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The micro, small and medium enterprise (MSME) sector is the second largest employer in Tamil Nadu. To give this sector a boost, the state government has launched initiatives that have helped it attract more entrepreneurs, even compared to Gujarat — held out as a model state in terms of industrial development.
According to state government data, there are around 36,996 industrial units in Tamil Nadu, compared to 22,220 in Gujarat. There are around 1.6 million industrial workers in Tamil Nadu, while Gujarat has only 1 million.
MSMEs are key to creating employment opportunities. During 2011-13 Tamil Nadu had 161,732 operational MSMEs, compared to 120,014 in Gujarat.
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To promote MSMEs further, the state government has created the Industrial Infrastructure Fund of Rs 100 crore for improving infrastructure facilities in SIPCOT (State Industries Promotion Corporation of Tamil Nadu Limited) industrial parks, and the creation by SIPCOT of 20 industrial parks in 12 districts.
Around 840 acres of land has been identified for creation of new industrial estates for encouraging micro, small and medium enterprises.
The state government’s capital subsidy on machinery for MSMEs has been increased to 25 per cent from 15 per cent, and Rs 160.66 crore has been disbursed through this programme. Besides, orders have been issued for the revamp of all the 32 District Industries Centres at a cost of Rs 50 crore. Work is complete in five districts and will soon be completed in the rest, the state government said.
Common Facility Centres were set up at a cost of Rs 47.76 crores under a cluster development programme at five places, Rs 18 crore was disbursed as 20 per cent low tension power tariff subsidy and Rs 39.48 crores as generation subsidy to micro and small enterprises for three years. Under the 100 per cent VAT subsidy scheme, Rs 950 crore was disbursed, according to state government data.
High interest rates have been a major challenge for MSMEs. To ease this burden the state government has disbursed loans totalling Rs 589.28 crore to 2,299 entrepreneurs through the Tamil Nadu Industrial Investment Corporation Ltd. (TIIC) at an interest rate of three per cent.
The other thrust area is power, as the state is facing power shortages, and entrepreneurs are left with no choice but to deploy generators. The state government has reduced the promoter’s contribution to 10 per cent to MSME units to avail loans for the purchase of generator sets. About 180 persons were given loans totalling Rs 11.83 crore.
Under the New Entrepreneur-Cum-Enterprise Development (NEED) scheme, which was introduced in 2012-13, the state government has disbursed loans totalling Rs 307 crore and grants totalling Rs 46.57 crore. The scheme envisions a loan facility of up to Rs 1 crore, with a subsidy component of 25 per cent and an interest rate of three per cent to help educated youth become entrepreneurs.
Under the unemployed youth employment generation scheme, loans totalling Rs 41.48 crore have been disbursed to 16,189 beneficiaries and Rs 49.45 crore was given as subsidy to 13,776 beneficiaries for use in their projects.
The state government will also undertake a cluster development programme, and around 50 small industry clusters have been identified.
A separate industrial estate has been established by the Tamil Nadu small Industries Development Corporation near Namakkal, for the building of heavy vehicle bodies, as a joint venture at a cost of Rs 13.68 crore.
