Single Window Clearance for MSMEs in Odisha: RBI Report

“Single Window System for regulatory clearances for MSME is already in place which needs to be activated. It may be covered under Public Service Guarantee Act of the state government which may help time-bound clearances for the start-up of the projects", the RBI, Bhubaneswar office suggested in its recent report on "The State of MSME sector in Odisha: Issues, Challenges and Way Forward".

The Reserve Bank of India (RBI) has sought activating the Single Window System for regulatory clearances for MSMEs under the ambit of Public Service Guarantee Act of the state government for time-bound clearances for the start-up projects in Odisha.

The report further suggested that, “A simplified and time bound clearance from IDCO will encourage new entrepreneurs. Special cell and vertical in IDCO may be created to give focused attention in dispensing of MSME related cases in time bound manner. Ÿ

NoC from IDCO for mortgage of the land is a major constraint for recourse to bank finance as land on which the plant and machine is installed is treated as primary security. This needs to be addressed on priority basis,” said the report.

To address the issue of infrastructure in tribal areas, State Government may contemplate creation of industrial estates and marketing hubs by using Government land in these districts to create a facilitatory environment for encouraging MSME sector, RBI suggested.

The Reserve Bank further suggested in its report that the State Government may issue an instruction to its PSUs to ensure that all dues have been paid to MSME entrepreneurs by them against receivables within specified time as per the existing rule before preparation of the final audit report of PSUs of the State.

The number of MSME units in Odisha has been steadily increasing over the years. District-wise, the maximum numbers of MSMEs were set up in Sundargarh district followed by Khorda, Cuttack, Ganjam and Jajpur during 2013-14.

The contribution of services and industrial sector to the total GSDP of Odisha are at 59 per cent and 25 per cent, respectively during 2013-14 which is more or less equal to that of all India level of 60 per cent and 26 per cent, respectively, during the same period. Odisha is one of the top ten States in creation of job by MSME sector although it is positioned at 11 in respect of number of MSME units set up as compared to other States.

According to the report, other major issues hurting the sector are lack of skilled labour, absence of sufficient number of capacity building institutions in the State, non-existence of single point information channel to promote MSME products and lack of awareness about various incentive schemes.

With regards to the Financial ecosystem, the major findings of the survey was that there is “Lack of timely and adequate credit, non-coverage of CGTMSE, insistence for collateral for loans up to Rs 10 lakh, cumbersome documentation, inadequacy in hand holding by the banks, increasing level of NPAs, debt waiver mind set of the entrepreneurs, non-rehabilitation of sick units on time, non-availability of single point grievance redressal system are found to be constraining factor for an effective financial ecosystem.”

In the context of Infrastructure ecosystem, the survey noted that erratic / inadequate power supply, hazards in last mile connectivity, insufficient infrastructures for marketing the products, inadequate road and rail linkages are the major bottlenecks for horizontal spread of MSME in the State.

Inadequate capital outlay as percentage to GSDP of the State, insufficient marketing linkages, non-functional single window clearance system, differential tax structure, issues relating to mortgage of tribal lands, unfavorable recovery climate, issues relating to mandatory procurement from MSMEs in the State etc., are hindering the growth of MSME sector in the State, it pointed.