I. Ministry of Small Scale Industries
(i) SMED Bill
In line with the declaration in the National Common Minimum Programme
(NCMP), the Small and Medium Enterprises Development (SMED) Bill, 2005
has been approved by the cabinet on 4 May 2005 and introduced in the
Parliament on 12 may 2005 during the Budget Session. The Bill seeks
to provide for facilitating the growth and development of small and
medium enterprises and enhancing their competitiveness. On enactment
by Parliament, this would be the first comprehensive Central legislation
catering to the small and medium (manufacturing as well as related service/business)
enterprises in the country and lead, inter alia, to simplification and
harmonisation of multiple inspections under specified existing laws
to which the small scale industry (SSI) units are currently subject.
(ii) De-reservation
To facilitate further investment for technological upgradation and higher
productivity in the SSI sector, 193 items have been taken off the list
of items reserved for exclusive manufacture by the SSI units. This number
is the highest in a year since the process of gradual de-reservation
started in 1997. These items are in the product categories of textiles,
auto components, electrical and electronics, mechanical engineering,
rubber, plastics, chemicals, etc. With this, no textile item remains
in the list reserved for the SSI units, thus paving the way for a major
thrust on additional investment, exports and employment generation in
this sector, in the wake of termination of the Multi Fibre Agreement.
(iii) Credit-cum-Performance Rating of SSI Units
In his Budget Speech of July 2004, Finance Minister had announced that
SSI units would be encouraged to obtain credit rating. Accordingly,
after prolonged negotiations with the six largest credit rating agencies
and in association with them, the first-ever Scheme of Credit-cum-Performance
Rating of SSI units has been launched on 06 April 2005. The scheme reimburses
75 per cent of the fees paid for this purpose by the SSI units. The
fees to be charged for this purpose by most of the rating agencies are
affordable, in the range of Rs. 30,000 – Rs.40,000. 181 SSI units
have already applied under the Scheme within a short period of about
2 months. This Scheme will help the credit-rated SSI units in accessing
institutional credit on more favourable terms and also improving their
internal management. All efforts would be made to publicise the Scheme
widely, so that a large number of SSI units are encouraged to avail
of its benefits.
(iv) Credit Guarantee Fund for SSI Units
During the year May 2004 – April 2005, the number of SSI cases
(14, 156) that have been provided guarantee cover is nearly equal to
the total number of such cases (14,324) covered during the entire period
since the inception of this Scheme ( 01 January 2001 – 30 April
2004). The amount loan (Rs. 336.88 crore) for which credit guarantee
was extended during this year is also over 50 per cent of the total
amount (Rs. 220.29 crore) guaranteed during the preceding 4.25 years.
(v) New Initiatives in the Annual Policy Statement, 2005-06
of the Reserve Bank of
India
As a result of the joint initiatives of this Ministry and the
National Manufacturing Competitiveness Council, the Annual Policy Statement,
2005-06 of the Reserve Bank of India (RBI) has provided specifically
for a new Scheme, to be finalised by the RBI, for a strategic alliance
between the branches of the Small Industries Development Bank of India
(SIDBI) and those of Banks in 50 identified SSI clusters for co-financing
of SSI term loan and working capital. The RBI has also declared its
decision to review all its existing guidelines on financing the small
scale sector, debt restructuring, nursing of sick units, etc., with
a view to rationalizing, consolidating and liberalising them.
(vi) ISO 9000/14000 Certification of SSI Units
For the first time since the commencement (1993-94) of the Scheme of
reimbursing 75 per cent of the costs incurred by SSI units in obtaining
ISO 9000/14000 certification, over 3300 units have availed of the benefit
of the Scheme in a single year.
(vii) Small Industries Cluster Development Programme (SICDP)
For further improvement in the quality of its interventions under the
SICDP, the Ministry has established, during the year, the “International
Centre for Cluster Competitiveness and Growth” at the Entrepreneurship
Development Institute of India, Ahmedabad. The Centre has started providing
valuable services in areas like training, research, documentation, publicity
and experience-sharing at national and international levels.
(viii) Initiatives of the National Commission on Enterprises
in the Unorganised/Informal
Sector (NCEUIS)
(a) The Commission has prepared initial draft papers on the Notion of
Growth Poles based on Industry/Service Clusters and Skill Formation
in the Informal Sector. These initial papers have been discussed with
various stakeholders as well as with the agencies having programmatic
interventions in these domains. The proposal of the Commission on pilot
projects for ‘Growth Poles’ applying the PURA (Provision
of Urban Amenities in Rural Areas) principles has been included in the
Budget Speech, 2005-06. The Government will take up the creation of
few growth poles, as pilot projects, in 2005-06.
(b) The Commission has also decided to constitute Task Forces to deliberate
on the following issues identified for immediate intervention in the
Action Plan of the Commission and make appropriate recommendations:
· Growth Poles for Promotion of Unorganised Enterprises;
· Legal and Administrative Problems before Unorganised Enterprises;
· Improving the Access of Unorganised Enterprises to Finance;
· Social Security for Unorganised Sector Workers;
· Statistical Issues in the Unorganised/Informal Sector
(c) The Minister of Labour & Employment has sought the assistance
of the National Commission in redrafting the Unorganised Sector Workers’
Bill, 2004 which has elicited strong reactions from various interest
groups. A joint meeting of the National Commission and its Advisory
Board was held on 12.4.2005 to discuss the implications of the provisions
of the draft Bill from a pragmatic view point and delineate the contours
of a new draft Bill to be put up for a national debate.
(ix) Initiatives of the National Manufacturing Competitiveness
Council (NMCC)
(a) The NMCC has taken up the issues of enhancing the competitiveness
of the small industries across a wide range of product sectors like
textiles, leather, auto components, etc., in a holistic framework, in
consultation with this Ministry and all other stakeholders. Product
sector-wise sub-groups have been set up by the Council to analyse the
issues comprehensively and suggest specific, time-bound plans of action.
The concerns of declining credit to the SSI sector have been taken up
on priority.
(b) The Council’s proposal for initiating the “Manufacturing
Competitiveness Programme” to revive the manufacturing sector,
particularly small and medium enterprises, and enable them to adjust
to the competitive pressure caused by liberalisation and moderation
of tariff rates have been included in the Finance Minister’s Budget
Speech, 2005-06.
II Ministry of Agro and Rural Industries
(i) Scheme of Fund for Regeneration of Traditional Industries
(SFURTI)
A Scheme of Fund for Regeneration of Traditional Industries like khadi,
village industries and coir has been framed and is in the final stages
of formal approval. The Scheme is based on the strategy of “cluster
development” so that regeneration of these employment-intensive
industries becomes sustainable, through empowerment of these tiny enterprises,
with the Government providing all necessary support for backward and
forward linkages.
(ii) Revamping of the Khadi and Village Industries Commission
To revamp the Khadi and Village Industries Commission, based on the
recommendations of an Expert Committee appointed for this purpose, steps
have been initiated to bring about necessary legislative, structural
and programmatic changes in the Commission.
(iii) Cluster Development Project for Coir Sector
A major cluster development project with an approved outlay of Rs. 56.8
crore has been taken up, in association with the Department of Industrial
Policy and Promotion, for development of coir industries in and around
Alappuza, Kerala, with a Central grant of Rs. 42.6 crore. The first
instalment of Rs. 14.2 crore has already been released to the special
purpose vehicle set up for implementing the project. This is the largest
cluster development project for the coir industry, which not only employs
a large number of women but has also been growing consistently in terms
of volume and value of production as well as exports.
