NEW DELHI: Simplifying labour laws, besides making changes in investment norms and the implementation of the value-added tax regime, will help small-scale industries (SSIs) become more competitive in the global scenario.
A survey conducted by the Confederation of Indian Industry revealed that 49% of respondents were optimistic that simplifying labour laws was key to making SSIs competitive at the international level.
Around 33% of those polled expected changes to rules governing foreign direct investment to do so, while 29% of them said transitions from SSIs to small and medium enterprises (SMEs) would strengthen these units to face competition. Three other obstacles to the growth and operation of SSIs were identified as high interest rate, collateral requirements of banks and financial institutions and bureaucracy, the survey found.
Even though 35% of the respondents said SSIs would be struggling to find their feet for another year, 39% expected SSIs to graduate to the medium scale by 2010.
The majority (around 72%) of the respondents did not agree to raising the FDI limit in the sector while 83% said non-traditional banking sources would play a dominant role in financing small and medium industries.
Around 39% of the respondents suggested extension of reservation policy to include more items for production exclusively by SMEs.