EXCISE: 1. Deemed Credit on Melting Scrap of Bicycle & its Parts:

At present, Cenvat credit is not permissible/available on the melting scrap

being generated from the manufacturing of bicycle & its parts, as the

raw material purchased is duty paid.

The melting scrap generated, ultimately goes to the Induction Furnace, after

melting become the raw material in the shape of Ingot (kulfi).

It is suggested that deemed credit on melting scrap may be allowed, as

the raw material from which this scrap is generated, if duty paid.

We have been given to understand that Commissioner, Central Excise &

Customs, Chandigarh has also recommended.

2. Rationalization of Excise Duty:

The offset printing industry is manufacturing intermediate products i.e.

packing material for other industries. The industry is manufacturing two

types of items i.e corrugated cartoons/boxes/cases attracting

concessional rate of duty of 5% advalurem vide Notification No.

4/2006 dated 1.3.2006.The second is duplex cartoons/corrugated.

At present, the input excise duty is 5%, whereas, the output excise duty

vary from 5% to 10% on various products. The balance can't be

maintained due to vast differential rate of input/output excise duty.

Thus, it is suggested that input and output excise duty should be 5%.

There is loss of revenue to the Govt., as the industry is an intermediary

industry.

Central Excise Duty : At present, the excise duty is 12%.

It is an admitted fact that mostly all the industries get CENVAT on the

excise duty paid on the basic raw materials/inputs.

Whereas, bicycle/its parts, sewing machine industry pay Excise duty on

inputs and can't get CENVAT as such industries enjoy NIL rate of duty or

exemptions.

It is high time that excise duty should be brought down to 8% from 12%,

so as to make the sector internationally competitive, till GST comes into

force.

B) POINTS RELATING TO CUSTOMS:

1. Increase in Custom Duty on import of Bicycle parts and fixation of Minimum floor price/Cap on import from China :It is a well known fact that China is our main competitor. The custom duty

on import on bicycle parts from China has been raised to 20% only from

10%, which is quite inadequate in view of the percentage of domestic

Bicycle industry, as announced by Hon'ble Union Finance Minister on

16.03.2012.

It is pertinent to point out that bicycle parts are being imported at hefty

under invoicing, even upto 25% of the actual price, as a result of which

both the domestic industry as well as the Govt. are the worst sufferers. The

Govt. is deprived of revenue. The import duty on bicycle parts should be raised to 40%, in order to save the domestic bicycle parts manufacturing

industry in the Micro & Small Enterprises Sector.

The exports have gone down drastically due to W.T.O. w.e.f. 1.1.2005, as a

result of which 85% supporting manufacturers in MSEs sector had to

suffer and are on the verge of closure.

The replacement market, which is over 50%, had also adversely been

effected, as containers of bicycle parts are being imported from China in

almost all major market/states in the country under invoicing.

It has also been brought to our notice that Tyres & Tubes have not been

included in the list of Bicycle parts, which is a major part of bicycle.

Tyres & Tubes may be included in the list of Bicycle parts.

It has been brought to our notice that though the custom duty on bicycle

has been increased to 30% instead of 10% and on parts 20% from 10% in

2012. Though, the duty has been increased yet the bicycles / parts are

being imported from China under Free Trade Agreement APTA/SAPTA

@4% in which the Govt. is loosing revenue and the industry is adversely

affected.

It is suggested that in case the free trade agreements cannot be re-looked into it is

suggested that bicycle / its parts should be placed under negative list, to avoid import.

2. Floor Price: We would also suggest that Cap/minimum floor price should be fixed at Rs.80/- per

kg. for bicvcle parts manufactured from Mild steel Raw materials i.e. H.R. Coil/MS

Rounds, Rs.100/- per kg. Heat treated for tempered/electroplating/zinc plating /

painting etc, bicvcle parts & Rs. 1507- per kg. for parts manufactured from EN Series /

Alloy Steels/ Steel Balls etc., in order to contain under invoicing/heavy imports from

China, to safeguard the interest of domestic industry, which is suffering badly due to

evasion of custom duty by importing the parts at upto 25% value of the actual price.

It has also brought to our notice that children bicycle / parts are being imported at

under invoicing, which should be stopped forthwith.

It is high time that Custom duty on import of Bicycle parts from China should be raised

to 40% instead of 20%, so as to protect the domestic industry.

B) POINTS RELATING TO DIRECT TAXES

1) TAX RATES:

It is suggested that the tax rates should be made tax payer friendly, as tax

exemptions have been stated to be cut down DTC 20% upto Rs 15 Lacs for Micro

Enterprises. It should be fixed, as the Equity base of these Enterprises is very

weak.

Whereas, the corporate sector also demand lower tax rates from 30% to 25%

despite of the fact that the corporate sector enjoy various exemptions & perks It is

an admitted fact that reduction in tax rate increases more compliance and revenue

increased manifolds. It is suggested that the tax rate should be as under:

TAX SLABS

Upto Rs.3 Lacs NIL

From Rs.3 Lacs to 10 Lacs 10%

From Rs. 10 Lacs to 15 Lacs 15%

From Rs.15 Lacs to'^,3 Lacs 20%

Above Rs^p lacs 30%

Comparative chart is as under: -

US MEXICO THAILAND KOREA

5.20% 5.30% 10% 11.80%

SPAIN TAIWAN BANGLADESH SWITZERLAND

13% 15% 16%

CANADA JAPAN NEW ZEALAND PAKISTAN

16.20% 16.30% 18.50% 20%

AUSTRALIA .ERMANY FRANCE UK

20% 20.80% 21.60% 22%

4

2) STANDARD DEDUCTION U/S 16(1) :

The Standard Deduction u/s 16(1) of the act should be restored back to salaried

employees and the computation of pre-requisites should be liberalized.

3) STANDARD DEDUCTION IN RESPECT OF RENTAL INCOME U/S 24(1):

0

The Standard deduction in respect of rental income should be increased from 30%

to 50% for senior citizens.

4) DEDUCTION UNDER 80 (C):

It has been brought to our notice that deduction u/s 80C has been increased to 1.5

lacs from 1 lac by the NDA Govt.

It is suggested that deduction u/s 80C should be raised to Rs. 3 lacs and Rs. 5

lacs for Senior citizens/Super senior citizens.

5) SUPER SENIOR CITIZENS:

The age for Super Senior citizen should be uniform at 70. It is suggested that more

opportunities for investment should be made available for senior citizens to enable

them to enjoy comfortable life without any dependency. It is further suggested that

the age limit of the Super Senior citizen should be reduced to 75 years against 80

years of age because the average age in India is 65 to 70 years.

6) RENTAL INCOME OF SR. CITIZENS:

At present, deduction is allowed @1/3rd of the rent collected, as per the Income

Tax Act, 1961.

It is suggested that atleast 50% deduction should be allowed to Senior citizens, as

this step will encourage Senior citizens to invest their savings, which would give

boost to the construction activities. It would also generate employment.

Moreover, rent rates are under pressure due to easy availability at lower rate of

interest on housing loans etc.

7) TAX AUDIT U/S 44(AB):

The Tax Audit Limit was Rs 40 Lacs for the last more than 20 years, which had

been increased to Rs 60 Lacs in the Budget of 2010-2011, is quite inadequate,

looking to the prices index/inflation. Therefore, it is, suggested that it should be

raised to Rs 200 Lacs.

8) DEPRECIATION:

Depreciation rates for machinery is pegged at 15% for the past so many years. In

today's World of modern and changing technology, the machinery becomes

obsolete within 5-6 Years and hence, revision in depreciation rates in required and

it should be minimum 25% , if not 30 %, for Micro Enterprises.

9) MEDICAL EXPENSES:

As there is no social security scheme available in India, it is demanded that

medical expenses incurred during the year by the individual on his/family health,

should be allowed as deduction from returned income on the production of the

medical bills.

10) RESIDENTIAL HOUSE:

The construction of one Residential house should not be subjected to

investigation. It will give boost to cement and steel Industries and generate more

employment. Fair value of the registered deed should be taken for wealth tax to

avoid corruption. It is further suggested that the house constructed on the land

area measuring under 250 Sq Yards and/or if flat in Metropolitan cities ranging

1000 to 2500 Sq feet should be exempted from any enquiry/investigation.

11) AMENDMENT TO SEC 40A(3) READ WITH RULE 6DD OF THE INCOME TAX

RULES. 1962:

The existing provisions of the section 40A(3) r.w.r. 6DD where, a payment or

aggregate payments made to a person in a day, otherwise than by an account

payee cheque drawn on a bank or account payee bank draft, exceeds twenty

thousand rupees in the cases and circumstances specified clause (a) to (i).

It is suggested that an amendment should be made, where, the relation of the

payer & payees exist e.g. in the case of a colonizer, he is compelled to make

payment in cash, if he has to take the possession of land against cheque or draft.

Since, in the instant case, the payment has been made in front of the Sub-

Registrar, who is an Govt. official, the payment made by the colonizer to the

agriculturist can't be denied.

Therefore, it is suggested that cash payment made in front of the Sub-registrar,

the expenditure made by the assesses for purchase of agriculture land should not

be dis- allowed with retrospective effect, as hundred of cases are pending before

The Appellate Authorities on this issue, throughout in India.

12) HIGH HANDEDNESS OF INSURANCE COMPANIES/SECTOR:

At present, there are 24 companies Govt. as well as private companies, which are

in operation. There is no transparency whatsoever in the insurance sector.

It has also been brought to our notice that quite a good number of customer

complaints have been received by IRDA. But, unfortunately the regulator can't

settle the complaints reasons best know n to IRDA officials.

The agents, who are selling the products of 24 companies don't apprise the Small

investors about the term of policies & KYC. As a result of which the small

investors hav eto suffer and put to loss. Their main aim is to garner the

.commission etc. only and public is put to loss.

Moreover, a number of agencies are in operation, which instead of resolving the

complaints of the Small investors are being exploited under the garb of bonuses,

festival bonuses etc.

Your kind attention is invited to Harshad Mehta Scam of 1993, wherein, a whole lot

of small investors were deceived and put to loss.

It is high time that the redressal mechanism should try to contain of such mal

practices. IT is suggested that some concrete steps should be taken by the Govt.

It is incumbent on the part of the Govt. to ensure that safety of Small investors and

ensure that no fraud is played with small investors as well as Senior citizens, who

have put in their saving for rainy days in the insurance sector.

C) Points Relating to Banks

1. Timely & adequate availability of credit:

The perception of the Public Sector banks is that lending to MSE Sector is a high

risk area and costly is totally false/baseless. Whereas as per %age of NPAs of

micro/Small enterprises has been steadily declining. The major concern of MSEs

has always been the availability of timely and adequate bank finance.

Whereas the lenders prefer to lend to other sectors than the MSEs reasons best

known to the banks. It is easy to get loan of Rs. 2 crores than Rs. 2 lacs. Though

Govt. has introduced credit guarantee scheme since 2000 through SIDBI, yet the

lending has not improved to the extent it should have to be.

The budgetary provisions are being provided by the Govt. to SIDBI every year to

cover the risk. The banks were supposed to provide 60% to Micro Enterprises

sector by March, 2014, as per the recommendations of the Task Force, but, by

March, 2014, the banks have not achieved the target.

It has been brought to our notice that the credit to SME sector during 2009-2010

has increased from Rs. 2,56,12,807/- crore to Rs.3,64,00,101/- crores. Whereas,

the erstwhile SSI sector now Micro Sector needed the most timely & adequate

credit.

RBI had wrongly included Micro Enterprises under the umbrella of Small

Enterprises, which has caused greatest damage to this sector as the banks have

soft options to lend to the higher end. The Micro Enterprises have got a legal

lexicon.

However, now on the recommendations of high level Task Force, RBI has clarified

that in Section-Ill of their Master

Circular

RRCD/SME&NFS/BC/No.9/06.02.31/2010-11 dated July 1, 2010, Banks have

been advised to ensure that 60% of their MSE advances are made to the Micro

Enterprises, which is to be achieved in stages viz. 50% in the year 2010-11, 55%

.in the year 2011-12 & 60% in the year 2012-13, which is the need of hour.

It has been brought to our notice that only 43% has been achieved by the banks

instead of 60% till date.

We do hope that if the recommendations are implemented in letter & spirit, the

long standing demand of Micro Sector with an investment in Plant & Machinery

upto Rs. 5 lacs & Rs. 2 lacs both manufacturing as well as service Enterprises.

. Bank service charges:

At present, the Public sector Banks charge hefty service charges for each &

every service provided by the banks such as processing/recital charges etc. No

doubt, RBI has de-regulated the service charges and it was learnt that a working

group was constituted by RBI, wherein, users representatives were not

represented in the working group. It is only "the wearer who knows where the shoe

pinches."

It is also learnt that the commercial banks used to charge on the minimum

balance of Rs. 10,0007- in the current account & Rs.1000/- in the saving account, if

there as a shortfall in any quarter.

We have been given to understand that IDBI will be the first bank to do away with

the minimum balance requirement and simultaneously waiving off service charges,

as no interest is being paid on the current account by any public sector banks.

We suggest that he other public sector bank should follow IDBI.

It is high time that the bank service charges should be rationalized as it adds to the

cost of funds.

3. Securitization Act. 2002 :The Act was enacted to bring around defaulters/big fishes, but, unfortunately, the

banks have exploited clause 13(2) as limit was Rs. 1 lac and the banks issue 60

day's notices under 13(2). It is high time that limit should be raised to Rs.10 lacs

instead of Rs. One lac at present.

4. Representation of the Boards of Public Sector Banks/SIDBI:

The long standing demand of this vital sector has been that at least one/two non

official Directors of Public Sector Banks, who are real entrepreneurs having their

own units.

5. Grievance Redressal Mechanism:

At present, there is no grievance redressal mechanism for redressal of issues

relating to Banking sector.

It is suggested that a mechanism at par with Board for Industrial & Financial

reconstruction for Micro/Small Enterprises upto Rs. One crore.

6. SARFAESI Act. 2002:

The Act was actually meant for the corporates defaulting companies, wherein, the

NPA was higher than SSI Sector running to over lac crores. Corporates have the

option of going to BIFR.

As per section 31 (h) of the Act, the limit is one lac implying that even the Small

loans taken by Micro Enterprises after becoming NPA attract the provisions of this

act.

But, it is most unfortunate that the commercial Banks have exploited the stipulation &

issue 60 days notices to the Micro Enterprises u/s 13(b). The Act is detrimental to

the development & growth of Micro Sector. There is no distinction between willful

and non-willful defaulters. The Act puts onus entirely on the borrowers. The

sweeping powers given to the banks under this Act has a cascading effect on the

growth of the Micro Sector.

We suggest that the limit should be raised from Rs. One lac to Rs. 25 lacs. We

don't concur with the views of Finance Ministry that if MSE is excluded from the

purview of this Act, the lenders will be increased risk in lending to this sector. We

have instances wherein crores of the money has been sacrified by the Banks in

order to help the influential persons. The commercial Banks reject genuine cases

of Micro Enterprises, the Banks quote that their hands are tight.

There is no redressal mechanism for the Micro Enterprises. We suggest that the

mechanism should be evolved for Micro Enterprises at par with BIFR.

7. N.P.A. A/C

The MSE sector is considered to be a high risk area by commercial banks, which

means the sector's NPA must be high. Whereas the NPA MSEs sector were Rs.

20,067 crores in March, 2010, Rs. 21000 crores in March, 2011, Rs. 26000 crores

in March, 2012 and Rs. 31000 crores in March, 2013, as per RBIs statics.

Whereas, on the other hand, gross NPAs in other than MSEs sector stood at

.Rs.61,741 crores in March, 2010, which rose to Rs. 71,862 crores in March, 2011.

It went upto Rs. 1,10,000 crores in March, 2012, Rs. 1,52,000 crores in March,

2013. The NPAs rose to whopping Rs. 2,38,000 crores in 2014, as per reliable

sources.

Thus, it is evident that NPAs is much more than the NPAs of MSEs. It is

earnestly requested that the murmur of the banks of NPAs is Glister clear and they

are crying foul of NPAs of MSEs rather banks should control the NPAs of other

than MSEs sector.

8 Interest subvention:

We have been given to understand that the govt. is providing interest subvention

@2% upto 31.03.2010 to the Agriculture Sector.

The Govt. has further provided 2% interest subvention in the budget 2010-11 to

the Agriculture Sector. Thus, the agriculture sector is getting loan @5%.

Needless to mention that erstwhile SSI Sector now Micro Sector is the largest

employment generator next to Agriculture.

National Commission on Enterprises in the un-orqanised sector had submitted its

report on credit to Dr. Man Mohan Singh, then Hon'ble Prime Minister of India and

had demanded that the interest subvention should be provided to the Micro & the

rate of interest should be charged at par with Agriculture sector.

It is high time that the interest subvention of 4% should be provided to Micro

Sector in view of its enormous potential.

9. RoleofSIDBI:We have to reiterate that SIDBI was set up on 2.4.1990 as a Principal institution

exclusively for SSI, to cater to the needs of this vital sector of economy.

But, unfortunately, it has shifted its focus since 2005 on SMEs only and its logo is

'We empower SMEs, which is contrary to the interests of erstwhile SSI Sector now

Micro.

SIDBI was supposed to scale up and strengthen its credit operation for Micro

Enterprises, as per package dated 3.10.2007. It was supposed to cover 50 lacs

additional beneficiaries over 5 years new Micro Enterprises. SIDBI was also

supposed to provide directly or through its intermediaries demand based Small

loans to Micro Enterprises under a pilot scheme.

Budgetary allocations are made every year in the Budget. SIDBI must bear the

risk element / service charges, as has been done by SBI under CGST SME

Scheme.

It is suggested that Govt. should direct SIDBI to meet with the credit needs of

Micro Sector. It is also suggested that major portion should be earmarked for

Micro Sector for which SIDBI was set up in 1990.

10. CGTMSE Scheme:

It has been brought to our notice that credit guarantee fund trust for MSE was

mooted in 2000 and 27 banks had signed MOUs and SIDBI was the nodal agency.

The processing fee was stipulated to be 2.5%, which was reduced with the

passage of time. It was stipulated to charge interest on the balance as and on 31st

March, every year.

It was brought to our notice in the Advisory Committee meeting of RBI held at

Mumbai in Feb., 2012, which the undersigned attended that SBI has decided to

bear the processing fee. It is high time that other banks should also follow SBI, so

that the Micro Enterprises should not have to bear the additional cost ( processing

fee)

11. Separate Pre-Budget meeting:

We would like to draw your kind attention that separate pre-budget meeting were

being held with SSI Sector since 1991 by the Ministry of Finance in consultation

with Additional Secretary & DC (SSI).

But, unfortunately, Sh. P. Chitambram, Hon'ble Union Finance Minister, dispensed

with separate pre-budget with SSI and only representative of FASH and Laghu

Udyog Bharti were included with corporate sector, but in 2009 FOTSII was

represented along with FASH and Laghu Udyog Bharti and attended upto 2013.We

have been demanding that separate pre-budget meeting should be held with the

representative of MSMEs, but unfortunately not acceded to.

Thus, it is earnestly requested that separate pre-budget meeting with MSME

sectors should be held in the ensuing pre-budget meeting.

As a result of the investigations that 1 undertook, it was ascertained and

confirmed that during 1951, certain of the transactions, as recorded in the

books of the various Jute M i l l s Companies, Baling Companies and in the

books of McLeod & Co., Ltd., were irregular. Some of these

transactions were fictitious in that no actual transactions took place,

while in other cases, although there were actual transactions, the dates on

which they took place had not been cor rectly shown, thereby transfer-

ring profits by charging incorrect prices."-

According to the auditors, either some of the transactions were not

entered in the Company's Register of Contracts maintained under

section 91(a) of the Indian Companies Act, or false entries were made in

the books of account and provisions of the Indian Companies Act

contravened.

Fortunately, because of the keen interest taken by Mr A. J. Peppercorn, the

present Chairman of the Company, in reorganising its affairs, matters have

now been set right and the accounts of the managing agency firm and

of the industries under its control as shown now, represent the position

as it would have been, had the irregular transactions referred to by the

auditors never taken place. This is no doubt a satisfactory position

but the fact that a British firm of such a long standing and reputation

as that of McLeod & Co.. should also have stooped to practices which

have been associated generally with financiers who have captured a

number of industrial enterprises in this country in the post-war period

and used them to their own personal ends, augurs i l l for the future of

the managing agency system.

Sen-Raleigh Bicycle Factory to go into Production

HE Sen-Raleigh bicycle factory, to be formally declared open in

June at Kanyapur, near Asansol in West Bengal, has a capacity for

manufacturing 200.000 machines per year.

TIn the first stage the output target is fixed at 100,000 units and, with the

installation of machinery in the different " shops " all but complete, production is due

to begin in June, Some the small firm of Sen and Pandit was started w i t h a

capital of Rs 400 for the import of bicycles and parts. The firm crowned its long

association with Raleighs by jointly sponsoring with them the new enterprise, Sen-

Raleigh Industries of India Ltd. The authorised capital of the new company is Rs

1,00,00,000, half this amount being fully subscribed.A few miles out of Asansol. the

new township of Kanyapur site of the new factory is rapidly taking shape The

extensive (125,000 sq, ft) modern factory building and the neat, handsome living

quarters spreading out alongside will, from June, become the home of Sen-Raleigh

Industries. Workmen's quarters are in the blueprint stage, and building w i l l

commence soon. The administrative block which will house the offices of the con-

cern is under construction.

The factory, now fed with elect r i c i t y from a neighbouring colliery, w i l l

ultimately draw i t s power from the Darnodar Valley grid.

The Oil of Contention

HER AN reported last Monday that a five-year agreement had been

signed by Iran with an American firm for the sale of 3 million tons of

oil and aviation spirit annuall y . If the report is true, it w i l l mean not

only a breach in the year old Iranian oil blockade but also some friction

between the UK and the US. For, the blockade has at all been possible

because the US Government preferred not to embarrass its ally by

strengthening the bands of Dr Mossadeq, and despite his pilgrimage to

Washington, he could not drive a wedge between the two.

r

Dr Mossadeq's position became even less comfortable when the matter

was referred to the International Court, so that anybody buying Iranian oil

could be proceeded against legally by the Anglo-Iranian Oil Company, who

stil l claim the oil as their property. It is therefore not surprising that the

news of the deal should have caused a considerable flutter both in the

UK and in America. Britain has made her intention of suing anybody

receiving the " stolen " oil clear; and-unless The Hague Court decides in Iran's

favour, she can make nonsense of any agreement entered into by Iran. It

might even be that the International Court will itself declare the agreement

void, since the matter of ownership of the o i l is s ti l l sub judice.

To add to the complications, it is not clear whether any of the major oil

companies of the USA is involved in the deal. Should it be so, Britain's fight

to have the contract annulled w i l l not be easy. She will have to procure

the support of the State Department; and the State Department might find it

difficult to restrain openly a powerful o i l concern to satisfy Britain,

especially in an election year. If the Teheran report is true, Dr Mossadeq

will have added yet another factor straining the Anglo American trade

relations.

Japanese Reparations Plants

THE J a p a n e s e Reparations Agency recently announced that, under

a SCAP memorandum of March 1 8 , privately owned plants and

facilities in Japan, which had been designated for dismantl ing and

distribution as reparations would be released simultaneously w i t h the

coming into effect of the Japanese Peace Treaty, unless they were being

used by the Occupation Forces for producing materials essential for

the Korean war. Almost 900 " reparations" plants and facilities were

under the control and custody of the Occupation Authorities; 724 of them

were p r i vate property and 154 government property. Except for some 20

privately-owned plants and the state-owned plants that were being

used by the Occupation Forces (and would continue to be used by

the US Garrison Forces), all privately-owned reparations plants and faci-

lities would, in principle, be returned to the Japanese owners.

Moscow Conference

In Moscow economic conference issue it hs been spoken disparagingly of

the business deals concluded at the conference, on the ground that since

the delegates who handled them did not have governmental status.

Speaking of the trade agreements with which the British Delegation were

concerned, it is quite true that these were provisional in character;

In the sense that (like all trade agreements) they dealt with commodities

in general categories, and places stated in the agreements. But to call

them exploratory is quite an understatement. Acting on the British side

were Business representatives authorized to speak not only for their own

firms but also on behalf of others; and in the course of the negotiations at

Moscow a great deal of cabling took place between these representatives

and chambers of commerce in England, Whereby firms in England were

invited to take part in the trading offers that were the subject of

negotiation. After the end of the conference a large quantity of

samples(mainly clothing and textiles) was flown to Moscow. On the side of

countries like china, USSR, etc., the negotiators were of course,the

representatives of governmental import and export organizations.

From the last two lines of paragraph in question, your stress on the

exploratory nature of these talks seems likely to have arisen from a

misunderstanding which has been common in England as well as

elsewhere; namely that the commodities concerned were on the so-called

“ restricted list” , requiring specific governmental authorization. All

imports into Britain require of course a license. But the caes of soviet

purchases, at least these were to be paid out of sterling balances held by

the soviet Government London, and hence did not need to be matched by

equivalent sales in order to “clear” these transactions. It is true that each

trading agreement contained a clause to the effect that “ this agreement

and all contracts made in pursuance of it shall be subject to government

license wherever necessary on either side.But as Mr. Sidney Silverman,

M.P. (who was closely associated with the negotiations) said that he is

aware, none of the commodities referred to in the agreements, which

were all the subject of very hard bargaining, are on the restricted list.”It is

worth adding that the figure cited by Mr. Silverman in this letter as the

“global sum” of all the British agreements concluded and immediately

after was 56,500,000 Euros a far from negligible sum!

Memorandum

Before we express our views we would like to kindly accept our heartiest well

wishes on behalf of the 2300 MSME industrial unit's members. Our association

is one of the most leading reputed and prestigious one in Asia in a single trade

including exporters earning foreign exchange for the country. We are very much

oblidge for the patronage provided to the small scale industry by the

Government and have ample confidence that the Punjab Government will

continue to keep the welfare of the small scale units in future also. Further we

would like to have your sympathetic view on following points to protest the

reeling bicycle industry.

1. Regarding VAT refund:

The VAT refund of the members of the association is lying pending inspite of

repeated written and verbal requests though they have completed all the

formalities required by the Departments. Every time the members have been

given assurance by the departments that the refund will be released without

further loss of time but sorry to point out, that this cases remain pending with 1

pertax or the other, locking up previous working capital of the industry as it is

understood that the liquid cash is the need of the hour as the industry is already

reeling under global economics crisis. The department imposed condition that

the applicants should not be defaulter in this respect upto fourth stage of the

transaction between the buyer and seller which Is very cumbersome for the

members to prove themselves free of these conditions. So it humbly requested

to please abolish the fourth stage verification while deciding the VAT refund

cases of the units and release the VAT amount soon so that the industries can

run smoothly.

2. Vat on Bicycles:

Previously VAT on Bicycles costing less than Rs 3500/- was abolished in Delhi. Now

this year in Uttar Pradesh the Government has abolished VAT on the bicycles

costing upto Rs 3500/-. So it kind request to Punjab Government that please

remove the VAT on the Bicycles so that the sale of bicycle will grow here and the

economy of Punjab will rise. As Punjab (Ludhiana) is the hub of cycle manufacturer

but the rates here are more than Utter Pradesh and Delhi because of VAT, We

specially request you to reduce Vat on Bicycle Spare parts from 6.05% to 3.00%.

Regarding Mix Land Use Areas:

In the Ludhiana Master Plan more than 72 areas/pockets which have been

identified as Mix Land Use Zone where industry co-exist with the residential

activity. In order to develop these areas it is our humble request that Mix Land

use Zones be declared as "Industrial area" so that the units located in these areas

may get facilities and benefits as being provided to other industrial areas l,e

Industrial Area-A, Industrial Area-B, Industrial Area-C & Industrial Estates.

4. No Extension no expansion in Mix Land Use Area:

Ludhiana Industry is one of the oldest industries in Punjab which has been

running from last five decades. Most of the small and micro industry is situated in

Mix Land used Zone in which the Government has imposed the terms "No

Extension No Expansion". We request the Government to give all the facilities to

the Industry for proper working in these areas by abolishing the terms No

extension No expansion. Extension of Power loads and expansion of the units

should be allowed in these areas. As these have been already allowed to run their

units up to 2018 by the Government.

5. Separate Exhibition Hall:

Industry is facing marketing problems so it is high time that permanent Exhibition

Structure hall or area like Pragati Maidan Should be set up at one place so that

buyer/ seller meet could be arranged product wise every Fortnight/ one month

to promote Domestic and international market.

6. Regarding Electricity problems:

Electricity acts like the blood in human being. There are certain problems which

are being faced by the industrialist related to electricity.

• The new system of reading by which calculation is done should be abolished

and the old system should be imposed. New reading is done in KBH while the old

system of Reading was KWH.

• The hike in the electricity bills will be paid by the industrialists from the

date on which the circular has passed and comes in the hand of Industrialist.

The rate should not be imposed from the first quarter of the financial year.

• There is shortage of the man power or staff in the electricity department

due to which the Industrialist suffers a lot.

• The Complaints about the electricity problems is not solved immediately

by PSEB staff due to which the factory remains shut down for long time and

creating huge loss for the industrialists.

• As the connection is provided for the whole factory but few factory

owners give theirhalf or more portion on rent due to this the flying squad of

PSEB charge them with UUE (unauthorized use of Electricity) and charges them

with high penalty. The small industries person suffers a lot due to this problem.

So please abolish these things and charge the normal rate of electricity only.

• As the PSEB has increased the rates of electricity by 2paise per unit. It

should not be imposed as because the industries are already going in recession. So

the Government should think about it and should not increase the rate of

electricity.

• The Government has again charging ACD (Advance Consumption

duty) from the industrialist. Already in the year 2011 ACD has been given by the

industrialist. Again revised ACD is being imposed on the industries. In this way

Government is taking money from the industrialist and they promised that they

will give 12% interest. But till date no interest is being paid by the Government

instead they are demanding more money in the form of ACD.

7. Regarding Sewerage Sharing Charges:

In the present time industries is already facing lots of problem due to

Government different tax policy and not supporting the industries properly. Again

dumping of materials from China is also a big issue for destroying the cycle

industries. Now this new charges is being imposed on the industrialists.

• In 1992 notifications was passed and in the year 2005 the rate revision

letter were sent to the industries in which it is clearly written that the

Sewerage sharing charges will be recovered from the institutes like Focal

point, PSIDC ( Punjab State Infrastructure Development Corporation, PS1EC

(Punjab small Industries & Export Corporation. Instead of this the Government has

imposed such charges on industrialist.

• In the year 2005 the sewerage charges was Rs78 per Sq yard. But the

Government is calculating from the rate of Rs 185/- per sq yard which is the

prevailing rates of 2014 which is illegal.

Regarding Factory renewal Charges:

It is brought to your kind notice that the Government has imposed new ways

of taking money out of the pocket of Industrialist. The factory renewal charges

have been increased thrice times to the existing rates. Afterthat they are also

collecting charges of 5 years in the new rates which is again illegal. As all the

working capital of the Industrialist get blocked in the treasury of Government

then how will they run the factory. So it request from the Government to

abolish the sewerage sharing charges so that the industries can run smoothly.

We have gone through the above National Policy/ Consultation Paper

thoroughly & we apprehend that this consultation paper has been prepared

at the behest of certain vested interests i.e. CM, FICCI. ASSOCHEM & PHD

Chamber Of Commerce & Industry, as the interest of vibrant Micro

Enterprises Sector has been overlooked

As you are well aware of the fact that the o/o DC (SSI) came into existence in

1954 on the recommendations of the Ford Foundation. Promotional &

developmental policies were formulated. The sector had always

demonstrated its inherent strength & resilience

The sector contributes to 45% in the manufacturing activities, 40% in exports

(Direct) £ '!'" largest employment generator next to Agriculture. The sector

contributes to 10% in GDP

The greatest damage to the Micro Sector has been done by the Government,

at the behest ot certain vested interests, by raising investment limit in Plant

& Machinery for the small enterprises above Rs. 25 Lacs to Rs. 5 Crores

against the spirit of 3 rcl Census Report, wherein, 99% fell under the ambit of

Tiny sector

It is pertinent to point out that in our country the definition is linked with

investment in the plant & machinery, whereas in the developed countries, it is

linked to the number of workers employed The Small Business receive

specific attention of the Governments in the developed countries as there

is a separate frame work for Small Business Administration [t is suggested

that Micro Enterprises should be segregated from SME's, so that the sector

could get focused attention and role in policy formulation.

It is pertinent to point out that problems of Micro Enterprises are quite

distinct from those of SME's/ Large. Thus, it is evident that Micro/Village/

Services Sector have no voice in policy formulation as the Govt. has shifted its

focus to SME's

The 4th Census Report pertaining to the period 2006-2007 was got

conducted in 20Gb n the report was released in Sept.. 2009. As a result of

which, there is no substantial change m percentage term. The Census was

conducted of the registered MSME sector only. As per the census there are

26 million registered units, which provide employment to around 60 million

people.

It is note worthy to point out. that there are more than 3 4 crores tin-

registered units.also and they provide employment to around 10 crore

people The 6 crore enterprises which are mostly proprietorship/partnership

firms These enterprises sustain their existence also Thus it is evident that

employment provided to more than 25 crore people

We don't have any objection in case the Govt. provides any incentives to SME

sector, but not

at the cost of Micro Enterprises Sector Micro Enterprises Sector is_Jhe

engine of growth

which Contributes to 45 percent in the Manufacturing activities.

contributes to_4j3j3eic^tjriej(Bcj1s.iP^^^ generation next to

Agriculture.

We have to reiterate that Micro Sector & SME/Corporate sector is the two

wheel of the Bullock cart. We apprehend that in case the focus of the Govt is

on one wheel the Bullock cart won't move. That is what is happening since

2006,

Our suggestions are as under:

1. Separate Policy for Villaqe/Cottage/Service/ Micro Enterprises Sector

. Keeping in view the above stated facts it is earnestly requested that a Separate

Policy for the above sector, which is the real engine of inclusive growth should be

formulated at par with Small Business Administration, in the developed countries,

as there is a Separate policy for this vibrant sector, which will go a long way in

addressing the genuine grievances of this vibrant sector

2 National Statutory Commission for Micro/Village/Cottage/Service

Sector:

There should be a separate National Statutory Commission -. on

Micro/Village/Cottage/Service Sector with Quasi Judicial powers at par with

National Human Rights Commission, National Women Commission etc, in

order to safeguard and protect the interests of this vibrant sector.

Thus, it is all the more important, that the National Statutory Commission with

Quasi Judicial powers may be set up for the Micro Sector under the

Ministry of MSME, so that the focused attention could be given on this sector,

wherein the interests of Micro Sector are being over looked under the garb of

SME's.

3 SIDBI Board

At present there are 15 Directors on the Board of SIDBI, which are mostly officials

A d e q u a t e r e p r e s e n t a ti o n h a s n o t b e e n g i v e n t o t h i s s e c t o r

That Sec6(i)(e) of SIDBI Act. needs to be amended and at least 2-3 non-official

directors of Micro/Small Enterprises Sector (SSI) upto one crore should be

nominated on the board of SIDBi, to look after interests of this vital sector of

economy.

4 Interest Subvention:

At present, interest subvention is provided to Agriculture & budgetary

allocation is made yearly. As you are well aware of the fact that Micro/Small

Enterprises to Rs. One crore is the 2nd largest employment generator next to

Agriculture. It is also learnt that Govt. has provided interest subvention to

Housing Sector also It is suggested that interest subvention should be provided

to this sector at par with Agriculture. The issue of lowering the interest

rates for loans to the Micro Enterprises was considered by the IMG in its

meeting held on 10th July, 2009 and it was agreed that the Ministry of MSME

may formulate a scheme to provide interest subvention to Micro

Enterprises sector

This issue was also considered in the meeting held under the chairmanship

of Cabinet Secretary on 13 th October, 2009 to review the action taken on the

recommendations contained in the reports of the NCEUS It was decided

that Ministry of MSME may formulate the scheme relating to interest

subvention for Micro Enterprises Sector expeditiously and send it to Planning

Commission The Planmng Commission may make suitable recommendations

as necessary and forward the proposal to Department of Expenditure,

Ministry of Finance, may further examine the proposal and finalist their views

on the proposed scheme

It is high time that necessary steps may kindly be taken up by Ministry of

MSME, so that interest subvention could be addressed to expeditiously.

Hence, it is a fit case for interest subvention to the Micro & Small Enterprises

upto Rs. One crore, so that the sector may be able to compete internationally as

it present differential / higher rate of interest is being charged from the sector

5 TUFF Scheme for Light Engineering Industry:

We raw your kind attention that TUFF scheme is available to Textile Industry only

It is pertinent to point out that Bicycle Auto Parts. Nuts & Bolt (Fastner

Industry. Forgings, Machine Tool/Sewing industry/tractor parts fall under the

ambit of Light Engineering Industry. China is our main competitor. The Light

Engineering Industry need modernization and technology upgradation, so as to

compete internationally, as it was one of the objectives of

liberalization/globalization as announced by Dr Man Mohan Singh on

25.08.1991.

Your kind attention is invited that Hon'ble Union Finance Minister, while

presenting Budget 2013 to Parliament on 28.022013 had announced to

continue TUFF SCHEME to Textile Industry during the 12th Five year plan.

It is suggested that TUFF scheme at par with Textile industry may be available to

the light engineering industry, so that the sector may be able to compete

internationally by modernization/technology up gradation.

6. Infrastructure:

We have to bring to your kind attention that the proper quality / infrastructure is

not being provided to the entrepreneurs in our country Whereas, in China,

the infrastructure is being provided by the Govt. But in our country, the

entrepreneurs have to build factory at his own cost.

The prices of land have gone up considerably beyond the reach of the

entrepreneurs Proper infrastructure is the major bottleneck of Micro Sector. The

sector has neither expertise nor funds. Cluster Scheme of Ministry of MSME is

in force, wherein the land is to be provided by the entrepreneurs

Hence, it is suggested that proper infrastructure should be provided to the

Micro Enterprises.We have also been given to understand that 12 NMIZ's

are to be set up in the country. It is suggested that proportionate NMIZ's be

provided to Micro Sector

7 Permanent Exhibition Infrastructure:

As you are well aware of the fact that Marketing of products is another

bottleneck of this sector.

We have been given to understand that most of MSME-Dls have plenty of land

wherever available in the MSMEDI's, which can be utilized for setting up of a

permanent structure for the products to be exhibited. Buyer/Seller meets of

different product groups could be arranged, so as to enable entrepreneurs to

exhibit their products. At present there is ample space available in MSME-DI

Ludhiana, where a permanent exhibition structure can be set up.

8L Grievance Redressal Mechanism:

At present, there is no grievance redressal mechanism available to Micro/Small

Enterprises upto Rs One crore. Whereas, BIFR is available to large sector

It is suggested that Grievance redressal mechanism at par with BIFR should be set

up for this vital sector of economy.

Role of SIDBI:

We have to reiterate that SIDBI was set up on 2.4.1990 as a Principal

institution exclusively for SSI. to cater to the needs of this vital sector of

economy.

But, unfortunately, it has shifted its focus since 2005 on SMEs only and its

logo is We empower SMEs. which is contrary to the interests of erstwhile SSI

Sector now Micro

SIDBI was supposed to scale up and strengthen its credit operation for

Micro Enterprises, as per package dated 3.10.2007. It was supposed to

cover 50 lacs additional beneficiaries over 5 years new Micro Enterprises

SIDBI was also supposed to provide directly or through its intermediaries

demand based Small loans to Micro Enterprises under a pilot scheme.

Budgetary allocations are made every year in the Budget. SIDBI must bear the

risk element / service charges, as has been done by SBI under CGST SME

Scheme.

It is suggested that Govt. should direct SIDBI to meet with the credit needs of

Micro Sector. It is also suggested that major portion should be earmarked for

Micro Sector for which SIDBI was set up in 1990.

10. Skill Development

We have been given to understand that the Hon'ble Union Finance Minister

has provided a sum of Rs.10,OOOCrores for Skill development in the Budget

2014-15 for MSME Sector.

As you are well aware of the fact that erstwhile SSI Sector, now Micro

Enterprises Sector contribute to 45% in the manufacturing activities. 40% in

exports(direct) & is the 2nd largest employment generator next to Agriculture

& its growth is m double digits, there figures are prior to enactment of

MSMED Act.2006

Keeping in view the enormous contribution of this vital sector of economy, it

is earnestly requested that 60% of the total fund, should be earmarked for

the product specific skill development, in each state so that the vital sector of

economy may be able to compete Internationally.

We apprehend that the total funds should not be utilized by SME sector at

the behest of vested interests i.e.CII.FICCI, Assochem.

11. FREE TRADE AGREEMENTS

UPA-I & II had signed Free Trade Agreements with various countries without

taking in to confidence the domestic industry. The Bicycle Industry, which is

the major industry of Punjab is concentrated in & around Ludhiana, due to

process specialization Manufacturing involves various processes. M/s Hind

Cycles Ltd, Mumbai, M/s. SenRaleigh in Asansol, were set up under one roof

with foreign collaborations can't compete & had been taken over by Govt. &

were in loses. M/s T I.Chennai & M/s Atlas Cycles Ltd. , Sonepat had opened

their offices at Ludhiana & got components • as per their drawing &designs,

cheaper by 30% Ludhiana enjoys a unique position not only in India but.

Internationally also.

Bicycle industry is the worst sufferer, due to imports from China through Sn

Lanka, Bangladesh etc.

It is high time that AFTA/SAFTA should be relooked into/rework, which would

benefit/protect the domestic industry and Country's economy at large

Imports in respect of RCEP countries- Base metals & articles of base metals

under chapter 72.83 is much more than the exports It is also suggested that

the no. of countries should not be raised to 16 from 10 including China, in

ASEAN, which would prove counterproductive. It is also suggested that

Bicycle Industry should be put in the negative list, if FTA's cannot be revoked

12. Freight Equalization Scheme

We would like to draw your kind attention that Punjab is the hometown of

Small Scale Industries. The first Industrial Estate was set up in early 50's,

wherein, A,B& C type Industrial sheds with Electric Connections of 10 HP, 7.5

HP & 5 HP was provided Industrial Estates in other States were setup on

Ludhiana pattern.

Punjab has locational disadvantages, as it is far away from Sea ports as well as

Steel Plants set up by Govt. Iron & Steel materials were available at same rates,

whether at Kolkatta. Mumbai or Punjab up to 1991.

But. Unfortunately Sh.P V NarsimhaRao's Govt.at the behest of certain vested

interests, Freight Equalization scheme was dispensed away w.e.f from

February 1992 with the stipulation that within the radius of 200 Kms of Steel

Plants, no freight would be charged. Beyond that, actual freight is being

charged. The Iron & Steel users in Punjab have to pay Rs 3000/Ton as freight

& the units have become uncompetitive.

It is suggested that it's high time that the Freight Equalization may be revived

so that the Small Scale Industry in Punjab can be revived & competitive

internationally

13 Separate Pre Budget Meeting

We draw your kind attention that Separate Pre Budget Meeting with various

sectors were held by Hon'ble Finance Minister for SSI /Corporate Sector since

1991.in consultation with DC (SSI) now DC (MSME). But unfortunately, Shn

P.Chidambran, Finance Minister during UPA-1 had dispensed separate

meeting of SSI sector in 2004, only FASH & LAGHU UDYOG BHARTl were

invited up to 2009 Shn Pranab Mukherjee, became Union Finance Minister

in 2009, FOTSII President was also invited. We had demanded that Separate

Pre Budget Meetings with SSI Sector be held but unfortunately, our request

was not acceded to.We strongly urge upon your good nonor that separate Pre

Budget Meeting should be held for MSME Sector, as our issues are quite

distinct.

14. Representation on the Board Of Public Sector Banks

It has been brought to our notice that politicians were being .nominated as

Non Official Directors Of Public Sector Banks

The long standing demand of the sector regarding nomination of 2-3 Non

Official Directors on the Board of PSB's has not been met with so far.

It is suggested that 2-3 Non- Official Directors be nominated on the Board of

PSB's , to look after the interest of this vital sector of Economy.

We do hope that the above stated suggestions would be looked into

sympathetically while formulating National Policy for this sector, which will go

a long way in addressing grievances of this vital sector of Economy

It is also suggested & imperative on the part of the Govt. to maintain balance

on the Micro Enterprises Sector on the one hand & SME/Corporate Sector on

the other hand.

As you are well aware of the fact that Bicycle Industry is the major industry of

Punjab & is concentrated in & around Ludhiana after partition

Initially, Hind Cycle Ltd. was set up in 1939, under one roof. M/s Sen Religh

was set up under one roof at Asansol in Kolkata. M/s T.I was set up under

one roof in Chennai with foreign collaboration & M/s Atlas Cycle Ltd was set

up at Sonepat. indigenously in joint Punjab.

M/s Hero Cycle Ltd., M/s Atlas Cycle Ltd., were set up at Ludhiana in early 50s,

M/s Road Master Industries Ltd. was set up Rajpura. Since M/s Hero ycle Ltd

& M/s Avon Cycles Ltd were SSI units & got the components developed from

SSI units by way of process specialization, as a result of which there was. 3

difference of Rs 100..'- in e3r!y 198Q's. M/s Hind Cycle Ltd & M/s Sen Religh L.td

can't withstand the competition & had to be taken over by Central Govt. M/s

T.I. Ltd & M/s Atlas Cycle Ltd. Sonepat. set up their offices in Ludhiana & got

Bicycle components at 25 to 30% less than their cost as per their designs/

specifications Both the units are surviving.

We have been given to understand that survey on Bicycle Industry was

assigned to National Productivity Council, under Ministers of Commerce &

Industry, has been put on the back burner.

The undersigned has been representing United Cycle & Parts Manufacturing

Association as General Secretary as well as President for five terms each. I

had been representing Bicycle Industry both at State level £ Central Govt. for

the last 3 decades & has got in-depth knowledge of this industry.

We have to reiterate that China is our main competjtor. The Bicycle industry

which was once a Sunrise Industry has become a Sunset Industry post W T O.

We humbly request that it is high true that an early surveying should be got

conducted & find out the reasons as a result of which, the Bicycle industry

should be brought on right track.

An early action in the matter shall highly be appreciated.