Micro, small and medium entreprises (MSMEs) in Orissa have demanded a Rs 500-crore bailout package to face the meltdown that has already led to retrenchment and production cuts by industries.
A committee formed by the UCCI, one of the largest bodies of industries and trade in the state, and organisations like Orissa Small Scale Industries Association, Orissa Young Entrepreneurs Association, Orissa Assembly of Small and Medium Enterprises have urged chief minister Naveen Patnaik to act fast and create a corpus fund of at least Rs 500 crore for the MSME sector’s bailout.
The UCCI president, Niranjan Mohanty, said the meltdown would have disastrous affect on MSMEs unlike large industries which can reopen their units once the situation improves owing to their wide financial and organisatinal bases, while small industries would slip into permanent closure.
Mohanty said the fund could be used to offer soft loans to all viable units. The MSME policy for new units with interest subsidy of 5% should also be extended to existing units.
The UCCI president has called for immediate steps to revive and rehabilitate the OSFC which can act as a facilitator for availing Sidbi loans at low interest rates for the sector. The Centre has announced a Rs 7,000-crore package for the sector which would be executed by the Sidbi. With a non-functional OSFC, Orissa will have to forgo its share, he cautioned.
Mohanty has also demanded the provision of market assistance to MSME units though revamping of the EPM system. Necessary changes in the VAT rates should be brought in to make local MSME units competitive and worth supplying materials to Central PSUs and infrastructural projects, he said.
The UCCI-led committee also demanded for expediting refund of Vat to exporting firms and revision of the NPA norms from three months default to one year by the Reserve Bank of India at least till the end of 2010.