The ministry of small scale industries has mooted this new proposal which will be considered at the forthcoming meeting of the group of ministers. It will also contemplate the need to increase the foreign investment to 49 per cent from the existing 24 per cent as also enhance the credit guarantee fund corpus to Rs 500 crore from Rs 125 crore.

Abrol said that the government should maintain a nodal agency to procure orders for the SSI units as also draft seperate laws for SSI and large sectors as is the practise in USA, UK, Germany, Taiwan, China and other countries. "The proposal to hike the foreign investment limit to 49 per cent has been totally uncalled for", he added.

The corpus of credit guarantee fund too is a meagre amount considering the 1.32 crore SSI units in the country. Even if it is decided to fund a unit with Rs 10 lakhs not more than five thousand units can be covered, Abrol said.

The Economic Survey had stated that the SSI sector has posted a turnover of Rs 5,27,515 crore in 1998-99, which accounted for a raw material cost of 60 per cent i.e. Rs 3,16,509 crore. This itself augurs for a working capital requirement of Rs 79,000 crore for every quarter which the government should ponder over, Abrol said. "More than Rs 91,000 crore of SSIs are blocked with large public sector units or government utilities which itself will improve the fund flow to the sector rather than foreign investments" Abrol revealed.

He also advocated the implementation of the Nayak committee report which has stated that 20 per cent of the turnover should be earmarked for working capital by banks for the SSI sector.