The Hindu : Business : EPFO-like body for small sector on anvil

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Tuesday, Jun 28, 2011
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EPFO-like body for small sector on anvil

Special Correspondent

NEW DELHI: Seeking to address the concerns of the small scale sector, the Department of Policy and Promotion (DIPP) is planning to come out with a strategy paper to evolve a framework for a privately-run body on the lines of the Employees' Provident Fund Organisation (EPFO) for managing retirement funds and insurance.

Concept paper

“We will soon be coming out with a concept paper. We are giving a framework of that organisation, which can come up as a commercially viable entity in the private sector and which will takeover the obligations of SMEs,'' DIPP Secretary R. P. Singh said here. The new entity will be an alternative mechanism to the EPFO and the Employee's State Insurance Corporation.

Mr. Singh said the new entity would be set up as a private sector company or trust and it could levy charges for providing various services for the small scale sector. The move, he said, would reduce compliance burden on the small and medium enterprises, which contributed about 45 per cent to the country's manufacturing segment.

He said the organisation would collect the money or subscription and would assume all the legal responsibilities of the SMEs.

“We are saying that this commercial entity will collect subscription from small scale companies to provide the same facilities at the same level like the ESIC. They will take care of the pensions funds through a trust mechanism,'' he added.

The SMEs could be given the choice to avail themselves of the services of the new entity, he said.

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