National
CII moots 7-point plan for SSIs
By Our Special Correspondent
NEW DELHI, JAN. 28. As the Finance Ministry is currently engaged in the Budget finalisation exercise, the Confederation of Indian Industry has suggested a seven-point stimulus package for the small scale industry.
In a pre-budget memorandum on indirect taxes for the fiscal 2002-03, the CII has identified finance, technology, operating environment and business development as the areas of focus to ensure a competitive and vibrant small industry.
According to the memorandum, growth-oriented policy measures for promoting venture capital, factors services and capital markets should be developed as alternative sources of finance. Simultaneously, credit delivery mechanisms should be relooked into. Further, competition in the banking sector between private and public sector banks would help in achieving desired results.
Observing that technology was another area where small sector was lagging behind, the memorandum said that there was urgent need for this sector to keep pace with the latest technology and also be pro-active about future technological trends.
Also reforms ought to be carried out to address the technology transfers, joint ventures and operation for the credit linked capital subsidy scheme for technology upgradation. At the same time, there should be aggressive promotion of the usage of information technology in manufacturing processes of SSI.
Favouring a strategic plan for a national level policy for developing exports from the SSI sector, the confederation said that plan should include identification of sub-sectors with high export potential. Steps should also be initiated for creation of adequate infrastructural support and export consortia.
Asking the Government to demerge the SSI sector from the agricultural sector in relation to credit allocation, the CII said that the small scale sector should be accorded the status of priority sector lending targets for the banking sector.
For adequate business development for the small industry and to enable it to attract Foreign Direct Investment, it has been suggested that India should be projected as a sourcing base. Giving vent to its feelings that operating environment deserved absolute priority, the confederation said that a single business act based on the draft Small Industries Bill should be formulated with the support of the Ministry of SSI, Development Commissioner and various industry associations.
Legal experts and academia need to be consulted for formulating a law to provide growth conducive climate for the SSI sector. A limited partnership act to restrict liability of a partner to the extent of his equity contribution to bring in more equity and to provide much needed exit routes for banks and other stakeholders too has been suggested.
Also the custom duty rationalisation must conform to internal domestic reforms in infrastructure, financial sectors and labour with a clear road map. The rate structure must encourage greater value addition within the country. It should also been ensured that the net effect of duties do not result in negative effective rates of protection.
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