Does Tamil Nadu Need Yet Another MSME Committee? | SupportBiz

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Does Tamil Nadu Need Yet Another MSME Committee?

The Tamil Nadu Government set up a new committee named State Level Rehabilitation Committee (SLRC) recently to address the health sick units of MSMEs as reported in

Chennai, December 19: The major areas of focus are to formulate and approve an incentive package scheme for sick MSMEs as well as guidelines for their implementation, sanction rehabilitation packages for SMEs as recommended by the sub-committee of the State Level Inter-Institutional Committee, enable acquisition of sick units by other SMEs under certain terms and conditions and convert outstanding loans as soft loans.

Though Tamil Nadu is a home to 46 million MSMEs of the country which contribute to 40 per cent of India's exports, but the question to be answered is whether it needs an SLRC or not when a State Level Inter-Institutional Committee already exists for the same purpose.

The State Level Inter-Institutional Committee was set up by the RBI five years ago to identify symptoms and potential weaknesses in MSMEs before banks deemed these enterprises unviable. The Tamil Nadu Government itself has also been very proactive in providing various types of opportunities to MSMEs. Earlier this year, it announced allocation of space at competitive prices, hiking of subsidy on plant and machinery and has pumped Rs 16 crore to initiatives of the Small Industries Development Corporation.

On ground, there is no substantial difference between SLRC and State Level Banker's Committee and there even needs to be some level of information exchange between the two as per the new order. The query is whether these two committees concerning the MSMEs will actually address the cause of the entrepreneurs or not. Moneycontrol quoted a senior official, a deputy director at the Directorate of Industries and Commerce as saying, “The purpose is to refine the existing process and recruit more personnel to create a more efficient process."

The issue of setting up two committees for the same task is debatable. It is worth pondering upon as to why the former committee's objectives were not expanded. Also what power does the State Government have to sanction rehabilitation packages for SMEs as recommended by the State Level Banker's Committee?

There can be doubt expressed whether our Government is building redundancies into the system instead of aiming for efficiency and streamlining of processes or is it feeding the bureaucratic machinery instead of creating a lean, mean system that could actually benefit MSMEs.