The Madhya Pradesh government’s initiative to reserve 20 per cent land in every district for small scale industries may not yield expected dividends, experts said.
Experts are of the opinion that entrepreneurs are reluctant to set up units at locations far from the district headquarters.
The government needs to provide land within 10-15 km radius from the district headquarters to attract the micro, small and medium enterprises (MSMEs), the experts feel.
“Why would an entrepreneur go to a distant location to set up a unit just because the government is providing industrial land? The labour and transportation costs will shoot up if plants are set up in remote locations and small-scale industry cannot afford to pay that cost,” Pithampur Audyogik Sangathan president Gautam Kothari said.
Experts said that lack of social infrastructure in industrial hubs located away from the district headquarters will also be a factor.
“The small industries will agree to move to new industrial hubs only if there is a social infrastructure in place. The SMEs will need housing for labourers, schools, clinics among other things and also industrial infrastructure such as warehousing,” industrialist Rajesh Agrawal said.
Government officials said that the industrial hubs in and around the major cities are already saturated and land is only available in locations away from the city limits.
However, the industry association has suggested that a portion of the upcoming 22-km long industrial corridor to be developed between Indore to Pithampur could be reserved for the small-scale sector.
Moreover, the state government’s record in implementing the memoranda of understanding (MoUs) signed during the previous investor summits too remains poor.
In rupee terms, only 17 per cent of the investment committed by MSME sector has translated into actual production in the five year period between 2007 and 2012.
A state industry department official on the condition of anonymity said that the government was looking to create industrial hubs across the state instead of focusing only on districts such as Indore as they are already industrially developed.