'A $5 trillion economy won't be a dream'

'We have 750 districts across the country, and each district can create one cluster like Tirupur on any product of their choice.'
'This way, we can even have $3 trillion in exports.'

"The government has to create the infrastructure needed for the chosen product in the chosen district. Then, the government can ask the players to make use of the facilities and attain a set target. This is the strategy adopted by China," Raja M Shanmugam, President, Tirupur Exporters Association, tells Rediff.com's Shobha Warrier in the concluding part of a two-part interview.

• Part I: 'Public Sector Banks Don't Like To Loan To MSMEs'

CRISIL's 2022 SME Report 2022 says more than one-fourth of MSMEs lost a market share of over 3% due to the pandemic, and half of them suffered a contraction. What's the real situation after the pandemic?

Crisil comes out with approximate statistical figures without going into proper records or real-time data.

Yes, MSMEs suffered due to the pandemic but it is much more than what the rating agency says because in India MSMEs are the dominant players in the industrial spectrum.

Like I said earlier, MSMEs have a hand-to-mouth existence.

It is a fact that the pandemic has crippled the sector all across the country.

Production got hampered because of covid. Finances stopped coming.

When the pandemic struck, many in the sector said it was the third blow after demonetisation and GST. Has the MSME sector recovered from the first two blows?

Yes. Due to demonetisation, there were operational difficulties because the cash flow got affected as the sector worked mainly on cash.

When GST was first introduced, there were a lot of technical glitches and even the top officials were clueless.

Now, all those technical glitches have been corrected, and it has become easy to handle GST even for MSMEs.

Then came the pandemic. Here, we have to thank the government for introducing the ECLGS (Emergency Credit Line Guarantee Scheme) and around 30% of the industry was flushed with fresh loans under the guarantee of the central government.

It was a great help to the MSMEs, and most of us were saved from perishing.

It is said that China's economic success story is mainly because of the stress it gave to manufacturing. Similarly, do you feel unless the Indian government took care of the MSME sector that provides maximum employment in the country, targets like a $5 trillion economy will be a far away dream?

What is important is to implement the idea 'one product, one district' as visualised by the prime minister.

For that the government has to create the infrastructure needed for the chosen product in the chosen district.

Then, the government can ask the players to make use of the facilities and attain a set target.

This is the strategy adopted by China.

The Chinese government chose one province and created the infrastructure for the stream of business that was to take place there.

If the Indian government also adopts this strategy, there will not be any hue and cry from the MSME sector.

Is that why you said the government should adopt the Tirupur model?

I cited Tirupur as an example because without any support from neither the central nor the state government, on its own Tirupur managed to grab 1.07% of the total exports in the country.

Tirupur gives employment to 600,000 people from across the country.

Trade from Tirupur per annum is Rs. 70,000 crore (Rs 700 billion), out of which Rs 34,000 crore (Rs 340 billion) goes to exports.

So, why not showcase this model elsewhere in the other districts of the country too?

We have 750 districts across the country, and each district can create one cluster like Tirupur on any product of their choice. This way, we can even have $3 trillion in exports.

A target of a $5 trillion economy will not be a far dream then. It is easily achievable.

Feature Presentation: Rajesh Alva/Rediff.com