Institutional framework for SSI support

Abstract

Since Independence, Small Scale Industries (SSIs), have been playing a stellar role in the economic development of the country. SSIs account for more than a third of the total manufacturing output and generate almost 35 per cent of the country's exports. Importantly, they provide employment to more than ten million Indians.

With the onset of economic liberalisation in the country-since 1991- even SSIs have been trying to redefine their role and adapt effectively to the changing macro-economic environment, where market forces are calling the tune.

The Abid Hussain Committee, which was constituted to re-define the role of SSIs in the post-liberalisation era has suggested certain far-reaching reforms in this sector. Recognising the high growth potential of this sector, the committee strongly recommended, forthwith, the replacement of hitherto protectionist policies pursued by the government with promotional directives.

Notable among the recommendations are - fast-track development and focus on industrial clusters, increase in the basic investment limit and exemption of excise limits, a separate law for this sector, setting up factoring services and corporatisation of Small Industries Service Institute.

What is the SSI's new role? Do SSIs require strategy to compete in the open market environment? Will setting up of exclusive financial institutuions with more powers improve their lot? What are the lessons to be learnt from other SSIs in the Asian region? These are some of the issues which are addressed in this round table.