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.
types of items i.e corrugated
concessional

rate

of duty

of

The industry is manufacturing two

cartoons/boxes/cases

attracting

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%
0

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

15%

16%

13%
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):

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 @1/3 rd 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 SubRegistrar, 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.
investors hav eto suffer and put to loss.

As a result of which the small

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 31 st
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

correctly

shown,

thereby

transferring

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 ne ve r ta ke n pla c e .
Th is is no doubt a satisfactory position but the fact that
a British fi rm of such a long standing and reputation as
that of McLeod & Co.. should also have stooped to practices
which have been associated generally with fi nanciers 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

HE

Bicycle Factory to go into Production

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.

In the fi rst stage the output target is fi xed at 100,000 units and,
with the installation of machinery in the diff erent " 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 fi rm 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
of Asansol.

the new township of Kanyapur

site

few

miles

out

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
offi ces of the concern 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

five-year

agreement had been signed by Iran with an American

fi rm 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.
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 s till 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 t i 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
diffi cult 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 dismantling and distribution as reparations

would be released simultaneously w i t h the coming in t o
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 con trol 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 facilities 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

agreements

as

the

concluded

global
and

sum

of

all

immediately

the
after

British
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 coexist 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

Consumption

has

again

charging ACD

(Advance

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.
MSME sector only.

The Census was conducted of the registered

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.

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 t i 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 2 nd

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).
Finance

Minister

But

unfortunately,

during

UPA-1

had

Shn

P.Chidambran,

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.