bicycle typing
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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.
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