Uttar Pradesh government should provide a financial package for revival of sick MSME units in the state, industry body Assocham said today.
According to a study by Assocham and Thought Arbitrage Research Institute (TARI), the micro, small and medium enterprises (MSME) sector performed well during the 11th Five Year Plan (2007-2012).
"The Uttar Pradesh government's thrust on development of MSMEs across the state has resulted in establishing over 1.66 lakh MSMEs with an investment of over Rs 13,000 crore and generating over 8.5 lakh employment opportunities during the 11th Five-Year Plan (2007-2012)," Assocham Secretary General D S Rawat said while releasing the findings of the study along with TARI Director Kaushik Dutta.
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However, there has been a fall in investments in MSME sector since 2012-13, which may be attributed to macroeconomic slowdown and a shift in focus from manufacturing to services sector, which requires lower investment, the study said.
Assocham urged the state government to revive over 84,000 sick MSME units across UP as the sector forms the backbone of economic progress and development of the state, which has the highest number of MSME units at 44 lakh, of which over 42 lakh units remain unregistered.
Shortage of working capital, lack of technological support, internal structural issues, heavy interest burden, obsolete plant and machinery, resource crunch and dearth of manpower are some of the major issues facing MSMEs in UP.
The state government should involve industry players, academic institutes, field experts and others to assist sick MSMEs, the Assocham-TARI study said.
Repairing and servicing industries account for over one-fourth share in the MSME sector in UP, followed by miscellaneous manufacturing (15 per cent), food products (15 per cent), and hosiery and garments (11 per cent), the study said.
Western UP accounts for over 50 per cent share in terms of region-wise composition of MSME units, followed by Eastern UP (28 per cent) and central region (16 per cent).
MSME sector accounts for almost 60 per cent of UP's total industrial output.
It is the second largest employment generator (after agriculture), employing over 92 lakh people across the state.
However, 90 per cent of these people were employed in unregistered MSMEs, it said.
