The Hindu : Business : MPs panel for compulsory SSI registration

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Friday, Aug 12, 2005

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MPs panel for compulsory SSI registration

Special Correspondent

High interest rate on delayed payments suggested

NEW DELHI: Registration of all small-scale industry (SSI) units should be made mandatory, instead of leaving the option to individual companies, the Standing Committee on Industry has suggested while vetting the Small and Medium Enterprises (SME) Development Bill.

Mandatory registration, the committee said, would enable the Government to monitor the trends in the sector which would go a long way in taking corrective action and appropriate policy initiatives.

Noting that the tiny sector has been left out of the ambit of the Bill, the committee, in its report, said: "Tiny enterprises have not been classified in the Bill along with small and medium enterprises. The Committee recommends that the tiny sector may also be classified in the Bill."

The committee felt that service providers with investment up to Rs. 10 lakh and manufacturing units with an investment limit of up to Rs. 25 lakh should be segmented as tiny units. The Bill, in its present format, has classified SSI units as those having investment up to Rs. 5 crore in plant and machinery while a new medium enterprises (ME) sector has been classified as those units having investment in plant and machinery worth up to Rs. 10 crore.

The SME Development Bill, which was tabled in the Lok Sabha in the previous session and forwarded to the standing panel for scrutiny, provides for help to SMEs to overcome constraints and promote forward and backward linkages. In its report, the standing committee has suggested that the Bill should ensure that the Railways earmark a definite percentage of its freight capacity for movement of raw material for tiny, small and medium enterprises as also transportation of their finished products in wagon loads and small parcels.

Likewise, the committee has also recommended that Clause 9 of the Bill should also mention that steel and coal producers have to reserve a definite percentage of their produce for assured supplies to the tiny, small and medium-sized units.

The committee was in agreement that one of the main causes of sickness in the small sector was the delayed payment for goods and services rendered to large houses and other clients. To tackle the problem, the Government has legislated an Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act which will stand repealed following the enactment of the SME Development Bill. In this regard, the committee has recommended that the rate of interest on delayed payments should be so high as to ensure prevention. "It should be three times the Bank Rate instead of nine per cent plus bank rate as prescribed in the Bill," the committee said.

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