In a bid to attract entrepreneurs, Tamil Nadu exempts startups slew of conditions

Welcoming the move, K E Raghunathan of Consortium of Indian Associations, said it was heartening to see the state inviting entrepreneurs after wooing investors

Tamil Nadu has exempted start-ups registered with the state from a slew of conditions like Earnest Money Deposit (EMD), prior turnover, and prior experience for government purchases up to Rs 20 lakh in a bid to attract more entrepreneurs to the state.

Tamil Nadu is the latest in the list of states like Karnataka, Telangana, and Kerala that have exempted the start-ups from several aforementioned conditions. The move will lead to talent attraction from across the country as an entrepreneur who has registered with the Udyam portal in Karnataka can also participate in government purchases in Tamil Nadu after duly registering.

A government order (GO) dated July 22 signed by Arun Roy, Secretary, Micro, Small and Medium Enterprises (MSME) department, said many start-ups struggle in the early stages because of a lack of market for their products and patronage from the government, which is a major purchaser, can solve their marketing problem to a “great extent”.

Roy said after careful examination, the government has decided to provide concessions to registered start-ups for public procurements by a procuring entity which includes government departments, PSUs, local bodies, cooperative institutions, universities, statutory boards, and societies.

Read | 104 startups registered on Startup India Showcase platform: Commerce ministry

Under the new rule, the start-ups registered will be exempted from payment of Earnest Money Deposit (EMD), condition of prior turnover, condition of prior experience, and waiver of tender cost. At present, EMD is exempted for locally registered MSME which includes start-ups as well.

Welcoming the move, K E Raghunathan of Consortium of Indian Associations (CIA), said it was heartening to see the state inviting entrepreneurs after wooing investors.

“This is a great initiative and a step in the right direction. These efforts will show their benefits in about four years from now as we have embarked on attracting entrepreneurs from outside Tamil Nadu. We should also think on what more we can give them without taking away the cake from existing players,” Raghunathan told Deccan Herald.

He also said the government should ensure these start-ups registered with the portal get business.

“The real test is the weightage that the government will give to these start-ups. Are we going to identify the certain portion of the government purchases to start-ups? The first step has been taken, and the subsequent steps should be to help these start-ups get business that would ensure that they sustain,” Raghunathan added.