Chat session with Hon'ble Minister Ms. Vasundhara Raje

The following is the transcript of the Chat session with Hon'ble Minister Ms. Vasundhara Raje held on July 16, 2002

Topic of Discussion : "SSI's as creator of jobs"
Time : 4 P.M. to 5 P.M. IST on 16th July 2002

There were 90 questions asked to the minister most of them, were not presented due to there no direct relevance to the subject. Some of them could not be answered due to lack of time.

For a copy of the transcript please send your request to chat administrator.

atul:

It is widely accepted that SSIs create jobs. Why is it then that they also face maximum harassment from various inspectors such as Labour, etc? What is the Government doing about this? ?

  Government is fully aware of the problems faced by SSI units due to large number of visits of inspectors. In order to reduce this, we propose to introduce self-certification, wherever possible. National Labour Commission has also suggested that Labour Laws should not apply to units employing less than 20 persons. The Ministry of SSI also proposes to bring out a single unified legislation for the SSI sector.

me2:

During the 1980s, the pace of job creation by SSIs was quite rapid but this has fallen in the post-liberalisation period. Is it true that SSIs are no longer employing more persons as they used to earlier?

  Yes, there are indications of increased reliance on machines in SSI units as a result of which per unit employment has declined in recent years. However, on the whole, it still continues to create more jobs than the large-scale sector.... We agree that some changes have to be made in the Labour Laws and that Labour Commission is applying themselves to it and have recommended that units employing upto 20 persons maybe exempted from Labour Laws. Hopefully this will make the situation better.

guestguest :

Two reports of the Planning Commission have come recently on jobs. Do you agree with Montek Singh Ahluwalia or S.P Gupta report?

  There are no contradictions really between the two reports. The Ahluwalia report is a macro overview of the economy with regard to employment whereas the SP Gupta suggests the micro level issues, which should be taken up. In fact, PM has endorsed the SP Gupta report.

adi:

Is your Ministry doing anything to train workers in SSI sector?

  We run large number of institutions such as Small Industries Service Institutes, Regional Testing Centres, Product cum Process Development Centres, Tool Rooms, where training is given to fresh entrants as well as workers. In addition, our 3 National level Entrepreneurship Development Institutes conduct long-term courses for entrepreneurs and we help State-level Entrepreneurship Development Institutes. In fact some of our centres have been converted to Technology Resource Centres to further assist entrepreneurs and workers.

hemant :

What role will be of SSIs in Government's proposal to create 1 crore new jobs every year. What will be SSIs role in this?

  I believe that the Government is looking at SSI to play a major role here. You have to remember that we are the largest employment generator after agriculture and with the kind of support structures that the Ministry of SSI has put into place, we will be able to play a vital role in meeting the Government's target for employment creation.

sambit :

Cheap imports from China have affected the job market for low-skilled labour. What is government doing to improve the job market for them?

  This perception is not supported by facts. Studies carried out in this regard have shown that there is no surge of imports from China, which would effect the production or jobs in the SSI sector.

rajan :

What are the consequences of dereservation in SSI sector on job creation?

  Dereservation in itself does not appear to be impacting on job creation in any significant way. Two independent studies on the subject have confirmed that there has been no negative impact on the sector due to dereservation except for a marginal impact in respect of a few items such as Biscuits. The SSI sector should now start to grow out of its protectionist regime and prepare for global markets. I for one believe strongly that the SSI sector has the resilience, the potential and the innate strength to tackle the challenges of globalization and liberalization

rajan :

Almost all commercial banks are now participating in Credit Guarantee scheme. However, the branch managers are not encouraging the SSI units to avail benefits of this scheme. Is it due to lack of awareness in the level of branch managers or they are under pressure not to give collateral free loans to the SSI units ?

  This is a new scheme, which has been started from August 2000. The actual operations started only in Jan 2001. Today 30 banks have joined the scheme and by the end of June we have assisted 4954 cases and provided guarantee cover for 51.38 crores There are over 60000 branches of banks across the country and you will appreciate that for a new scheme to percolate all the way down will take a certain amount of time. However we are encouraged by the progress so far..

jagadish: :

In the context of Globalization, the focus is on adoption of latest technologies in SSI sector. Will it affect the creation of jobs in SSI sector, if the SSI units go for technology upgradation?

  Per unit probably in the short term. But in the long term as the economy grows, more units will come up and the SSI sector would become more competitive and sustainable.

kalpesh :

General excise exemption scheme is linked with the production limits. With a view to have continued benefits under these schemes, the SSI units do not increase their production beyond the eligible limits. Isn't it detrimental to the creation of jobs in such SSI units?

  You have a point. But in a strange way the practice followed by the SSI units in that the moment they reach the threshold they create another SSI unit and continue to take advantage of the benefits of the exemption and yet create employment in the new unit.

reema :

S P Gupta report has recommended creation of 1 million jobs. The maximum possibility of creation of jobs is in SSI sector. The credit flow to SSI sector is declining. If adequate credit is not made available to the SSI sector, there is least possibility for creation of jobs in SSI sector. Can the targets stipulated in S P Gupta report be fulfilled by SSI sector?

  The targets stipulated in the report can only be fulfilled by the SSI sector. We also realise that credit flow is of vital importance for the SSI sector and with that in mind, new schemes amongst which Credit Guarantee is one (which is collateral free loans upto Rs.25 lakhs) general collateral free scheme upto 5 lakhs specialised bank branches, amongst others are available to the SSI sector.

CEDMAP :

Can the government think of providing some employment index related incentives to SSIs?

  Yours is an organisation that has done some very good work. We are always open to new suggestions. Why don't u write in to us.

NEWMAN :

The amendments to “Interest on Delayed Payments Act …. 1993” proposed by SSI associations were accepted in principle by the Ministry of SSI (in three meetings convened by Shri Shankar Aggarwal, Joint Secretary), about two years ago. The amendments have not been brought forth yet and SSIs are suffering. It is understood that the approvals to the amendments from the Ministry of Law and Ministry of Finance are delayed. We request intervention at your level with these Ministries. After all, we are asking for only strengthening the existing provisions in the Act to which these Ministries can have least objection. This will greatly help to create more jobs.

  We can understand your concern and the Ministry of SSI is also persuing the matter diligently with the Ministries concerned. We have also come out with the proposal for a Single Law for the SSIs, which will include some of these concerns expressed by you.

rajan :

Have SIDO made any study on the effect of the proposed Labour Reforms on SSI Sector and Job creation?

  Mr. Sundarajan, this is your 5th question and I am happy to see that u r paying such close attention to this Chat. I hope that we have been able to satisfy you with replies to your previous questions. As you would I am sure know, this Ministry has been in constant touch with the Labour Commission for bringing in labour reforms for the SSI sector at the earliest.

guestguest :

There are certain products that are reserved for SSI industries because the industrial units can produce them at a cheaper price but how come there are no restrictions whatsoever about importing the same goods from abroad?

  We are bound by the WTO agreements for removal of quantitative restrictions and bringing many items under the OGL.

CEDMAP :

National level financial institutions like IDBI, ICICI, IFCI have withdrawn support to State level Entrepreneurship Development Intuitions. The state finance are also in poor shape. Whether GOI is thinking in terms of providing direct central assistance to these institutions so that they can keep themselves updated for training and counseling to new entrepreneurs?

  There is a scheme through which Rs. 1 crore is provided to State sponsored EDIs by Government of India on matching basis.

CEDMAP :

What do u think is the viability of SSI's in the current global economy?

  I believe that so far the SSIs have displayed their innate strength and flexibility and I don't see any reason why their viability would be doubtful.

CEDMAP :

By International standards, wage costs in India are extremely low. Why can’t our SSIs become manufacturing bases as in the case of China?

  Low wages alone are not enough. Good infrastructure and power supply are vital. We have taken a lead in services which seems to serve us better

jagadish:

Madam, are there any guidelines issued by Government regarding safety of workers and suitable working conditions in ssi units? Are they followed?

  There is a plethora of laws that take care of the workers' safety and health A good example is the Factories Act. I believe SSI entrepreneurs abide by the laws of the land.

sambit :

Labour laws for small, medium and large are the same. While large industries have lot of money and are able to substitute workers with machines, small industry cannot do that. How do you propose to check Inspector Raj?

  In the first instance, the recommendation of the Labour Commission for exempting units employing upto 20 persons is before the Government. In the Single Law for the SSI, we have proposed a simplified form for answering many of these questions in one single form. As far as the second is conerned, this above will take care of the units that will come under the provision of employing less than 20 workers and exempt from labour laws

mickey_manchanda :

small industries is back bone of the economy of INDIA & its the largest employer segment & why is it left unprotected by taking it out of reservations .What has been done for small industries protection from the web of all the government obsolete laws & harrasements--From Manoj Banka (GEN>SECRATATRY PANKI INDUSTRIES ASSOCIATION)

  Whatever dereservations have taken place have taken place at the behest of the stakeholders. We are in the process of putting together a single comprehensive law for the SSI sector We placed this before the SSI board very recently for consultations.

kajal :

Any packages for newly created states like Jharkhand, Uttaranchal and Chattisgarh? And also, any initiatives for the north-eastern states?

  I have personally visited all the NE States and interacted with SSI Associations. We have tried to be sensitive to their requirements and hence we got NEDFi to work with usWe have a commitment from them and NSIC to open offices in each state and 10% of our budget has been earmarked for the NE States We are also working with converging our schemes with other Ministries so that the delivery of the schemes can be improved. Most of this is also applicable to the three new states. In addition to that we have upgraded our field support systems in these three states.

sambit :

Government seems to be giving emphasis only on IT and Biotechnology. Labour working in manufacturing industry is being ignored. What are you doing about this?

  We are doing our best to see that while IT and Biotech are the new areas that we are supporting, we also believe in and support strongly the manufacturing industries (labour intensive areas of the SSI). Because, smats.. the employment generation and workers' welfare is one of our most constant concerns

sambit :

Labour laws for small, medium and large are the same. While large industries have lot of money and are able to substitute workers with machines, small industry cannot do that. How do you propose to check Inspector Raj?

  No.

ishwar :

Is there any mechanism available to enforce minimum wages for the workers in SSI units?

  There is a law called the "Minimum Wages Act" but as far as enforcement is concerned the State Governments are empowered to do this in this respective areas.

rupesh :

Marketing is a big constraint for SSI units, specially in the context of globalization and liberalization. Has Govt. taken any initiative in providing better access to markets to the SSI units?

  Yes Rupesh. We agree with you. It is something that we are concentrating on. The latest scheme is the Market Development Assistance Scheme for SSI units apart from the ongoing scheme of participation in International Fairs. Price & Purchase preference policy, vendor development programmes, buyer-seller meets, sub-contracting exchangesand various training programmes related to marketing of SSI products.

rupesh :

How is government doing to ensure that the products from SSI units are tested for quality? Is there any scheme of the government for assisting SSI associations in establishing testing laboratories?

  We have got 4 Regional Testing Centres and 7 Field Testing Stations. We are also encouraging the Associations to set up testing facilities for which we give financial assistance upto Rs. 50 lakhs.

mickey_manchanda :

Small scale soap industries is facing serius promlems due tonon availebility of non edible oils & THEIR HIGH IMPORT DUTY RATES WHICH IS ABOUT 58% WHEREAS THE MOST FAVOURED NATION LIKE NEPAL IS HAVING 0% IMPORT DUTY WHEN THEY RE-EXPORT THE LAUNDRY SOAP TO INDIA .FROM MICKEY MANCHANDA (STATE PRESIDENT UP SOAP ASSOCIATION)

  The Indo-Nepal treaty has recently been renegotiated where value-addition norms and Rules of Origin have been clearly specified. With regard to the import duty on Edible Oil, we also have to see the interests of the domestic producers.

mickey_manchanda :

THE FACIALITIES GIVEN TO THE SSIS SHOULD NOT BE ON INVESTMENT BASIS BUT SHOULD BE ON THE BASIS OF EMPLOYMENT INVOLVED THEWRIN.---MANOJ BANKA (GEN.SECRATARY PANKI INDUSTRIERS ASSOCIATION)

  Our definition exists from the time when there was capital scarcity and problem of labour surplus. It was employment oriented and continues to be so. However, yours is an interesting question and I would certainly want to leave it open to debate before the Associations as there are other countries across the world that use this definition.

rahul :

Various incentives are available to identified SSEBs. Is govt. going to expand a list of SSEBs?

  This list is reviewed from time to time. Very recently, we have added some new items to the list and we have also enhanced the investment limit to Rs. 10 lakhs.

sonia :

Agro-based industries have a vast potential domestically and globally. What is govt. doing for it?

  This is one of our major areas of priority. Government recognises the fact that it is in these areas that both employment and potential exist. Within the SSI Food Processing is the single largest component in terms of production. Recently, there has been a lot of emphasis on setting up of new Agriculture Export Zones. under the new Exim Policy. But apart from this, there are other schemes like loans, grants, technology Upgradation cold chains, packaging etc. that would encourage this sector.

ronita :

How has the job market in SSIs been affected by a slowdown in economy in the past 2 years?

  On a macro basis, there is no decline in employment in the SSI Sector. In fact, it has increased from 185 lakhs last year to 193 lakhs by March 2002.
  Many thanks for a most interesting interactive chat with you all. Look forward to talking to you all again. I have a question for you all to think about before we talk next.
"DO YOU THINK THAT THERE IS NOW A NEED FOR REDEFINING SSIs IN INDIA IN TERMS OF EMPLOYMENT OR TURNOVER, RATHER THAN IN TERMS OF INVESTMENT."