Our Bureau

Chennai , June 24

REPRESENTATIVES from small and tiny industries associations have condemned the Small and Medium Enterprises Development Bill, 2005, and demanded that it be scrapped.

The Bill, which has been put together without dialogue or discussions with the small-scale sector overlooks the needs of the sector and is biased in favour of large players. Industry associations would come together to oppose the proposed legislation, they said.

At a press conference organised by the Industrial Estate Manufacturers Association, Guindy, members said that the Bill fails to recognise the small and tiny industries as a segment but lumps them with larger players whom it favours. It makes a "mockery" of the sector that has a huge potential for employment generation and contributing to economic growth, they said.

Their main grouse was that in its present form the Bill would further impede flow of credit to the small and tiny units. It would only encourage the trend of banks and financial institutions to deal with larger players alone.

Mr M.S. Parthasarathy, a senior member in the SSI movement, said that the Bill should be scrapped completely, a separate law that supports the small and tiny industries should be in place along the lines of similar legislations in developed countries such as the US and Japan.

The definition of tiny, small and medium sectors should be refined to include turnover also. Units with a turnover of up to Rs 1 crore and an investment of up to Rs 25 lakh should be classed as tiny units and those with a turnover of Rs 1 crore to Rs 10 crore and an investment of up to Rs 1 crore as small scale.

But the SME Act has hiked the investment limit to Rs 5 crore for small units to bring larger players under the purview of the SSI sector, he said.

Medium-scale enterprises would be those with a turnover of Rs 10 crore to Rs 100 crore and large units would be those with a turnover of more than Rs 100 crore.

The Act for small and tiny units should be mandatory in nature setting clear targets for banks on credit flow to the sector. The Small Industries Development Bank of India should focus on the needs of the SSIs. It is not enough that the Reserve Bank comes out with guidelines since banks simply ignore them, he said.

Mr V.S. Narasimhan of the Small Industries Management Institute pointed out that earlier the Gupta Committee headed by a Planning Commission member had held extensive dialogues with the SSI sector before drafting an SSI Bill.

But that was allowed to lapse and the industry has been saddled with something that totally goes against its best interest. Even developed countries that are proponents of an open market support the small players because they recognised their role in economy.

A major burden on the sector is the payment delay they face on supplies to larger units.

Earlier, there was a provision, at least on paper, to penalise larger players for delayed payment.

But the present Bill glosses over this crucial issue and simply states that the small units can take recourse to existing laws.

While successive governments acknowledge the role of small-scale sector in employment generation and contribution to economy the UPA Government, which is putting in place an employment guarantee scheme has hit out at the one sector, which has the potential to offer the most employment, he said.

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