New Delhi, April 1: India Inc has sought simplification of labour laws, change in foreign direct investment norms and regulation of high interest rates to reposition the country’s small-scale industry.

In a business confidence survey conducted by the Confederation of Indian Industry (CII), companies said “high interest, collateral requirements of banks and financial institutions and bureaucracy” are the financial obstacles to the growth and operations of small industry. The survey was conducted between December 2006 and March this year.

The findings revealed that nearly 50 per cent of the respondents are optimistic about simplification of labour laws — the key to repositioning the small industry in the changing global scenario.

Thirty-three per cent of the respondents expect regulatory changes, including FDI norms and implementation of VAT and indirect tax structure.

According to the poll findings of the survey, about 35 per cent of the respondents felt the small and medium industry is still struggling to find its feet and it will take them at least a year to do so.

While 39 per cent of the respondents expect to graduate from small to medium industry by 2010, another 38 per cent foresee a positive shift in the business situation in the country over the next five to 10 years.

The survey also said 83 per cent respondents of small and medium industry foresee the dominant role of non-traditional source of finance substituting the traditional banking sources.

About 50 per cent respondents see the credit guarantee fund, launched by Small Industries Development Bank of India (Sidbi) with an initial corpus of Rs 125 crore guaranteeing loans of up to Rs 25 lakh, as a substitute for collateral security. On the other hand, 80 per cent respondents expect the limit of Rs 25 lakh is insufficient.

As for the innovation, 37 per cent of the respondents surveyed feel that transformative change and quantum improvement in the organisational skills and capabilities of medium and small and medium enterprises (MSME) will impact innovation strategy across the country.