Industrial Vi e w First and only platform forMSMEs VOLUME 01 ISSUE 09 HYDERABAD FEBRUARY 2014 PAGES 60 Rs. 100 Technology in Banking The Next Frontier AP lacks good SSI policy UTURE FUEL Banking sector to succour wilting SMEs UPA AP transforming into a mecca of business (L to R) Shankarachary, Cherlapally, ILA executive member and FSME-AP advisor, G Prasad Kumar, minis - ter for HTLTSSI, APK Reddy, President,FSME-AP and editor, Industrial View, N Kiran Kumar Reddy, CM, AP, Sudheer Reddy, Secretary, ILA, Cherlapally and M V Rajeshwar Rao, CEO, CREDAI at the launch of the magazine at CM’s chamber Launch of Industrial View APK Reddy, President, Federation of hief Minister N Kiran Kumar Reddy launched Small and Medium Entrepreneurs Industrial View on 22 June, 2013. The CM (FSME- AP), submitting a Chanded over the first copy of the inaugural memorandum to BJP national issue to MSME minister G Prasad Kumar. Speaking on the occasion, the chief minister general secretar, M Muralidhara said, “A magazine for the MSME sector is a wel - Rao on the occasion of latter’s come development and the need of the hour.” interactive session with the members M V Rajeshwara Rao, Former Secretary General FAPCCI and advisor to FSME-AP, Sudeer Reddy, Sec - of FSME- AP in Hyderabad. retary, Cherlapally Industrial Local Authority, Sankarachary, Cherlapally, ILA executive member and FSME-AP advisor were also present on the oc - casion. rajamyndar reddy Contents SMEs in the Globalisation Era 6 Panjab Simplifies SME Functioning 30 THOUGHT PROVOKING 34 The jurisdiction of court cases pertaining to the items published in Industrial View will only be Hyderabad (the place of its publication). Cases of other jurisdictions will not be entertained. RAGHURAMA RAJU KALIDINDI - Editor MEDIA CONSULTANT 9849350555 PRINTED & PUBLISHED BY ARANI PRASANTH KUMAR REDDY ON BEHALF OF FEDERATION OF SMALL AND MEDIUM ENTERPRISES OF ANDHRAPRADESH, PRINTED AT HARSHITHA PRINTERS, 6-2-985, YOUSUF BUILDING, KHAIRATABAD, HYDERABAD - 04. PUBLISHED AT FEDERATION OF SMALL AND MEDIUM ENTERPRISES OF ANDHRA PRADESH, FLOT.No. G1, DWARAKAMAI APART, HINDI NAGAR, DWARAKAPURI COLONY, PANJAGUTTA, HYDERABAD, A.P. EDITOR : ARANI PRASANTH KUMAR REDDY FEBRUARY 2014 I Industrial View I 3 Industrial Vi e w First and only platform forMSMEs APK Reddy UPA he original Gujarati edition 2 are also worrying on growing porate players, but absolutely neg - of ‘Hind Swaraj’ of Ma - popularity of BJP, particularly of lected small to medium enter - Thatma Gandhi was banned Narendra Modi, who is advocating prises. in India by the ruling British in and implementing Gandhiji’s It is not at all repetition, but an 1910; but the English translation of Swadeshi model. emphasis to say that SMEs have the same was not banned. The BJP, as a policy, is strongly been the backbone of the Indian logic was simple: the rulers knew backing the revival of regional economy. Being the dominant na - well that the English ‘Hind Swaraj’ banking and the reinvigoration of tional business employer, SMEs might have little impact on the SME lending and Gandhiji Hind engage close to 40 per cent of English-speaking Indians' servi - Swaraj model is often quoted by India's workforce and contribute tude to the British ideas. In Hind the party to help SMEs. In contrast 45 per cent to India's manufactur - Swaraj, Mahatma advocated for to this broad-based organic ing output. They play a critical role Swadeshi (self- reliance); accord - process, UPA encouraging corpo - in generating millions of jobs, es - ingly Indians should refuse all rates. pecially at the low-skill level. The trade and dealings with the British. In his tête-à-tête with this cur - country's 1.3 million SMEs ac - Thus the British, who were wor - rent edition Industrial View, BJP count for 40 per cent of India's ried of the radical thoughts of National General Secretary, M total exports. But, UPA, which has Gandhiji, banned the Gujarati edi - Muralidhar Rao also shared our been rolling red carpet to the Cor - tion to prevent the ideas from view on UPA’s criminal negligence porates and MNCs with provision spreading among the majority pub - on indigenous industry of modest of number of industrial parks, lic. investments. UPA, in its nine and showed no interest to create busi - Sharing the same logic with the a half- year rule, has been focus - ness parks, common technology British, the rulers of present UPA ing too much on big business, cor - platforms or pooled energy sources FEBRUARY 2014 I Industrial View I 4 for SMEs. Even it is not keeping ment. Most state-awarded con - any separate State. its promise of allocating 20 per tracts required that SMEs be given Even the banks are not acting cent of space of Industrial parks to a significant percentage of the according to the rule books; actu - SMEs. As a matter of fact, SMEs value of the work. The states also ally, there should be no need for a could employ 24 persons for an invested directly into SMEs, and collateral security for loans upto annual budget of Rs. One crore, provided debt guarantees on their Rs one crore, but banks are insist - with which not more than 4 per - behalf. ing upon collateral security even to sons are engaged in corporate set But, here in India, the situation meagre amounts. Interest rates of up. is chaotically different, as SMEs banks have been high, which is de - According to economists, na - are always at the receiving end, as moralising the entrepreneurs. tional financial integration can best share of the SMEs in total bank Rubbing salt to the wounds, AP be assessed through the share of credit is gradually declining. Transco is penalizing them with its the SME sector in national credit. Kick-starting our faltering engine unilateral decisions on power con - But, it has never been robust in will require various forms of gov - sumption. AP Transco is restricting India under UPA rule, as SME ernment interventions. Credit is the SMEs to use only 60 per cent credit is consistently in downfall. only one part: equally, what is of the power sanctioned. If the Sharply increasing inequality in fi - needed is building SME capacity power usage goes over the slab, it nancial access, between the big through provision of common is lashing heavy penalties, over and the small business sectors, and overheads. five times of the standard charges, in between national regions, closes on the entrepreneurs. So, many the prospect of upward income Now, owing to the SMEs are falling prey to financial mobility for large sections of the problems arising merely out of population - presaging social po - deteriorated situation power cuts. Now, owing to the de - larisation and its political conse - and other nagging teriorated situation and other nag - quences. In Andhra Pradesh, ging problems, the SMEs are on particularly owing to the political problems, the SMEs the brink of collapse and it will hit uncertainty amid the divisional are on the brink of 40 lakh more families in Andhra politics, the situation is further de - Pradesh severely. teriorating. collapse and it will hit Thanks to the vote-bank policies When the banking is concerned, 40 lakh more families of the rulers, we are in the situation it is highly concentrated in India. where a particular part of the econ - Over 70% of banking assets are in Andhra Pradesh omy is being attacked because of held in a few banks in the top severely. the financial indiscipline, which is notch. This concentration does lit - created in a community by waiving tle for deepening the national eco - The present Chief Minister, N off loans of gigantic proportions. nomic base. For more than a Kiran Kumar Reddy wrote to RBI Here I would like to quote from the century, the progressing countries asking the banks to take up reha - famous speech of Fransisco d'An - across the globe passed through bilitation of sick or potentially conia in Ayn Rand’s ‘Atlas their developmental phase with a sick units. He assured that the Shrugged’- Money is made--before strong inclusion of SMEs and it is State government provide reliefs it can be looted or mooched--made inherent in the distribution of fi - relating to power, sales tax dues, by the effort of every honest man, nance. interest subsidy and others to the each to the extent of his ability. An The fundamental objective was sick units, if banks come forward honest man is one who knows that to ensure that local savings served in the rescue of sick units. How - he can't consume more than he has community interests by support - ever, RBI did not oblige, stating produced. SMEs in Andhra ing local enterprise. In addition, that the policy matters have na - Pradesh are superior to the honest the states themselves took initia - tional perpective and they could men, as they produce more than tives to reinforce SME develop - not be altered for the interests of they consume. FEBRUARY 2014 I Industrial View I 5 Small and Medium Scale Entrepreneurs in Modern India are going through a toughest ever phase in the history of recent times. All this is attributed to lopsided policies of the State and Central govern - ments, bankers, power generation and distribution companies. The industrial development during the last nine years in India and in Andhra Pradesh in particular has not been up to the mark with a good number of industries getting converted into NPAs, adversely affecting the lives of lakhs of entrepreneurs/employees. State lacks good SSI policy: Muralidhar Rao BJP leader sees a ray of hope for SMSEs BJP National General Secretary, M Muralidhar Rao sharing his views with Editor, Industrial View, APK Reddy FEBRUARY 2014 I Industrial View I 6 owever with the politi - neglected for the last nine and half India is always the country of en - cal scenario set to un - years under the Congress rule.