TN adopts cluster strategy for small enterprises

State government announces incentive package for development of MSMEs

In a move to boost the micro, small and medium enterprise (MSME) sector in Tamil Nadu, the state government is planning to take up projects that will not only help the sector address financial constraints, but also issues relating to infrastructure and marketing. It has announced a package of incentives for the development of MSMEs to enable them to grow faster.

The state government has adopted a 'Cluster Development Approach' as a key strategy and allocated Rs 50 crore in 2014-15 as financial assistance to entrepreneurs' consortiums for establishing new industrial estates and also for shifting their industrial units to geographically defined areas for better management of power supply, infrastructure and pollution-related issues.

THE CLUSTER APPROACH

• Rs 50 crore Allocated in 2014-15 as financial assistance to entrepreneurs’ consortiums for establishing new industrial estates and shifting industrial units to geographically defined areas
• Rs 100 crore Additional funding provided to the New Entrepreneur-cum-Enterprise Development Scheme or NEEDS, launched by the state government in 2013
• 70 per cent Grant component in new scheme to support clusters of micro industries, - up to a maximum of Rs 2.5 crore to each cluster
• Rs 100 crore Allocated by state government in 2014-15 for the Skill Development Mission;  this is double the 2013-14 outlay
  of Rs 50 crore
• 10 New Industrial Training Institutes (ITIs) started by the state government. Allocated Rs 50.89 crore for upgrading existing government-run ITIs
• Number of MSMEs in Tamil Nadu has more than trebled in the past nine years - from 25,794 enterprises in 2003-04, to 83,348 enterprises in 2012-13

Further, the New Entrepreneur-cum-Enterprise Development Scheme or NEEDS, launched by the state government in 2013, will be provided with an additional Rs 100 crore in 2014-15. As a new initiative to support clusters of micro industries, the state government proposes to launch a new scheme with a grant component of 70 per cent - up to a maximum of Rs 2.5 crore to each cluster - to put up common production infrastructure, a raw material bank and marketing infrastructure. Initially, a sum of Rs 25 crore will be allocated for the year 2014-15 to develop 10 such clusters of micro industries.

One of the major challenges facing the industry is skilled manpower. To address this issue, the state government has decided to place greater emphasis on skill development. In 2013-14, the state government allocated Rs 50 crore for the Skill Development Mission and this has been doubled in 2014-15 to Rs 100 crore.

Industrial Training Institutes (ITIs) run by the government are a key source of human resources. The state government has started 10 new ITIs and has allocated Rs 50.89 crore for upgrading existing government ITIs, utilising the funds available with the Construction Workers' Welfare Board at a cost of Rs 50 crore to enable students to acquire the latest skills. The number of MSMEs in Tamil Nadu has more than trebled in the past nine years - from 25,794 enterprises in 2003-04, representing an investment of only Rs 722.16 crore, to 83,348 enterprises in 2012-13, with investment soaring to Rs 8,751.54 crore.

According to the Fourth All India Census of MSMEs (2006-07), Tamil Nadu accounts for 14.95 per cent of the total number of operational MSMEs in India. Also, 15.24 per cent of India's micro enterprises (the highest among all states), 9.6 per cent of its small enterprises (third highest among all states) and 9.21 per cent of its medium-sized enterprises (second highest among all states) are located in Tamil Nadu.

To give the sector a boost, the state government has drawn up the Tamil Nadu Vision 2023, whose focus areas will be access to finance, technology and markets; a conducive regulatory and policy environment; and infrastructure availability. The vision document has suggested a strategy for effectively addressing these issues through a combination of policy measures, skill development and infrastructure facilities.

Measures such as cluster development are also to be adopted in implementing focused initiatives to make MSMEs competitive. The cluster development initiative will include both ancillary clusters, based on large mother industries, and stand-alone clusters. It has been planned to generate 1.5 million more jobs during the Twelfth Five-Year Plan period in the state.