Loan structure to SSI units to the Ministry of Finance, Government of India should consider the following points.
Small Scale Industries (SSI) are one of the pillars which drive the Indian economy. But there are lot of things that needs to be done to help them grow.
Small Scale Industries take lot of courage to start their business due to very little support and face lot of problems. One of the biggest problems is securing investments and even if they do get investments the higher interest rates and high EMI due to very short span of repayment almost break their back and many of them turn NPA and eventually closed down.
Government of India should consider 25 year repayment schedule on term loan for loan of land and building. This will ease off the burden of very high EMI’s and every SSI will come out doing a tremendous business with good financial results. (1:25)
Lot of SSI have to shift their unit from place like Delhi/ NCR due to pollution problem are unviability of the current location. But then they either close down or wither out due to uncertainty on further investments. If bank starts financing on land and building on 25 year loan tenure they will build up courage to go forward with such investments.
All medium and large corporates at one stage has faced this problem. Many withered few went on to become such big companies.
With this scheme we can create more medium and large corporates. This will further generate revenue for government, bring more investments and reduce the number of NPA accounts in the banking system.
Government of India should consider that the machinery loan can remain the current tenure of 7 to 10 years but a tenure of term loan on land and building of 7 years will never be viable and very few lucky ones can draw the courage of such heavy investments and come out profitable.
Hope this suggestion will help the government in creating positive environment for SSI companies.
