ENHANCEMENT OF INVSTMENT LIMIT TO 5.00 CRORE
The Small Scale Industry Sector has emerged as India's engine of growth in the New Millennium. By the end of March 2000, the SSI sector accounted for nearly 40 per cent of gross value of output in the manufacturing sector and 35 per cent of total exports from the country. Through over 32 lakh units, the sector provided employment to about 18 million people.
The on going programme of Economic Reforms based upon the principle of liberalisation, globalisation and privatisation and the changes at the international economic scene including the emergence of World Trade Organisation (WTO), have brought certain challenges and several new opportunities before the SSI Sector. The most important challenge faced by the sector is that of growing competition both globally and domestically. At the same time sector has also been facing some problems which relate to credit, infrastructure, technology, marketing, delayed payment hassles on account of so many rules and regulations etc. In order to enable this sector to avail the opportunities and play its role as an engine of growth, it is essential to address to these problems effectively and urgently.
The small scale industry sector output contributes almost 40% of the gross Industrial value-added 45% of the total exports from India (direct as well as indirect exports) and is the second largest employer of human resources after agriculture. The development of Small Scale Sector has therefore been assigned an important role in India's national plans.
In order to protect, support and promote small enterprises as also to help them become self-supporting, a number of protective and promotional measures have been undertaken by the Government.
SSI turnover eligibility limit for availing General SSI Excise Exemption enhanced from Rs. 3 crore to Rs. 4 crore. Further SSI units will now have only two options: either full exemption on the first clearance of Rs.1 crore or normal duty on the first clearances of Rs. 1 crore with CENVAT credit.
108 items de-reserved which include 30 textile products including hosiery.
Small service providers having gross annual turnover less than Rs. 4 lakh have been exempted from purview of service tax.
Service tax on business auxiliary service has been exempted for persons producing/ processing goods, from the inputs received from a manufacturer and sending the resultant product to the same manufacturer for further manufacture of final products, which are cleared on payment of excise duty.
A provision of Rs. 173 crore made for promotion of SSI Schemes.
SME growth fund to be created by SIDBI with a corpus of Rs. 500 crore to provide equity support to small and medium units in knowledge based industries such as Pharma, Biotechnology and IT Sectors.
The Small and Medium Enterprises Development Bill to be introduced during the current session of the Parliament.
As proposed by the National Commission on Enterprises in the Unorganised/Informal Sector, pilot projects for creation of “growth poles” applying the Provision of Urban Amenities in Rural Areas (PURA) principles will be taken up in 2005-06 to expand production and employment in the unorganized enterprises around existing clusters of industrial activities and services as well as encourage the formation of new clusters.
The target for Credit Linking of Self-Help Groups (SHGs) enhanced from 2 lakhs SHGs to 2.5 lakh SHGs.
Micro Finance Institutions (MFIs), which seek to provide Small Scale credit and other financial service to low income households and small informal business to be promoted in a big way.
Rs. 100 crore Micro Finance Development Fund to be re-designated as Micro Finance Development Equity Fund and the corpus will be enhanced to Rs. 200 crore.
RBI to open a window to enable qualified NGOs engaged in micro finance activities to use the External Commercial Borrowing (ECB) window.
In order to revive the manufacturing sector, particularly small and medium enterprises and to enable them to adjust to the competitive pressure caused by the liberalisation and modernization of tariff rates a new scheme called Manufacturing Competitive Programme to be launched to strengthen operations and sharpen competitiveness. The design of the scheme will be worked out by the National Manufacturing Competitiveness Council.
Cluster development approach is to be adopted for production and marketing of handloom products.
Peak rate of customs duty for non-agricultural products reduced from 20% to 15%.
The customs duty on selected capital goods and parts reduced to 10% in some cases and to 5% in some others.
Customs duty on seven specified machinery for leather and footwear industry reduced from 20% to 5%.
Customs duty on nine specified machinery used in pharmaceutical and biotechnology sector reduced to 5%.
For primary and secondary metals customs duty reduced from 15% to 10%.
Industrial raw materials such as catalysts, refractory raw materials, basic plastic materials, molasses and industrial ethyl alcohol-key inputs to manufacture, will have reduced customs duty of 10%. On lead, customs duty is reduced to 10%.
Customs duty on coking coal is reduced from 15% to 5%.
4% Countervailing Duty (CVD) imposed on the imports of Information Technology Agreement (ITA) bound items and their inputs that attract ‘nil’ duty.
Excise duty reduced from 16% to 8% on Imitation Jewellery.
8% excise duty imposed on Mosaic Tiles.
Surcharge of Re.1 per kg on tea abolished.
Excise duty of Rs.1 per kg on refined edible oils and Rs. 1.25 per kg on Vanaspati withdrawn.
Excise duty reduced from 16% to 12% on matches made in mechanized and semi-mechanised sectors.
Excise duty on Iron & Steel restored to the normal level of 16%.
An Advisory Committee to be set up to advise the government on the extent of abatement for excise duty and service tax.
Enhancement of investment limit from Rs. 1.00 Crore to Rs. 5.00 in respect of Stationery Sector and Drugs and Pharmaceuticals Sector
Government of India, Ministry of Commerce & Industry (Department of Industrial Policy and Promotion) Order No. S.O 655(E) dated 5th June, 2003 (notified in Gazette of India, Extraordinary Part II – Section 2 – Subsection (ii) on 5th June, 2003) detailing the list of 13 itmes of the Stationer45y Sector and 10 items of the Drugs and Pharmaceuticals Sector, which figure in list of items reserved for manufacture in the Small Scale Industries (SSI) Sector, investment limit in plant and machinery for which has been enhanced from Rs. 1.00 Crore to 5.00 Crores. These items are in addition to 27 Hosiery and 14 Handtool items listed in the list of reserved items for manufacture in SSI Sector, investment for which has already been enhanced vide Ministry of Commerce & Industry (Department of Industrial Policy and Promotion) Order No. S.O 1013(E) dated 9th October, 2001.
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