The SME Pharma Industries Confederation (SPIC), an apex body of thousands of small pharma units spread across the country, has asked union minister for micro, small and medium enterprises Dinsha Patel to convene a joint meeting of concerned ministries to ensure that the Credit Linked Capital Subsidy Scheme (CLCSS) is allowed to the loss making units also to upgrade their units as per GMP norms.

The SPIC asked the minister to intervene to ensure that the small pharma units are not victimized for not complying Schedule M, especially when the government could not upgrade its own vaccine units till date despite abundant funds. Victimization leads to closure which shall be against the mandate of the 181st Report of the Subordinate Legislation Committee.

SPIC's letter to the minister in this regard comes in the wake of reports that licenses of units in Haryana are being suspended for deficiencies in Schedule-M.

SPIC contends that the small units are not able to upgrade their units without financial assistance from the government as they are not able to utilise the government's CLCSS scheme mainly due to the clause involving the profit of the company. Even though the department of pharmaceuticals (DoP) has been taking several measures to make the scheme a success, what prevents the CLCSS from being popular, inter alia, is the fact that SIDBI – the nodal bank for disbursement of funds, seeks balance sheet of the financed unit for the previous three years. Only if they show profits, CLCSS is disbursed.

For the last several months, SPIC has been making efforts to drive home the point that disbursing the CLCSS should have no relation with profit and loss if government wants to make it a success. Earlier, it had urged the union chemicals minister M K Alagiri to initiate steps to remove anomalies in the scheme like the 'clause of Profit and Loss' to make it more industry friendly so that the struggling small pharma companies in the country can utilise the scheme in upgrading their units as per the GMP norms.

SPIC letter to the Dinsha Patel said that the major problem is that Schedule M – amended in 2005, is a most confusing document. Each inspector has his own interpretation. Units unable to satisfy inspectors are pressurized. Tactics deployed also include non-renewal of manufacturing licenses and refusal to allow additional items for manufacture which further affects their viability. Guidance for Schedule M implementation is not available. NIPER is yet to set up a sample SSI unit promised 3 years ago.

Another important aspect is that MRP Excise was also implemented in 2005. While Schedule M mandates upgradation, this rendered 5000 SMEs outside excise free zones unviable owing to anomalies in the change. Consequently, sales of 5000 units outside the excise free zones dropped significantly which was reflected in their balance sheets showing losses. But CLCSS is disbursed by banks only to units whose balance sheets show profits in preceding three years. This is the reason why CLCSS has failed – not because SMEs do not wish to upgrade, as is being alleged, SPIC secretary general Jagdeep Singh said.