Southern India MSME Meet, 2008

To strengthen the unity of Micro and Small Enterprises so also to have an effective coordination, cooperation and meaningful dialogue amongst Southern States MSME Associations, the Southern India MSME Meet, 2008 at Mangalore was organized on 1st June 2008

Inaugural Session

After prayer by Vidushi Girija Bhat and Priyanka, COSIA Hon. Secretary General Shri. P. S. Agwan welcomed the delegates. Thereafter the Meet was inaugurated at the hands of Chief GuestHon. Shri. Oscar Fernandes, the Union State Minister [Independent Charge] for Labour and Employment.

While offering Opening Remarks COSIA President Shri. M. R. Khambete underlined the vital contribution of Southern States in the economy of India and appealed to unite strongly to face the challenges of Globalisation. He emphasized that the competition is not amongst us but with other countries. To fight with it Indian MSME should unite as a Brand Identity under COSIA Banner, he concluded.

Thereafter ‘Spot Light’ issue of TISA was released at the hands of the Chief Guest Shri. Oscar Fernandes and Guests of Honour. This issue is edited by Shri. Dilip Salvekar, the Secretary General of COSIA. It contains Industrial Policies of all Southern States, articles of experts, vital statistics and issues of MSMEs in Southern India.

Thereafter Chief General Manager of Corporation Bank Shri. M. Narendra, while appreciating COSIA’s efforts in organizing the Meet, explained in brief the role and support of Corporation Bank to strengthen Indian Micro and Small Enterprises. He also appealed to the delegates to take the benefits of various schemes of the Bank.

Thereafter the COSIA Entrepreneurship Appreciation Awardswere presented at the hands of Chief Guest Shri. Oscar Fernandes to the following industries:

M/s. Om Enterprises, Andhra Pradesh
M/s. E. P. Industries, Goa
M/s. Lamina Suspension Products Ltd., Karnataka
M/s. Mechelonic Welders Pvt. Ltd. , Karnataka
M/s. Pankajakasthuri Herbals India (P) L., Kerala
M/s. Classic Paints, Kerala
M/s. Chemin Controls & Instrumentation Pvt. Ltd., Pondicherry
M/s. Leo Fasteners Unit II, Pondicherry
M/s. Kali BMH Systems Pvt. Ltd., Tamilnadu
M/s. Padma Metals, Tamilnadu
M/s. Barani Hydraulics India Pvt. Ltd., Tamilnadu

Hon. General Secretary Shri. P. S. Agwan, on behalf of selection committee, briefed the gathering about these Awards and introduced them while presenting these awards.

To recognize, respect and felicitate the Leadership in MSME Sector in Southern India, COSIA Pune Branch Chairman Shri.Pravin Mistry, thereafter invited and introduced followings who were traditionally felicitated a the hands of the Union State Minister for Labour & Employment Shri. Oscar Fernandes.

Shri. Vijay Kumar, Vice-President Federation of A. P. Small Industries Association
Shri. Kurade, Vice-President Goa State Industries Association
Shri. M. C. R. Shetty, President Karnataka Small Scale Industries Association
Shri. Abdul Rahim, President Kerala State Small Industries Assn.
Shri. K. Parathasarathy, Secretary Association of Small Industries of Union Territory of Pondicherry
Shri. Shanmugaveluthan, President Tamilnadu Small and Tiny Industries Assn.
Shri. R. G. Shenoy, Director Canara Lighting Industries Ltd, Mangalore

Thereafter while addressing the Meet Chief Guest Shri. Oscar Fernandes appreciated COSIA’s role to unite Micro and Small Industries whom he identity with worker’s seat only being a one man show, called upon the delegates to unite for the cause of betterment of Indian economy. Referring to the rupee appreciation, he opined that this is a sign of strong currency and stable economy. He further opined that inflation will be brought under control. He promised to call a meeting at New Delhi for discussions on Labour Reforms and also promised to give proper representation to COSIA on Labour related Committees at National Level.

Thereafter Smt. Sujata Soparkar, Committee Member of COSIA, introduced Key Note Speaker Shri. Amulya Charan, the CMD of Tata Power Trading Company Ltd.

While delivering Key Note Address Shri. Amulya Charan, briefed the Meet about the overall power scenario in the country with special reference to Southern India. He opined that here private sector has a definite role to play which can provide electricity of their captive plants to the National Greed and smooth and planned distribution of this power through the current infrastructure of the Distribution Companies will help to reduced the load shedding drastically.

At the end Hon. Jt. Secretary of COSIA Dr. Madhu Gupta thanked the Chief Guest, Key Note Speaker and Guests of Honour for their guidance and support to the Meet. With this vote of thanks the inaugural session ended and the meet commenced Business sessions.

Business Session One

The opening business session was held under the Chairmanship of Dr. Ashok Sahu, Advisor, Ministry of Labour and Employment, Govt. of India, on the subject of ‘Labour Reforms for MSME Sector.’

While introducing Dr. Sahu, the Hon. General Secretary of COSIA briefed the delegates about the recommended Law by the II National Commission on Labour. If enacted by the Govt. of India, he explained, this will be the desired reforms for Micro and Small Enterprises.

Dr. Ashok Sahu explained the Govt. thinking on Labour Reforms and opined that totally new Labour Law may not be possiblebut there is one Current Act for only one Register and Annual Return which covers nine different laws. Increasing the number of workers applicability from 10 to some other figure, under various laws can be a good proposal, he added. He also placed before the Meet the point of ‘Self Declaration or Self Certification’ and requested the delegates to send their suggestion on it.

Shri. Dilip Salvekar, thereafter, wanted to know about the readiness of the Govt. to accept the self-certification as it is. He opined the separate law seems to be the right choice of reforms.

During these deliberations, President of Kanara Chamber of Commerce & Industry Shri. Kumbale stressed upon the need of effective human resource development for capacity building of an unit as a whole. The Chairman of this session appreciated this view of Shri. Kumable.

While summing up, session Chairman Dr. Ashok Sahu, said that how to end the Inspector Raj is a crucial question. We can curtail visits and inspections to minimum and may be guided by Andhra Pradesh experience. He also stressed upon the training the workers in unorganized sector. In the end Shri. P. S. Agwan proposed a vote of thanks to the Chair.

Address of RBI Director :Smt. Devaki Muthukrishnan, Director, RBI, Bangalore, a Guest of honour of the Meet thereafter addressed the Meet after being welcomed and introduced by Joint Secretary of COSIA Dr. Madhu Gupta.

In her address Smt. Devaki Muthukrishnan, briefed the Meet about the package announced by the Govt. for Micro and Small Enterprises. While narrating some of the difficulties in providing finance to smalls like, high transaction cost, sickness, she explained that financial empowerment to this sector is RBI’s aim. She also explained vital guidelines of RBI and advised the delegates for Credit Rating. While summing up her speech she referred to the clusters approach and monitoring machinery. She also explained about SLIK Committees and encouragement to Women Entrepreneurs.

Thereafter during the interaction with the Director following suggestions were given by the delegates.

Shri. M. C. R. Shetty,President, KASSIA – Bangalore There should be a target for each bank and district for collateral free loan. The rate of interest should not exceed 7% to 8%.
Shri. Biradar, President, Vijapur Small Ind. Association The guidelines of RBI are not followed by the Banks, particularly in rural areas. These must be mandatory.
Shri. Suresh Kumar Jain, Secretary, Mysore Ind. Assn. The stamp duty levy of 0.5% on documents is still collected. RBI should intervene in it.
Shri. Damodaran, Secretary, Kerala State Small Industries Assn. Funds for Priority sector are always diverted and this needs strict control.
Shri. Shanmughavelauthan,President, TANSTIA, Chennai. The directives on Minimum Balance are to be more clear. SSI to get loans at a moderate rate of interest.
Shri. Dinesh, Man. Com. Member, DSIA, Mangalore Banks do not follow RBI directives fully & collateral is always demanded. It is essential to educate the Bankers also.
Shri. Dilip Salvekar, Secretary General, COSIA There is a general complaint everywhere that Banks do not observe RBI Guidelines and always insist on collateral security. The Director of RBI requested the delegates to send their points in writing to her to deal with them appropriately. She thanked COSIA for inviting her to the Meet and praise COSIA efforts for MSMEs in Southern India.

After vote of thanks to the Director of RBI, the Meet took a lunch break.

Business Session Two

This was held on two subjects as below:

A] MSMED Act, 2006 :
This was Chaired by Shri. K. L. Rao, the Director, MSME Development Institute, Bangalore.While welcoming and introducing Shri. K. L. Rao to the delegates.Smt. Sujata Soparkar, Committee Member of COSIA, said that there is a need to change the definition of Micro and Small Enterprises in as much as it lacks the reference of Turnover and number of employees. This is necessary to protect this sector from backdoor entry of giants, she added.

Thereafter following delegates offered their suggestions.

Shri. Suresh Kumar Jain,Secretary, Mysore Ind. Assn. The investment limit for smalls is still Rs. 3 Crs. in Karnataka and needs correction.
On this point Session Chairman, Shri. K. L. Rao, clarified that limit prescribed under the MSMED Act prevails, everywhere.
Shri. Biradar, President, Vijapur Ind. Assn. Involve local Associations for the registration and related matters.
Shri. Mohan, Vice President, TANSTITA, Chennai Registration be compulsory and bench marking of Association is essential.Here Shri. K. L. Rao briefed about the scheme ofCapacity Building of Associations. Shri. M. C. R. Shetty, President, KASSIA, opined that assistance to functioning SSI Associations and on merits only be provided under such schemes
Shri Jayraj Pai, Join Secretary, KASSIA, Bangalore. A simple Exit Policy be made and declared under the Act.
Shri. Srinivasan,Member of KSIA, Mangalore Single Window for all forms and registration is vital. Registration under MSMED Act be mandatory. Exit policy for closed units be immediately declared. Delayed payment is still problem of almost all micro enterprises.

While insisting on compulsory registration and Bench Marking of Associations, Shri. Shanmughavelutham, President, TANSTIA, Chennai suggested to have separate discussions on above issues at New Delhi at Higher level.

In sum up Shri. K.L .RAO, touching to the Rajiv Gandhi Udyami Mitra Scheme in particular and other schemes in general promised to communicate the suggestions to the secretary MSME and other authorities for their consideration.

In the end Smt. Sujata Soparkar, Committee Member of COSIA, proposed a vote of thanks to shri K. L.Rao and delegate of the Meet.

B]. Finance to MSME Key issues & solutions :
Initially Dr. Madhu Gupta Hon. Joint Secretary of COSIA, offered opening remarks and pointed out that main issue seems to be ofinadequate finance that too at higher rate of interest. Banks like SIDBI, Canara Bank and Corporation should provide low cost credit line to the small industries, she added.

Thereafter Shri. K. M. Nair, CGM, Southern Region, SIDBI, Chennai, while promising all best possible support to MSMEs, narrated various financial schemes of SIDBI. He also stressed upon the Credit Guarantee Scheme of SIDBI and requested delegates to take advantage of it to free themselves from collateral issue.

He also referred to the Equity Support Finance Scheme and appealed to the delegates to take benefit of this scheme for their future development and growth.

Thereafter Shri. M. M. Kudva, Deputy General Manager, Canara Bank, Mangalore, spoke about the various schemes of Canara Bank for priority sector with special reference to Micro and Small Enterprises. In summing up his presentation he advised the delegates to be in constant touch with the financer and also to take advantage of their expertise.

The Corporation Bank also made a presentation during this session on their schemes for MSME Sector. It also included their Awards for Entrepreneurships.

At the end Dr. Madhu Gupta, Hon. Joint Secretary of COSIA proposed a vote of thanks.

Business Session Three (Resolutions)

This was a vital Business session from the point of view of functioning of MSME Associations, their experience sharing and unity at National level. It was chaired by President of Karnataka Small Scale Industries Association Shri. M. C. R. Shetty. On the invitation by the Session Chairman, following delegates participated in this session.

Shri. Shetty, Madurai No real relief is made available to small scale industries by MSMED Act. We have to unite and have a strong unity. It also calls for the Bench-marking of the MSME Associations in its true sense.
Shri. Achar, President, KSIA Mangalore Changes in Boilors Act are needed. Amendments in Weights & Measures Rules are essential. Exit policy be announced. Strong Association with the involvement of younger generation is need of the day.
Shri. Biradar,PresidentVijapur Small Ind. Assn. Backward areas need more attention & focus. MSMEs are not supported properly by agencies of the Govt. Mandatory implementation of RBI directives is a must.
Shri. C. Muthuswami,PresidentCODISSIA Skills development programmes be also organized by the Associations Invitation to visit CODISSIA.
Shri. Vishwanath,PresidentMysore Ind. Assn. Strong Association is the solution. Active participation of the members is needed.
Shri. Dhanpalan, ChairmanTANSTIA – FNF Service Centre More update of the information is necessary. Associations should have services for knowledge and training. Strong Association is the need of all.
Shri. Dixit, Treasurer, KASSIA Lending rate of banks is very high. It should be 7% only. RBI directives must not be ignored by bankers.
Shri. Vijay Kumar,Vice PresidentFAPSIA Interest Rates are high. Fight Inspector Raj Associations my have their own Media. For training workers we should have Education Policy.

At this point, Session Chairman Shri. M. C. R. Shetty, who had to leave for Bangalore, sum-uped saying that, efforts of COSIA are noteworthy but at the same time it should go beyond few centres like Thane, Pune. The meet had discussed many common issues in general. The operations of SIDBI and MSME development Institutes must be expanded to serve MSMEs in better ways. He also invited all the delegates for the opening ceremony of KASSIA Bhawan in the month of June. In the end he thanked COSIA Team for this meet and assured continuous support for the cause of unity of MSME Sector.

Thereafter the session continued under the Chairmanship of Shri. A. Shanmugavelayuthan, President of TANSTIA, Chennai.

Shri. K. ParthasarathySecretaryASIOUTOP MSMED Act is not helping for delayed payments. Policies for MSMEs are only announced but not implemented. Credit availability is the major problem.
Shri. Govind BhatSecretary KSIA The social security of new entrepreneurs needs to be protected. COSIA needs to expand its wings.

Thereafter at the instance of Chairman of the session, COSIA General Secretary Shri. P. S. Agwan briefed the Meet about the Pre Meet Meeting of the President which was held one day prior to the Meet at Mangalore and read out of the Resolutions which were finalized by the President’s Meeting. These Resolutions are as under :

a) MSMED Act, 2006

1) Micro / Small Defination:
Resolved that while congratulating the Govt. of India for enacting MSMED Act, 2006 for MSMEs in India, there needs to be an amendment in the Definition of Micro so also Small Enterprise. Along with limit of Investment in Plant & Machinery, a TURNOVER LIMIT of Rs. 10 crs. for Micro and Rs. 50 crs. for a Small Enterprise in Manufacturing sector be added to prevent backdoor entry of Large Enterprises in the Micro and Small Sector.

2) Purchase Policy:
Resolved that it should be mandatory by Law itself for all the Depts., Corporations, Boards and Mandals of Central, States’ and Local-self Govt. Bodies to purchase minimum 35% of their requirement from the Micro and Small Enterprises only. The Micro and Small Enterprises be exempted from earnest money deposit. There should be 5% reservation for Women Entrepreneurs. The State and District Associations of Micro and Small Enterprises should be given representation on the committees formulating / amending purchase policies.

3) Delayed Payment:
Resolved that more teeth be provided in the Act to ensure prompt payment by the Buyers to the Micro & Small Enterprises. Resolved also that a provision in the Act be made to ensure that the Buyer sends his approval within a period of 15 days of delivery.

4) Separate Secretary & Development Commissioner for MS Sector in States:
Resolved that in every State there should be a separate Secretary as well as a Development Commissioner for Micro & Small Enterprises

b) Banking & Finance

Resolved that lending bank should sanction a ‘CREDIT LINK’instead of separate loans for each purpose comprising of two parts viz. term loan & working capital. This should be on a multiyear basis, with automatic revision of limit, proportionate to turnover.

Resolved further that no collateral be demanded by the Banks from Micro and Small Enterprises but loans be automatically covered under Credit Guarantee fund Scheme and the Rate of Interest be two percent below PLR.

Resolved also that the guidelines of RBI be binding & mandatory to the Banks.

c) Labour Reforms

Resolved that the recommended Law, namely “Small Enterprises (Employment Relations) Act” of Second National Commission on Labour, be enacted by the Govt. of India for the labour Reforms for MSME Sector, so as to ensure through its provisions-

1. Compliance of the said Act by way of self declaration by the CEO of MSME.
2. Unless there is a written complaint no Inspector should visit the premises of the entrepreneurs.
3. All forms to be filled and registers to be maintained be drastically simplified for ease of understanding & compliance.
4. The unit employing less than 50 workers should be exempted from the provisions of Labour Laws.

Proposed By : Shri. Vijay Kumar, Vice President – Federation of Andhra Pradesh Small Industries Associations.

Seconded By : Shri. A. Shanmugavelayuthan, President – Tamilnadu Tiny & Small Industries Associations

Seconded By : K. Parthasarthy, Secretary, Association of Small Industries of Union Territory of Pondicherry

“Resolutions Passed Unanimously.”

Thereafter Shri. P. S. Agwan, Hon. Gen. Secretary of COSIA also placed before the delegates the suggestions of TANSTIA which were also accepted by the Pre Meet Meeting of the Presidents as below –

d) TANSTIA Suggestions

1. Benchmarking and Empowering State Level SSI Associations :
The Benchmarking of SSI Associations in our country is a must and selection of members by the Government Departments / Undertakings should be purely based on the merits of the Associations and in a more transparent manner.

2. Registration of Micro and SSIs be Mandatory :
The registration of MSEs should be made mandatory which will help the Government of India to have consolidated data on SSIs and frame policies accordingly. If this is done, then there will be no need to conduct Census on SSI & Micro Industries in our country for getting data.

3. Labour Incentives:
For the amount spent towards welfare measures about 150% for ESI and PF shall be exempted from the purview of Income Tax Act.

4. Exit Policy & Social Security Scheme for failed SSI Entrepreneurs:
Time bound special package for easy exit policy without cumbersome procedures for failed SSI and Micro entrepreneurs.
Social Security Scheme for the failed SSI & Micro Entrepreneurs.

The Meet unanimously accepted all above suggestions.

5. Conclusion

At the end Shri. A. Shanmugavelayuthan, Session Chairman thanked all the delegates for passing the Resolutions and accepting TANSTIA suggestions. He also appreciated COSIA efforts and while thanking COSIA, appealed to expand the COSIA network in all states. He also thanked all the delegates for their active participations.

During this session the Presidents of other participating Associations were also felicitated at the hands of respective state Presidents by presenting them a Memento.

At the end onbehalf of organizers and local committees Shri. Jayraj Pai, proposed a hearty vote of thanks. The Meet ended with National Anthem.

6. Representatives from Different Places

Kumbakonam, Thanjavar, Kochin, Sannor, Udupi, Ernaculam, Surathkal, Panoor, Coimbatore, Mulki, AGM – NABARD, Hubli, Bikumpady, Cochin, Mysore, Yeyyadi, Thirupu, Niti, Guindy, Manipal, Navi Mumbai, Thane, Madurai, Pondicherry, Kundapur, Bijapur, Hyderabad, Ankola, Donaroor, Goa, Bantwal, Bangalore, Tarapur, Kalapatti, Hejamady, Ujire, Kumbakonam, Sanoor, Mungudi, Delhi

7. Presidents

Codissia, Mulki, Canara Chamber of Commerce & Ind. , Mysore, Bijapur, Udupi, Goa, Cochin, Federation of Indian Export Organisation, New Delhi, Canara Bank, Syndicate bank, NABARD, SIDBI, Corporation Bank.