Even as the Department of Pharmaceuticals is making efforts to make the Credit Linked Capital Subsidy Scheme (CLCSS) more industry-friendly, the feedback available from the small scale industry shows that the scheme at its present form is too difficult to avail due to several stringent norms. The main impediment in availing the loan amount is the stringent conditions of the banks that were identified as the nodal agencies for implementing the scheme.
The CLCSS scheme was introduced by the Department of Pharmaceuticals in association with the Union Ministry of Small and Medium Enterprises for the technological upgradation of the SSI units for Schedule M compliance.
In Tamil Nadu, though most of the companies are complying with the norms of Schedule M, they have to invest more in other areas for technological upgradation in compliance with the Good Manufacturing Practices. To satisfy this cause by enabling the units to avail more financial assistance, DoP has revised the scheme and expanded the list of products beneficial for financial assistance to 179 from the earlier list of 41 items.
When the DoP officials conducted their second workshop in Chennai last week to attract more takers to the scheme, it witnessed poor response from the Tamil Nadu pharma industry. The meeting also witnessed poor presence of small scale players, and even the office-bearers of certain pharma organizations have also not turned up. Whereas, in the first workshop that held in October 23 last year, for the same purpose, it was represented by more than 150 people from various companies. Last week’s meeting was attended by less than 20 people.
Though the officials in the department of pharmaceuticals were stretching a helping hand towards the industry by encouraging them to avail the scheme, the major impediment of the scheme is the stringent conditions put forward by the bank. SIIDBI is the nodal agency identified for the disbursement of the loan amount. Dr Ashok Vishandas, deputy director general in the DoP has conceded that there are no takers from Tamil Nadu after July 30, 2009.
When Dr Vishandas was asked what modifications or changes his Department has made in the guidelines to attract more takers, he said there is no fundamental changes or commit anything, but he can help the industry with maximum possible ways. The interest of the manufacturers will be promoted and there won’t be any communication gap between the industry and the government.
According to people from the industry, who has attended the second time, the scheme stands as the sole discretion of the bank to disburse the amount. They said after 2005, all the units are struggling and running in big loss, then how can they produce an audit balance of good performance of three years.
For the existing units, the bank will sanction the loan only if the units have a good performance record of three years. For the new units, they have to submit next three years projections.
The Chennai regional manager of SIDBI, M Chitra Iyer, who was present in both the meetings, reiterated the bank’s stand that it cannot deviate from its conditions as the bank has to get the money back. For this, the Department of Pharmaceuticals has not made any revision in the guidelines.
The industry people wanted to make the norms more transparent. When contacted, B Sethuraman, president of Tami Nadu Pharmaceutical Manufacturers Association said all over India, SME players are showing a lukewarm attitude towards the scheme due to the stringent conditions of the bank. He said they cannot avail the scheme from other nationalized banks where the units have account with.