While talks of “green shoots” and “global economic recovery” and the “worst is behind us” are gaining momentum, many small scale manufacturing units in the southern districts are yet to see any tangible growth.
All talks of recovery, the micro, small, and medium enterprises (MSME) say, are confined to large industrial units and automobile sector. Industrialists and trade bodies are calling upon the Centre to implement the recommendations of the Task Force Committee on MSME, which was constituted by the Prime Minister Manmohan Singh.
Formed in August 2009 under the chairmanship of the Principal Secretary to Prime Minister, the task force submitted its recommendations on January 30 to Dr. Manmohan Singh.
Tamil Nadu Small and Tiny Industries Association (TANSTIA) vice-president KR. Gnanasambandan told The Hindu that the Centre must act expeditiously to implement the recommendations as no noticeable movement has taken place so far on this committee report.
The major issues concerning the MSMEs are an assured market and access to credit. The Small Business Act of America assures these for the small units. Apart from mandating that Government departments, including the space agency NASA buy 38 per cent from small industries, the Act directs banks to clear loan applications inside three days.
“There is no grass-roots level lending agency focussing exclusively on providing credit to MSMEs. The concept of microfinance should be scaled up and trade bodies and industrial estates consulted on this,” he said.
Important recommendations of the Task Force, N. Somasundaram, president of Madurai District Tiny and Small Scale Industries Association (MADITSSIA) said, was doubling the limit for collateral-free loan to Rs. 10 lakh and mandating banks to provide 60 per cent of MSME loans to micro industries.
P. Sitaraman, past president of the Kappalur Industrial Estate Manufacturers' Association, said that Small Industries Development Bank of India (SIDBI) should be converted into an operational bank and begin providing direct loans and working capital to MSMEs.
Reduction of bureaucratic hassles such as combining the payment for Employment Provident Fund with Employees' State Insurance Corporation (ESIC) would be of great help. Further, the limit for compulsory audit of an MSME is Rs. 40 lakh and above, a limit that was fixed in 1985. Factoring in the inflation, this should be increased to Rs. 1 crore, he said.
Keywords: Small and Medium scale Industries