GoM approves Rs 5,000 cr Tech Fund for the SSI sector

GoM approves Rs 5,000 cr Tech Fund for the SSI sector
PRESS TRUST OF INDIA

NEW DELHI, JULY 30: A high-powered Group of Ministers (GoM) for Small Scale Industries has approved setting up of the much-awaited Technology Upgradation Fund (TUF) for SSIs with a corpus of Rs 5,000 crore.

The group headed by Union Home Minister L K Advani is believed to have approved the fund which would be operated through the Small Industries Development Bank (SIDBI), official sources told PTI.

As per the proposal of the GoM, which met here last week, SIDBI would earmark Rs 5,000 crore for disbursing loans to specific sectors in the SSI for technology modernisation.

SSI units would be able to avail loans from commercial banks or through SIDBI for undertaking technology upgradation, sources said adding that under the scheme, SSI units would receive a specified percentage as `capital subsidy' on their loans through SIDBI.

The scheme would extend credit for specific technology upgradation and would be applicable in specified sectors such as leather and leather products, information technology, food processing, auto parts and components, hand tools and toys.

The GoM also approved the setting up of a committee under the Secretary, Ministry of SSI which would have technology experts on its panel to review the technology and the sectors getting benefit of the scheme from time to time, they said.

The fund would cater to hi-tech, export-oriented SSI sectors which are likely to face the maximum brunt of competition under the WTO, sources said. The Ministry of Small Scale Industries had earlier submitted a scheme to the GoM on `interest support for technology upgradation for SSIs' to provide reimbursement of five percentage points on the interest charged by the lending agencies on projects of technology upgradation by SSIs.

Sources said that the scheme prepared along the lines of the Rs 25,000 crore Technology Modernisation Fund under the Ministry of Textiles would be operational for a five year period and the loan amount eligible for interest support annually would be Rs 1,000 crore.

During the complete period of the operation of the scheme, a total sum of Rs 5,000 crore advanced for technology upgradation would be eligible for interest support, they said adding that the liability of the government on providing interest support would be Rs 750 crore spread over a period of ten years.

The GOM has, however, asked the SSI ministry to review certain aspects of the proposal like the interest reimbursement and simplify it further before the scheme was sent to the cabinet, the sources said.

The study group set up by the Planning Commission headed by Dr S P Gupta had also recommended the setting up of a TUF for the SSI sector. The interim report of the study group is being presently considered by the GoM which is expected to finalise a composite policy to `empower the SSI sector' in its next meeting, sources added.