Business

A third of firms default on easy CSIR loans

Nearly a third of the companies have defaulted on the loans they have taken from the Council of Scientific and Industrial Research (CSIR). These loans were extended on “easy terms” towards developing new technologies, and to encourage start-ups.

They were awarded as part of an ongoing scheme since 2001, according to a response by Union Minister for Science and Technology Harsh Vardhan to a question in the Lok Sabha.

The New Millennium Indian Technology Leadership Initiative (NMITLI), as the scheme is called, was rolled out in 2001; 45 companies have since received unsecured, soft loans at 3% interest per annum to develop prototypes as well as position them for emerging markets.

As of March, nearly ₹298 crore has been disbursed since the scheme’s inception, of which about ₹92 crore has been classified as loans “in default” by 15 companies who have been labelled “defaulters.” The most prominent among them is Ghaziabad-based Samtel Colour.

The firm received a ₹28 crore loan between 2007-2010 to develop a ‘Next generation plasma display technology: a 50” high definition (HD) TV prototype’. While the CSIR claims that the company developed the device, the firm has since been declared “sick”, said Dr. Harsh Vardhan.

Another company, Encore Software, which received ₹3 crore from 2004-2005 to develop a ‘..Cost effective Simple Office Computing (Sofcomp) platform to replace [the] PC (personal computer)’ has also been labelled a defaulter.

‘Acceptable’ rate

A CSIR official, however, said there have been several successes and that 15 defaulters out of 45 loans was still an “acceptable” rate.

“CSIR does not write off a loan and all such cases are being pursued in the courts for recovery. However, in terms of successes, this is still a good rate compared with many other scientific departments,” the official added.

Some recipients of NMITLI’s loans, such as Mahindra Reva Electric Vehicles, which was tasked with making an electric car, and Tata Consultancy Services (TCS), which received ₹8 crore to develop a bio-informatics-based application, have paid back their loan or are paying their instalments on time.

The key principle of the NMITLI is to encourage entrepreneurs and technologists to try out novel, risky ideas with government support and mentoring. “…The criteria for selection of the project are based on the novelty of the proposal, potential technological benefits, and the ability of industry to capture those benefits,” says a note on the NMITLI.

The technologies encompass a wide range of subjects — developing new drugs, making novel liquid crystal displays, innovating in low-cost computers and diagnostic devices.

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Printable version | Mar 29, 2020 1:33:03 PM | https://www.thehindu.com/business/a-third-of-firms-default-on-easy-csir-loans/article23437308.ece

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