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January 07, 2002

‘15’

FINANCE MINISTER MEETS REPRESENTATIVES OF SMALL SCALE INDUSTRIES

The Finance Minister, Shri Yashwant Sinha, today met representatives of small and tiny industries. This was the second meeting as part of his pre-budget consultations with various groups of experts, industries, business and commerce. Welcoming the representatives, the Finance Minister reiterated the commitment of the Government for the development of the small scale industries. This is evidenced by provision of several fiscal concessions (such as enhancement of exemption limit for excise duty, Prime Minister's special package for the SSI sector announced in 2000 etc) given to the SSI sector in the Union budgets presented by him. He mentioned that government is aware of the various problems, such as greater internal and external competition due to globalisation of the Indian economy, removal of quantitative restrictions on imports and reduction of tariff rates on imports as part of our economic reform programme. Problems of the SSI sector arising out of technological obsolescence, credit delivery, lack of efficient marketing and rising sickness have been addressed in the past and initiatives have been announced by the Government. He underlined the need for SSI units to prepare themselves to face competition domestically and also at global levels by improving productivity and efficiency and upgrading technology.

The Finance Minister further mentioned that Indian economy is presently passing to a stage of general slowdown particularly in the industrial sector. The Finance Minister sought the views of the participants for the growth and development of the SSI sector, particularly for technology upgradation, capacity expansion, export thrust and improvement in quality, efficiency and productivity.

The participants thanked the government for all their help to the SSI sector. In a wide-ranging discussion that followed, the representatives made a number of suggestions for the forthcoming budget. Major suggestions made by the participants included the following:

Enhancement of exemption limit for excise duty may be raised to at least Rs 2 crore.
Policy of reasonable differential between customs duty on raw materials and components.
Basic exemption limit for income tax may be raised to at least Rs.75,000.
To establish special bank branches in each state for providing finance and other help to SSI units.
Greater representation from the SSI units in the boards of commercial banks and financial institutions.
Provision of more credit and better banking services for the SSIs.
To abolish the need of collateral security even for loans from the financial institutions as in the case of commercial banks.
To establish special institutions to provide infrastructure support, market development and technology upgradation of SSI units.
No excise duty on marble industry.
Focus on clusters to promote credit availability and technology upgradation to SSI units.
Promote establishment of infrastructure for SSI units.
A specified minimum proportion of Government procurement should be sourced from the SSI sector.
SSI dereservation should be pursued gradually and in consultation with Industry Associations.
Provide improved access for the SSI sector to capital markets.
Introduction of single rate or brand rates for duty drawbacks for simplicity and better tax administration and expediting refunds of duty drawbacks.
Implementation of budget proposals may be given priority.
Introduction of Single Business Act based on draft Small Industries Bill.
100% exemption for exports from income tax for all SSI units.
Special Exit policy for SSI units and simplification of labour laws.
Special concessions for sick textile units.

Representatives of the following associations attended the meeting:

All Assam Small Scale Industries Association,
Association of Lady Entrepreneurs of Andhra Pradesh ,
Delhi Exporters Association,
Electronics ad Computer Software Export Promotion Council (ESC),
Federation of Andhra Pradesh Small Industries Associations,
Federation of Association of Small Scale Industries of India,
Federation of Delhi Small Industries Association,
Federation of Indian Micro and Small & Medium Enterprises,
Federation of Indian Women Enterprises,
Indian Council of Small Industries,
Indian Drugs Manufacturers Association,
Indian Industries Association,
Karnataka Small Scale Industries Association,
Laghu Udyog Bharti,
Orissa Small Scale Industries Association,
Small Industry Committee of the Confederation of Indian Industry,
Solapur District Industrial Co-operative Bank Ltd.
The Southern Gujarat Chamber of Commerce and Industry
Tamil Nadu Small and Tiny Industries Association,

The meeting was also attended by Minister of State for Expenditure, Banking and Insurance, Minister of State for Revenue, Secretary (Economic Affairs), Secretary (Revenue), Secretary (Expenditure), Adviser to the Finance Minister and Chief Economic Adviser, Secretary (Small Scale, Agro and Rural Industries) and other senior officers of the Finance Ministry and concerned Ministries.