How Can Small Businesses Benefit from Tamil Nadu’s New (MSME) Policy 2021?

The new policy will make Tamil Nadu a perfect ecosystem for MSMEs and start-ups to set up ventures.


To improve and develop the MSME ecosystem in Tamil Nadu and boost investments in the SME sector, Chief Minister Edappadi K Palaniswami announced a new MSME policy recently. MSMEs form the crux of the Indian industrial market with millions of small and medium enterprises thriving across states. 

Why are MSMEs important?

MSMEs form the foundational base and accelerate growth in developing countries. The MSME sector has expanded post reclassification, which is why new policies are needed to set the tone for the newly expanded sector to boost the sector by attracting more investments and providing incentives for development in backward districts.

In a labour-intensive country like India, MSMEs are important as they constitute over 90% of total enterprises and generate the highest rates of employment growth. The sector has shown innovativeness and adaptability to survive even in the recent economic downturn and recession which shows growth potential. The sector also helps in the socio-economic development of the country.

About the New Industrial Policy

  • The main aim of the Policy is to strengthen the Ease of Doing Business through District Industries Centres. 
  • The government aims to attract Rs 10 lakh crore investments in four years and induce employment for 20 lakh people by 2025 in the state. 
  • They plan to achieve an annual growth rate of 15% in the manufacturing sector and to increase the contribution of the manufacturing sector to 30% of Gross State Value Added by 2030. 
  • The project will also focus on industrial units, sunrise sectors, R&D projects, industrial park developers, logistics and FDI investments and let investors choose their structured incentive package for higher flexibility. 
  • It also encourages higher participation of women, differently-abled and transgenders in the workforce.
  • Several concessions including land at 50% discounted price, will be provided to the entrepreneurs starting ventures in the 22 industrially backward districts.
  • The MSMEs capital subsidy will be increased to Rs 1.5 crore from the present Rs 50 lakh.
  • ‘Under the Business Facilitation Act, exemptions will be given for various state approvals for 3 years to New MSMEs and Start-ups based on self-certification.
  • They also plan to increase access to affordable finance through schemes like the Unemployed Youth Employment Generation Programme, New Entrepreneurs cum Enterprise Development Scheme and Credit Guarantee Fund Trust for Micro and Small Enterprises. 
  • They will also facilitate scaling up of MSMEs via listings and incentives and access to access to National and Global Markets through the Government e-Marketplace (GeM) portal.

What is in it for you as an MSME entrepreneur?

The policy will facilitate national and international investments in the sector and help in scaling and diversification of MSMEs. It will also expand employment, infrastructure support and balanced industrialisation. As an MSME entrepreneur, Tamil Nadu through their policy provides the best market for you to set foot in or invest in, especially if you are just starting. There is immense scope for innovation and you will be provided with several incentives which will help in substantial expansion and diversification. The policy also aims to increase easier access to national and global markets; to improve competitiveness and productivity. If you are an existing MSME entrepreneur or are planning to start a small-scale business, research more into the New Industrial Policy, you will find something that helps your business thrive and grow.

Smruthi Krishnan
Smruthi Krishnan
Smruthi interviews and writes on inspiring entrepreneurs and the success stories of start-ups. She is currently pursuing Economics major from Delhi University.

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