Industry, Labour and Employment

Micro Small and Medium Enterprises (MSME)in Kerala

Micro, small and medium enterprises (MSMEs) can play a crucial role in promoting equitable development and in nurturing innovation on a small scale. The MSME sector in India is diverse in terms of size, levels of technology employed and products. There are 346.12 lakh units spread across the country employing 805.24 lakh workers.

Micro, Small and Medium Enterprises (MSME) contribute a share of 37.5 per cent to the country’s GDP. The sector has huge potential in addressing structural problems such as unemployment and regional and intersectoral imbalances. Given their comparatively low capital costs and their forward- backward linkages with other sectors, MSMEs can play a crucial role in building a diversified manufacturing sector.

Realizing the importance of the MSME sector, the government has undertaken a number of schemes/programmes such as the Prime Minister’s Employment Generation Programme (PMEGP), Credit Guarantee Trust Fund for Micro and Small Enterprises (CGTMSE), Credit Linked Capital Subsidy Scheme (CLCSS) for Technology Upgradation, Scheme of Fund for Regeneration of Traditional Industries (SFURTI), and Micro and Small Enterprises-Cluster Development Programme (MSE-CDP) for the establishment of new enter
prises and development of existing ones. Some of the new initiatives undertaken by the government for the promotion and development of MSMEs, are as follows:

Udyog Aadhar Memorandum (UAM):

The UAM scheme, which was notified in September 2015 under section 8 of the MSME Development Act 2006, is a path-breaking step to promote ease of doing business for MSMEs. Under the scheme, MSME entrepreneurs need to just file an online entrepreneurs’ memorandum to instantly get a unique UdyogAadhaar Number (UAN). The information sought is on self-certification basis and no supporting documents are required. This marks a significant improvement over the earlier complex and cumbersome procedures.

Employment Exchange for Industries: To facilitate match making between prospective job seekers and employers an employment exchange for industries was launched on June 15, 2015 in line with Digital India. More than 3.42 lakh job seekers have been registered on the portal as on December 30, 2015.

Framework for Revival and Rehabilitation of MSMEs: Under this framework, which was notified in May 2015, banks have to constitute a Committee for Distressed MSME enterprises at zonal or district level to prepare a Corrective Action Plan (CAP) for these units.

A scheme for Promoting Innovation and Rural Entrepreneurs (ASPIRE): ASPIRE was launched on March 16, 2015 with the objective of setting up a network of technology centres and incubation centres to accelerate entrepreneurship

The Micro, Small and Medium Enterprises Development Act, 2006

India is one amongst very few countries which has a legal framework for the MSME Sector in the form of MSMED Act 2006, as per which investment limit for Micro, Small & Medium enterprises are specified for Manufacturing and Service enterprises.

Entrepreneurs Memorandum (Part-II)

As per the provisions of Micro, Small and Medium Enterprises Development Act, 2006, MSMEs file Entrepreneurs Memorandum (Part-I) at District Industries Centres (DICs). After commencement of the project, the entrepreneur concerned files Entrepreneurs Memorandum (Part-II)/ [EM-II]. Prior to the enactment of the Micro, Small & Medium Enterprises Development Act, 2006(MSMED Act, 2006) small-scale industrial units filed only EM-I with the DICs. Now, filing of EM-II is discretionary for micro, small and medium enterprises engaged in both manufacturing and services.

Figure No. 3.8. shows the number of EM-II filed by the MSMEs at DICs under the various State/UT Commissionerates/Directorates of industries during 2007-08 to 2015-16.

Figure 3.8
Total Number of EM II filed with DICs in India, 2007-08 to 2015-16, in lakh  


*Data up to September 17, 2016
Source : MSME Annual Report 2015-16, Ministry of MSME, GOI.

Number of MSMEs filing EM-II with the District Industries Centres across the country increased from 1.73 lakh in 2007-08 to 4.25 lakh in 2014-15. Top ten States in terms of number of EM-II filed by the MSMEs during 2014-15 are Tamil Nadu, Gujarat, Uttar Pradesh, Maharashtra, Karnataka, Madhya Pradesh, Rajasthan, West Bengal, Kerala, and Telangana. These States together account for nearly 94 per cent of the total number of EM-II filed

MSME in Kerala

Kerala, with its excellent connectivity, communication network, availability of highly skilled human resources and relatively good industrial infrastructure, is highly suited for the growth of the MSME Sector. The Micro Small and Medium Enterprises sector help in industrialisation of rural & backward areas, targeting youth and socially disadvantaged groups such as SCs, STs, women, and physically challenged persons. This sector contributes enormously to the socio-economic development of the State.

The potential of IT industry in the MSME sector is big as the State offers best connectivity with broadband reach in almost all parts of the State. Consultancy firm KPMG has suggested that there is strong potential in Kerala for growth based on SMEs and IT.

The industries coming under the MSME sector include handicrafts, handloom, Khadi, food processing industries, garment making and textile industries, industries related to coir, wood, bamboo, plastic, rubber, leather, clay, and electronic/electric components. The Directorate of Industries and Commerce of Government of Kerala acts as a facilitator for industrial promotion and sustainability of MSME sector and traditional industrial sector in the State with the help of Directorates of Handloom & Textiles, Directorate of Coir and Khadi and Village Industries Board. A total amount of 2,373.74 crore has been provided for the development of Industry and Minerals, during the first four years of 12th plan.

State Profile of the MSME Sector

The number of new enterprises filed Memorandum under MSMED Part II in Kerala during the year 2015-16 up to September 17, 2015 was 7705. Out of these, 301 (3.9%) MSMEs were registered by entrepreneurs belonging to the SC community, 31 (0.4%) by entrepreneurs belonging to ST and 1805 (23.42%) by women. Investment in the sector during the period was 1,29,356.95 lakh while employment generated and the value of goods and services produced were 45407 Nos. and 3,38,001.36 lakh respectively. The details are given in Appendix 3.16.

As on September 17, 2015, the total number of working SSIs/MSMEs registered in Kerala are 2,57,466. Out of the total SSIs/MSMEs, 3.84per cent were promoted by SC entrepreneurs, 0.72per cent by STs and 24.97per cent by women entrepreneurs. The total investment was 17,98,646.38 lakh while the total value of goods and services produced was 67,65,143.93 lakh and the total number of employment generated was 13,18,666 Nos. The details are given in Appendix 3.17.

EM Part II had stopped in DIC from September 18, 2015 and online registration in UdyogAadhar has started. From September 18, 2015 till March 31,2016 the number of UdyogAadhar Memorandum filed were 11317 Nos with investment in plant & machinery of 1,90,735 lakh and the employment generation of 75402 nos. ( The details are given in Appendix 3.18.

Performance of the Sector in Kerala

Trends in investment & employment in MSME sector over the period from 2011-12 to 2015-16 is shown in Figure 3.9.

Figure 3.9
Production, Investment & Employment in MSME sector, 2011-12 to 2015-16


Source: Directorate of Industries &Commerce
*Figures only up to September 17, 2016 for the year 2015-16 .Online registration in
Udyog Aadhar started from September 18, 2016.

The investment in the sector during the period from 2011-12 to 2014-15 has increased on an average by 9.73 per cent. The investment has shown a steady upward trend over the period. The value of production shows an enormous increase of 25 per cent during 2013-14. The employment has remained more or less constant over the period. The value of production and employment generation were at their peak during 2013-14.

The rate of growth of the number of MSME units has been increasing though at a declining rate from 2011-12 to 2014-15. However for the year 2015-16 from April- September 2015 there has been a growth rate of 10.95 % that is from 6944 as on September 2014 to 7705 as on September 2015 and is shown in Figure 3.10.

Figure 3.10
Growth rate of MSME units registered in MSME sector over the last 4 years 


*2015-16 Data up to September 17, 2016
Source: Directorate of Industries & Commerce

Figure 3.11 shows the growth rate of employment generated over last 4 years. There has been increase in employment generation for the years 2012-13 and 2013-14. But the employment generated has decreased by 4.88 per cent in 2014-15. However for the year 2015-16 from April- September 2015 there has been a growth rate of 14.51 per cent ,tha t is, from 39651 as on September 2014 to 45407 as on September 2015.

Figure 3.11
Growth rate of Employment generated in MSME sector over the last 4 years


*2015-16 Dataup to September 17 2016
Source: Directorate of Industries and Commerce

District wise achievements

 District wise analysis reveals that during the year under review, Thiruvananthapuram occupies highest position with 298 new MSME units and Ernakulam tops in numbers of employment generated with 10105 and Wayanad was at the lowest position with 184 new MSME units and 777 new jobs generated. In case of online registration from September 18, 2015 to March 2016 Ernakulam occupies the top position in all aspects with 2129 new MSME units, 48371lakh investment and 18857 employment generated. The details are given in Appendix 3.19.

Major State Plan Schemes and achievements

During 2015-16, State Government implemented various schemes successfully for improving the industrial environment of the state through development of industrial infrastructure, promoting entrepreneurship and providing skill development. Following are the major schemes and achievements.

 Industrial Co-operative Societies

In Kerala, the total number of working industrial co-operative societies as on March 31, 2016 was 408 against 405 in the previous year, a increase of 0.74 per cent over the previous year. Out of 408 cooperative societies, 111 Societies were registered by women. The details are given in Appendix 3.20. During 2015-16, 12 societies were registered. 

Industrial Development Plot/Areas

Directorate of Industries and Commerce (DIC) develops infrastructure facilities for small-scale industries in the State. At present there are 37 Development Area / Development Plots under DIC, having a total acquired area of 2439.44 acres. A total of 2274 units are functioning in these DA/DPs in 2015-16 compared to 1797 in the previous year. The details are given in Appendix 3.21.

Table 3.4
Major schemes and achievements during 2015-16

Sl No Scheme Name Achievements 2015-16
1 Infra- structure Development Schemes These schemes intend to promote development of infrastructure in the industrial parks, estates, development areas/plots including roads, power, water and facilities for waste management. It is also envisaged to develop new multi-storied industrial estates, industrial parks and common facility centres for clusters. During 2015-16, the functional industrial estates at Changanasseri and Manjeri were upgraded and road construction work for the Anthur Development Plot(DP), Kannur was initiated. An outlay of ₹2430.00 lakh was provided for the year 2015-16 for implementing the scheme.  
2 Entrepreneur Support Scheme (ESS) The scheme intends to provide extensive support to MSMEs and give one time support to entrepreneurs, especially women and person belonging to SC and ST community. During 2015-16 a total amount of ₹3925 lakh was sanctioned to 1021 enterprises.An outlay of ₹4000 lakh was provided during the year 2015-16 for ESS.
3 Capacity building programme The scheme intends to promote Entrepreneurial/ industrial promotional activities and skill development training in Micro, Small and Medium Enterprises. Under the scheme following events were conducted
  • Entrepreneurial Development Programme: 15 Days each in 14 Districts.
  • Technology clinic: two-day programme in 14 districts.
  • Investors meet: One-day workshop in 57 taluks.
  • Conducted 93 Investment meets, 505 entrepreneurs started new enterprises with investment of 67.32 Crores
  • An outlay of 750 lakh was provided during the year 2015-16.

Source: Directorate of Industries and Commerce

Mini Industrial Estates

As on March 31, 2016 there were 112 mini industrial estates and 857 SSI units in these estates providing total employment of 3590. The details are given in Appendix 3.22.

Industrial Estates under SIDCO

Kerala Small Industries Development Corporation (SIDCO) provides infrastructure facilities such as land, work shed, water, distribution of scarce raw materials to the units in the small scale sector. There are 17 major industrial estates, which include 882 working units, under the administrative control of SIDCO. These working units provided employment to nearly 7394 people as on October 31, 2016. Further, there are 36 mini industrial estates and 7 Industrial Parks under SIDCO in which about 1303 employees are working in 326 working units all over the State. The total turnover during 2015-16 of SIDCO was 277.69 crore. It is suffering losses from 2012-13 onwards. Details of industrial estates under SIDCO are given in Appendix 3.23, Appendix 3.24 and Appendix 3.25.

MSME Amendment Bill, 2015

The Ministry of Micro, Small and Medium Enterprises Development (Amendment) Bill, 2015 was introduced in the LokSabha on April 20, 2015 .The objectives of the proposed amendments are to (i) enhance the existing limit for investment in plant and machinery considering changes in price index and cost of inputs consistent with the emerging role of the MSMEs in various Global Value Chains, (ii) include medium enterprises apart from small enterprises in section 7(9) to enable the aforesaid category of enterprises to avail the benefits and become competitive, and (iii) empower the Central Government to revise the existing limit for investment, by notification, considering the inflation and dynamic market situation.

Promotional Events / Exhibitions – Achievements of the MSME sector during 2015-16

The Directorate of Industries and Commerce conducted/participated in 27 Exhibitions / Fairs /Expos inside Kerala with 709 stalls in 2015-16 and generated an income of Rs. 1220.89 crore. Nine exhibitions were held in Thiruvananthapuram. While there were only 3 exhibitions in Kannur the maximum number of stalls (218) were put up in the district. The DIC represented Kerala in an international exhibition with 13 stalls. Details are given in Appendix 3.26. Following are the major promotional activities undertaken by the Department of Industries during 2015-16.

  • The Kerala Business to Business Meet 2015 organised at Kochi from February 26 to 28, 2015 
  • Government of Kerala participated in and won the Horeca Buzz Award for its efforts to create maximum buzz on ground and online at 'AAHAR 2016' Exhibition organised at Pragati Maidan, New Delhi from March15 to 19, 2016.
  • Organised an 'Awareness programme on Workshop on Food Safety' on April 29, 2016 at Kochi
  • Participated in the Food Hospitality World 2016 Exhibition from June 9 to 11, 2016 at Bangalore.
  • 93 Investment meets were conducted, which were attended by 6292 entrepreneurs of which 505 entrepreneurs started new enterprises with a combined investment of 67.32Crore.
  • The following meetings were conducted; District Level Review Committee(37), District Industrial Development Councils(6), Green Channel Counter(9), District Level Committee on State Investment Subsidy(37), District Level Committee on State Tax Extension(28), Single Window Clearance Board(28), MSME Empowered Committee(16).
  • 27 exhibitions were conducted in which 999 units participated and the total sales turnover of the units was 15.15 crore.
  • 360 Industrial seminars were conducted which were attended by 21642 entrepreneurs out of whom 1416 started an enterprise.

Bank Credit to SSI / MSME Sector

As per the State Level Bankers’ Committee (SLBC) report, the outstanding bank credit to various sectors by the commercial banks in Kerala at the end of March 2016 increased by about 13.9 per cent, that is, 218706 crore against 192010 crore in the previous year. The outstanding flow of credit to MSME sector was 39463 crore, an increase of 10.44 per cent,as compared to 35730 crore in the previous year. The status of flow of credit to various sectors is given in Appendix 3.27.

Entrepreneurship Development

Entrepreneurial activity is a pillar of economic growth, across countries. In both developed and developing countries, fostering entrepreneurship for sustainable development could improve and create more sustainable consumption and production systems overall. Entrepreneurial education fosters innovation and helps entrepreneurs build better products, processes, and services. It is especially effective when it takes into account the social, economic and ecological complexities of development, the values of sustainability, and a long-term perspective.

In Kerala, entrepreneurship thrives in a number of sectors including trade, transport, tourism, information technology (IT),IT enabled services and engineering.

Promoting Skill Development

Staff training and the vocational and continuous on-the-job training ensure a constant upgrading of workers 'skills. In India, Ministry of Micro, Small and Medium Enterprises provided entrepreneurship and skill development training to 16,87,324 persons during the 11th Plan and 11,58,562 persons during the first two years of the 12th Plan through various institutions such as MSME-Development Institutes, KVIC, Coir Board, and NSIC.

MSME-Development Institute (MSME-DI), Thrissur, Government of India has conducted 81 tailor made development training programmes in 2015-16 benefitting 2384 potential entrepreneurs. Details are given in Appendix 3.28.

Table 3.5
Skill Development & Training Institutes in Kerala

MSME Development Institute, (MSME-DI), Thrissur, Government of India Institute under the Ministry of MSME, Government of India provides techno-economic and managerial consultancy services to the MSME sector in Kerala and the Union Territory of
Lakshadweep. It also conducts various training programmes.
Kerala Academy of Skill excellence (KASE) Government of Kerala has setup three Kaushal Kendras under KASE at Kollam, Kozhikode and Palakkad to provide career guidance and industrial training to rural youth, improving their employability
Kerala Institute of Labour and Employment (KILE) Constituted by Government of Kerala for training and research in labour and allied subjects. During 2015-16 various programmes were conducted by KILE including Training, Workshops, Seminars, Publications and Research studies. The beneficiaries through these programmes were 669. During 2016-17, 29 programmes were conducted (as on 30thNovember, 2016).The beneficiaries of these programmes were 1641, which is 40.77 per cent higher than the previous year.

Source: 1. MSME Development Institute, (MSME-DI), Thrissur, Government of India.
2. Kerala Academy of Skill excellence (KASE)
3. Kerala Institute of Labour and Employment (KILE)