The Ministry of Small Scale Industry will recommend the Ministry of Finance and Planning Commission to continue the Credit Linked Capital Subsidy Scheme (CLCSS) for technology upgradation of small-scale units in the 11th five-year plan.

The Ministry along with Small Industries Development Bank of India will call for a meeting soon to deliberate various aspects of the CLCSS including its initiation and execution. One of the main issues to discuss is the poor off take of the subsidy by the SSIs. This has been pointed out as the main reason for discontinuation of the scheme by the Planning Commission from the current fiscal year.

The decision to seek renewal of the Scheme comes as the part of the increasing demand from the small scale industry. A meeting of Department related Parliamentary Standing Committee on Industry, conducted at Mumbai last week, assured the representatives of SSIs to take necessary action immediately. In the meeting, the SIDBI officials asked the pharma industry to submit a list of pharma machinery required for compliance of revised Schedule M to make the SSIs eligible for up gradation using the subsidy under CLCSS.

"We have asked the IDMA to submit a comprehensive list of machineries which could be included in the infrastructure facilities made eligible for technical upgradation subsidy under CLCSS. We have also asked them to give us a justification with clarifications on aspects like why they need to include the particular machineries in the list," Rakesh Rewari, deputy-managing director of SIDBI told Pharmabiz.

He added that the decision on discontinuation of the Scheme, which was available upto 31st March 2007 could be included in 11th year plan, once the Ministry of Finance and the Planning Commission announces a positive decision. However, he refused to comment on the format of the Scheme, which has been deplored by the Pharma SSIs as against the interests of the industry.

When asked about the allegations on lack of support from SIDBI as a nodal agency for the Scheme, Rewari responded that the Bank has never received such specific complaints from the industry. "This is for the first time I am hearing such a complaint. We are here to support the industry and I would suggest all the industries to come forward with their complaints, if they have any," he averred.

It is to be noted that the industry associations have earlier pointed out that the efforts of the ministry of small scale has not been reaching the industry through the bottleneck of its nodal agency, Small Industries Development Bank of India (SIDBI) and the lack of adequate support from SIDBI has weakened industry's enthusiasm to survive using the aid of the scheme.

The meeting has also decided to issue the subsidy for the SSIs by accepting an affidavit from the concerned company, stating that the company has not availed any loan from other banks nearby the unit. Currently, the companies have to submit No-Objection Certificates (NOCs) from all the banks in the nearby area of the unit for getting subsidy under CLCSS. Considering the response of the ministry and the industry, the planning commission is reviewing its decision to discontinue the subsidy scheme, according to official sources.

The meeting has also discussed relaxation of RBI rules on collateral securities and other norms to fit with the interests of SSI units, and has asked the representatives from various banks to take friendly approach to the needs of small-scale industry. The committee consists of 10 MPs under the chairmanship of Santhosh Bagrodia.

"The IDMA has asked the Parliamentary committee to ensure adequate support for the pharma industry, especially the SSI units. We will soon submit the list of machineries to be included in the list of facilities offered under the technical upgradation scheme," said S R Vaidya, co-chairman, SME committee, IDMA who has represented the pharma industry in the meeting.