Small and medium scale drug manufacturers of Tamil Nadu called for effective monitoring of the Credit Linked Capital Subsidy Scheme (CLCSS) to ensure that the loan amounts, under the scheme, are reaching the SSIs from banks on time. The Scheme was launched by the Union Ministry of Micro, Small and Medium Enterprises (MSME) for Schedule M implementation of SSIs.

The revised guidelines contain a list of 179 machineries or equipment recommended for drugs and pharmaceutical industry to upgrade to the standards of the revised good manufacturing practices.

The Ministry has conducted workshops and awareness camps for the manufacturers in big cities in the country to attract more manufacturers to avail of the scheme. The Department of Pharmaceuticals wants maximum units to be included in the scheme.

A workshop, was organized jointly by the Chemicals ministry and SIDBI in Chennai on October 23 in this regard. Members of CIPI, IPA, PMA and other pharmaceutical organizations had attended the workshop. The ministry officials said more than 3,000 SSI units can benefit from this enhanced scheme and a benefit of more than Rs 400 crore can be availed by the SSI sector.

While welcoming the initiative, T S Jaishankar, chairman of the Confederation of Indian Pharmaceutical Industry said there are only 14 nationalized banks identified as nodal agencies for the implementation of the scheme and it is a drawback for the success of the scheme as the SSIs are forced to depend on these banks for availing the scheme. He further said unless the banks consider the scheme favourably, the scheme could fail. The procedures for getting the loan amount should be made easier. Likewise, he said, a minimum of Rs 2 crore with capital subsidy of 15 per cent is expected of the scheme rather than the present Rs 1 crore.

J Jayaseelan, secretary of the Tamil Nadu chapter of Indian Pharmaceutical Association, said for the best performance of the scheme, the ministry should set up a single window system and the ministry should co ordinate the scheme for all the manufacturers. Further, he added, the authorities themselves should co ordinate with the banks also instead of the industrial people approaching different banks directly.

He termed the present scheme is like the educational loan scheme where the finance ministry says that all graduates are eligible for the loan. But when one student approaches a bank, the loan is disbursed only based on the earning capacity of his parents. He said as far as the CSS is concerned, the banks will look into three years financial data to make sure that they are unable to give loan to the sick units. The purpose of the scheme is to help the needy people but the focus of the bank is to support the big manufacturers, Jayaseelan asserted. He urged the government to set up of a single window system to approve the loan. He said if it is approved by this authority, then any bank can give the loan with subsidy.

According to B Sethuraman, president of Pharmaceutical Manufacturers’ Association of Tamil Nadu, if the scheme is going to be implemented in the present form, it will not help the small-scale units. “The banks are asking for balance sheet. How can the sick units give a balance sheet of three years? After 2005 when Schedule M Implemented, all the SSIs are suffering and most of them are sick,” he said.

He further said that the DPCO is virtually killing the small scale units. “The NPPA says there are only 74 drugs under DPCO, but there are many unscheduled drugs are there in the list. When they add a new drug, it should be notified. Likewise, all the raw materials should also be brought under price control. The price of raw materials is increasing, but the drug price is not revised,” Sethuraman said.

M D Varadarajan, managing director of KNISS Laboratories, Chennai, said the ministry should take immediate steps to include all nationalized banks in the scheme. He suggested that the Scheduled Banks should also be made nodal agencies for Scheme as it is often a hurdle for any industrialist who is not having account with the selected 14 banks. He is of opinion that the refinancing from SIDBI is cumbersome and no bank is interested in the same. While quoting announcement of the Zonal Manger of SIDBI in the workshop, he said It is evident that throughout India SIDBI has disbursed Rs 2200 crore for the past 6.5 years. This is only a meagre amount.

Dr. Vijay A Mehtha, Secretary of Tamil Nadu Ayurvedic, Siddha, Unani Drug Manufacturers' Association(TASUDMA) said the Scheme is not practical as no bank will pay the loan without any collateral security. Government says the banks will issue loan without collateral, but it is not possible for the bank to disburse such a huge amount, he opined.

While addressing the manufacturers, M. Bhaskaran, the Director of the Tamil Nadu Drugs Control Department said from 2001 to 2009, the department had issued 125 stop Production Orders to Pharma Units for want of GMP standards.

Dr.Ashok Vishan Das, Deputy Director at the Ministry of Pharmaceuticals said the Scheme would continue up to March 31, 2012.