MSME sector registers degrowth

The Times of India,

AHMEDABAD: While Prime Minister Narendra Modi talks about Make In India, his home state has registered fall in number of new players coming up in micro, small and medium enterprises (MSME) sector.

After recording growth of 12% to 85% in five years from 2008-13, Gujarat registered a fall of over 14% in the new MSMEs established in the state in 2013-14 when Modi was chief minister.

According to Ministry of MSME, as per the number of Entrepreneurs Memorandum indicating commencement of operation (filed under MSME Development Act, 2006), Gujarat registered a decline of 14.08% in 2013-14, putting brakes to number of new units set up in the state.

The ministry attributes degrowth to problems being faced by the sector related to credit, infrastructure, technology, marketing and skill development among others across the country. However, industry experts in the state believe that the reasons for degrowth in new units in MSME sector include economic slowdown over two years till 2014, lack of finance and lack of innovation among the units in the state. “Several units in the state are ancillary units providing support to big companies. As these big companies slowed down during the recession, it directly impacted the units in the state. Also, the MSMEs in the state have not developed to an extent that they can operate independently,” said Jaimin Vasa, president, Gujarat Chemical Association. Vasa, who is also the president of GCCI’s MSME committee, said that finance continues to be a major drawback for the sector which dissuades start-ups from setting up units and existing units to expand. According to the data available with the Gujarat government, investments worth Rs 50,000 crore came to Gujarat between 2010 and 2014 in MSME sector, generating employment for 1.39 million people.

According to the recent Assocham report on MSMEs in Gujarat, the major challenges faced by the units in the state include absence of adequate and timely banking finance, low production capacity, ineffective marketing strategy and identification of new markets for expansion.