Investment Limit For Ssis Raised To Rs 3 Crore

The Union government has ratified the raising of the investment limit for small scale industries (SSI) to Rs 3 crore from Rs 60 lakh. The investment limit in ancillary units has also been hiked to Rs 3 crore.

The cap on foreign equity participation has been retained at 24 per cent for the SSI sector as well as for domestic units.

The investment limit of Rs 3 crore has been set for fixed assets in plant and machinery, whether held in ownership terms or on lease or hire purchase. Further, no small scale or ancillary industrial undertaking for this purpose can be a subsidiary of or owned or controlled by any other industrial undertaking.

 

The raising of investment ceilings was part of the UF governments budget promises and was based on the recommendations of the Abid Hussain committee set up to examine dereservation of the small scale industries sector.

Towards this end, the industry ministry had also placed a copy of the notification in Parliament on March 21. However, this notification could not be ratified on account of procedural hiccups.

The notification states that where two or more industrial undertakings are set up by the same proprietor, each of such industrial undertakings shall be considered to be controlled by the other. The notification states that while calculating the value of plant and machinery, the cost of equipment like tools, jigs, dies, moulds and spare parts for maintenance and the cost of consumables would be excluded.

The cost of installation of plant, research and development equipment, pollution control equipment and generation sets will, however, not be included for calculating the value of plant. Some sections of the SSI sector have been demanding the raising of the ceiling as this would enable modernisation through mechanisation and larger investment in plant and machinery.

However, some others feared that this would allow larger operators to enter the reserved sector.

After the recent depreciation of the rupee, exporters have been claiming that the raising of investment limits will provide a boost to their export effort. The SSI sector accounts for about 35 per cent of the countrys exports.