Coimbatore’s manufacturing sector took a beating in the last one year, leading to unutilised capacities, job losses, and financial stress. As a new year dawns, the industry hopes for measures from the government for demand to revive.
For most of the sectors, the first six months went off relatively well. Things started getting worse from July, say industry association heads here. The general economic slowdown, unseasonal rain affecting crops, drop in market, and lack of stability in policies have all affected the industry, sources say.
Since June-July, it was not just the automobile sector, but many other sectors that started seeing a slowdown. It has affected jobs and working capital availability for industries, especially the Micro, Small and Medium-scale Enterprises (MSMEs), says R. Ramamurthy, president of Coimbatore District Small Industries Association.
“The MSMEs in Coimbatore are facing 30 % to 40 % slowdown and nearly 40 % capacities remain unutilised. We are unable to meet the overheads,” he says.
Coimbatore supplies nearly 40 % of the country’s pumpsets, mainly in the agricultural and domestic sectors, and the pumpset industry usually sees good demand from States such as Rajasthan and Madhya Pradesh during November -December. This year, unseasonal and excess rain affected crops and demand dropped drastically in the third quarter, says V. Krishnakumar, president of Southern India Engineering Manufacturers’ Association.
The market in the southern States picks up after Pongal. But the demand starts in the northern markets earlier. That has not happened this year, he says.
Rain, hail storms, political disturbances, and slowdown in the construction sector have all affected the pumpset industry.
In the case of textiles, “the year 2019 was a challenging one for the Indian textile and clothing industry, especially the spinning sector, due to steep fall in cotton yarn exports,” according to Southern India Mills’ Association (SIMA). Majority of the textile mills had to cut down production and face an unprecedented crisis, the Association said.
Export of cotton yarn declined 37 % between April and October this year compared to the corresponding period last year. While the country used to export on an average 120 million kg of cotton yarn a month in 2013-14, it is just half that volume now. It is not just yarn, but export of cotton fabrics and made ups reduced 2 % and that of man made yarn, fabric and made ups, and ready-made garments all registered 5 % and 3 % negative growth respectively. The industry is concerned as imports of fabrics and MMF ready-made garments have increased during the same period.
According to J. James, president of Tamil Nadu Association of Cottage and Tiny Enterprises, the year 2019 was one of the worst for the micro units as every bigger factory that gives job orders to these units insist that the unit should have GST registration.
The micro units continue to demand total exemption from GST, he says.
However, data available with the District Lead Bank shows that bank advances in the district registered growth in the first six months this year.
Between April and December 2018, the banks lent ₹69,650 crore. This year, between April and September, the banks had lent ₹72, 387 crore. Bank credit flow to MSMEs between April and December last year was ₹17,317 crore and this year, from April to September, it was ₹17,579 crore.
Higher advances could be because the industry is stressed and borrowed more, says Mr. Ramamurthy. Further, some industries would have invested in the first two quarters and the capacities are lying idle now, he says.
Union Finance Minister Nirmala Sitharaman’s announcement on Tuesday related to ₹102 lakh crore national infrastructure funding should be implemented at the earliest. The government should start executing its projects so that the demand revives, he says.
The SIMA says that any policy should remain stable for three to five years to enable ease of doing business. Further, all export-related refunds should be disbursed without delay so that the industry does not face financial crunch.
Industry sources say unless there are immediate measures from the government in the next three months, the industry will face a tough situation next year too.
The government should focus on reviving demand, implement the policies it has announced and help the industry grow, they say.
