Orissa plans special body for small firms

With a view to identify the sick micro, small and medium enterprises (MSMEs) for revival and pick up viable projects for setting up of new units, the Orissa government plans to constitute a "MSME Development Consortium" soon.

The proposed consortium will have the director, Industries, director, Institutional Finance, State Bank of India, UCO Bank (convener of SLBC) and the director, Micro, Small and Medium Enterprises Development Institute (MSMEDI), Cuttack as members.

The consortium is proposed to be in the form of a society with appropriate and agreed upon share holding by each stake holder. However, the detailed modalities of the organisation and its structure and functions will be laid down by the director, Industries, Orissa, in consultation with other consortium members.

The decision to form the consortium was taken in a meeting on the credit flow to the MSME sector under the chairmanship of the commissioner-secretary, industries department, Ashok Dalwai, recently.

It was decided that the banks operating in the state will formulate liberal credit policies for encouraging the MSMEs to come up in and around the major industrial hubs, industrial clusters, industrial parks, special economic zones (SEZs) and the large and the mega industries.

But to ensure that the sector is not deprived of getting the required credit, the credit flow will be monitored by the director, Industries and director, Institutional Finance.

Besides, to give a further push to the development of this sector, the State Bank of India (SBI), having more than 500 branches in the state, has agreed to engage a reputed consultancy firm to make an in-depth and comprehensive survey of MSMEs in the state. It will also prepare a detailed project report (DPR) for the revival and development of this sector.

It will finalise the name of the consultancy firm and the terms of reference (ToR) in consultation with the state industry department. The latest government initiative assumes importance in view of the precarious condition of the small scale industries in the state.

"Only 15 percent of the SSI units in the state are financed by the banks while 85 percent of the units are self financed. This acts as a major stumbling block on the way of development of this sector," a senior official of the state industry department said.

He said, though the share of the SSI sector in the total industrial employment of the country is about 92 percent, the average size of investment in these unit is Rs.3.5 lakh as against the present eligibility for investment of Rs 5 crore.

The average size of investment of about 70 per cent of the units is within Rs 1 lakh. Besides, about 56 per cent of the total registered units are either sick or closed.

MSMEs mainly operate as ancillary of large units or add value to the products of the large units. However, most of the large industries in Orissa have remained as stand-alone industries.

So, ancillary and downstream industries have not flourished around these large and mega units. Similarly, the entrepreneur class have not been able to come up as they did not have the required capital base, the official pointed out.

Development of the small scale sector, to a large extent, depended on the lending of the state-owned Orissa State Finance Corporation (OSFC). As it became sick, the small scale sector units could not get the required finance.

So far, the Orissa government has received investment intents of more than Rs 4 lakh crore. It perceives that this is the opportune time for the growth of the MSME sector for generation of employment and augmenting revenue.

Accordingly, the state industry department is preparing a blueprint for providing policy incentives, infrastructural and marketing support and financial linkage for revival of this sector.

In this backdrop, the state government needs to focus on the development of the sectors like agriculture, textile, handlooms and handicrafts where the state has core strength. It is emphasising on the cluster approach for the development of MSME units as that would put them on a strong footing.