SME Bill plans to increase investment limit to Rs 5 cr

New Delhi, March 30 | Updated: Mar 31 2005, 05:30am hrs
The government will raise the investment limit for small scale units from Rs 1 crore to Rs 5 crore in the Small and Medium Enterprises Development (SMED) Bill which will be presented in the current session of Parliament. However, sectors like pharma and bio-technology with investment limits of Rs 5 crore will see no change with the passing of the Bill.

For the first time, the government has defined medium enterprises as those which have an investment in plant and machinery between Rs 5-10 crore in the Bill, a senior official said. The Bill will provide statutory backing to the price and purchase preference policy for the sector, he added.

The long-awaited promotional package for SSIs has been sent to the finance ministry for its comments. It seeks to provide assistance to the units and create a conducive policy environment. The package involves measures to improve credit flow while persuading banks to lend at lower rates of interest. The small scale industries ministry had earlier approached the finance ministry to introduce a sub-target for the sector within the 40% priority sector lending that banks must undertake. With Basel II norms being introduced and host of other factors, the finance ministry has rejected the proposal, a senior official told FE.

The government also wants to tie up with private training institutes in order to streamline the training process, he said.