The Indian Drug Manufacturers Association (IDMA) has requested the Ministry of Small Scale Industries to increase the investment limit for Small Scale Industries from the current Rs 1 crore to Rs 5 crore level, in the wake of the ongoing modernization process among the SSI pharmaceutical companies for complying with the Schedule M deadline and other global challenges faced by the industry.

In its memorandum submitted to Suresh Chandra, development commissioner, Ministry of Small Scale Industries, the association pointed out that the revised guidelines proposed by the government for Schedule M would entail a heavy expenditure on existing SSI units due to increased requirements of space as well as machinery in the form of upgrading the plants, installation of modern equipments, air handling systems and water systems. This requires a minimum investment to the tune of Rs 1 crore.

IDMA said it was concerned that some of the SSI pharmaceutical manufacturers with the apprehension that they will lose the SSI status, may not go for technology upgradation as stipulated and may even go for a closure. Unlike other segments, the pharmaceutical sector needs consistent technology upgradation and hence the SSI investment limit of Rs 5 crore needs to be considered for the pharmaceutical sector, said IDMA.

The SSI Pharma sector will be up against multinationals when the new product patent regime as per the TRIPS-WTO agreement comes into effect from January 2005. In order to face the competition and for survival, technological upgradation is a must for SSIs. Similarly, many SSI pharmaceutical companies in India are in the process of exporting their products, using their scientific knowledge and cost benefit. They require investments in plants and equipments to meet global standards, and the present Rs 1 crore limit was insufficient, felt IDMA.

The association also said the interest rates charged for term loan and working capital for the SSI has been quite high, and hence the government should consider a 50 per cent reduction in the current interest rates in the next 5 years in order to boost the SSIs. Apart from contributing to the state's exchequer by way of taxes, excise duties and other levies and boosting exports, SSI is a major contributor towards employment generation in our country and keeping the consumer drug prices under check. Considering the national importance of the SSI sector, the government should increase the investment limit to Rs 5 crore, felt IDMA.