The MSME sector in Tamil Nadu has a diversified presence catering to a wide range of industrial sectors such as textile, electronics, engineering, auto components, leather, chemicals and plastics.

While the well established manufacturing base is a natural strength for drawing further investments, the State cannot afford to be complacent. Competition for investments is growing among various State governments and policies and systems have to be strengthened.

According to official statistics, the total number of micro, small and medium enterprises is about 1.43 lakh units accounting for a total investment of ₹24,349 crore and provide 6.51 lakh jobs.

To encourage investments in the sector, the State provides a range of incentives, including capital subsidy of up to 25 per cent on plant and machinery, up to a maximum of ₹30 lakh and additional subsidy for promoting clean technology and employment subsidy. It has also identified 13 thrust areas: electrical and electronic goods, leather and leather goods, auto parts, drugs and pharmaceuticals, solar energy equipment, gold and diamond jewellery for exports, pollution control, sports goods and accessories, cost effective building material, readymade garments, food processing, plastics and rubber products. While Tamil Nadu’s industrial base can help it sustain momentum of investments, there are challenges. Increasing competition from other States is a concern. Tamil Nadu has to gear up to face the challenge, say industry representatives.

KP Gopal, Director, Stuser Tools and Convenor, MSME Panel, Confederation of Indian Industry – Tamil Nadu, says after the opening up of the economy in 1990s large investments came in. Investments in the MSME sector then were a follow up to the entry of large players such as automobile OEMs. But now the MSME sector is seeing a wave of investments directly and as part of supply chain strengthening by large players in the backdrop of a slowing economy elsewhere globally.

This presents opportunities and also poses challenge for domestic players. They can gear up to face the competition and grow or if they do not scale up in capacity and technology, they could lose out.

Tamil Nadu has a natural advantage in drawing investments in the MSME sector because of its well established industrial base. But the State government must gear up in terms of speedy clearances, ease of doing business, addressing constraint in land supply for industries, particularly close to existing industrial clusters, and land cost, he said.

P Ganapathi, Joint Secretary, Ambattur Industrial Estate Manufacturers Association, the MSME sector is waiting for a hand up in the form of major investments that will contribute to order flow. The Centre has come out with a range of initiatives, , the ground work is in place and the sector is waiting for the positive impact.

Measures are needed to kick-start large investments which will give a fillip to the sector, Ganapathi said.

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