Huned Contractor reports on the SME Manufacturing Summit held at Pune on October 25, 2013

With the election bugle about to be sounded in the State and the Centre, small and medium industry is expected to witness almost 35 per cent loss in production in the next six months, caused by the diversion of workforce for political canvassing. This was the grim picture presented at the SME Manufacturing Summit held at Pune on October 25 by Chandrakant Salunke, president of the Small and Medium Business Development Chamber of India. "Many trade unions lead political campaigns and this is likely to impact operations in the SME sector. Further, due to recession, the non-performing default assets of small scale industry are expected to reach 6 to 6.5 per cent," he added.

Salunke also highlighted the fact that the small scale industry in Gujarat has seen growth with the help of state infrastructure unlike the SME sector in Maharashtra. Meanwhile, efforts are on to increase the limit of the collateral free loan provided to SMEs by the Ministry of Small and Medium Industries. "Loans for manufacturing units could be increased to Rs 2.5 crore. The increase in limit is to ensure easy finance for SMEs who often find it difficult to get funded by commercial banks," he said. Also, on the lines of the National Stock Exchange (NSE), an electronic platform will be created for SMEs to register their grievances with regard to late payment made by the companies. Almost 20,000 manufacturing units are registered in Maharashtra with nearly 1.29 lakh people in the small scale sector.

Meanwhile, giving an optimistic spin to the summit, TCA Ranganathan, Chairman and Managing Director, Export Import Bank of India (EXIM), said that while EXIM facilitates funding of medium, small and micro enterprises from commercial banks, it also offers financial programmes and term loans to small and medium scale industries. According to him, the potential of common testing and packaging facilities at clusters can be utilised by industrial units but this would need their cooperation. "EXIM provides a better rate of interest than most public sector undertaking banks and we have the benefit of borrowing more foreign currency."

According to Ranganathan, a tie-up with the Asian Developmemt Bank (ADB) for USD 100 million to lend to MSMEs and USD 500 million for re-finance has been taken up. EXIM has also initiated financing of creative fields like filmmaking and has set up technical camps in five states to support the MSMEs. "With the help of these camps, almost eight to ten small industrial units have already been financed. We provide schemes for financing research and development and packaging in case units want market entry loans, we help with that as well," he said. Moving on to other issues, Ranganathan pointed out that exports in key sectors such as leather and textile has seen a decrease in the recent past but the quality of manpower has increased. "The policy level has had a negative impact on the growth of the industry," he concluded.