According to a report released by the Associated Chambers of Commerce and Industry of India (Assocham), in its first quarter the contribution of small scale industries (SSI) to manufacturing and employment generation has slipped by 10 and 7 percent respectively due to which both the large and medium industries have started sourcing their inputs through cheaper imports.

While presenting the report Assocham President Sajjan Jindal said, “The SSI's contribution to manufacturing in the first quarter of current fiscal has come down to 35 percent as compared to around 45 percent a few months ago.”

“The number of SSI units in 2007-08 were estimated at 4.4 million with employment capacities for nearly 23.8 million workers with their output to manufacturing measured at Rs.14 trillion ($333 billion)," he said.

He further added that due to the high cost of borrowings most of the SSI units could not upgrade their machinery and equipment. As a result their competitiveness has wrinkled to a great extent.

In order to combat this problem Jain asked the government to reduce the number of inspectors to less than 15 and concessional credit be extended at not more than six to seven percent. He also demanded that the availability of equipment and machinery be made to this sector at much reduced customs tariff with facilities for technology adoption to the entire SSI sector.