05 December 2019

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TANSTIA Aims to Leverage SME Growth

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Tamil Nadu Small and Tiny Industries Association General Secretary Mr. Gopalakrishnan was gracious enough to spare time from his busy schedule to talk in length to Small Enterprise India about SME activities in the state.

 Could you tell us in brief about TANSTIA?

We have been in the service of micros and SSI’s for more than 50 years. We provide guidance to small and micro enterprises in terms of global bench marking and related initiatives. Secondly, we synergise roles of the central and state governments to provide more meaningful service to small and micro enterprises, by means of appropriate representation in all central and state government for an evolving  business policy  environment.  Also, we foster business networking with industry associations  and chambers globally. Further to this, TANSTIA facilitates business development service to SME in relevant areas. We try to evolve an industrial base that remains socio- environmentally compliant, establishing  social infrastructure. In brief, we contribute actively towards generation of the globally competitive entrepreneur of tomorrow.

  What does TANSTIA represent?

 We represent 10,00,000 MSME’s  31 district associations, 78 industrial estate associations, and various other associations too.  TANSTIA represents small and micro industries in many of the policy making bodies..We hold periodical interaction meetings with state and central government departments and officials to highlight the desires and problems  for their intervention and redressal. Occasional surveys are conducted of industries to assess the health of the MSME’S.  For the past 20 years, we have been publishing  a monthly magazine {Small Industry) to help the entrepreneurs to be updated on all fronts.

Could you elaborate on the MSME policy?

 The government of Tamil Nadu announced the micro , small and medium industries policy , 2008 on 22nd February , the first of its kind in Tamil Nadu.  The policy envisages ways and means for the development of  micro and SSI’S in the state  with all facilitation.  TANSTIA played a key role in  framing the policy  and these efforts  were   recognised  by the Tamil Nadu government  by presenting the 1st  copy of the policy  to the president of TANSTIA, MR Gandhikumar.

Have efforts been made to take the initiative  beyond the boundaries of Tamil Nadu?

Yes. TANSTIA FNF Service Centre  is a collaborative venture between TANSTIA, and ,  Friedrich Maumaan Foundation Germany, established to provide  supporting services to MSMEs,. TFSC works at two levels- macro and micro.  At the macro level, we advocate SSI friendly policy framework  and work towards  promotion of SME’S.  At the micro level, we render supporting  services to  small and tiny industries by  encouraging entrepreneurship  and promoting  enterprise development.

 What is the current status of small and medium enterprises in India?

For the last four to five years, industries have grown substantially  and business has boomed. After recession, the automobile industry has collapsed . Number of orders has reduced , dues are not paid on time . Even though government says economic slow down is over,  micro sector in Chennai , Hosur, Ambattur  are facing hardships. They are not closing down only because  they fear that the credirors will give them more trouble . Even though the government has come up with various schemes, restructuring  has not been a success. Ad hoc capital too is not being given. 100% translation of what they promised is not being done.

What measures or aids are available to the SME bodies?

Of course Tamil Nadu government is highly supportive. Banks provide various schemes too. Moratorium has been imposed on interest for SME’s  and all kinds of support promised but in some instances like ICF and Defence, its not happening. In Tamil nadu, price advantage has been provided for the SME ;s. Even purchase preference is given but central government is yet to implement these.

Is FDI a boon or bane for Indian SME?

It has not exactly been a boon.For instance Hyundai  has its ancillary procurement from Korea. So , instead of getting material from India, first and second level procurement is done from Korea and only  third and fourth levels are devoted to small and micro. Nokia too procures its raw materials from abroad.

What role do SME’s play in the export scenario?

35-40% of the entire export  of India is from  the small scale sector.Next  to agricultuere,SME s provide the maximum  employment.  If not for the SME sector,.  Several school drop outs would be unemployed,  and the rate of unemployment in India would be very high, adversely affecting the socio economic scenario.

Our honourable Prime Minister had called for two meetings  and a task force committee was asked to submit in a report on SME sector  and its activities in 30 days. There are 1125 small and micro units in Tamil Nadu.  12- 15 % of  industries are con- centrated in this state, this state is  the most vibrant state when it comes to SME activities.
Recently we concluded the state convention of MSME ‘s . Mr Pongalur  Palaniswamy, honourable  minister of state for Micro and small industries graced the function.

What is the future you envisage for SME’s in India?

SME ‘s cant exist by themselves. They have to form clusters to fight  competition from other  countries as well as bigger industries in India. Jawahar lal  Nehru had reserved 600  products exclusively for the small scale industries sector, of these only 35   are reserved now,  and these too face the threat of being taken away  due to globalization.   Most of the SME industries  are operating on a very low margin  and are not able to accumulate funds  for expansion and modernization.  Bank interests too are high. We have put in a request for interest on par with agricultural loans. Even though banlks have  lot of funds, they  prefer not to lend to the tiny industries, since the transaction costs are high. Banks prefer the creamy layer.

Gujarat, Maharashtra, Tamil nadu, Andhra Pradesh  and Karnataka lead highest in the maximum number of SME ;s in the country.

What are the future initiatives of TANSTIA?

1. Implement lean manufacturing  practices in MSME’s.
2. Take up more studies and researches  to develop much needed policy measures for MSME;s.
3.    Enable  micro and small entrepreneurs to  harness the benefits of information and
       communication technology.
      4.      Endeavour to build a comprehensive database  for micro and small industries 
                   in the state of Tamil nadu.
      5. Strengthen the network of SME’s in the SAARC region.
      6. Improve the energy and environment  management  systems in MSME’s.
      7.  Facilitate and enhance  the export  contribution from this  sector.


What are the traumatic conditions faced by the SME sector in Tamil Nadu?

Financial assistance is not adequate  during the period of economic down turn. Timely assistance is essential which is not extended to the SMEs.  Even sanctioned loans are not disbursed  which lead to closure of units.,  Adequate power  is not available  and hence the units are compelled to go  for alternative  source( captive power) which is not affordable  due to rising cost of petroleum products. Wide and frequent fluctuation of  raw material prices  which place the small scale  and micro  industries   in a tough spot, to operate below  profitable levels leading to virtual; closure  of the units. Complexity in taxation structure too is a major issue. Labour laws are difficult to comply, which are compulsive  rather than encouraging.

What are the few measures being considered to rectify matters , or suggestions made to the government?

The micro industries lag behind on all fronts due to the fact that  they do not own their industrial shed or plot. Even banks refuse to lend to them  on the sole reason that  these industries are functioning on rental premises. But, due to exorbitant  price  of land in metros and major cities, , the  micro industries are not in a position to  own a piece of land  for their factory.  They cannot afford to   purchase  land in SIDCO or SIPCOT industrial estates  at the present exorbitant cost. Exclusive  industrial estates should be  established for micro industries. For this, government of Tamil Nadu should allot land at  50% of the actual cost  to SIDCO to extend  concessional rate  for micro industries  for purchase of plots in such  estates.

Purchase preference should be  given for all the small  scale and micro industries  in all the procurements of government departments  and public sector undertakings. Government should also try to prevent  bundling of contracts  which will help only the big multi nationals  to procure orders.  Uninterrupted power should be made available to  these industries at concessional rates.

 Initiative may be taken  by the government to  arrange for  delegation visits  of MSE entrepreneurs  along with government agencies to  developed countries like   America,  European countries, Japan, China, etc., on trade mission  for which the government of India  may bear the  entire  expenses. .  It will enable the entrepreneurs to  explore the standards  and technologies  adopted in such developed countries.

Considering  immediate action  required to rejuvenate  or resurrect  the SME s‘ in the country, at least 30 %  reservation may be extended to  micro and small  scale industries  in all the  procurements of government undertakings  like railways, defence, BHEL, ports, etc. The sick industries  may be given  concession of 50 % in all their statutory  dues  for an honourable exit.

 We  have even put in a request to the RBI  and banks and other financial institutions in the state  to extend the  period  for restructuring  of advances  to MSME’s till March 2010. During this period of restructuring, moratorium  for the payment of interest  may be extended.

 On a concluding note, Mr Gopalakrishnan  affirmed that, small and micro  enterprises in Tamil Nadu  will evolve into  a global industrial power house  by 2020  by means of synergized  competitiveness oriented  initiatives.


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