MSME

Expert committee submits recommendations to revive MSMEs in Tamil Nadu

TE Raja Simhan | | Updated on: May 23, 2022
Tamil Nadu has an 11.13 per cent share of all MSME units in India, which is the highest among the States

Tamil Nadu has an 11.13 per cent share of all MSME units in India, which is the highest among the States | Photo Credit: PERIASAMY M

The committee recommends using Single Window Clearance to create a simplified application form for MSMEs

The expert committee set up to revive the MSMEs in Tamil Nadu has submitted over 100 recommendations, including the adoption of ‘corridor and cluster’ approach in the long run and single window clearance in the short term. The report is presently under the consideration of the State government, said officials.

The committee was chaired by former Industries Secretary N Sundaradevan with 12 members from business, the financial sector, academicians, consultants and venture capitalists.

Tamil Nadu has an 11.13 per cent share of all MSME units in India, which is the highest among the States. Other States, including Maharashtra (10.43 per cent), Uttar Pradesh (9.89 per cent), West Bengal (7.21 per cent) and Gujarat (7.14 per cent) have a smaller share..

According to the Sixth Economic Census, there are 50.29 lakh MSMEs in Tamil Nadu. However, the number of businesses in Tamil Nadu with GST registration is only around 10 lakh. This points to the informal nature of almost 80 per cent of the enterprises.

While the relatively smaller scale of these enterprises provides them with some operational flexibility, they are also affected by a number of structural issues posed by their size, and they have to surmount these structural constraints to survive. Furthermore, the Covid-19 pandemic has dealt a debilitating blow to many of them.

The MSMEs in Tamil Nadu manufacture a wide range of products across 22 sectors, accounting for more than 90 per cent of manufacturing enterprises in the State, with textiles topping the list.

The Committee was mandated to provide tangible inputs to the State Government for the revival of MSMEs, bearing in mind socio-economic indicators such as combating unemployment, social support, structural, institutional, financial, technological and other infrastructural changes.

Officials said that the committee’s recommendations were categorised into short (less than 3 years); medium (3-5 years) and long terms (over five years).

In the long term, there should be a “Corridors and Clusters” approach wherein the State government should endeavour to bring as many enterprises as possible under the umbrella of one cluster or other, identify gaps in the value chain of those clusters and concentrate on plugging the gaps.

Committee’s proposal

In making Tamil Nadu business friendly, the committee recommended Single Window Clearance to create a simplified application form for MSMEs. All clearances for MSMEs must be brought onto the single window portal.

In the medium term, there should be an initial approval free period . States like Kerala and Haryana allow MSMEs to setup and commence business operations and apply for approvals and clearances within the first three years of their operations—subject to certain conditions. The committee recommends that similar legislation is issued in Tamil Nadu also, they said.

The Committee has also suggested strengthening the existing SIDBI’s Credit Guarantee Fund Trust for Micro and Small Enterprises’ programme: Only 201 units in Tamil Nadu have availed of this scheme, amounting to approximately ₹50 crore of guarantees. It recommended that there is a need to accelerate adoption of this scheme by lenders in the state.

Published on May 23, 2022
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