The government on Monday proposed a new legislation to promote the growth of small-scale industries.
A proposal to this effect will be introduced during the winter session of Parliament.
Speaking at the inauguration of a two-day seminar on Monday, Union Minister for Small-Scale Industries C P Thakur announced a series of measures to promote and save India's small-scale industries, said to be the economic backbone of the country employing about 18 million people.
Thakur said: "The government is planning to incorporate provisions to reduce the problems faced by small-scale industries in the proposed legislation. This legislation is under consideration of the government and most probably would be introduced in the winter session of the Parliament."
Entrepreneurs due to large number of rules and regulations relating to the registration, location, security, labor, welfare and environmental measures to be followed by small-scale industries, he said, have formed the new legislation, keeping in mind the problems faced.
The seminar on small-scale industries focusing on its leadership aspect was organised by voluntary group Centre for Bharatiya Marketing Development promoted by the Swadeshi Jagran Manch.
Thakur said a 20-member ad-hoc committee headed by a minister has been formed to give recommendations to promote Indian small-scale industries and to suggest ways to face the challenges of increased competition due to globalisation.
The committee would be announced this week and it will submit the report in a month.
The minister said there was a need to simplify the laws and reduce the formalities that have become a roadblock in the development of this sector.
There are 14 regulations one has to follow while establishing a small sector industry, he said. "There are so many laws and regulations that it is hampering growth."
To inspire new entrepreneurs and widen the base of small-scale industries, the government has decided to revive five sick and open five new industries in each Parliamentary constituency of the country.
"I have personally written to all the Parliamentarians in this regard," he said.
The major problem before small entrepreneurs was of getting credit from banks and other financial institutions, he said. Delayed finance, inadequate finance and costly credit even after manifold collateral were other problems.
To improve the flow of credit, the government has now decided to raise the limit of collaterals free loan from Rs 100,000 to Rs 500,000, and in some cases up to Rs 1.5 million.
Limit of composite loan would be raised from Rs 1 million to Rs 2.5 million.
Limit of projects would be raised from Rs 2.5 million to Rs 5 million under the National Equity Fund.
The government will also open 394 small-scale industry specialised bank branches across the country.
Small-scale units will now be able to get loans at interest band of 2 percent below and above their prime lending rates. To mitigate the problems of collaterals, government is implementing the Credit Guarantee Scheme for loans between Rs 500,000 and Rs 2.5 million, Thakur said.
The government is implementing a price and purchase preference scheme and has reserved 358 small-scale products for exclusive purchase by government departments.
"We will make it mandatory in the new legislation that certain percentage of purchases by the government department are sourced from small-scale sector," said Thakur.
