Textile MSMEs in North and South India spur sector growth

CRISIL has studied the growth performance of 774 micro, small, and medium enterprises (MSMEs) rated by it in the textile sector. Their performance was analysed for the three-year period 2010-11 to 2012-13 (refers to the financial year, April 1 to March 31). The study indicates that the average sales of the sampled enterprises grew at a compound annual growth rate (CAGR) of 19 per cent, from Rs 1,271.89 lakh to Rs 1,809.81 lakh over the three-year analysis period. MSMEs in northern and southern India outpaced their peers in eastern and western India in sales growth, with a CAGR of 21 per cent.

  The key contributors to North India's growth story were MSMEs from Haryana, Punjab, and Uttar Pradesh, all with a CAGR of 23 per cent, while enterprises from the states of Karnataka, Andhra Pradesh and Tamil Nadu spurred sales growth in South India with a CAGR of 23 per cent, 22 per cent, and 19 per cent respectively. The Rs 200-crore Budget proposal to set up six new mega-clusters across the country is expected to significantly benefit the textile industries of both North and South India, which are expecting four of these mega-clusters, planned at Bareilly, Lucknow, Mysore, and Tamil Nadu.

 

However, MSMEs across India are set to benefit from the continuation of zero-excise duty on readymade garments and the increase in the budget allocation to the Technology Upgradation Fund Scheme (TUFS) to Rs 2,300 crore in 2014-15, from Rs 1,950 crore in 2013-14.

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Note: The analysis is based on the latest audited financial statements of CRISIL-rated MSMEs. Most enterprises finalise their audited financials by the end of the second quarter, after the closure of the financial year. CRISIL rates over 50,000 MSMEs in India. This fortnightly tracker presents to our readers insights on MSMEs, a key element of the Indian economy.