The Union finance ministry has earmarked Rs 500 crore for the technology upgradation of pharmaceutical units under the Pharmaceutical Technology Upgradation Fund Scheme (PTUFS) to assist the small-scale pharmaceutical units in the country to upgrade their units to meet Schedule M standards.

The finance ministry has asked the chemicals ministry to find some new modalities to disburse the amount to the needy units who desire to upgrade their units as per Schedule M specifications. Though the finance ministry had earmarked some amount last year too for the purpose, there were few takers for the fund last year because of several cumbersome procedures, which the small units found it difficult to comply.

Thought there were several attractive features in the scheme, the rider of providing a collateral matching to that of the loan amount proved to be a major handicap for the small industries. Small Industries Development Bank of India (SIDBI) was the nodal agency appointed by the finance ministry last year to disburse the fund.

Due to the poor response to the fund disbursed through SIDBI, the chemicals ministry is now finding some new method to disburse the fund to the small units.

Under the scheme, the government proposes to reimburse 5% point interest on the loans taken from the banks or financial institutions. The scheme is proposed to give 5% interest subsidy to a maximum limit of Rs one crore on a single application. Supposing the banks are offering technology up gradation loans at seven per cent to the units, the interest burden on the industry would be just 2%. The loan would be for a period of five years.