The Hindu : Tamil Nadu / Chennai News : Plea on definition of SSI units

Online edition of India's National Newspaper
Wednesday, Jan 03, 2007
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Tamil Nadu

Tamil Nadu - Chennai

Plea on definition of SSI units

Staff Reporter

``If investment is the only criterion, commercial banks will only lend to bigger units''

Chennai : Representatives of small-scale industries in Tamil Nadu have urged the Centre to include turnover in the criteria to define an SSI unit. The Micro, Small and Medium Enterprises Development (MSMED) Act, which came into force in October last year, defines an enterprise with an investment of up to Rs. 5 crore as an SSI unit. The investment upper limit was only Rs. 1 crore earlier. Increasing the investment limit would allow medium enterprises to come under the SSI sector, while edging out genuine small enterprises, members of the Tamil Nadu Small and Tiny Industries Association (TANSTIA) told reporters recently. Also, banks would prefer to lend only to the bigger SSIs. However, if the Centre-prescribed turnover of about Rs. 30 crore, SSIs would benefit, said TANSTIA President A. Shanmugavelayuthan. He said that the United States used turnover as a criterion for small enterprises. If investment was the only criterion, commercial banks would only lend to bigger units, he said. Mr. Shanmugavelayuthan also called for a scheme that would give an employee a permanent social security number. This number could be used for the PF and ESI accounts of the employee even when he moved from one SSI unit to another. Companies would then need to remit single payment to subscribe for PF and ESI schemes.

The MSMED Act should also clearly spell out the exit policy for SSI units if they turned unviable, he said.

TANSTIA members recently met Mahavir Prasad, Union Minister for Small-Scale Industries, to submit a memorandum on the Act.

They have requested that TANSTIA is represented in the Board for micro, small and medium industries. VRC Pandiyan, TANSTIA Joint Secretary, stressed that RBI recommendations to banks should be made mandatory to reach out to small entrepreneurs. Many banks continued to deny collateral-free loans under the Prime Minister Rozgar Yojana scheme as the rules were only advisory.

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