All You Should Know about MSMEs in Tamil Nadu

Micro, Small, and Medium Enterprises (MSMEs) are vital to Tamil Nadu's economy. They drive employment, exports, and overall growth. The state government offers various support schemes to help these businesses thrive.

Whether you're a new entrepreneur or looking to expand, understanding the available options is crucial. So, in this article, let’s delve deeper into the MSMEs in Tamil Nadu.

What are MSMEs?

MSMEs are businesses classified based on their investment and turnover. The Government of India defines them as follows:

• Micro enterprises: Investment up to INR 1 crore and turnover up to INR 5 crore.
• Small enterprises: Investment up to INR 10 crore and turnover up to INR 50 crore.
• Medium enterprises: Investment up to INR 50 crore and turnover up to INR 250 crore.

Tamil Nadu has a robust MSME sector, contributing about 8% to the state's GDP, according to official data from the government.

Also Read: MSME Certification: Why is it Important?

Importance of MSMEs in Tamil Nadu

MSMEs play a critical role in Tamil Nadu's industrial and economic development. They contribute to:

• Employment generation: Creating job opportunities for both skilled and unskilled workers.
• Economic growth: Contributing to exports and attracting investments in various sectors.
• Innovation: Bringing innovative products and services to the market.
• Self-reliance: Encouraging local businesses reduces dependency on imports.

The government provides various MSME schemes in Tamil Nadu to support business growth and sustainability.

Key MSME Sectors in Tamil Nadu

Tamil Nadu's diverse MSME sector covers various industries, such as:

• Textiles and garments: The state is a hub for textile manufacturing, with cities like Coimbatore and Tiruppur leading the industry.
• Automobile components: Tamil Nadu manufactures 35% of India's automotive components, a sector driven mainly by MSMEs.
• Leather products: Vellore and Ranipet are known for their leather exports.
• Food processing: MSMEs play a key role in adding value to agricultural produce.

These industries benefit greatly from various MSME schemes in Tamil Nadu, helping businesses grow and become competitive.

Popular MSME Schemes in Tamil Nadu

The Tamil Nadu government offers several schemes to support micro, small, and medium enterprises. Some of the most popular MSME schemes in Tamil Nadu include:

Capital Subsidy Scheme

• Provides financial support to MSMEs for purchasing new machinery.
• Subsidy of up to 25% of the investment, with a cap of INR 1 crore.

Technology Upgradation Scheme

• Helps MSMEs adopt modern technologies to improve productivity.
• Provides financial assistance up to INR 50 lakh.

Credit Guarantee Fund Scheme

• Offers collateral-free loans to MSMEs.
• Guarantees up to 85% of the loan amount, reducing the risk for lenders.

Single Window Clearance

• Aims to simplify the process of starting and running an MSME.
• Provides approvals and clearances within 30 days.
• Entrepreneurs can explore these schemes to get the necessary support for their businesses.

MSME Loans in Tamil Nadu

To help businesses meet their financial needs, lenders provide various MSME loans in Tamil Nadu. These loans can be used for working capital, expansion, and equipment purchases. Some key features include:

• Loan amount: Ranges from INR 50,000 to INR 2 crore, depending on the business size.
• Interest rates: Typically start from 8% per annum, depending on the lender and the borrower’s credit profile.
• Repayment tenure: Flexible terms ranging from 1 to 10 years.

Entrepreneurs can apply for an MSME loan in Tamil Nadu through various government and private financial institutions.

How to Apply for an MSME Loan in Tamil Nadu

Applying for an MSME loan in Tamil Nadu is a simple process. Here’s how you can do it:

• Check eligibility: Ensure your business meets the criteria set by the lender.
• Prepare documents: Gather documents such as proof of business registration, income tax returns, and financial statements.
• Select a lender: Compare interest rates and loan terms from different institutions.
• Submit application: Apply online or visit the lender’s office with your documents.
• Approval and disbursement: If approved, funds will be credited to your account within a few days.

Government initiatives like the Tamil Nadu Industrial Investment Corporation (TIIC) also offer loans at competitive rates.

Benefits of MSME Loans in Tamil Nadu

Taking an MSME loan in Tamil Nadu can provide several benefits, such as:

• Quick disbursal to meet urgent business needs.
• Flexible tenure that suits your financial situation.
• Lower interest rates compared to personal loans.
• No collateral is required, thus reducing the risk.

Entrepreneurs can use these loans to scale their businesses and explore new opportunities.

Also Read: MSME Certification: Why is it Important?

The Bottom Line

The MSME in Tamil Nadu sector is a driving force behind the state's economy. Entrepreneurs can benefit from various schemes and loans for growing businesses in the presence of government support, financial assistance, and growth opportunities. If you want to either start a new enterprise or expand an existing one, Tamil Nadu is a good place for MSMEs.

If you are an entrepreneur looking to benefit from MSME schemes in Tamil Nadu or secure an MSME loan, apply for an MSME loan now and take your business to the next level.

Additionally, an EMI calculator can help you easily gauge your EMI amounts! So, go ahead and propel your business towards success ASAP.

FAQs

Q.1. How many MSMEs are there in Tamil Nadu?

A. Tamil Nadu now has the 3rd highest number of MSMEs in India. As per the 73rd National Sample Survey, held in 2015-2016, there are 49.48 lakh MSMEs in Tamil Nadu.

Q.2. What is the role of MSMEs in Tamil Nadu?

A. The main focus of MSMEs is to promote the country's economic and social development. This is done by fostering the spirit of entrepreneurship with a socially inclusive policy. They also encourage women to run businesses.

Q.3. What do you need to know about MSME?

A. MSMEs, often considered the backbone of the Indian economy, have contributed substantially to India's GDP. It generates employment opportunities in the country and contributes towards developing backward and rural areas.

Q.4. Which state is no. 1 in MSME in India?

A. As of March 2024, according to Statista, Maharashtra leads in the number of MSMEs in India. It accounts for over 17% of the country's MSMEs. Following Maharashtra, Tamil Nadu holds the second position.

Q.5. Which MSME is most profitable?

A. Some of the most profitable MSMEs are those focused on food processing, healthcare, IT services, etc.

Disclaimer:

The contents of this article are for information purposes only and not a financial advisory. The information is subject to update, revision, and amendment and may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject Godrej Capital or its Affiliates to any requirements. Godrej Capital or its Affiliates shall not be responsible for any direct/indirect loss or liability incurred by the reader for making any decisions, financial or otherwise based on the contents and information mentioned. For more information, please visit www.godrejcapital.com.