SSI cap to be raised to Rs 5 cr

The Bill seeks to extend progressive credit facilities to SMEs.

The government today introduced the Small and Medium Enterprises Development Bill, 2005, in the Lok Sabha, seeking to enhance the investment cap for small-scale units from Rs 1 crore to Rs 5 crore.

The Bill also proposes to make medium enterprises a separate category, with an investment of up to Rs 10 crore in plant and machinery.

In the services sector, units with less than Rs 2 crore investment in equipment are proposed to be classified as small enterprises, while units with investments of Rs 2-5 crore will come under the medium enterprises category.

The Bill aims to consolidate the laws governing small and medium enterprises (SMEs). It also seeks to extend progressive credit facilities to SMEs in line with the guidelines laid out by the Reserve Bank of India.

It also seeks to introduce notification of preference policy for the procurement of goods and services by SMEs and create a fund for their development. The Bill provides for the setting up of a fund for skill development of employees, management, marketing assistance, infrastructure facilities and development of clusters.

The small-scale sector ministry has given importance to self-regulation and self-certification by aiming to reduce the number of inspections.

In a move to enable small enterprises to grow, the Bill provides that more than 50 employees can be freed from the purview of labour laws, including the Employers' Liability Act, 1938, the Weekly Holidays Act, 1942, the Employment Exchanges Act, 1959, which ensures compulsory notification of vacancies, and the Apprentices Act, 1959.

For speedy completion of contracts, the Bill seeks to limit the period agreed upon between buyers and suppliers for making payments to 75 days (from the day of acceptance or the day of deemed acceptance).

If a firm fails to make payments within the stipulated period, it will have to pay 9 per cent interest on the delayed amount in addition to the bank rate specified by the Reserve Bank of India.

The Bill states that industry facilitation centres, to be set up by state governments, will act as arbitrators. It also seeks to establish a 27-member National Small and Medium Enterprises Board, chaired by the SSI minister, to regulate SMEs.