UP firms don't heed call of the hills

Despite reports of mass migration of small, medium and large enterprises from Uttar Pradesh to the hill states in the north, many have stayed on. Not long ago, there was a buzz in industry circles and the media that small and medium enterprises, as also big units, were migrating to the hill states of Uttarakhand and Himachal Pradesh to avail of the several fiscal sops and incentives there. Besides, these states were also power-abundant and followed a simpler tax structure.

Contrasting this to UP, which continued to grapple with power outrages, bad infrastructure, red-tapism, complicated tax formulae and political instability, one was made to believe the industries were doomed in the state.

However, a survey by the Directorate of Industries, UP negated that perception. The study found that practically none had completely migrated to the hill states, nonetheless some had indeed established their second or ancillary units there to avail of the benefits and to expand their businesses. The same report was also submitted to the Centre.

The MSME sector in Uttar Pradesh has learnt to survive. However, the fight continues for better power, infrastructure, marketing and financing facilities. From a little under 100,000 such units five years back, there are an estimated 3,50,000 MSME units at present in the state, providing employment to millions of people in rural, semi urban and urban areas.

There are certain pockets, which have a high concentration of these units, such as Kanpur, Moradabad, Lucknow, Agra, Ferozabad, Bhadohi, Meerut, Aligarh and Ghaziabad.

However, equally true is the degradation of the industrial town of Kanpur from the epithet of the 'Manchester of the East' to being synonymous with industrial pollution and sick units, both small and large, due to lack of power and government apathy.

MSMEs mainly span leather, paper, chikan, handicraft, machinery, auto ancillary units, plastic, brassware, textile, glassware, food processing, carpet, medicine and chemical industries in the state. They have defined traditional pockets of operation "" such as Varanasi is famous for Banarasi sari and Lucknow for chikan.

To ameliorate the state of the MSMEs in Uttar Pradesh, the state government has decided to follow the cluster approach and has already proposed 145 clusters all over the state, including ones at Lucknow, Kanpur, Aligarh Moradabad, Agra, Bhadohi and Bareilly.

Official sources said that the proposals had been sent to the Centre for clearance and Detailed Project Report (DPR) already filed for 80 such groups.

Under the cluster programme, the government gives a grant of Rs 10 crore, besides other facilities and sops, such as training, marketing and credit. The cluster development programme is a project of the central MSME ministry, under which a group of homogeneous industries form a cluster to enjoy a host of benefits, which the industries, as individual units, may not avail.

It is aimed at improving the competitiveness of the cluster through technology upgrade, facilitate development of new products, improve production process, improve quality of products and establish marketing linkages in domestic as well as international markets.

The government supports the cluster by conducting 'diagnostic study tour' of the cluster, carrying out industry-related research/development, conducting seminars, workshops and study tours. Under the scheme, the units form a society or a Special Purpose Vehicle (SPV), which is extended the incentive to be shared by all the members. Such clusters set up a common facility centre.

"So far 25 organisations have expressed their desire to form such clusters in Moradabad, Agra, Kanpur, Varanasi, Bareilly, Lucknow, Meerut and Aligarh," sources informed. Besides, under the Technical Up-gradation Scheme, the government provides Rs 2 lakh grant for plant/machinery and Rs 2.5 lakh for import of technology.

"Till date, almost one crore such cases have come before the Directorate of Industries, UP," the source informed, adding more such beneficiaries are likely to come under the scheme next fiscal.

Besides, UP Small Industries Corporation, Kanpur is engaged in supplying raw materials to Small Scale Industries (SSIs), such as iron and steel, coal and non-ferrous metals. They also provide marketing facilities.

Last fiscal, the Corporation provided almost 40,000 metric tonnes of iron and steel to 188 SSIs Uttar Pradesh. Meanwhile, the industry chambers have been demanding cheaper and regular supply of power to the MSMEs in UP, which from the backbone of the industrialisation firmament in the state.