to be called the National Small Enterprises Board to suggest measures for the SME sector
• The Bill will also include the legal provisions pertaining to credit due to the small scale sector