A loan of Rs 738 crore had been released to the All India Khadi and Village Industries Board in 1955, before it was taken over by the Khadi & Village Industries Commission, which is under the MSME Ministry.
According to K H Muniappa, the minister of state for micro, small and medium enterprises (MSME), KVIC has already paid about Rs 1,170 crore -- Rs 441 crore from the principal amount and Rs 728 crore as interest on the loan.
Muniappa, speaking on the sidelines of an awards function here, urged the government to waive the remaining outstanding principal amount of about Rs 296 crore.
"In view of the repeated demand from various quarters including KVIC for waiver of the loan, there being no cash outgo from the government and cleaning up of the books of accounts of KVIC institutions, their request may be considered," Muniappa said while addressing the function presided over by Prime Minister Manmohan Singh.
On financial assistance from state-run banks for the smooth rollout of government schemes, Muniappa said the lenders had assured the ministry that all pending loan applications in this regard would be cleared by March 31.
The ministry has proposed tax relief measures to be incorporated in the Foreign Trade Policy for 2014-19 to help boost exports.
"What we are looking at is if there is anything in the duty structure which can come in the way or due to which the small enterprises are getting unfairly treated or not getting a level-playing field, those things need to be corrected," said MSME Secretary Madhav Lal.
The Commerce Ministry has initiated the process for formulating the Foreign Trade Policy for 2014-19, which will be unveiled by the new government.