SMEs generate more jobs in U'khand than large players

Small units have nearly five times as many employees as their bigger counterparts

When it comes to employment generation, the Micro, Small and Medium Enterprises (MSME) sector is a clear winner in Uttarakhand, as compared to large companies.

Though Tata Motors, Ashok Leyland, Hero Motocorp, Hindustan Unilever and other leading large companies have invested heavily in the hill state over the past few years, the jobs have been generated mainly by the MSME sector, a new report by the department of industries has revealed.

A total of 26,598 MSMEs representing investments to the tune of Rs 7,073 crore have provided employment to nearly 146,000 people since 2000, when Uttarakhand was carved out of Uttar Pradesh.

On the other hand, large players like Tata Motors – which are 181 in number – have given employment to only 55,340 people. Their investments now total Rs 21,556 crore.

“The rapid industrialisation in our state has resulted in high overall growth. But the fact remains that the MSME sector performed much better than the large companies in terms of employment generation,” said Sudhir Nautiyal, additional director of the MSME department.

At the time when Uttarakhand was formed, only 14,163 MSMEs with total investments of Rs 700.29 crore employing 38,509 people were operational in the state. As on July 2012, a total of 40,761 MSMEs with total investments of Rs 7,773.96 crore have provided employment to 185,359 people.

The report said the industrialisation largely occurred due to the state’s 2003 industrial policy, which is still operational. In addition to the benefits granted under the concessional industrial package of tax incentives provided by the Central government, the state government has also made several provisions for fiscal and non-fiscal incentives in the policy.

These incentives include an interest incentive of three per cent – up to a maximum of Rs 2 lakh per annum per unit – to new SMEs for modernisation and substantial expansion. There is also a provision for purchase and price preference for SMEs in the state.

A single-window mechanism has been provided for time-bound clearances. With the help of the Confederation of Indian Industry (CII), the state government now wants to set up an online single-window system.

A credit guarantee scheme has also turned out to be beneficial for MSMEs in the state, with the total number of proposals approved until March 31, 2011 being 6,316, and entailing an approved amount of Rs 340.49 crore. “The progress under the scheme has shown consistent improvement,” said Nautiyal.

The government has also made efforts to follow a cluster-based industrialisation approach to give the MSME sector a fillip. Industrialisation has spread quickly in Uttarakhand, but is largely confined to the plains only. The hill region is still devoid of industry.

In 2008, the government introduced the Integrated Industrial Development Policy for the hill region, which is now attracting new entrepreneurs. Fiscal incentives like 100 per cent stamp duty exemption on purchase and lease of land are available under this policy.