Tamil Nadu’s MSME Secretary, V Arun Roy has issued new SOPs to promote entrepreneurship in the state. His order dated, July 22, allows the startups registered in Tamil Nadu to be eligible for relaxed rules, including exemption from payment of Earnest Money Deposit (EMD), exemption from the condition of prior turnover; exemption from the condition of prior experience and waiver of tender cost for procurements that are below Rs 20 lakh in value.
The concessions, now, being extended to the startups are due to the recommendations from the Mission Director, Tamil Nadu Startup and Innovation Mission (TANSIM). The mission was brought into existence to give a boost to MSMEs. The procurement entities include government departments, public sector undertakings, statutory boards, local bodies; co-operative institutions and universities in the state.
According to the Tamil Nadu government, numerous startups struggle to keep up in their initial days due to the lack of access to market for their products. As the state government is a major purchaser, it can aid the startups and solve their marketing problems to a major extent. Meanwhile, the state will also be providing recognition to these startups.
As per the order, “It is observed that many startups face entry barriers as departments and Public Sector Undertakings (PSUs) impose restrictions like EMD, prior turnover condition and prior experience condition.” It cited the examples of Kerala, Karnataka and Telangana saying that many states have recognised this issue and have released orders dispensing with such entry barriers for startups.
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Convenor for the Consortium of Indian Association KR Raghunathan called the initiative a step in the right direction. He said, it will help create unicorns from Tamil Nadu while also bolstering employment opportunities.
As reported by a national daily, Raghunathan said, “Currently, EMD is exempt for locally registered MSMEs including startups. However, a startup with Udyam registration in another state like Karnataka, Andhra Pradesh and Maharashtra can also benefit if they register as a startup in Tamil Nadu.”