The Small Scale Sector (SSI) pharma units in the country, which have to comply with the revised Schedule M norms by the end of this year, are yet to avail the liberalized technology upgradation loan schemes offered by the Small Industries Development Bank of India (SIDBI).

An enquiry by Pharmabiz revealed that only less than half a dozen pharma units have applied so far for loans for modernization, with the SIDBI branches in the state under the Credit Linked Capital Subsidy Scheme (CLCSS) and Technology Development and Modernization Fund (TDMF) scheme. Sources noted that though SIDBI was offering TDMF at an interest rate of 9.5 to 11.5 per cent, the stipulation related to units in operation for more than three years with a good track record was among the main reasons for pharma SSI units not availing the scheme.

TDMF, aimed to encourage the SSIs to modernize and upgrade the technology, offers loans from a minimum of Rs.10 lakhs for need based civil works, additional land and expenses on packaging, TQM, ISO etc. without processing fees, with a minimum promoter's contribution of 20 per cent of the loan amount. SIDBI sources in Chennai said the bank was extending the loans to medium scale firms, provided the units were SSIs at the time of registration.

Under the Credit Linked Capital Subsidy Scheme (CLCSS), SIDBI offers 12 per cent capital subsidy for induction of proven technologies in 21 specified products and sub-sectors, applicable for all SSIs. The scheme is available until September 30, 2005 and is also operated through other banks with SIDBI as the nodal agency. The bank also offers a Direct Credit Scheme with liberal incentives, which can be availed for setting up units, marketing, expansion, diversification, technology upgradation etc.

SSI pharmaceutical industry sources said lack of awareness about the schemes of various banks, coupled with lethargy and hope of further extension of Schedule M deadline for few more years, could be the reason for SSIs unwillingness to go for modernization. If the government could announce a liberal Technology Upgradation Fund Scheme (TUFS) as in the case of textile units (the government had offered a Rs.25,000 crore corpus TUFS with IDBI and SIDBI as nodal agencies to help the textile units modernize in 1997-98), it could help the SSI pharma sector comply with Schedule M deadline. However, with elections round the corner and the Parliament unlikely to meet for an extended period in the coming months, it was impossible to expect much changes in the existing norms, say industry circles.