What revival? Close to 50,000 MSMEs shut up shop in Tamil Nadu in past year

Number of workers employed too falls by more than 5 lakh

June 08, 2018 01:05 am | Updated 07:47 pm IST - CHENNAI

Contrary to claims that the industrial climate in Tamil Nadu has improved, close to 50,000 micro, small and medium enterprises (MSMEs) have been wound up in the State in just one year on account of a host of factors.

A government policy note tabled by the MSME Department in the Assembly on Thursday revealed that the total number of registered micro, small and medium industrial units in Tamil Nadu had dipped by a significant 18.45% in 2017-18 from the previous year. In absolute numbers, as many as 2,67,310 MSMEs were registered in 2016-17; this figure fell to 2,17,981 during 2017-18.

This means 49,329 industrial units wound up operations in one year. In a parallel development, the number of workers employed in MSMEs has fallen by over five lakh during the same period.

In 2016-17, the number stood at 18,97,619, but in 2017-18, it dwindled to 13,78,544.

Big dampeners

Industrial observers said the ever since the Chennai floods of December 2015, when industrial units were marooned, the MSME sector in Tamil Nadu has been facing a series of crises. During the floods this sector incurred huge losses with many entrepreneurs losing their documents, stocks, plant and machinery.

“The four big dampeners for this sector were the 2015 floods, Cyclone Vardah, demonetisation and GST. Post the floods many firms ran into losses which eventually led to winding up of operations,” said an industrialist in Guindy who did not want to be identified.

“From a priority sector we now have become a neglected sector,” rued K.V. Kanakambaram, president of The Industrial Estate Manufacturers Association. “In the last few months we have sent several representations to the government seeking its intervention. They have not even called us for a meeting to understand why units are closing down or what challenges we are facing,” he said.

Mr. Kanakambaram pointed out that earlier private financiers came to bail out the ailing industry. “Financiers are also staying away from us these days. They need some kind of guarantee from us. When the businesses are down what sort of guarantee can we give them,” he asked.

Another entrepreneur from Ambattur Industrial Estate said that MSMEs have been asking for a bankers meet which has not happened. “If the state government can facilitate this, it would be a breather for several small firms that are currently carrying non-performing assets,” he said.

Six MSME promoters that The Hindu spoke to called for a meeting between the government and industry in addition to a rehabilitation package.

Meanwhile, Industries Minister M.C. Sampath said that the State had lined up investments to the tune of ₹45,000 crore in sectors including automobile, tyre manufacturing and textiles. The Minister also said that work was on in full swing for the upcoming Global Investors Meet, 2019.

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