Vajpayee urges operational freedom for small industries

Friday, 20 December 2002, 08:00 Hrs
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NEW DELHI: Prime Minister Atal BiharI Vajpayee Friday said the needs of small and medium scale industries should be paid more attention and legal and bureaucratic hurdles should be removed to help them compete globally.

"While 11 years of liberalisation have given big businesses much more freedom to operate, the 'Inspector Raj' (red tape) still stifles small businesses," said Vajpayee while addressing Indian and foreign delegates at the first Global Summit on Small and Medium Enterprises (SMEs).

Jointly organised by the ministry of small-scale industries and the Federation of Indian Chambers of Commerce and Industry (FICCI), the two-day meet will see several countries sharing their experiences to chalk out an agenda of action to help SMEs become globally competitive.

"SMEs represent over 80 percent of the industrial enterprises of most developing countries," said Vajpayee.

Dispelling a popular misconception that SMEs do not play a significant role in developed nations, Vajpayee said that in the U.S. they account for 99 percent of all businesses and employ half the workforce. In Japan, they account for around 80 percent of employment and 52 percent of the workforce.

In India's case, SMEs are the second biggest employment generators after agriculture, providing jobs to over 19.2 million people. This sector accounts for 39 percent of industrial production and 34 percent of exports.

"It is a bit of a misnomer when we call them small-scale industries or enterprises. The size of the individual industry or service enterprise may be small but together their contribution is truly big," said Vajpayee.

To help them cope with the challenges of globalisation, Vajpayee said: "The attention that governments and financial institutions ought to pay to them has also to be great."

Stating that both trans-national and national financial institutions are not paying adequate attention to this sector, Vajpayee said it is ironic that while individuals wanting to buy a house and big businesses are able to get money from the market at less than 10 percent "a small business has to pay 13 percent or more".

Urging speedy action to liberate small industries from the heavy burden of constraints, Vajpayee said: "This should be done by making necessary changes in legal and administrative frameworks. Wherever necessary, rules, regulations, procedures and guidelines should be amended and simplified."

Minister of State for Small Scale Industries Vasundhara Raje said the need is for a global environment and national policy to help SMEs face competition.

"It is in the protected markets specially that SMEs have become exposed to competition from overseas," Raje said.

Targeting the creation of 4.5 million additional jobs in the SME sector in the next five years, India has entered into alliances with industry and government bodies in several countries like Britain, Italy, Saudi Arabia, Egypt, Sudan, Syria, the United Arab Emirates (UAE) and Yemen.

Representatives from these and other countries in the region are attending the two-day meet to chalk out a new agenda of action and a training programme.
Source: IANS
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