India seeks change in SME definition by European Union.

NEW DELHI: India has asked EU to amend its definition of small and medium enterprises to accommodate the country's labour intensive small units, so that they qualify for fee concessions under the region's environment legislation, popularly known as REACH.

It has also asked the EU to allow Indian exporters of chemicals and other products, who have to comply with REACH regulations, to go in for direct registration of their products with the authorities instead of appointing EU-based 'only representative' to save on costs.

"Our industry has been struggling to keep pace with the fast-changing regulations under EU's REACH initiative, and are also taking a financial blow due to the heavy fees that have to be paid for getting chemicals registered under the programme," a government official told ET. "The least that the EU can do is to recognise our genuine SMEs and give them the due concessions."

Delhi raised the issue at a recent meeting of the World Trade Organisation's Committee on Technical Barriers to Trade. REACH, which stands for registration, evaluation, authorisation and restriction of chemicals, was implemented in 2007 to restrict the levels of specific chemical substances in all imported goods into the EU.

Under the programme, items that contain chemicals identified by REACH have to be registered in EU giving details of the levels of various substances in the product.

Indian exporters of chemicals, textiles, leather and toys are required to identify an OR to carry out the registration. Exporters not only have to pay registration fees but also the OR, which pushes up their costs. According to industry estimates, the cost of registering a chemical varies from Rs 350,000 to Rs 90 lakh, depending upon the hazardous nature of the chemical.

The cost of conducting toxicology tests to generate safety data is also prohibitive.

Although the EU offers steep fee concession to SMEs depending on their size as a medium, small or micro enterprise, most Indian small companies do not fall under these categories as they are labour intensive and employ more than the prescribed workers.

"The use of staff head count in addition to annual turnover and balance sheet ceiling would classify many of India's micro enterprises as large under REACH, despite meeting the annual turnover or balance sheet ceiling," the Indian representative said at the WTO meeting. "This goes against the spirit of the Technical Barriers to Trade Agreement as it creates unnecessary obstacles to a developing country."

Source : economictimes.indiatimes.com