Nearly 15% Kerala MSMEs shut shop but survival rate better than national average: P Rajeeve

  • Around 8% or 11,833 enterprises shut because of financial and marketing reasons
  • Only 503 units closed because of labour issues such as not getting workers, says Minister for Industries
  • The first 'Made in Kerala' certificate to be issued to 100 coconut oil brands
  • Policy on Campus Industrial Parks, where students can earn while learning to be released in a month
Industries Minister P Rajeeve. Photo: Manorama

Kasaragod: Nearly 15 per cent of the over one lakh micro, small, and medium enterprises (MSME) started as part of Kerala's Year of Enterprises last year have shut shop, said Minister for Industries P Rajeeve on Monday. But that is half the death rate of enterprises in the country, he said.

He said around 30 per cent to 40 per cent of new businesses die in India, attributing the numbers to the Union government's MSME Development and Facilitation Office in Thrissur. "We take it as a credit that we were able to halve the closure rate of enterprises in Kerala," he said, inaugurating Rising Kasaragod, an investors' meet organised by the District Panchayat, at The LaLiT Resort and Spa in Bekal.

The minister was responding to a report aired by Manorama News on Monday that 18,315 of the new ventures started in the Year of Enterprises have closed. The report said Malappuram saw the highest number of closures with 2,031 businesses winding up.

It said 1,880 MSMEs closed in Palakkad, 1,845 in Kannur, and 1,829 in Ernakulam.

Wayanad and Idukki districts, which saw the least number of new ventures, were also at the bottom of the table of closed enterprises, with 521 and 398 closures, respectively.

Reasons for closures

The government cannot make the mortality rate of enterprises zero. "It can only work to bring down the rate. And we have halved it to 15 per cent," Minister Rajeeve said in the Investors' Meet.

He listed out the reasons for the closures. He said 5,703 enterprises were shut down because of financial crunch; 6,180 units were shut because of marketing issues; 1,155 units were shut because of inadequate infrastructure; 503 units were shut because of labour issues; 120 units were shut because of technical issues; and 383 businesses wound up because their owners died. These numbers total up to only 14,044 enterprises.

He said labour issues were related to the unavailability of workers or attrition.

Also, banks were not receiving applications for loans despite a high number of units shutting down because of the financial crunch. "I asked my officials to find out the reasons. Could it be because of banks' approach?" he said.

Rajeeve said MSMEs were required to foot only 4 per cent interest of the loan and the rest is borne by the government under the Year of Enterprises scheme.

First Made in Kerala tag to coconut oil brands

The first 'Made in Kerala' tag would be given to 100 coconut oil brands, said Minister for Industries P Rajeeve. The government is soon coming up with criteria to claim the tag, he said.

The government is coming up with the 'Make in Kerala' tag as part of an exercise to brand products not just made in Kerala but also using products sourced from Kerala. The certification would read 'Made in Kerala, safe to eat. Certified by the government of Kerala', the minister said.

Other products would be given the certificate after coconut oil. "We have set aside Rs 1,000 crore for the proposal," he said

Referring to Onmanorama's report on 'How Kerala revived its lost copra & coconut oil market' published on June 8, the minister said the state has 2,150 coconut oil mills. "People are ready to pay Rs 10 extra for unadulterated coconut oil from a mill in their neighbourhood," he said.

Campus Industrial Park policy in one month

The state government will make public the policy for the campus industrial park in one month, said Minister for Industries P Rajeeve. "It will be a pathbreaking policy for Kerala," he said.

Students who go abroad do part-time work to fund their education. Campus Industrial Parks will allow students to work while learning, he said.

Campuses with more than five acres to spare may start such parks, where industrial production units can be set up. Mahatma Gandhi University recently started a nano fertiliser production unit. Alumni and businesses from outside could also set up units in the park. Projects of faculty members could also be implemented in the park, he said. 

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