MSME sector still stuck in red tape, rue industrialists in MP | indore | Hindustan Times
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MSME sector still stuck in red tape, rue industrialists in MP

indore Updated: Sep 11, 2016 11:16 IST
MSME sector

The government’s promise to create a separate ministry for the MSME sector was fulfilled only four months ago.(.Arun Mondhe/HT file)

During the 2014 Global Investors Summit, MP chief minister Shivraj Singh Chouhan had promised to improve ease of doing business for micro, small and medium enterprises (MSME) sector and to end ‘inspector raj’. Two years down the line, industrialists say red tape exists.

“The ease of business has improved to the extent that many processes such as getting permissions and land allocations are now online, but ultimately nothing moves without meeting the officials,” Association of Industry, Madhya Pradesh, secretary, Yogesh Mehta said.

Infrastructure remains a problem and apart from roads, nothing else is done for the small scale sector. The industry’s demand for storm water drainage system,

common effluent treatment plant and fire station at industrial areas remains unfulfilled.

“The promises made to the MSME sector is not reflected on ground. The government’s focus remains on new investments while existing industries are neglected,” Dewas industry association president Ashok Khandelia said.

“The government gave some concessions in terms of labour laws but the recent action taken by the Centre has nullified it to some extent.”

One of the major problems facing the sector is unavailability of land closer to the city limits. While the government has reserved a minimum 20% land for MSME sector in new industrial hubs, small industries want to set up shops near the city. “We don’t have resources of big industries to run buses for employees and ferry goods to and from remote locations,” Mehta said.

Funding and credit flow remains a major problem for the small-scale sector, with MP Small Scale Industries Organisation terming it as the biggest challenge.

The small-scale sector gets working capital from banks at a higher interest rate compared with large enterprises. Also, the ratings are degraded on minor defaults.

“Our money gets stuck at offices and often it gets stuck in big private and state-owned companies due to different reasons,” association officer bearer Deepak Bhandari said.

The government’s promise to create a separate ministry for the MSME sector during the Global Investors Summit 2014 was fulfilled only four months ago, and so the industry is yet to get the full benefits.

MSME department principal secretary VL Kantarao said the government is doing a lot of work for promotion of the sector.

“The works include promoting entrepreneurship under which the government gives bank guarantees to make it easier for the youth to avail loans ranging from Rs10 lakh to Rs1 crore for setting up an enterprise,” Kantarao said.

The ease of business too, he said, has improved remarkably in the past two years.


1. All the approvals and licenses will be issued within fixed time-frame and action against officials responsible for delays.

Action: Many processes made online but little action taken for delays.

2. The process of applying for approvals and licenses to be made online in all the major departments.

Action: Red tape still exists despite online processes.

3. Drastic improvement in industrial infrastructure.

Action: Infrastructure, barring roads, remains poor

4. Rs 100 crore venture capital for enterpreneurs to launch start-ups in the state.

Action: Scheme only partially successful so far