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Posted on 31st August 2007 at 09:57:00 |
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TOPIC : Red-tapism, high capital cost affecting SMEs
An estimate by industry body ASSSOCHAM has revealed that higher costs of capital in India coupled with increased red-tapism have curtailed the productivity of Small and Medium Enterprises (SMEs) in the country by 28 to 30 percent.
SMEs contribute more than 60 percent in total export proceeds of India and if the trend continues, it would bring down the export targets of $ 160 billion for 2007-08 fiscal by more than $ 20 billion, the chamber said.
The number of inspectors have gone up to 40 from 35 and at the same time interest rate in the country have also doubled from 7.5 percent to 15 percent and both factors combined to make a serious impact on the productivity of SMEs in the country, the chamber said in a release.
The chamber had urged the Prime Minister to intervene in the matter to bring down the numbers of inspector to 15 in next two years and subsequently reduce it to 5 in another two years.
"There should be one inspector for examining the records of SMEs in PF, excise, bonus, sales tax etc and likewise special arrangements should be made in a manner so that one inspector is made incharge of five different functions of SMEs," ASSOCHAM President Venugopal N Dhoot said in a statement.
Besides this, the procedural issues faced in raising loans includes lot of paper work, collateral security, high processing fee and pre-payment charges coupled with time taken by banks in processing the loans also adversely affect the growth in the sector, it added.
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Posted on 12th September 2007 at 07:37:00 [Message #681
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Mr. Sandeep Saxena
Manager
CAPITAL ENTERPRISE
Allahabad, India
Free Member
Joined :10/02/2003
No of Topics Posted : 0
Reply/Comments : 1
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Re: Red-tapism, high capital cost affecting SMEs
Yes, Agreed!
The last paragraph is also quite relevant and important.
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Re: Re: Red-tapism, high capital cost affecting SMEs
This is very unfortunate.SME's are strugling to keep the selling price at this competitive environment in the Local market.SME'S can only make up their profit and survive by tapping export market,Which is not easily available,considering quality requirements.
Unless authorities concerned are looking into this,local manufacturers imports from China and other countries will continue and increase.
Government should also find the ways of easy finance and friendly attitude with SME's.If not,over a period advantageous of Globalisation will vanish.
L.N.Raghavan
Consultant
Chennai.
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