The state government proposes a target of Rs 100 cr as subsidies for MSMEs

he Tamil Nadu government has proposed a target of Rs 100 crore as subsidies to be disbursed among micro, small and medium enterprises (MSMEs), and also decided to make services companies eligible for them. According to a state government representative, MSMEs’ lack of awareness is a big challenge for the state government.

Selvam, additional chief secretary in the Tamil Nadu government’s MSME department, said the state government encouraged entrepreneurs to set up MSMEs across the state.

However, not many were coming forth to set up units, due to a lack of awareness. This challenge will be addressed through awareness programmes to be conducted in association with industry chambers and associations.

He noted in the last four years, the state government had issued a cumulative capital subsidy of Rs 60 crore. “The pattern of development is biased towards cities and this needs to be corrected,” he added.

“Off-take is low, but there is a demand for subsidies,” Selvam said. The government found only Rs 60 crore of subsidies had been availed of by MSMEs in the previous year. This was because services companies had been left out.

He noted that the subsidy disbursed was Rs 35.16 lakhs to eight units in 2006-07, increasing to Rs 4.16 crore (to 32 units) in 2007-08. After the MSME policy was announced in 2008 it went to Rs 14.67 crore to 476 units in 2008-09 and to Rs 40 crore for 1,000 units in 2009-10.

“To encourage the sector, the government has proposed a target of Rs 100 crore as subsidies and decided to make services companies also eligible,” he told Business Standard on the sidelines of a seminar organised by the Hindustan Chamber of Commerce recently.

While a cross-section of industry representatives in various industrial clusters have agreed that it was due to lack of awareness, a few have pointed out that the issue was the channels through which MSMEs can opt for the subsidies.

The Tamil Nadu government had extended the scope of the capital subsidy scheme under its MSME policy 2008 to cover services and business facilitation along with manufacturing activities. Selvam said necessary orders have been issued to this effect.

As on April 1, 2010, the state had 631,609 registered MSMEs, employing nearly 4.4 million persons. They accounted for an investment of Rs 26,136 crore and produced over 8,000 varieties of products.