Kassia seeks more sops to help small units stay alive

The Karnataka Small Scale Industries Association (Kassia) has sought the Reserve Bank of India’s (RBI) intervention to help small industries get back their dues from large and medium companies.

Addressing reporters here on Wednesday, Arvind N Bhurji, president, Kassia said, “Large and medium firms owe an average of Rs 2 lakh to Rs 3 lakh per small scale unit (SSI) per month of supply of goods and services. The dues amount to Rs 1,800 crore over 6-7 months. The entire SSI sector is in peril. These self-employment enterprises set up in the last 20-25 years are getting crushed due to hostile economic environment.”

He said, if the RBI comes out and gives instructions to banks to assist SSIs, then banks in turn could turn the heat on large and medium companies to pay up the dues. “With this help, we can continue our business otherwise we will shut shop,” said Burji.

“Due to a slowdown in the economy, manufacturing, supply of goods and services have fallen drastically. This has also added to the woes of SSIs,” he added.

Kassia has also asked RBI to reschedule the loan repayment of SSIs and amend the clause pertaining to non-performing asset (NPA) norms as many SSI units are witnessing dwindling orders and revenues are affected.

“This has made large number of SSIs sick. Many companies have resorted to staggering layoffs and nearly two million casual workers have been told to find employment elsewhere,” said Burji.

The RBI should also amend the clause pertaining to NPA norms.

The current norms to the SME sector should be redefined and the present 90 days limit to be kept in abeyance until normalcy is restored. Banks and financial institutions should also reschedule the loan amount whenever requested so that the loan does not become NPA.

Kassia has also sought Central government help in payment of taxes like excise, service tax, value added tax (VAT) instead of present monthly payments. Export finance should be made available at lower rate of interest.

As for the Karnataka government’s help for SSIs, Kassia has sought replacement of 12.5 per cent VAT category by 4 per cent to all industrial inputs as done in many other states and facilitate level playing field.