Assocham suggests regulatory body for SSI sector

By Our Special Correspondent

NEW DELHI, APRIL 20. To arrest and eliminate the growing sickness in the small scale industries (SSIs), the Associated Chambers of Commerce and Industry of India (Assocham) has suggested creation of a regulatory authority for the sector.

In a note to the Government, the chamber has cautioned that unless the incidence of the sickness in this sector was arrested, employment will be affected and the balance of development will get disturbed.

The chamber has suggested the implementation of the Nayak Committee recommendations should be monitored at the highest level as many units are complaining about non-implementation by the various banks.

The Reserve Bank of India should also advise the banks to adopt a specific time frame to clear loan applications, mechanism to easily liquidate non-viable sick units, setting up sub-committees of State Level Inter Institutional Committee (SLIIC) to look into the specific individual cases of rehabilitation.

The chamber says that in spite of greater competition from domestic and international markets following the removal of quantitative restrictions, the SSI sector still preserves a niche in the Indian market. It can best serve specialised demands of local markets and offer opportunities to small entrepreneurs. Over the decade 1988-98, the value of production at current prices in the small-scale sector has increased more than four fold from Rs. 87,300 crores to Rs. 465,171 crores. Exports have increased almost 10-fold from Rs. 4,372 crores to Rs. 43,946 crores while employment had gone up by 56 per cent from 107 lakhs to 167 lakhs. The growth performance also compares well when compared to the overall growth of the manufacturing sector.

Though the sector has definitely done better in terms of greater efficiency and capacity utilisation, it is also bogged down by issues such as lack of timely credit, quality improvement, support for developing niche pockets in the global market and introduction of modern management practices. These issues will have to be addressed to have a vibrant SSI sector in the new millennium, it points out.

The chamber has suggested that the SSI units should get credit as fast as possible as delay results in various other problems such as obsolescence, inability to stick to the delivery schedule of items and the like. Many SSIs face the problem of not getting their dues against the supplies made by them to the purchasing agencies in the stipulated period and this delay results in hampering their production and servicing process.

As a long-term measure the Assocham has suggested that the Government should explore the possibility of setting up credit information bureaus. The specialised SSI branches promised in this budget should work towards this, it feels.

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