Working Group on MSMEs Growth for the 12th Five Year Plan Period (2012-17)

Submission to the Sub-Group V on Infrastructure

6th June, 2011, New Delhi

By KR . Gnanasmbandan Vice-President, TANSTIA

Infrastructure
n

According to the Online Etymology Dictionary the word infrastructure has been used in English since at least 1927, originally meaning "The installations that form the basis for any operation or system" Infrastructure is the basic physical and organisational structures needed for the operation of a society or enterprise, or the services and facilities necessary for an economy to function.

Infrastructure
n

The term typically refers to the technical structures that support a society, such as Roads, Water Supply, Sewers, Electrical Grids, telecommunications, and so forth. Viewed functionally, infrastructure facilitates the production of goods and services, and also for the distribution of Finished Products to Markets, as well as basic social services such as Schools and Hospitals.

PMs Task Force Committees Recommendations

n

8.10 A national programme for renewal of Industrial infrastructure may be undertaken on the lines of JNNURM. The IIUS/IID two programmes would require additional funding support to assume the character of a National Mission What is the status to-day

n n

Land
n n

Availability of Land for MSEs has to be ensured Land Bank has to be created in each District Government should identify Puramboke lands (Barren Lands) and allot it to MSEs at affordable price. Land use classification has to be updated based on the demand Clear Policy should be evolved on Change of Classification for Industrial purpose.

PMs Task Force on MSME 8.10. (v)

n

Need to encourage setting up/earmarking of at least one industrial estate in each block for micro and small enterprises What is the status to-day

Creation of New Industrial Estates

n

Out of 26.1 million SMEs in this country not even 10% of the units situated in formal Industrial Estates Majority of them are only in Mixed Residential/Residential areas. Creation of Small Estates exclusively for Micro Units, Service Industries, specific products should be given preference

Creation of More Industrial Estates

n

Minimum 3 Industrial estates has to be formed in each district. Establishing the second estate should be allowed based on the potential of the area Approval for the subsequent estate need not be delayed till the allotment of plots in the previous one

PMs Task Force on MSME 8.10. (iii)

n

Flattened Factory Complexes may be set up, particularly in and around large cities for MSEs. What is the status to-day

n n

Flatted Constructions
n

India is one of the thickly populated country and availability of Land is scarce The need to go in for Vertical construction is inevitable A scheme has to be evolved for including flatted constructions under IID scheme and concepts have to be evolved to identify the Common Usage such as Pathways, Staircases, Varandhas and Common Lighting.

Creation of New Industrial Estates Fund Flow

n

Disbursement of funds has to be done on completion of appraisal by SIDBI. No need to wait for further inspection by other Central Agencies Grant under SME CDP has to be enhanced, proportionately to the size of the Estate or on special cases. Flexibility in use of funds under various sub-heads such as Road, Drainage, Water Supply etc.

Re-approval
n

The present scheme insist for a reapproval even for minor changes in the project. This has to be insisted only on major changes Minor alterations need not necessitate re-

Up gradation of the Existing Industrial Estates

n

Even the Fourth census did not reveal how many industrial estates are in this country and how many units are situated in Own/Rental Buildings It has also not revealed the state of the facilities available in the Industrial Estates There is no facility like ETP, Captive Power Generation and Marketing/Display centers in the old Estates

Up gradation of the Existing Industrial Estates

n n

There is an Urgent need to upgrade the existing estates. State Government Agencies are not interested in utilizing the MSE-CDP for up-gradation and they are concerned only with the establishment of new one. A special scheme has to be formulated for up-gradation of existing estates taking into account of the special requirements of each estate.

Maintenance of the Estates

n n

Estate Maintenance has become a ticklish issue Local Bodies are keen in collecting property tax and other levies but not in maintenance Small Industry Development corporations charge separate levy for maintenance but not discharging the duty resulting deterioration of the estate.

PMs Task Force on MSME 8.10. (i)

n

As a long term measure, the Industrial Estates should be entrusted with the municipal functions including levy of taxes, responsibility to maintain the infrastructure within the Industrial Estates Local Bodies will earmark funds for Industrial Estates within their budgets What is the status to-day

Maintenance of the Estates

n

Deemed Local Body Status should be given to the Industrial estates Industrial Township Act has to be invoked for estates having more than 50 Acres of Land. This should be made mandatory under the Panchayat Raj Act.

Maintenance of the EstatesPPP model

n

SPVs should be formed in each estate with representation from the Government and the Developing agency It should be empowered to collect charges and maintain the estate Smaller estates, where the Deemed Local Body Status/Industrial Township act could not be invoked, local body can share the revenue with the SPV.

Marketing/Display Centre
n n

Each estate should have a marketing center/Display centre. New estates should include this component while the existing estate should be encouraged to establish one Countries like Thailand, China and Siingapore has got exclusive productwise display centers

PMs Task Force on MSME 8.10. (i)

n

The State Governments would undertake to provide dedicated power supply to the Industrial Estates. Alternatively, funding for common captive power generation in Industrial Estates would be encouraged through subsidies given to the SPV managing such facility. What is the status to-day

Power Availability and Electricity Act

n n

Availability of Power is one of the major criteria of an Industrial estate Many states, particularly Tamilnadu is facing acute power shortage Captive power generation has to be encouraged Electricity Act has to be amended to wheel power by Estates/Clusters and distribute among themselves. (At present the Act permits only an individual captive power user to transport power)

Power Generation & Distribution

n

The present grant of Rs. 2.5 crores is very much insufficient for any form of power generation Cost range from Rs. 5 Crores to Rs. 20 Crores depending on the type of project such as Gas/Coal/Wind/Solar etc. It has to be increased to Rs. 15 crores or 75% of the total cost whichever is lower at least to establish 4 MW. ONGC has to be instructed to give Gas wherever available to SME clusters on priority basis for establishing Gas Turbines SPVs should be authorised to buy power from any where and distribute it to its member units.

Priority to MSEs in Power Supply

n

Many states are providing uninterrupted powers to MNCs and depriving even the normal power to SMEs. Electricity Act, 2003 has to be amended to stop this unfavourable practice. Priority in providing Power connection and as well as uninterrupted power should be ensured for MSEs. 50% Subsidy should be given to Micro Units for buying Gensets.

Roads
n

Providing Good, Motorable Roads is one of the foremost duty of a Government Roads are very essential for an Estate. Unfortunately, many of our estates lack in this. The subsidy component for Roads under the IID scheme has to be increased Existing estates should be given special grant to re-lay the roads. Special funds has to be allotted every three yearsto maintain the Roads.

Sewage, Effluent Collection, Treatment and Disposal

n n

Greener Production is the order of the Day. Protecting Environment is every bodys business. Industries should be helped and facilitated by PCBs rather than being an inspection agency Technology support should be given by PCBs. Consent fee should be charged only based on the Quantum of Effluent and not on the cost of PC Equipments

Common Effluent Treatment Plants (CETP)

n n

Effluent is unavoidable in Manufacturing Industry CETPs are essential for every estate Government/PCBs should have a proactive role rather than reactive Grant for CETPs should be sanctioned based on the nature of industries Estates for special products like Leather, Bleaching, Electroplating etc. should be given separate funds for

Support for establishing Integrated Modular Industrial Estates having

Tool Rooms & Testing Labs

n

Tool rooms/Testing Labs should be an integral part of an Industrial Estate. We have the scheme but not much of Sanctions Rules has to be simplified in order to establish more number of sector specific tool rooms/testing labs

Incubation Centers
n

Incubation centers are now sanctioned only for Educational Institutions Industrial Associations and Estates should be encouraged to set up Incubation centers

PMs Task Force on MSME 8.10. (iii)

n

Flattened Factory Complexes may be set up, particularly in and around large cities for MSEs On similar lines, dormitories for industrial workers in industrial estates may be set up on PPP mode. What is the status to-day

Workers Quarters/Hostels
n

Lack of Skilled/Semi skilled work force is a major hindrance for MSEs Retaining them and compensation package posing a big problem Compensation goes up because of abnormal rents prevailing No Proximity of the living area to the Estate is another factor Availability of Houses/ Accommodation at affordable Rent should be ensured

Workers Quarters/Hostels
n

As in China every Estate should have workers quarters/hostels which should be included as component under IID Every estate should have at least 5% of the land allocated for construction of Quarters At least TWO hostels (One for Men and one for Women) should be established Scheme should include this component also

Hospitals/First Aid Clinics

n

We have the ESI schemes for a long time The benefits have not reached the deserving section All small estates should have an ESI dispensary and every Large estate should have an Hospital Building a Dispensary/Hospital should be added as a component of the Scheme

Mile Stones to be achieved in the 12th Five Plan Period

Mile Stones to be achieved in the 12th Five Plan Period contd.

Conclusion
n

TANSTIA has done its best to bring various issues related to Infrastructure which are confronting the MSEs. Many committees, Groups and Task Forces have done this exercise many times. What is required is implementation of the recommendations It requires adequate funding and dedicated officers

Thanks!
n

TANSTIA thanks the Secretary, MSME and the DC-MSMEDI for giving this opportunity TANSTIA assures its unstinted support and cooperation in finding amicable solutions to the problems enumerated here.

 A Big Thank You for All