BADISH Jindal meets MSME Secretary

Author(s): City Air NewsFASII’s National President Badish Jindal. New Delhi / Ludhiana, April 11, 2013: FASII’s National President Badish Jindal met Madhav Lal,  Secretary, Union Ministry of MSME, at Udyog Bhavan here on Thursday and discussed...

BADISH Jindal meets MSME Secretary

FASII’s National President Badish Jindal.

New Delhi / Ludhiana, April 11, 2013: FASII’s National President Badish Jindal met Madhav Lal,  Secretary, Union Ministry of MSME, at Udyog Bhavan here on Thursday and discussed certain points. 

He said it is known that when a business of the Micro or Small Enterprise fails, not only do the assets of the business but the entrepreneur’s personal assets also get attached to pay off business dues. Presently identification and declaration of sick micro and small units is with the banks. It has been experienced  that normally banks do not take timely steps to identify sickness. Recommendations of State Level Committee also are seldom honoured by the concerned Banks.  Hence it is necessary that the identification should be done by a separate agency. Nayak committee has already recommended for formation of an authority on the lines of BIFR.  As soon as large industries apply to BIFR after erosion of 50% or more of their net-worth, they immediately get protection. No pending liabilities of MSE sellers of goods can be realized from them, and tax arrears etc. are also frozen. Such protection is not available to sick MSEs.Even the ESI and EPF recoveries are stalled once the large units apply to BIFR.  However, the Micro and Small Enterprises have to continue paying the ESI and EPF dues even during their heightened sickness. It is therefore requested that an authority on the lines of BIFR be formed with reference to sick Micro and Small Enterprises which will help them to come out from their dire-straits.

Regarding Credit to Micro and Small Enterprises at a fixed Base Rate, he said a target should be fixed by RBI for the funds to flow at a fixed Base rate to Micro and Small Enterprises.


He also raised the issue of harmful provision of the current fiscal’s Union Budget. He said The Union Finance Minister stated while presenting the Union Budget 2013-2014 on the 28th Feb.2013 that the MSMEs will enjoy their benefits for a period of three years even after when they grow out of the MSME category. This proposal of the Finance Minister, FASII feels, will drive the Micro and Small Enterprises to a very tight corner. He said taking advantage of this proposal, the Medium and large units may invest in plant and machinery below Rs.5 crores and register them as a Small Scale Enterprise.  However, thereafter within a short span, the Medium and large units could shoot up their investment in Plant and Machinery beyond Rs.5 crore and continue to corner the benefits of the Micro and Small Enterprises for a period of three years.  It is perceptible that the period of three years is not a brief period. He added it is known that one medium scale enterprise (whose investment in plant & machinery is above Rs.5 crore and below Rs.10 crore) is equal to minimum 20 micro enterprises.  As such, one medium enterprise can gobble-up the benefits meant for 20 micro enterprises.  It is quite simple & easy for a medium enterprise to consume the benefits of the micro and small enterprises at a time when the fund-position is precarious with the Government. He pointed out the provision will also enable the medium and large enterprises to toss-down the micro and small enterprises in seizing the benefits under schemes like 20% Procurement Policy and others.

In the circumstances, we request you to impress upon the Hon’ble Finance Minister to cross-out this provision in the interest of the existing and surviving Micro and Small Enterprises.

About formation of Advisory Committees at MSME-DIs, he said an Advisory Committee at MSME-DIs needs to be formed. Many Central Government schemes are being implemented by States.  Implementation of such schemes, Credit related matters, Water/Land/Electricity issues, Documentation aspects related to running of industries etc can be discussed and a solution can be thrashed out then and there.  Director of MSME-DI could be the Chairman, and Officials (both Central and State) connected with Industry, Finance, Taxation, Water, Land, Electricity, Officials of the Banks, Officials of the NSIC and local industries-associations could be made as members of the Committee. There are Apex Committees in every State functioning under the State Government.  They, however, do not attach much importance to central subjects.  Therefore, formation of MSME-DI’s Advisory Committee is essential.

He asserted don online status of MSME Schemes needs to be displayed. He said application details, Approval details, sanctioning, payment details etc of different schemes of the Government of India and the beneficiaries should be displayed in the portal of the MSME Ministry which will help the Entrepreneurs, Associations, Federations to proceed further in the matter. He added it is known that the enterprises heavily suffered as SIDBI delayed sending applications to the Ministry under CLCSS scheme.  Therefore such a display is imperative.

He also said the Micro and Small Enterprises Facilitation Councils have been dysfunctional and are not successful in many states.  Necessary steps need to be taken to rectify the aspect of “Delayed Payments”.

Further, he said at present power subsidy is given to agriculture and the same is recovered from industries.  Farmers enormously benefit from the subsidy and they do not have any tax liability.  “We suggest that the Micro enterprises also should be given cross subsidy on power so that they can make valuable socio-economic contribution to the nation”, he said.

Jindal said women entrepreneurs constitute only 5% of the total women population of India.  Therefore, separate allocation of funds for skill development and entrepreneurship developmnt of women entrepreneurs needs to be made.

He pointed out that Mini Tool Rooms and Training Centres are being run under the financial assistance of the Government of India.  He suggested that such tool rooms and training centres should accord price preference to Micro and Small Enterprises in the country.

Regarding separate Board for Agro Based  Industries, he suggested that a separate Board for Agro Based Industries under the Ministry of MSME should be established on the lines of Coir Board and KVIC.  This will give a huge boost to the Agro based industries.

Also, he said the main objectives of the International Co-operation Scheme of the Ministry of MSME are for exploring new areas of technology infusion/upgradation, facilitating joint ventures, improving market of MSMEs products, foreign collaborations, etc.   However, some of the delegates become import-agents and thereby violate the objectives of the said scheme.  An undertaking should be taken from the delegates that they will not become an importer or an import agent. Such nefarious activities should be rooted out at once.

Jindal also said the International Cooperation Scheme, Marketing Development Assistance, etc have been formulated for noble purpose.  Sanction is given to some of the Exhibitors whose activities are in no way beneficial to the Micro and Small Enterprises.  The Government should ensure that the Exhibitors provide due benefits to the  Micro or Small Enterprises only such exhibitors should be registered.

He said they have learnt that the Micro and Small Enterprises Limits are being revised in accordance with inflationary trends.  The Limit in accordance with Plant and Machinery of the said enterprises are already on the higher side.  They were raised from Rs.10 lakhs and Rs.1 crores respectively to Rs.25 lakhs and Rs.5 crore.  We feel the present definition should not be changed.  Any change we feel will facilitate back door entry of Medium and Large sectors into Micro and Small Enterprise sectors.

On the issue of MSMEs need assistance on Anti-Dumping, he said at present imports from China stands at Rs.277 lakh crores which are mainly finished goods.  And the exports from India to China stands at Rs.86 lakh crore only which are mostly raw-materials.  The mainly affected category is micro sector in India. The process of implementation of anti dumping duties against the imports of such products is very hard and difficult as  90% of the units manufacturing such parts in India belong to micro-enterprise category.  Necessary assistance should be given in this regard to the Micro enterprises.

Regarding Credit Guarantee and Banks, he suggested that Banks should display in their Portals about the Number of Applications received for Credit Guarantee, Number of applications sanctioned for Nil collaterals, Number of applications rejected with the reason. 

Regarding procurement policy and states implementing Central Government Schemes, he said it is known that all the State governments are implementing many of the Central Government schemes.  For example,  State governments of Karnataka and Rajasthan have accorded bicycles to students of their states under the implementation of a central government scheme. He gave below the terms and conditions of their tender advertisements:

ì  The Government of Rajasthan has issued two tenders for Purchase of Five  lakhs Bicycles for Students costing Rupees One Lakh and Thirty crores.  The deadline for participation in the tender was 4th April, 2013.  The conditions stipulated in the tender of the Government of Rajasthan are:

(a)The Annual Turnover of the bidder should be Rs.50 crore

(b)The bidder should be able to supply 40,000 bicycles in one-go

(c)Advance/Deposit payable is Rs.2.6 crore.

ì  Similarly, the Government of Karnataka has issued a tender for Purchase of 5,52,821 Bicycles(2,78,459 for Girls and 2,74,362 for Boys) costing Rupees One Lakh and Fifty Crores.  The deadline for participation in the tender is 15th April, 2013.  The conditions stipulated in the tender of the Government of Karnataka are:

(a)The Annual Turnover of the bidder should be Rs.100 crore

(b)The Plant Capacity of the bidder should be Rs.50,000 crores

(c)In the past three years the bidder should have supplied more than 300% of the quantity of bidding.

Such stipulations of the State Governments run counter to the procurement policy of the Union Government. As such, the needful should be done so that  the state governments take into account the provisions of the Procurement Policy of the Union Government while implementing the central government schemes.

Thursday, April 11, 2013