Covid, rising costs, flooding… the multiple woes of MSMEs


This is probably one of the worst phases for MSMEs as they are being hammered by multiple challenges at the same time.

While Covid inflicted huge pains to MSMEs, the recovery process became even more challenging due to inadequate support from the government and tepid demand, followed by unprecedented increase in prices of raw materials. Now, monsoon rains have hit many micro and small units in and around Chennai.

Hit hard

Hit hard by the spike in prices of raw materials such as steel and metals, micro and small units plan to stage a protest across the State on December 10. All MSME associations have decided to join the protest to draw the attention of the government.

Office bearers of various MSME associations in the State have indicated that steep and irrational increase in the prices of materials have caused immense hardships to the units, most of which are still reeling under the impact of Covid-19 and are fighting for their survival. The prices of materials have gone up in the range of 60-100 per cent in the past one year.

“We will stage a protest in front of collectorates to press for government intervention in reduction of raw material prices for the survival of micro and small units,” V Nithiyananthan, General Secretary, Tamilnadu Small and Tiny Industries Association (Tanstia) told BusinessLine.

The MSME associations have been requesting for import of raw materials at zero import duty to tide over the crisis, which pose a threat to their survival. “At least public sector undertakings should provide the raw materials for micro and small units at concessional prices through a proper distribution system/agency,” said a member of a MSME association.

The situation has turned grave for MSMEs that are dependent on certain categories of the automotive industry. Along with high commodity prices, chip shortages have disrupted the whole production supply chain. The steep increase in steel prices has hammered the segments such as the forging industry.

“If the present trend continues, the high steel prices will push inflation levels more than what the country is currently witnessing. Additionally high raw material prices continue to be a challenge and high fuel prices continue to have an impact on customers and purchase decisions,” said Vikas Bajaj, President, AIFI (Association of Indian Forging Industry).

AIFI has urged the government to take immediate steps to revive the reeling Indian forging industry, which comprises 85 per cent of the MSME sector. Over 3 lakh people are employed directly in the industry, with an equal number employed indirectly.

Rain impact

Meanwhile, heavy rains on Thursday have caused flooding in places like Kakkalur Industrial Estate in the outskirts of Chennai.

Over 74 units were hit by waterlogging and production losses on account of flooding was in the range of ₹20-30 crore. Water stagnation continues in many areas,” said K Baskaran, Secretary, Kakkalur Industrial Estate Manufacturers Association (KIEMA).

While lack of storm water drains is a major issue, a canal passing through the estate also causes flooding during monsoon . When the public gets affected by rains, they may get some relief. But we, small units, don’t get any relief. Many units are yet to start production after the impact of recent rains,” he added.

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