The Hindu : Business : Bill seeks to raise SSI investment limit

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Saturday, May 14, 2005

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Bill seeks to raise SSI investment limit

Special Correspondent

Medium sector concept introduced with ceiling of Rs. 10 crore; SMEs board proposed

NEW DELHI: The Small and Medium Enterprises Development Bill, 2005, introduced by the government in the Lok Sabha on Thursday, seeks to raise the investment ceiling from Rs. 1 crore to Rs. 5 crores for small scale industrial units. Medium enterprises (which, at present, have no legal definition), are sought to be made into a separate category where investment in plant and machinery is over Rs. 5 crores but not exceeding Rs. 10 crores.

The bill, which was introduced by the Small Scale Industries Minister, Mahabir Prasad, defines small enterprises in the services sector as those where the investment in equipment does not exceed Rs. 2 crores. Similarly, a medium enterprise in the services sector would have investment in equipment of over Rs. 2 crores but less than Rs. 5 crores.

The bill proposes the setting up of a National Small and Medium Enterprises Board, consisting of stakeholders for participative review of and making recommendations on policies and programmes for this sector.

The bill seeks to ensure timely and smooth flow of credit to small and medium enterprises. It also seeks to empower the Centre and the states to notify preference policies in respect of procurement of goods and services of small units. A provision has been included for creating a fund for promoting, developing and enhancing the competitiveness of small and medium enterprises. The existing law on interest on delayed payments to small units has been included in the new legislation with further improvements to help this sector. The statement of objects and reasons of the bill says that like in other countries, here too the concerns of entire small and medium enterprises need to be addressed and the sector provided with a single legal framework.

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