Union Budget 2001-02 (28/02/2001)

Comments on Economic Survey 2000-2001 (24/02/2001)

Mandatory Bar Coding for Exports (01/02/2001)

SSIs demand increase in investment limit for non-reserved items (30/10/2000)

FISME and RGF to study closures in SSIs (18/05/2000)

IT to take Indo-African relations to new high : Vasundhara Raje (18/4/2000)

DGQA to launch website on defence procurement (08/03/2000)

DGQA to launch website on defence procurement

Director General of Quality Assurance (DGQA) will soon be launching a web site to create awareness of opportunities that exist for the industries in defence. This was informed by Air Vice Marshal V.B. Batra, Director (DGQA) speaking at the meeting organized in New Delhi by FISME for increasing defence supplies from SSIs.

Informing about the activities of DGQA, he said that DGQA assists in evaluating and establishing dependable supply sources for very large number of stores for defence sources. He also lauded the contribution of SSIs in the defence preparedness of the country. Stressing the need to upgrade quality standards, he called upon the SSI units to acquire ISO 9000 to establish their credibility.

A special multi-media presentation was given by Brig. Radha Krishna, DGQA ( Bangalore) on various aspects of requirement from vendors. The acronym used in defence supply was DARM- Duability, Availability, Robustness and Maintainability. The participating SSI units were informed of procedure of registration and the quality systems needed to be a successful vendor.

Speaking at the occasion, Mr. Mukesh Gupta on behalf of FISME, raised some of the problems faced by small industries in supplying to defence and stressed the need create a more transparent system of purchasing. He highlighted the difficulties faced by the SSIs in getting even the registration. He suggested that post tender information should be freely available so that a supplier would know why he or she had not been considered.

FISME welcomed the decision of DGQA of launching the web site and suggested that the site should also contain the system of registration and procedure of purchase alongwith the contact address of the concerned officials.

Besides the Air Vice Marshal, Maj. Gen. Nambiar and FISME President, Shri Dinesh Singhal, many senior officers from Defence procurement wings were also present. The meeting was attended by 60 SSI units.

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IT to take Indo-African relations to new high : Vasundhara Raje

African nations could take advantage of India's experience in Information technology to develop greater and more value added job opportunities in their countries and in improving the quality of Governance, said Smt. Vasundhara Raje- Minister of State for Small Scale Industries and Agro and Rural Industries. According to her, the proven capabilities of India in the Information Technology Sector and the readiness of India to share its expertise needed to be harnessed by Africa.

She was inaugurating the Seminar in the capital on ' E-governance and E-Commerce : tools for exponential growth for Africa' which was organized by Federation of Indian Micro and Small & Medium Enterprises (FISME) and African Heads of Missions in New Delhi.

H.E. Mr. Ahmed Mansour Diop, Ambassador of Senegal and Dean of Africa Diplomatic Corps. called upon Indian companies engaged in Information Technology to look towards Africa for excellent growth opportunities. He informed that IT awareness in Africa was inreasing rapidly and there were several countries having better IT infrastructure than India. Countries like South Africa had started using IT in range of Governance activities, he informed.

There was a presentation from Arthur Anderson and Smart Chip Ltd. on how IT could be used for making the Governance more efficient and responsive.

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FISME and RGF to study closures in SSIs

'Set up a small industry ; go to jail'

The wave of entrepreneurship blowing in the country, hides the shocking realities behind the 'enterprising world'. A large number of cases are coming to light where entrepreneurs are being sent to jail following recovery proceedings under various laws.

Eye opening instances of turpitude, harassment and gross human rights violations are being reported during the process of recovery of dues, once an industry is failed. There is a jail term for seemingly each and every payable due to the Government whether it is Sales Tax or Electricity or Income Tax or loans from State Financial Corporations etc. Further, under the labour laws alone , the jail term could be awarded for half a dozen instances.

According to Mr. Dinesh Singhal, President of Federation of Indian Micro and Small & Medium Enterprises (FISME ), instead of awarding the jail term only as an extreme measure, it is being handed down quite casually without proper verification of records. In one case the entrepreneurs was sent to jail after the recovery proceedings following his inability to pay the raised demand and later on the demand was dropped by the department terming it as mistake: such casual is the approach. These cases are not even reported in the media as the failed entrepreneur is shunned by associations and the society leaving the option for him to either commit suicide or abscond.

FISME and Rajiv Gandhi Foundation are embarking upon a joint study to study the procedures of recovery of dues exercised in India for Small Industries and to suggest a fair system of recovery and winding-up for them. As the maximum number of cases have been reported from the state of Uttar Pradesh, the state is being taken up first for the study.

The President, FISME further said that much of the harassment was due to absence of fair winding -up procedures for small industries in case of natural failures in India.

"Failures would always occur in businesses for there is no business without risk. There is an urgent need - especially after liberalization, to bring about a change in the way failures are perceived in Government and in society. The govt. should take a cue from the EU as to how hard they are trying to emulate entrepreneurship of North America by drastically changing their laws governing SMEs", he said.

Mr. Singhal called upon the entrepreneurs from all over India who have been subjected to harassment under the process of recovery, to send their cases to FISME.

For any additional information on the subject, you may kindly contact :

FISME:
Mr. Anil Bhardwaj
Secretary General
Tel : 6109470, 6172722

Rajiv Gandhi Institute for Contemporary Studies (Rajiv Gandhi Foundation):
Mr. P.D. Kaushik
Fellow
Tel : 3312456, 3755117

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SSIs demand increase in investment limit for non-reserved items

The SSIs manufacturing non-reserved items have demanded immediate increase in investment limit from Rs. 1 crore to Rs. 5 crore to pave way for them to build capabilities required to compete in changed economic realities. The new SSIs thus created do not hurt the interest of other SSIs that are in reserved list but the enhancement would help new SSIs take advantage of Technology Upgradation Fund.

The sectors that have specifically recommended this increase are General Enggg, Electricals and Plastics which are facing tough times because of want of infusion of capital to upgrade the technology.

These findings have been reported by Federation of Indian Micro & Small and Medium Enterprises (FISME), a leading organization representing the sector through the feedback collected from its constituent sectoral associations. According to Mr. Dinesh Singhal, President of FISME, all the controversy of keeping the investment limit less than Rs. 1 crore was because of 812 reserved items out of the 7500 products manufactured by SSIs.

He said that with the removal of QRs and coming into being of SAPTA the reservation policy had outlived its utility. However, as the industry has not yet understood serious implications of keeping reservation policy , the Govt. could take its time in deciding the future of reserved items after researching product by product. But the small industries manufacturing non-reserved items never competed in protected environment so why tie their hands with 1 crore limit, he asked. He also cautioned that the much publicized Technology Upgradation Fund would find few takers if the limit was not enhanced to realistic level.

The concern of the traditional SSI sector that the bigger SSIs would corner bulk of priority sector lending could be addressed by freezing level of access of these units to such funds at the existing levels, the communique further added. Further, the medium industries could also be defined simultaneously with the investment cap of Rs. 10 crore. They may be denied access to the priority sector funds as well as access to most of the other benefits available to SSIs. Defining them would however, ensure that bulk of manufacturing sector is effectively covered under the 'special and differential clauses' available to SMEs under WTO dispensation as is done by most of the developed countries. This will also facilitate smooth transition from small to medium to large in India and also facilitate natural linkages.

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Mandatory Bar Coding for Exports

From 1st April, 2001 all exporters big or small who are producing finished or packaged items for retail sale will be required to implement the bar coding system using international symbologies/international numbering standards. The requisite amendment in the Import Export Policy has already been made and the notification has been issued by the Director General Of Foreign Trade (DGFT). In addition to the above, it shall be mandatory for export consignments relating to readymade garments, engineering products, food products, pharmaceuticals, leather goods, sports goods, plastic goods and handicraft packed in cartons/tin containers/drums of definite geometrical shapes like rectangular/square/cylindrical etc. to implement bar coding using international symbologies/international numbering standards at the consignment level.

Speaking at the Seminar organized by Federation of Indian Micro and Small & Medium Enterprises (FISME) in New Delhi today, Shri S. Swaminathan of EAN India has asked the Indian exporters to put their acts together and get ready before the deadline. It may be recalled that EAN India is jointly promoted by the Ministry of Commerce and Industry and the apex chambers of India to educate the Indian trade and industry on use of the EAN.UCC numbering system for unique identification of products/services and locations in line with international best practices.

According to the EAN the use of bar coding was increasingly sought by the buyers in the world and there was fear of Indian exporters losing out in global competition without adopting such a system. The implementation of Bar Coding replaces manual data entry and makes the entire system more efficient and reliable. According to EAN India, most of the Indian blue chip companies have already implemented the system.

Mr. Arun Goyal, International Trade Expert at Academy of Business Studies , however, questioned the mandatory implementation of the Bar Coding system using International symbologies in the context of India. He was apprehensive of the readiness of Indian exporters - chiefly small exporters, with regard to implementing the system. Further, he also raised the issue of high registration cost charged by EAN India.

Speaking at the occasion President of FISME Shri Dinesh Singhal , requested the Minsitry of Commerce and Industry to reconsider its decision of implementing the bar coding.

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Comments on Economic Survey 2000-2001

We welcome the observations included in the Economic Survey on reservation of Small Scale Industries suggesting complete de-reservation of small scale- a step strongly endorsed by FISME.

However, the survey's observations on two key issues are conspicuous by their absence:

a. The survey highlights the need to have modern bankruptcy laws (1.121) but why limiting to only companies- private or limited, through amendment in companies act. Majority of small scale units function as proprietary or partnerships firms. In changed economic realities, many of these unviable units either need to be closed down or required to effect change in business. The survey seems to have overlooked the sector in this regard. It should have suggested a suitable mechanism for proprietary or partnerships firms also.

b. Survey's comments on Tax Reforms ( 1.114) are too generic. Though there has been significant rationalization in indirect tax regime in the last couple of years first through MODAVT and later through CENVAT, somehow the rationalization of states' Sales Tax has always taken a back seat. It is silent on States' VAT. The survey overlooks the need to have 'zero' central sales tax - a step which is crucial in integrating the markets within India to pave way for seamless flow of goods.

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Union Budget 2001-02

· The Union Budget 2001-02 presented by the Finance Minister Shri Yashwant Sinha neither does reflect the concerns of the small sector nor addresses any of the critical needs. Terming the budget 'disappointing from small industry's point of view ', Shri Dinesh Singhal President of FISME, has said that the budget speech barely mentions the policy announced by the Prime Minister last year for small sector.

· The needs of the sector, amply brought out by the study groups and government's own committees as well as by associations like FISME, have been completely overlooked. The budget is silent on the likely policy of govt. of India after removal of quantitative restrictions (QRs) on 31st March 2001 which includes the products reserved for small sector. Further, in wake of removal of QRs, the Minister has neither dereserved the small sector nor increased the investment limit to realistic level nor medium sector has been defined.

· On tariff rationalization, the Finance Minister seems to have succumbed to pressure lobbies and only cosmetic change have been done with regard to duty rationalization for man made fiber sector. The source of major anomalies such as Iron and Steel, Copper and Aluminum have been left untouched. (The duty on these raw material is higher than or equal to their corresponding intermediate and finished products.)

· Similarly, he has not spelt out the agenda of his Govt. on further reforms on state VAT and abolition or reduction of Central Sales Tax- a step which is crucial in integrating the markets within India to pave way
for seamless flow of goods within the country.

· The budget overlooks the need to have modern bankruptcy laws - a need highlighted even by the Economic Survey. But why limiting to only companies- private or limited, through amendment in companies act. Majority of small scale units function as proprietary or partnerships firms. In changed economic realities, many of these unviable units either need to be closed down or required to effect change in business. The survey seems to have overlooked the sector in this regard. It should have suggested a suitable mechanism for proprietary or partnerships firms also.

· Similarly, the much needed reforms in the system of recovery of dues does not find any mention in his budget speech though the entrepreneurs are being sent to jail. Such archaic system of recovery exist in no other country persuing market economy where dues are realized through the law of bankruptcy.

· The budget speech evades any initiative on developmental assistance to the sector whether Marketing support to small sector on line of competing nations as China or for acquiring IPRs, measures that are compatible with WTO.

Overall, from the stand point of Small Sector, the budget is not progressive but regressive.

For more information, kindly contact :

Anil Bhardwaj
Secretary general
FISME

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