Proposed new policy: SSI lists demands

By Our Special Correspondent

CHENNAI, AUG. 9. The small-scale industry (SSI) sector is making a last-ditch attempt to put up its case on a wide gamut of issues ahead of the decisions, expected to be taken in the next few weeks, by the Group of Ministers (GoM) of the Centre on a new SSI policy, particularly in the context of globalisation and the WTO.

It is to highlight its demands and perspectives on issues like continuing the reservation of products, operationalisation of the credit guarantee scheme, enactment of a single and comprehensive labour, fiscal and regulatory law for the SSI sector and improvement of infrastructure support that the Federation of Associations of Small Industries of India (FASII) is organising a day-long seminar in the city on August 11.

Addressing a press conference here on Monday, Mr. V. S. Narasimhan, President, FASII, said the Group of Ministers headed by the Union Home Minister, Mr. L. K. Advani, was set to take a final view on matters that had already been dealt with by several committees in recent years, including the Gupta committee, Nayak committee and Abid Hussain committee whose recommendations remained on paper.

Mr. Narasimhan said the government could no longer avoid taking a realistic view on the need to protect and nurture SSIs, in view of the deteriorating situation of small units on one side and the grave threat to the employment scenario that would emerge if the situation of jobless growth continued. The position of SSIs catering to the automobile sector was particularly serious.

The FASII President said it was not so much competition from imports as unfair competition by way of predatory pricing by large units within the country that worried the small sector in case of dereservation of products. The fact that large units had not bothered to take advantage of the policy allowing them to make reserved products on condition of export of 50 per cent of the production showed that they had no competitive ability vis-a- vis the small sector in these labour-intensive lines.

In contrast, the SSIs had contributed substantially to foreign exchange earnings of the country through export of reserved products like garments and leather and were highly competitive. But if large units and multinationals were allowed to make these items freely, they would be tempted to wipe out the small units by heavy underpricing which they could afford, only to raise the prices later.

Though imports under the WTO regime were a problem, these could at least be taken care of through tariff and other border measures, Mr. Narasismhan said.

Emphasising credit guarantee as the best way of extending financial support to small and tiny enterprises as done by a lot of countries including the U.S., Mr. Narasimhan said the banking system and the financial institution concerned (SIDBI) should share the cost (guarantee fee) in a fair proportion since the scheme was intended mainly to give comfort to the lenders.

The seminar on ``challenges and opportunities'', sponsored and co-sponsored by promotional institutions and banks, will also deal with rehabilitation of sick SSIs, exit policy and marketing.

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