DMK MP Veeraswamy writes to MSME Min Nitin Gadkari; suggests way to fill ‘huge gap’ in MSME database

MSMEs had to earlier register at District Industries Centres (DICs) before the MSME Development Act, 2006 came into effect. Later, as per the provisions of the act, MSMEs had to file EM- part I at DICs before starting an enterprise EM-part II after commencement of production. (Express File/Gurmeet Singh)

DMK member of Parliament (MP) Kalanidhi Veeraswamy has reached out to the MSME Minister Nitin Gadkari over the ‘absence’ of MSME data across sectors and states in the country. In a letter to the minister on Sunday, Veeraswamy said, “Unfortunately, we do not have any data available with respect to the number of enterprises that are under trading/manufacturing/exporting/service categories with their sectors involved (such as textile/automobile/IteS/electronics…) state wise (if not district wise).” The MP also suggested measures for gathering and streamlining MSME data without which “we will not be able to plan and implement any support schemes and pave the way forward for their growth in the coming years.”

Importantly, the letter had cited Financial Express Online’s story earlier this month that reported 1.02 crore MSMEs registered under UAM between September 2015 and June 2020 apart from nearly 22 lakh units registered under EM II between 2007 and 2015, as per the FY21 annual report of the MSME Ministry. Moreover, as of May 16, 2021, 30,00,822 MSMEs were registered on the Udyam Registration portal, which replaced the erstwhile process of filing for Udyog Aadhaar Memorandum (UAM). Hence, out of the 1.24 crore registered MSMEs (UAM and EM II) in India, 24.1 per cent were registered on the new portal assuming all Udyam Registrations were existing MSMEs from UAM or EM II.

“The data available in MSME website claims to have over 65 million MSME but I understand that there were 1.02 crore registered MSMEs under UAM…This exposes the huge gap between the data on MSME,” the MP added.

Among the data points to be included in the MSME database suggested by Veeraswamy were the year of establishment of MSME and annual turnover during last three years, number of blue/white/brown collar employees, number of formal/informal workforce along with their status as migrant or local, and number of skilled and unskilled employees. “The best way is door-to-door survey as major industrial towns have area and locality defined and MSMEs in that region at least can be brought in the records. Investment in infrastructure or machines should be the main criteria as the infra you create leads to wealth generation and more activity and involves a level playing field overall,” Alok Kumar Jain, Proprietor, KPJ Distributors told Financial Express Online.

Veeraswamy also urged the minister to “generate one Unique Identification Number (UIN) for MSMEs as per these norms, with which we can tract many data such as — the number of enterprises which are in proprietorship, partnership, private limited, closely listed, public listed, employment in formal and informal segments, jobs under different categories of sectors, turnover and growth contribution in different types of the enterprises and sectors.”

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“MP Dr Kalanidhi has raised the valid and justifiable fundamentals on MSME. This data, if collected immediately, will serve as tracking points for future analysis and study. For the last seven years, we have no data which is worth analysis with respect to jobs and enterprise. Economy and livelihood need closer study now for future growth. We can address MSME problems if we have proper data,” K E Raghunathan, Convenor, Consortium of Indian Associations told Financial Express Online.

MSMEs had to earlier register at District Industries Centres (DICs) before the MSME Development Act, 2006 came into effect. Later, as per the provisions of the act, MSMEs had to file EM- part I at DICs before starting an enterprise EM-part II after commencement of production. The government had last year introduced the Udyam Registration portal that replaced the erstwhile process of filing for UAM. Moreover, the last survey involving MSMEs’ count was the National Sample Survey (NSS) 73rd round conducted by the National Sample Survey Office during FY16 that recorded 6.33 crore unincorporated non-agriculture MSMEs in India, of which 6.30 crore were micro firms, 3.31 lakh were small enterprises and 5,000 were mid-sized businesses. The Reserve Bank of India had last year mandated businesses registered under Entrepreneur Memorandum (EM) part II and UAM till June 30, 2020, to file for new registrations on the Udyam Registration portal.

“Before the Udyam portal, there were guidelines for MSMEs to take different Udyog Aadhaar registration for their multiple factories. However, we had objected to this as many large enterprises with multiple factories having turnover and investment of around Rs 50-100 crore were treated as MSMEs and were indirectly benefitted whereas the intent was to support MSMEs only. While in the new portal, which requires Aadhaar and PAN, GST details, one can also add new units but the turnover and investment limit will be picked from the company’s balance sheet automatically unlike in UAM, which required only Aadhaar, where you had to provide details manually,” Mukesh Mohan Gupta, President, Chamber of Indian Micro, Small & Medium Enterprises (CIMSME) told Financial Express Online.