SMALL SCALE INDUSTRY


800 SSI units out of excise net

The duty exemption limit raise from Rs. 50 lakhs to Rs. 1 crore will result in over 800 small scale units moving out of the excise net in the Delhi I Commissionerate (NCT) leading to a revenue loss of Rs. 25 crore.

SSI census to be ready by March 2001

The census for identifying small scale industries (SSI) in the country will be completed by the end of the current fiscal and will update the number of registered units, identify sick units besides collecting other information. The government had set up a committee for working out the parameters and modalities for collecting the desired data on number of units, manpower, production figures and financial conditions.

Currently, the SSI ministry relies on the RBI and the National Sample Survey (NSS) for collection data and the latest SSI data relating to number of units, employment, production and sickness. The latest data is of the year 1998-99. As per the data collected by the RBI, the total number of sick SSI units increased from two lakh units in 1998 to over three lakh units in 1999.

According to the ministry there are 32 lakh units producing 7500 different items for domestic as well as foreign markets.   The sector contributied about 40 per cent of the value-added in the manufacturing sector and its share in the national exports stands at over 34 per cent. SSI units account for 95 per cent of the industrial units in the country and provide employment to about 175 lakh people. 

The SSI ministry is currently working in co-ordination with the NSS and the National Information Centre (NIC) for the data collection and analysis.

This survey is expected to help the ministry in formulating policies for the development of the sector which is expected to face intense competition from overseas once the quantitative restrictions on imports are removed.

Micro Enterprises to be strengthened

As global competition becomes a reality, Government’s endeavour is to upgrade the micro enterprises to a level where they can withstand the competition and use it to their advantage.   This was stated by the Minister for Small Scale Industries and Agro and Rural Industries, Smt. Vasundhara Raje, while inaugurating the “Global Conference on Micro Enterprises” in New Delhi on 13.11.2000.   The emphasis on globalisation and efficiency often overlooks the cause of the smallest of the small and it is feared that the micro enterprises may be the worst hit as economics open up and we must attempt to strengthen these enterprises to enable them to stay on their feet and withstand the forces of change, said the Minister.

A whole package of measures is on the anvil for the traditional sector such as hand spun cloth and coir while major announcements have already been made for the modern small scale industries sector in respect of credit, marketing, technology, infrastructure and fiscal benefits said the Minister. 

SEZ, EPZ units access to SSI items made easy

The Union Government has decided to exempt units in special economic zones (SEZs), export processing zones (EPZs) and export oriented units (EOUs) from the requirement of an industrial licence to set up industrial units to manufacture items reserved for small scale sector (SSI).
“This step is expected to facilitate expeditious clearance of proposals for setting up of units under SEZs, EPZs and EOUs schemes at the level of development commissioner under the automatic route,” said an official statement in New Delhi on 08.12.2000.  It is part of the government’s endeavour to provide a simple operating regime for units in these zones. 

Southern SSIs inching toward sickness

Of the approximately 12 lakh small scale units spread over the five southern states of Andhra Pradesh (4.50 lakh), Karnataka (2.48 lakh), Kerala (1.20 lakh), Tamil Nadu (3.20 lakh) and Pondicherry (0.75 lakh), over 40 per cent are unoperational and another 15 per cent are sick.

All the small and tiny units in the southern region have joined hands to present their problems to the Centre.  In January, under the aegis of the Karnataka Small Scale Industries Association (KASSIA), they will submit a joint pre-budget memorandum to finance minister, Shri Yashwant Sinha. 

Big and medium industry units have the Board for Industrial and Financial Reconstruction (BIFR) that offers a survival kit. Small scale units, too want an organisation along similar lines.

The total number of small units in the region has increased by a mere 2 per cent over the last three years. The absence of a single comprehensive labour law is at the root cause for the stalled growth. The law, SSIs say, can ensure that an entrepreneur is not answerale to every government machinery separately.  Further, “the single window scheme for starting a small-scale business has too many doors. This discourages entrepreneurs who have to separately apply for power, registration of industry, pollution control board and conversion of agriculture land for commercial use”, says Shri J. Crasta, former KASSIA Chief. 

Only 30-40 items will remain reserved for SSI, by the year 2002. In the next three years, even these will be thrown open to the rest of the industry due to WTO regulations.

To counter this threat, the sector is requesting the central and state governments to purchase 50 per cent of their requirements from SSIs. Of this, 10 per cent should be earmarked for women entrepreneurs, says KASSIA President Shri A.N. Burji; “This is the only way we can face the WTO regime”,  The sector is of the view that it can compete with MNCs provided it has access to quality raw-material and cheap infrastructure. They are also demanding loan facilities at prime lending rates.

Around 40 per cent of the produce from small units in the south, like handicrafts, bulk drugs, garments and leather goods is exported. The remaining 60 per cent mostly provides for the requirements of ancillary, engineering and packaging industries. The sector employes around 170 lakh persons, of which over 80 lakh are in the southern states. The bulk are undergraduates who get on the job training. From the social perspective, their survival too is essential, says KASSIA.

The key to SSI survival is to upgrade technology to produce import substitutes such as laboratory and testing equipment. “While the basic machinery is there, only a part is required to improve the technology which will not entail a heavy investment” says Shri Burji.

Small units oppose dumping duty on alloy, steel products

The Small Scale Sector has expressed its strong opposition to the imposition of anti-dumping duty on inputs like seamless grade alloy steel billets, bars and rounds coming in from Russia, China and Ukraine.

According to industry sources, several units have represented to the designated authority for anti-dumping in the commerce ministry, advising it not to impose anti-dumping duty on these critical inputs.

SSI associations and units which have represented to the designated authority include the Federation of Engineering Industries of India (FEII), All India Steel Rollers Association, Bharat Steel Rolling Mills, Tehri Steels Ltd., Magnum Steels Ltd., GNA Duraparts, etc.

The designated authority, sources said, initiated probe into the dumping of seamless grade steel from a big manufacturer and was contemplating to impose provisional duty on steel items originating from Russia, China and Ukraine.

The FEII, which is an umbrella body representing the interest of small engineering units, has suggested that SSIs would lose export competitiveness if the government decides to impose anti-dumping duty on these products. The end products of the rolling mills would become expensive and would be outpriced in the export markets. Anti-dumping duty on alloy and non-alloy steels would also have implications for defence productions. The items used for raw-materials include bomb sheets, bullet-proof jackets, parts of tanks, gun carriers etc. Railway equipment / railway track parts were also being  manufactured from alloy and non-alloy steels and the anti-dumping duty would have adverse implications on the Railways, power, mining, oil, especially drilling, steel, cement sectors as well as the sugar industry.

The move would hit the auto ancillary segment also as prices of spur gears, transmission shafts, rareaxleshafts, bullgear, spider kits etc. would become dearer with the inputs becoming costlier. 
Italy to give Rs.90 crore loan for SSIs

While launching programme for the development of small and medium enterprises (SMEs) in India, Italy has committed a soft loan of Rs. 90 crore in the form of line of credit (LoC) to National Small Industries Corporation.

This credit line would smoothen the path for a fruitful and fast utilisation of the first tranche of funds, amounting to $ 5 million, towards the development of SMEs.

The programme would help in technology transfer, technical innovation and contacts between SMEs of the two countries. Initially, it would focus on selected sectors like leather, electronics, plastics, mechanical, textiles, marble and granite, food processing and automobile component. 

Automatic route for reserved items

The government has allowed units in the special economic zones and export processing zones an automatic route to manufacture items reserved for the small scale industry. The facility would also be available to the export oriented units, an official statement said in New Delhi. It is a part of the government’s endeavour to provide a simple operating regime for the units in these zones. The proposals for the manufacture of the reserved items can now be cleared at the level of Development Commissioner. 

Incenvites increase SSI’s share in exports to 35%

The share of small scale industries in the country’s overall exports has been around 35 per cent during 1997-98 and 1998-99 as per the latest information available with the Ministry of SSI, agro and rural industries.

The industry-wise share of SSIs in the last three years is as follows :
 

Sports Goods, Readymade Garments and cashew nut kernels : 100%
Spices : 80%
Tobacco incl. snuff & bidies : 67%
Processed food : 65%
Finished leather and leather products : 44%
Basic chemicals and pharmaceuticals and cosmetics : 29%
Engineering : 28%
Marine products : 26%
 
Some of the facilities provided to encourage the SSI sector in the last three years included - raising of small scale industries exemption limit under Central Exemption Scheme, that is, raising the limit from Rs.30 lakh to Rs.50 lakh; and from Rs.50 lakh to Rs.100 lakh - operation of the scheme of technology development and modernisation fund from April 1995; - the scheme of credit guarantee fund for small industries being operated from August 2000; - scheme of giving incentives to small/ ancillary units acquiring ISO 9000 certification; - simplification of procedural norms from March 1994. 

SSIs to have tough time after QR phase out: NCAER

Small Scale Industries may face hardships in adjustment of the production process and marketing strategies after the removal of quantitative restrictions (QRs) next year, the National Council for Applied Economic Research (NCAER) has said.

With reservations inhibiting small enterprises from expanding and achieving economies of scale SSIs may find it increasingly difficult to compete with imports, NCAER said in a research paper titled, ‘Implications of Removal of QRs’.   The paper said that while cheap imports might increase and affect domestic production, the consumers would derive advantages from the entire process.   However, it said “free imports of components or raw-materials used by the Indian industries may lead to increased production and employment”.

It suggested that some SSIs might tie-up with the multinationals and, thereby, access skill, technology and export markets.

Prior to 1990, there were about 8000 items of import on which QRs were imposed. Currently, after the announcement of Exim Policy for 2000-2001, there remain only 715 items under the Open General Licence (OGL) list. These items, as of now, are either in the restricted list or in the canalist list. There are 1,298 items under the OGL list which have no QRs.

The government would have to enhance the investment limit for SSIs so that these units could invest more and upgrade their technologies, the paper said.    It, however, added that the cumulative annual rates of growth in number of units, production, employment and exports had declined during the period when QRs were removed, tariffs were lowered and other reform measures were being pursued.  The real contribution from the unregistered manufacturing and SSI sector in the gross domestic production has declined in the post-reform period and also, the gross capital formation has been declining.

The NCAER in 1996-97 carried out a study confined to some of the clusters of industries and covered a few small scale units to reveal that the woollen hosiery and knitwear sector enjoyed substantial increase in return to fixed capital as well as in the import intensity. However, leather and leather products experienced significant decrease in return to capital.