MSME ECOSYSTEM IN THE STATES

One important component of the State of the MSMEs survey is the state ecosystem which is under the purview and responsibility of the state government. Respondents were asked to grade the states on various parameters on a score range of 1 to 10, with one for a non-starter and 10 for a leader.

Three parameters were evaluated through the questionnaire to evaluate performance of the  states, namely infrastructure & ecosystem, policies and schemes and support for procurement, exports etc..

India does not have the plug and play industrial estate infrastructure which is prevalent in growing and developed economies like China, Japan and Korea. Typically, in India  land acquisition and construction for a new industry tends to take around one – three years, which is the bane of our entrepreneurs. It is also increasingly impossible to set up manufacturing units in residential areas due to various factors and one cannot even go far from residential areas due to dearth of  transport facilities.

In terms of infrastructure and facilities available to MSMEs, respondents ranked Tamil Nadu at the highest score of 6.85, followed by Gujarat at 6.65, Uttar Pradesh at 6.13, Madhya Pradesh at 6.02 and Telangana at 5.97. These are the Top 5 States in terms of infrastructural ecosystem, which scored higher than the national average of 5.11. Notable underperforming states in this parameter are Delhi, Jharkhand, Bihar, Himachal Pradesh, Odisha, Punjab and Goa.

Industries being a state subject,  when a state government simply does not even have any MSME department, it becomes impossible to promote small industries or take note of MSME issues. Some of the more progressive minded states have set up separate and full fledged MSME departments, while others have not.  It is in the interest of every state to look at MSMEs as huge employment generators. There is ample scope for the best practices of some industrially advanced states in India to be adopted by other states.  As regards, policies and schemes for MSMEs, Tamil Nadu, with 6.22 points has been rated as the Top state, followed by Haryana with 6.04, Gujarat with 5.96, Rajasthan with 5.92, Uttar Pradesh with 5.91 and Andhra Pradesh with 5.85 are the Top scoring states with  Himachal Pradesh, J&K & Goa at the bottom of the Table.

The Government of India has also mandated that industrial clusters and export promotion departments must be set up & that MSMEs must be helped by encouraging procurement from them and  conducting buyer seller meets.

Scores given to states which support as well as provide opportunities to MSMEs including for exports, have seen an upheaval, with Gujarat at the top with 6.18. Gujarat is followed by Tamil Nadu at 6.03, Maharashtra at 5.99, Goa at 5.92, Rajasthan at 5.72 and Delhi at 5.68, while the bottom of the table has J&K at 3.74, Uttarakhand at 3.97 and Jharkhand at 4.05.

The mean average of scores has seen MSME respondents rate Tamil Nadu as the best state for small business, followed by Gujarat, Uttar Pradesh, Haryana, Maharashtra, Rajasthan, Madhya Pradesh, Telengana, Andhra Pradesh and Karnataka. The states at the bottom of the ranking begin with the lowest being J&K, Himachal Pradesh, Jharkhand, Bihar, Assam, Delhi, Uttarakhand and Goa. 

The Top 5 states as far as overall environment for MSMEs to thrive is concerned are Tamil Nadu, Gujarat, Uttar Pradesh, Haryana and Maharashtra. There is ample scope for policies and best practices of these states to be emulated by other states.  In fact, UNIDO has stated that if the best practices and policies of the top states are emulated across India, that itself could help double the national GDP. Therefore it is important for every state to learn from each other. What has worked for a particular state could also work for another state. There are several such experiences to be learnt across India. Sharing such experiences could help state governments and eventually all entrepreneurs. 

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