The current economic slowdown, which has seen businesses take a slew of measures to survive, has hit the small and medium enterprises (SMEs) most because of their low resource base and bargaining power.
The SME sector accounts for almost 60 per cent of the total industrial output in Uttar Pradesh. The current financial crisis has adversely affected SME units, especially engaged in export to the US and European markets.
Exports from UP mainly comprise leather goods, carpets, textiles, agriculture products, brassware and auto parts.
“The state government is concerned about the SME sector and is looking at steps to aid the industry,” UP Industrial Development Commissioner VK Sharma told Business Standard.
There are about 100,000 small-scale and medium units in UP and the state ranks fourth in the country in the number of SME units.
To strengthen the sector and help cope with the slowdown, the state government has now decided to aggressively pursue the cluster model of development.
“We are taking steps to strengthen the existing clusters in the state and plan new ones,” said V Rajagopalan, principal secretary of small scale industries, export promotion and textiles.
Some of the running clusters in UP include, sports goods (Meerut), glass work (Shikohabad/Ferozabad), leather footwear (Agra), pottery (Lucknow), locks (Aligarh), carpets (Bhadohi/Varanasi), among others.
Meanwhile, the Lucknow Management Association (LMA) is also planning to organise a special conclave for the SMEs to lend a helping hand to the sector in these troubled times.
“We will collaborate with the All India Management Association (AIMA) for the purpose and facilitate the sector with cheaper credit and management expertise,” LMA President Jayant Krishna said.
However, Indian Industries Association (IIA) executive director DS Verma said the state government was not serious about industries, least of all SMEs.
“The state government hiked VAT and imposed entry tax on several industries in September 2008, which pretty much shows its intent,” he lamented.