SIDBI to provide loan to Tamil Nadu govt under new cluster development fund to upgrade MSME clusters

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August 26, 2021 7:25 PM

Credit and Finance for MSMEs: The expert committee on MSMEs headed by U.K. Sinha in its June 2019 report had recommended SIDBI the use of Priority Sector Shortfall (PSS) funds to create a low-cost lending window for state governments for infrastructure projects in clusters, civil works for rehabilitation of existing industrial estates and setting up of new industrial estates.

SIDBI has so far setup Project Management Units (PMUs) in 11 states namely, Assam, Andhra Pradesh, Rajasthan, Gujrat, Haryana, Maharashtra, Delhi, Uttar Pradesh, Uttarakhand, and Tamil Nadu (Representattional image)

Credit and Finance for MSMEs: Two weeks after the principal financial institution for MSME financing and development — SIDBI announced its Cluster Development Fund to give a thrust to hard infrastructure support to state governments for MSME cluster development, it has provided the first approval under the fund beginning with the Tamil Nadu government. According to SIDBI, the project-specific “moderately priced loan assistance” under the fund will be extended to the state government for upgrading various existing MSME clusters and for developing new industrial infrastructural facilities in the state. However, SIDBI didn’t disclose the loan amount and tenure.

“The thrust shall be laid on clusters in sectors/subsectors which can directly benefit the MSMEs in the state and to bring them to a level ‘NEXT’ wherein they emerge vibrant, higher on the value chain and become sustainable. SIDBI shall complement these with its customized direct lending products being channelized in the supported clusters,” Sivasubramanian Ramann, IA&AS, Chairman and Managing Director, SIDBI said in a statement. He added that the bank shall also examine supporting the soft infrastructure issues in select clusters. The issues could be relating to technology, skilling/upskilling, energy efficiency, market, and credit. Ramann said a pilot has been launched for the same in the Ambattur leather cluster.

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“There are two crucial aspects to a cluster – hard and soft infrastructures. We have set up a Cluster Development Fund with the Reserve Bank of India’s support that will attend to the hard infrastructure side of a cluster. We have also launched the Business Development Services Intervention programme in five clusters that will attend to the soft side of it and we think it can impact 20,000-25,000 MSMEs,” Ravindra Kumar Singh, General Manager and Head — Promotion and Development, SIDBI had told Financial Express Online. Apart from the Ambattur cluster in Chennai, the other four clusters were tourism cluster in Jammu & Kashmir, Delhi-NCR innovation cluster; Jodhpur wood furniture cluster, and Sambalpur textile cluster.

The expert committee on MSMEs headed by U.K. Sinha in its June 2019 report had recommended SIDBI the use of Priority Sector Shortfall (PSS) funds to create a low-cost lending window for state governments for infrastructure projects in clusters, civil works for rehabilitation of existing industrial estates and setting up of new industrial estates. SIDBI has so far setup Project Management Units (PMUs) in 11 states namely, Assam, Andhra Pradesh, Rajasthan, Gujrat, Haryana, Maharashtra, Delhi, Uttar Pradesh, Uttarakhand, and Tamil Nadu. “We will rope in an agency and that will, based on the diagnostics, do action plan formulation that will have a break of short-term and long-term goals. In discussion with clusters stakeholders, it will formulate an action plan for two-three years,” Singh had said.

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