Micro, Small and Medium Enterprises (MSMEs) are assigned an important role in the quest to reach US 5 trillion dollar economy. Across states the government push is for the sector for its ability to create employment and exports. Here K Devaraj, who in September 2019 took charge as director, MSME Development Institute, Margao, talks to Shoma Patnaik on Goa’s MSMEs
In the short time that you are here, what is your assessment of MSMEs in the state?
It is a totally different environment here compared to Bengaluru where I was previously posted. I think Goan MSMEs are really good. Their achievement is unique. Goa’s is looked upon as tourism destination but the MSME sector is huge. However 8,000 units so far are registered under Udyog Adhar. We would like the registration to increase. The local MSME sector is diversified. The tourism industry is the main focus here and then the ship building industry.
Why should unit owners register under Udyog Adhar?
The advantages are several especially for a B2B unit. Schemes by the ministry of MSME can only be availed by Udyog Adhar registered units. There are several schemes such as the public procurement policy where 25 per cent of procurement by PSUs has to be from MSMEs.
What are your plans for the state?
Well the state has lot of potential but our focus is going to be on increasing awareness of schemes. We are working towards the formation of clusters, such as the maritime cluster and a cluster for food processing industry like paddy cluster, cashew processing, honey cluster, among others. We have identified about 10 clusters to be set up in the state. Our focus is going to be on traditional industries that Goa had. Such as coir cluster, handicrafts, etc. As first step we have completed the work of identifying clusters and the next task is to bring all the artisans together to form a SPV and get funds from the government.
What is the progress of the maritime cluster?
We are awaiting in-principle approval for it. The cluster will provide a common facility center for local shipping companies. Each MSME cannot afford new machinery. The maritime cluster wlll have all the machinery needed by MSMEs to manufacture their product. The cluster will be located in Verna over 50,0000 sq. mtr. The state government is giving the land and the project is already approved by the DITC. It needs in-principle from the center and also Goa IPB approval.
How aware are Goan MSMEs of Intellectual Property Rights (IPR)?
We have a basic scheme towards awareness of IPR. Many innovations happen in the sector but it is not patented and therefore unprotected. Small unit owners need to protect their ideas. The government gives reimbursement on patents and trademarks. For domestic patents the reimbursement is upto Rs one lakh and on foreign patents it is up to Rs five lakhs on the expenditure incurred. The state can open a intellectual property center for which also there is a financial incentive of reimbursement up to Rs one crore on the infrastructure expenditure.
What is your opinion on the proposal to change the definition of MSMEs?
Any policy has its pros and cons. But the new definition will definitely help the sector. The proposed new definition is based on turnover instead of investment in plant and machinery. In certain industries the investment in plant machinery is low but raw material consumption is high and also the turnover. For instance, the cashew processing industry. The new definition will improve the status of micro units. The bank lending norms are based on the turnover. So the proposed new definition will make assessment easy for financial institutions.
MSME associations however are against the new definition because it will include large companies in their sector and increase competition.
Probably but competition is not a bad thing. Competing with higher level is always good. Companies are actually recognized by the product in the market. If you have a good product then competition should not be a problem.
In your opinion what are the main hurdles faced by small units?
Maybe the first would be restricted credit flow and the other difficulty in marketing. MSMEs find it difficult to get loans because they do not meet the bank assessment norms. They are also find it difficult to identify markets.