The small scale industry has urged the Department of Pharmaceuticals (DoP) to hold a meeting of the public sector banks to remove the prevailing non-tariff barriers affecting the small scale units in securing liberal loans for upgradation and staying afloat in the competition with the big units by stepping up exports.

The SME Pharma Industries Confederation (SPIC), in a letter to pharma secretary Ashok Kumar, urged him to coordinate with the concerned departments for convening a meeting of the PSU banks to sort out the crucial issues and thereby help the small scale sector. "Exports cover premium paid by banks to Export Credit Guarantee Corporation (ECGC) should not be recovered from exporters in case the exporters are taking ECGC cover on case to case basis," the SPIC said.

"Exports on DA basis with ECGC cover should not be included while calculating the total exposure limit of funds by banks to SME pharma units. ECGC cover issued on case to case basis itself is a guarantee to banks from the government. Banks should not take any margin on imports L/C used and working capital margin should not be more than 10 per cent where collateral guarantees are taken," SPIC vice chairman Lalit Kumar Jain pointed out.

Use of ACD (Asian Currency Dollars) during trade amongst SAARC countries should be stopped as it delays export remittances and exploitation by foreign banks. Exports to focus countries even against L/C or ECGC cover should not be refused for refinancing by banks as a credit risk, he suggested, referring to the previous government instruction to banks to be very helpful in providing export credit. He said the ministry of commerce should clearly issue guidelines that in no case exports of drugs under L/C DA or under ECGC cover on DA basis should be included in overall capping by public sector banks which take shelter of RBI guidelines to enforce overall capping.

"Banks should give liberal term loans below PLR for infrastructure development, purchase of machinery and laboratory equipment to further improve the quality of drugs by SME. Term loans availed from public sector banks for infrastructure development according to schedule M along with term loans for purchase of sophisticated laboratory equipment required for testing of drugs as required under good laboratory practices, boilers VAP, AHU, under energy efficiency schemes should not be included in the exposure norms capping by public sector banks," the SPIC said.