New Ssi Policy Not To Include Dereservation

The government has decided to exclude critical issues like dereservation of items and increasing the foreign investment limit in the small scale industries to 49 per cent from the new policy to be announced by prime minister Atal Bihari Vajpayee on August 30. The new policy is also not going to address the issue of changing the definition of SSI units on an index-based system as suggested by the S P Gupta study panel, sources told Business Standard. The policy will also exclude a separate definition for medium enterprises as suggested by the S P Gupta Committee. The government has decided to postpone the issue of derservation in wake of a divided opinion in the group of ministers, a senior officials said. "The GoM has been unable to chalk out a roadmap for dereservation, the purpose for which it was set up. It will now chalk out a roadmap at the subsequent meeting," the official added. Commerce and textiles ministry had asked for dereservation of 15 items falling under three categories reserved for the sector. The three segments are garments, toys and leather. "We need to consider the issue seriously since we are in a transitionary phase," an official said on the issue of dereservation. Some tax incentives for the sector are, however, expected to be part of the new policy. The ministry had sent a note to the finance ministry seeking amongst other things accelarated depreciation norms for the certain industries that fall in the SSI category, an increase in excise exepmtion limit from Rs 50 lakh to Rs one crore. Finance ministry is expected to convey its decision on these aspects directly to the prime minister's office. The policy is broadly going to focus on five areas namely, improved credit flow, technological upgradation, marketing, human resource development and creation of circumstances for better compliance of World Trade Organisation (WTO) norms, sources said. "At present the ministry is preparing the paper that will form the policy," an official added. The GoM has already cleared an increase in investment limit for six sectors from Rs one crore to Rs five crore and has also agreed on the creation of Technology Upgradation and Modernisation Fund and an increase in the corpus of the Credit Fuarantee Fund for Small Industries to Rs 2,500.