One-Time Dereservation Of Small Sector Ruled Out

Industry minister Murasoli Maran yesterday ruled out dereservation of 836 industries earmarked for the small scale sector at one stroke. Instead, he sought a nation-wide debate on this issue.

The cost of dereservation, as suggested by the Abid Hussain committee, will be Rs 2,500 crore over the next five years. The finance minister will not shell out this fund. So why not go slow instead of spending this money, he asked a seminar on the development of small scale industries (SSI) here.

He said government had implemented the non-controversial recommendation of the committee pertaining to raising the investment ceiling for SSIs to Rs 3 crore from Rs 60 lakh.

 

Maran said instead of dereserving the entire list at once the government could consider doing it in a phased manner, and sought to allay the fears of the tiny and smaller SSIs about their credit needs in the wake of the enhanced investment ceiling.

The Abid Hussian committee had said all items under the reserved lists could be imported now, besides over 230 items which were not produced by this sector. It also suggested the government shell out Rs 500 crore annually for the next five years to support the sector during the post-dereservation period.

Maran said We have to beware of the creamy layer among the small scale sector. The government will soon come out with a package to earmark the lions share of the priority sector lending for the tiny and smaller of the SSIs, so that bigger units do not knock the entire credit.

He said the Centre would come out with a suitable legislation to effect the committees recommendations relating to the inspector raj and added that his ministry would take suitable steps related to the special revamp scheme for technological support to the small scale sector.

He admitted that the technology development and modernisation fund, operated by the Small Industries Development Bank of India (Sidbi) was not proving effective as it was linked with export obligations.

Former president of the Federation of Indian Chambers of Commerce and Industry (Ficci) D N Patodia warned that the new ordinance of the Reserve Bank of India, effective April 1, to curb private lending for business purposes would play havoc as about 94 per cent of the SSI units were totally dependent on private sourcing of funds in absence of banking facilities.