New Delhi: Industry chamber Assocham has urged the Finance Minister to relax interest rates not only for India Inc. but more especially for SME’s as a stronger rupee has already shrunk their margins and it is becoming more difficult for them to ensure their survival.
The chamber has sought excise reduction in excise levy for SME’s as most of their products fall under high excise slabs, ranging from 16% to 24% to a level of less than 12%.
* Majority of SME’s payments are delayed because faulty deferred payment clause exceeds beyond six months
* SME’s face severe liquidity crunch as banks and financial institutions insist on collateral and bank guarantee from them as a result of which interests cost to most SME’s go beyond 15% -16%, resultantly effective cost of interest to small and medium entrepreneur works out to be around 18%
* As a result of resource crunch, and high cost of money with rising rupee appreciation, SME’s have not been able to effect capacity expansion to enhance their production levels and are gradually becoming ineffective to compete at times when modernization and liberalization has reached transition levels
* SME’s, particularly, tiny and small scale entrepreneurs and their units are more often then not confronted with an increasing menace of inspectors, whose numbers have gone beyond 40; these inspectors create procedural hassles for most SME’s which take up a lot of their time and energies; central government should curtail number of inspectors for SSI
* Another hurdle faced by SME’s is low levels of research and development (R&D), limited access to technology and product innovations; investing in R&D to innovate by SME’s and government ahead of markets is necessary and should be encouraged; government should review existing policies relating to R&D funding, provide incentives for supporting generic technologies, engineering and physical sciences and take steps to encourage better coordination of efforts with greater focus on innovations and productivity enhancing technologies
* Create a platform for developing competitiveness in SME’s to extend skill upgradation to SSI through advanced technology; proposed front should enhance SSI manufacturing output and give them skills for safety measures
* SME’s faced difficulties in adopting expensive quality management systems or certification procedures that sometimes have to be repeated several times; the fund should provide solutions to this effect
* Lack of information, capability to build up an international market position and maintaining international business relations and insufficient management skills block the growth of SMEs; most enterprises in this sector are more product and technology oriented rather than market oriented; moreover lack of managers with international experience and foreign language skills is another hindrance in their growth