The state government has prepared a strategy to give fresh impetus to the small and medium scale industrial sector which is credited to play an important role in providing job opportunities and remove regional imbalances. The department of small-scale industries and export promotion is in the process of creating a dedicated venture capital fund to upgrade existing small and medium scale units besides providing financial help to start-ups.
In the first phase, the department plans to create a corpus of Rs 200 crore of which Rs 100 crore is proposed to be allocated by the state government while the remaining will be roped in by financial institutions. Small scale industries principal secretary Rajnish Dubey confirmed that the department was in talks with Small Industries Development Bank of India and other financial institutions for setting up a VCF.
The concept of venture capital fund is prevalent in states like Gujarat, Maharashtra, Karnataka and West Bengal. Sources said once finalised, the concept would be put before the state cabinet for formal approval.
“The idea is to put the sector back on a growth trajectory,” he said, speaking to TOI. He said the department would form a ‘fund management’ unit and invite applications from industrial units seeking upgrade. Dubey said of the total funds initially allocated for the purpose, 80% would be used to upgrade units and 20% is earmarked for start-ups.
Accounting for two-third of the total industrial export from UP, the sector had suffered a setback in 2015-16 when the total export volume dropped to Rs 81,000 crore from Rs 85,000 crore in the preceding financial year. The sector has since been struggling to get the much needed boost. Dubey said the dedicated fund allocation is expected to boost the sector and contribute to state economic development.
According to a report submitted by ASSOCHAM, the MSME sector accounts for second largest employment generation after agriculture in UP. It engages 92.36 lakh people in UP, of which 90% remain unregistered. The report noted that during the 2007-2012 period, investments in MSME have shown continuous increase. Investments declined in 2012-13 and continued to decline in the following year. This, the report said, was essentially because of the macro-economic slowdown as well as shift in focus from manufacturing to the services sector which require lower investment.