Micro, Small and Medium Enterprises Department Policy Note 2015 - 2016 Demand No.44 P. Mohan Minister for Rural Industries and Labour © Government of Tamil Nadu 2015 CONTENTS S.No. Description Page 1. Overview 1 2. Commissionerate of 5 Industries and Commerce Tamil Nadu Small Industries 3. 39 Development Corporation (SIDCO) 4. Tamil Nadu Small Industries 63 Corporation (TANSI) 5. Entrepreneurship 67 Development Institute (EDI) Micro, Small and Medium Enterprises As per the fourth Census Report of MSMEs Department published in 2012, the total number of MSMEs in Policy Note – 2015-2016 India are 3.6 crore employing over 8 Crore people. Manufacturing segment within the MSMEs 1. Overview contributes to 7.09% of GDP. MSMEs also contribute to 30.50% of services. The total Globally, Micro Small and Medium contribution of MSMEs to the GDP is 37.59% Enterprises (MSMEs) play a vital role in the economic development of a nation. MSMEs are the 1.2 MSMEs in Tamil Nadu nursery where small existing businesses have the MSMEs produce a wide variety of products in potential to become world beaters tomorrow. The almost all sectors. The prominent among them are larger players amongst the MSME space also are in the textile, electronic products, engineering the unique position to become global players products, auto ancillaries, leather products, attracting partners with technology and funds. chemicals, plastics, garments, jewellery etc. 1.1 Role of MSMEs in the Indian Economy Tamil Nadu has implemented an online system for filing EM-II through the website Micro, Small and Medium Enterprises www.msmeonline.tn.gov.in. Since the introduction (MSMEs) sector has emerged as a highly vibrant of this system around 5.80 lakh entrepreneurs and dynamic sector of the Indian economy over the have filed EM Acknowledgement Part-II, providing last five decades. MSMEs not only play a crucial employment opportunities to about 33.26 lakh role in providing large employment opportunities at persons with total investment of Rs.74662.27 comparatively lower capital cost than large crore. industries but also help in industrialization of rural and backward areas. MSMEs reduce regional Table-1 shows the annual registration of imbalances, assuring more equitable distribution of MSMEs during the last eight years. national income and wealth. MSMEs are complementary to large industries as ancillary units and this sector contributes enormously to the socio- economic development of the country. 2 Table - 1 Table - 2 Manufacturing Service Investment Number of Production Investment Employment Investment level Year Registered (Rs. in Enterprises Enterprises level (Rs. in crore.) (Numbers) units crore.) Micro Upto Rs. 25 lakh Micro Upto Rs. 10 lakh 2007-08 27209 2547.14 8739.95 242855 Small Above Rs.25 lakh Small Above 2008-09 32049 3557.89 13354.86 294255 and upto Rs.5 Rs. 10 lakh 2009-10 41799 3214.22 10880.01 151743 crore and upto Rs. 2 crore 2010-11 57902 5872.37 12500.86 405233 Medium Above Rs. 5 crore Medium Above 2011-12 70758 7429.59 15496.00 502381 and upto Rs.10 Rs. 2 crore 2012-13 83348 8751.54 17503.08 583436 crore and upto Rs. 5 crore 2013-14 116393 18939.87 16832.25 494990 1.4 Micro, Small and Medium Enterprises 2014-15 143104 24349.65 59789.70 651180 Department 1.3 Definition of MSMEs The Department has the following organizations under its administrative control: The classification of Micro, Small and Medium Enterprises is defined under the MSMED Act 2006. ¾ The Commissionerate of Industries and The enterprises are classified in Manufacturing and Commerce Service enterprises. Based on the investment in plant ¾ The Tamil Nadu Small Industries and equipment (excluding land and building) the Development Corporation Limited classification of Micro, Small and Medium Enterprises is (TANSIDCO) given in Table-2. ¾ The Tamil Nadu Small Industries Corporation Limited (TANSI) and ¾ The Entrepreneurship Development Institute (EDI) 3 4 2. The Commissionerate of Industries and all EMs are filed through online portal. Trend in Commerce filing online EM is given in Table-3. Cumulatively 5,27,952 EM-I and 4,65,286 EM-II have been filed The Commissionerate of Industries and through Online Portal. Commerce is mandated with the development of Table - 3 industries in general and Micro, Small and Medium Enterprises in particular. To discharge its mandate, EM Part I EM Part II Year % of EM % of EM the Commissionerate has set up the District Manual Online Total filed Manual Online Total filed Industries Centres (DICs) in 32 Districts. District online online Industries Centres facilitate prospective 2007-08 35072 - 35072 0.00 27209 - 27209 0.00 entrepreneurs in starting and sustaining Industrial 2008-09 22037 21395 43432 49.30 22642 9407 32049 29.40 enterprises and provide a variety of escort services 2009-10 11711 55177 66888 82.50 10673 31126 41799 74.50 to the entrepreneurs like identification of viable 2010-11 12059 65760 77819 84.50 16514 41388 57902 71.50 activities, preparation of project profiles, obtaining 2011-12 9999 73935 83934 88.10 18867 51891 70758 73.34 financial assistance from various banks/financial 2012-13 9997 84819 94816 89.50 16457 74517 90974 81.91 institutions, statutory clearances from Government 2013-14 1442 107519 108961 98.68 2540 113853 116393 97.82 Departments, sanction and disbursement of eligible 2014-15 0 119347 119347 100.00 0 143104 143104 100.00 subsidies and obtaining payments in delayed cases. Total 102317 527952 630269 83.77 114902 465286 580188 80.20 2.1 Filing of Entrepreneur Memoranda 2.2 Subsidy Schemes The concept of Entrepreneur Memoranda (EM) has been introduced by the MSMED Act, The following incentives are being extended 2006. The filing of EM is optional for all MSMEs to Micro, Small and Medium Enterprises in the except for medium manufacturing enterprises for State: whom it is mandatory. Any entrepreneur may now file this memorandum online on the website i. Capital Subsidy www.msmeonline.tn.gov.in . They can obtain the EM Acknowledgement instantly without visiting the ¾ 25% capital subsidy on the value of concerned District Industries Centres. eligible plant and machinery, subject to a maximum of Rs.30 lakh. This scheme of online filing has evoked a good response from entrepreneurs. Since 2014-15 5 6 ¾ Additional capital subsidy for enterprises set ¾ Electrical and electronic products up by Women / Scheduled Caste / ¾ Leather and leather goods Scheduled Tribe / Physically Disabled and Transgender Entrepreneurs at the rate of ¾ Auto parts and components 5% on the value of eligible plant and ¾ Drugs and pharmaceuticals machinery, subject to a maximum of Rs.2 lakh. ¾ Solar energy equipment ¾ Gold and diamond jewellery for ¾ Additional capital subsidy for promotion of exports cleaner and environment friendly ¾ Pollution control equipments technologies at the rate of 25% on the value of eligible plant and machinery/ ¾ Sports goods and accessories equipment subject to a maximum of Rs.3 ¾ Cost effective building material lakh. ¾ Readymade garments ¾ Employment Intensive Subsidy at the rate ¾ Food processing of 5% on the value of eligible plant and machinery, subject to a maximum of Rs.5 ¾ Plastic lakh. ¾ Rubber products Eligibility Criteria ¾ All new Small and Medium manufacturing enterprises established in all the 251 industrially backward blocks ¾ All new Micro manufacturing enterprises established anywhere in the State ¾ All New Agro based Small and Medium manufacturing enterprises established in all ¾ All new Small and Medium enterprises the 385 blocks of the state under following 13 thrust sectors established anywhere in the State excluding ¾ Existing Manufacturing Enterprises of the additional capital subsidy and employment above categories which have taken up generation subsidy. substantial expansion / diversification of the existing activities. 7 8 ii. Low Tension Power Tariff Subsidy iii. Value Added Tax (VAT) subsidy 20% low tension power tariff subsidy for 36 months from the date of 100% subsidy on the net value of Value commencement of production or from the Added Tax (VAT) paid by the MSMEs for date of power connection whichever is the first 6 years after commencement of later. production upto the value of investment made in eligible plant and machinery. Eligibility Criteria Eligibility Criteria ¾ All New Micro manufacturing enterprises established anywhere in the State Micro manufacturing enterprises established anywhere in the State. ¾ All New Agro based Micro, Small and Medium manufacturing enterprises iv. Generator Subsidy established in all the 385 blocks of the State Micro, Small and Medium manufacturing enterprises established anywhere in the State are ¾ All New Small and Medium manufacturing eligible for a subsidy of 25% on the cost of enterprises established in all the 251 Generator set purchased (upto 320 KVA capacity), industrially backward blocks subject to a maximum of Rs. 5 lakh. ¾ Existing Manufacturing Enterprises of the v. Back-ended Interest Subsidy above categories which have taken up substantial expansion / diversification of Back-ended interest subsidy at the rate of the existing activities. 3% of interest on term loan subject to a maximum of Rs.10 lakh for a period of 5 years to Micro, Small and Medium Manufacturing Enterprises for term loans up to Rs.1 crore obtained for Technology up-gradation / modernization and Credit Guarantee Fund Trust Scheme (CGFTS). 9 10 Micro and Small Enterprises who have ¾ Assistance for creation of Centres of availed term loan under Technology upgradation/ Excellence and Technology