Major Bailout On Anvil For SSIs

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New Delhi, February 24:: The government is expected to announce a bail-out package, including income-tax (I-T) exemptions to the newly created Credit Guarantee Fund Trust (CGFT) funded enterprises, increase in disbursement limits and further simplification of norms, for small scale industries (SSI) sector.

Similarly, SSI sector may be redefined by inclusion of term ‘medium’ industries.

According to sources, the finance ministry is likely to increase availability of advances to SSI sector from the present Rs 45,000 crore to Rs 55,000 crore and provide I-T exemptions to CGFT-funded enterprises in the forthcoming Budget.

A major thrust would be given to knowledge-based industries, which is expected to contribute 7.5 per cent of the GDP by 2008.

“The decision has been taken as the sector has registered a fall of 50 per cent in growth rate during the last two years and advances to the sector have fallen by 2 per cent because of economic slow-down,” said a top official in the SSI ministry.

“We have proposed income tax exemption to the CGFT. The finance ministry is considering the proposal,” said the minister for small scale industries Vasundhra Raje.

The Parliamentary standing committee on industry ministry has also suggested an increase in fixed amount by 16 per cent of total advances and hike in the limit of seed capital of the Trust from the present Rs 100 crore to Rs 500 crore.

“We have conducted a meeting in Mumbai with all the chairmen and the managing directors of

all the nationalised and private banks recently on the issue and forwarded the proposal to the ministry of finance,” Ram Aggarwal, chairman of the standing committee said.

To widen the scope of small scale definition, inclusion of ‘medium’ was being discussed with the industry, Mr Aggarwal said.

“We are deliberating the issue with stakeholders as SSI is small and medium enterprises internationally.