Reality check: Several SME projects fail to take off in MP | india | Hindustan Times
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Reality check: Several SME projects fail to take off in MP

india Updated: Aug 29, 2014 17:21 IST
Manoj Ahuja
Manoj Ahuja
Hindustan Times
small and medium enterprises

While the state government has organised a special session for small and medium enterprises (SME) sector in the forthcoming Global Investors Summit, its record in implementing the memoranda of understanding (MoUs) signed during previous investor summits remains poor.

Sample this: Out of 531 MoUs signed between 2007 and 2012, production has started in only 194 MoUs and 27 MoUs have been cancelled while the remaining are yet to be implemented. In rupee terms, only 17% of the investment committed during the summit by MSME sector has been translated to actual production during the five year period.

Experts put the blame on lack of land availability near the city, scarcity of funds and also on bureaucratic delays in clearing files.

"MSMEs (micro, small and medium enterprises) want land near the city and are not willing to move to remote locations where government is setting up new industrial hubs. Then, the government has failed to implement the single window clearance system, and the 'chalta hai' attitude of bureaucracy is leading to delay in clearance of files," Guild of Industries, Services and Trade (GIST) president Ashok Badjatiya said. "Many entrepreneurs are frustrated due to corruption and lack of decision making in state departments," he added.

Apart from these issues, experts cite scarcity of funds with banks not always willing to finance small industries due to high risk involved. "Also, the government had formed new policies during the last investors’ meet but has not come out with notifications for some of these policies," Badjatiya added.

Experts say that the government needs to do follow up after agreements are signed during the global investors’ meet. The government officials are very enthusiastic before and during the meeting and a lot of discussions are held and announcements are made to improve the investment climate but things cool down afterwards and proper follow up is lacking.

When contacted, a senior official of industry department said that investors can always approach the industry minister directly if they find any department is blocking the files.

He said that slowdown in economy since 2008 had impacted the investment climate in the state.