The Hindu Business Line : Small sector industries want more credit

TINY industries have gone out of favour with the Government. The small and medium industries (SMEs) are not sure as to what is in store for them and are looking forward to the policy announcement in the winter session.

"Our survival is at stake,'' said Mr S. Aravind, President, Madurai District Tiny and Small Scale Industries Association (Maditssia).

He told Business Line that with the Budget to be presented in a few months, they are the most worried lot in the emerging global scenario.

Reservation for the small-scale sector has become a mockery, as anything can be imported under theopen general licence. The promotion of free trade agreements is skewing the pitch further. While the Union Government wants to integrate the economy with the process of globalisation, the action is not matched with reforms at the domestic level. The tiny, small and medium industries are denied a level playing field.

Also, only the large-scale industries are making use of subsidies and export incentives with the SSIs not even aware of them.

On the part of bankers, they are not willing to entertain advances that are less than Rs 10 lakh. Their comfort zone appears to be above Rs 1 crore.

Mr Aravind said the Small Industries Development Bank of India does not consider requests below Rs 50 lakh. The SSI sector has been losing importance with the Government diverting funds to schemes like Prime Minister's Rozgar Yojana. Here again, collateral security is demanded, he said.

The SMEs expect the Central excise general exemption limit fixed at Rs 1 crore a decade ago, will be raised.

Agro-based products should be exempted from its purview. Further, the excise duty rate should be brought down to 8 per cent from the present 16 per cent to gain competitive edge.

The general exemption with reference to service tax at Rs 4 lakh is very low.

He further mentioned that the sales tax on goods transport should be collected only from the service providers. The practice of levying a penalty by certain banks for not maintaining a minimum balance needs a review.

Referring to Fringe Benefit Tax, Mr Aravind said it would adversely affect employee benefits.

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