The Gujarat government faced a piquant situation on the MSME front as it was preparing for the Vibrant Gujarat Global Summit starting today. On the one hand, it received the highest number of investment proposals for the summit, while on the other it accounted for a very high incidence of industrial sickness.
Reports suggest that the state government has received more than 16,000 offers for tie-ups with MSMEs during the Vibrant Gujarat Summit though the total sum assured would be known only at the close of the event later this week. In the previous edition, the state had received investment support worth Rs. 1 Lakh Crore through 17,081 agreements.
Initial information suggests that most of the agreements have been signed across industrial units in Vatva, Vapi and Ankleshwar. The sectors that attracted investments include chemicals, urban development, animal husbandry, fisheries, cooperation, mineral-based projects, rural development and food processing.
Sick Units Abound
However, the state government is also facing a big challenge in that Gujarat has recorded the highest incidence of sickness in the MSME sectors and stands third behind Uttar Pradesh and Maharashtra.
A report published in the Business Standard suggests that the state administration is now planning to take some practical steps to help these units. In addition to handholding initiatives of monitoring and mentoring growth, the government also proposes to create a website where sick MSMEs can list themselves for sale.
Over the last 12 months along, the incidence of sickness spread to 42,500 units, which stands third behind Uttar Pradesh (95,989) and Maharashtra (52,576), as per data shared by the Reserve Bank of India and presented to the Lok Sabha during the Winter Session.
The article quoted D. Thara, vice-chairman and managing director of the Gujarat Industrial Development Corporation (GIDC) to suggest that the website would provide asset valuation from professional agencies. Venture capital firms and other entrepreneurs could access this data and strike a deal directly, if interested.
Business for Sale
The project is a kind of ‘Business for Sale’ website where the MSMEs would be asked to pay a small fee via an agency nominated by the state government that would be responsible for the upkeep of the website. When the project fructifies over the next month or two, the administration will approach MSMEs.
However, the article claims that there could be an issue with this project as many of the sick MSMEs might not qualify for revival as a result of which there could be very little traction with prospective investors. It said that from the list of sick MSMEs, only 6000 units were identified as potentially viable.
Another concern is the fact that despite hand-holding the MSMEs on to a recovery path, the incidence of sickness has grown from 20,452 in 2013 to 48,000 in 2014 and 49,000 in 2015.