NABARD has estimated the credit potential of Micro, Small and Medium Enterprise (MSMEs) sector in Tamil Nadu to be Rs 14,032.35 Crore in 2012-13. Credit flow in the State of Tamil Nadu has steadily increased over years. This becomes evident from Ground Level Credit (GLC) was Rs 8,260.98 crore in 2008-09 and increased to Rs 9,437.08 crore in 2009-10. The credit further increased to Rs 10,421.84 crore in 2010-11.

Tamil Nadu MSMEs has the potential to generate immense employment opportunities. The sector accounts for 15.07 per cent MSMEs out of the National total. MSME sector in the state of Tamil Nadu comprises of variety of industries like handloom, leather-based activities, powerloom, engineering, agro-based industries, plastics, electricals, handicrafts, gem-cutting, electronics, hotel, and restaurants.

MSMEs by the end of 2008-09, counted to 5.89 lakh in Tamil Nadu and they were responsible for employment generation for 42.40 lakh people. The role that MSME plays in employment generation in the state shall continue to be overwhelming keeping into consideration the declining capacity of the agriculture sector.

The central and state governments have directed banks to meet the credit requirements of MSME sector of the state of Tamil Nadu. This sector is highly labour intensive and there are less constraints for the MSME sector. Micro and Small enterprises in Tamil Nadu can better grow if marketing centres are developed in every district and they are equipped with modern systems with regular power supply.