MSMEs bear the brunt of COVID-19 lockdown

Business COVID-19

Due to the lockdown in the entire country, Micro, Small and Medium Enterprises (MSME) are facing severe losses.

Reported by Shreyas Vange

Wednesday, April 15, 2020

Pune: The MSME sector is reeling under the financial stress due to the lockdown imposed across the country. MSMEs are facing huge losses in their business and are unable to pay wages to their employees.

Vinaya Patil, owner of AutoComp, a small-scale automobile components manufacturing company, said, “Some projects which were meant to be delivered by March 31, were ready. But they couldn’t be sent due to the lockdown. Hence, the company had to face loss of materials which were used for these projects. Also, we haven’t been able to pay wages to our workers. Some of them earn Rs. 19,000 to 20,000 per month.”

She also added that her business was performing well in the months of January and February,as she had achieved 60 percent and 70 percent of the total targets of Rs. 10 lakhs and Rs. 12 lakhs in the respective months. But from March, she said that her business activities started declining and after the lockdown—on March 24, her company’s target achievement percentage came down to zero.

Out of more than 63 million MSMEs functioning across the country, several of them are in a condition similar to that of Vinaya Patil. 

Dr. Sudarshan Sareen, President of All India Manufacturers’ Organisation, said that a loss of more than one lakh crore rupees has been suffered by MSMEs in the country due to the lockdown. 

The Confederation of Indian Industry (CII) said, “The MSMEs contribute to around 6.11 percent  of the manufacturing GDP, along with 24.63 percent of the GDP from service activities. They also contribute to nearly 33.4 percent of India’s manufacturing output.”

CII further said that MSMEs have provided employment to around 120 million people and have contributed to around 45 percent of the overall exports from India.

With Prime Minister Narendra Modi extending the lockdown till May 3, it is predicted that the  MSMEs will face more difficulties to survive.

N.N. Estolkar, Deputy Director of Ministry of MSMEs, Mumbai, said “In the lockdown period, MSME units are closed. However, we are requesting the state government to give permissions to reopen the units. The financial aid, through the relief package of Rs. 1.7 lakh crore,will also reach the MSMEs soon.”

Dr. Sareen added, “In the lockdown, even factories are closed. So, MSMEs are facing difficulties. Hence, MSMEs urge the government to prepare some financial packages for the revival of their businesses. By this aid, MSME owners will also be able to pay wages to their workers, and the working capital of the MSMEs will be increased by 50 percent.”

Picture Courtesy- ET Tech


Leave a Reply

Your email address will not be published. Required fields are marked *