Date:04/03/2007 URL: http://www.thehindubusinessline.com/2007/03/04/stories/2007030403540300.htm

Back Fair Budget for small, medium units: CII

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New Delhi March 3 The proposals announced in the Union Budget recently by the Finance Minister for the micro, small and medium enterprises (MSMEs) will help the sector to grow, according to the Confederation of Indian Industry.

Setting credit rating as a benchmark for deciding on the cost of lending to MSMEs, as suggested by the Finance Minister, will enhance the availability of cost competitive credit to deserving enterprises. It will also promote healthy financial and fiscal prudence and transparency in the sector, according to the chamber.

Technology cost

Most MSMEs suffer from lack of access to contemporary technology. The establishment of a Rs 500-crore Financial Inclusion Technology Fund to meet the costs of technology adoption will provide support for capacity building and technology up-gradation in capital-intensive sectors.

However, delayed payments plague the sector and are a deterrent to its growth. An amendment of the Securitisation Law to provide relief to the SME sector from the issue of delayed payments would go a long way in helping the sector.

The formation of an Expert Advisory Council for the sector, on the lines of the Expert Advisory Council for Agriculture, could help to better the eco system for the MSMEs.

Stock exchanges meant for raising funds by the SMEs could be encouraged. Foreign Direct Investment for better technology transfer within the permitted ceiling of equity participation by large-scale units in the equity of small units also needs a push, according to the chamber.