Small scale gets wee bit smaller

The small scale industries SSI sector was disappointed and said no specific incentives or specific scheme barring a one per cent reduction in credit guarantee fees was announced to strengthen the sector. In fact, SSI associations say the increase in the list of services and two per cent hike in service tax and fringe benefit tax will affect the business sector.

But the sector actually saw lots of reforms. The FM identified 180 items for dereservation. With the current round, the number of items reserved for exclusive manufacture by SSI units has come down to 317 from 497. Last year the government had dereserved 108 items.

In order to give a fresh impetus to lending by Small Industries Development Bank of India, the FM said the corpus of credit guarantee fund would be increased to Rs 2,500 crore in the next five years from Rs 1132 crore at present. He added credit guarantee trust for small industries CGTSI will be advised to reduce one time guarantee fee to 1.5 per cent from 2.5 per cent for all loans.

Chidambaram also proposed to recognise small and medium enterprises in the service sector and treat them at par with the small scale enterprises in the manufacturing sector.