Credit Guarantee Fund For Ssis Mooted

The government is considering setting up of a Credit Guarantee Fund, especially for high technology areas, to ensure timely availability and long-term finance to small and tiny enterprises, said Planning Commission deputy chairman K C Pant.

The fund is to be set up with contributions by the Government of India and the Small Industries Development Bank of India (Sidbi) in a ratio of 4:1, to provide 75 per cent credit guarantee on loans up to Rs 10 lakh to small scale and tiny units, he said.

Pant was addressing a seminar on "WTO Agreements Implications and Impact on SMEs" organised by the Associated Chambers of Commerce and Industry (Assocham).

 

The vulnerability of small and medium enterprises (SMEs) to increased competition was caused by factors such as low capital base, poor credit availability, difficulties in resources, poor marketing opportunities and lack of information about international regulations and standards, he added.

The government should consider setting up of a specialised institute for intermediation between research organisations and SMEs to facilitate technology transfer, he further said. This has become imperative in view of the need for technology support in research and product development, quality improvement, testing and standardisation.

Subsidies for R&D activities were permitted under WTO and the government could play an important role by extending support to efforts aimed at technological upgradation of SMEs, he added.

The role of the government hereafter would be more of a facilitating agency rather than a provider of protected markets for SME products and services.

It could encourage quality upgradation by enlarging credit availability, adopting anti-dumping measures wherever required and helping disseminate information about technical standards, he said.

Speaking on the occasion, Assocham president Shekhar Bajaj said the removal of quantitative restrictions should have been accompanied by an initiative to help and support SSIs.

They might be assisted by setting up `incubators', he said adding that entrepreneurs would be able to use the facilities provided by the incubators as they compete against imports and would then be able to move out and vacate the space for others.