A Spanner In The Works
FRONTLINE|November 24, 2017

Hit hard by demonetisation and GST, micro, small and medium enterprises in Vadodara and Surat, the industrial hubs of Gujarat, are striving to make a comeback.

Anupama Katakam
A Spanner In The Works

IN OCTOBER THIS YEAR, GUJARAT Chief Minister Vijay Rupani announced that the Gujarat Industrial Development Corporation (GIDC) would set up 16 additional industrial estates to attract Micro, Small and Medium Enterprises (MSME). Rupani said the government planned to invest Rs.19,650 crore in the hope of encouraging enterprise as well as generating large-scale employment.

With 202 industrial estates, Gujarat has been at the forefront of encouraging small to medium businesses. After the demonetisation debacle, which affected this sector severely, the State has gone into overdrive to prop up an area that has been a significant contributor not just to the State exchequer but to the country. The announcement came a few months after the government gave away Rs.730 crore as incentives to 16,000 MSME units wanting to expand or set up new units in the State. “These companies play a significant role in our economy and in employment, we have to assist in their growth,” Rupani said at a public event.

Are these announcements part of wooing the large base of businessmen and traders inGujarat in an election year? The 3,76,357 registered MSMEs in Gujarat are critical to the State’s growth. According to the Gujarat Industries Commissionerate, the MSMEs employ close to 26 lakh people.

In the initial weeks of demonetisation, the MSMEs were obviously hit hard, largely because of their dependence on cash. Gujarat, with its vast number of enterprises, secondary businesses and trading hubs such as Surat for textiles and Bhavnagar for diamonds, was initially gripped by paralysis. But no sooner had they recovered from it than GST was slapped on them.

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