TN govt provides concessions to startups in its state

Startups registered in Tamil Nadu will get a slew of concessions under the state’s startup mission.

They will now 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, said V Arun Roy, Secretary - MSME, in an order issued on Thursday.

Procurement entities include government departments, public sector undertakings, statutory boards, local bodies; co-operative institutions and universities in the state.


The concessions are based on recommendations of the Mission Director of the Tamil Nadu Startup and InnovaTN Mission (TANSIM), which was formed to provide a fillip to micro, small and medium enterprises.

A number of startups struggle in the early stages because of a lack of market access for their products, the state government said. The government is a major purchaser and its patronage can solve the marketing problem of startups to a great extent while also being a source of recognition to the startups, it said.

“However, it is seen that startups face many entry barriers because departments and Public Sector Undertakings impose restrictions like EMD, prior turnover condition and prior experience condition. Many States have recognised this problem and have issued orders dispensing with such entry barriers for start-ups,” according to the order.

Kerala, Karnataka and Telangana have already made such provisions by issuing necessary orders in this regard, it said.

This is a step in the right direction, said KE Raghunathan, convenor of the Consortium of Indian Associations.

It will help create unicorns from the State while also bolstering employment opportunities, he added.

“At present, EMD is exempt for locally registered MSME which include startups. But the highlight is, with this order, a startup with Udyam registration in another state like Karnataka, Andhra Pradesh and Maharashtra can also benefit if they can register as a startup in Tamil Nadu,” Raghunathan said.

This is a move to attract startups from other states and will eventually lead to other benefits like seed grants, he added.