In the wake of global spread of COVID-19, disruption in supply of raw materials from China and lower demand for finished products have strongly hit the MSME sector in Madurai, according to industry and trade experts.
With around 50,000 registered enterprises, the sector accounts for more than 95% of industries in Madurai. Demonetisation, introduction of Goods and Services Tax (GST) and the economic slowdown have left the sector in the lurch over the last two years. The COVID -19 pandemic has worsened the scenario, they say.
S. Rethinavelu, Senior President, Tamil Nadu Chamber of Commerce and Industry, says almost all MSMEs have been badly affected. “For instance, the food industry, which holds a major share in the sector, is the worst hit. As the movement of people has come down drastically, so has the demand for the products.”
For some industries, the disruption in importing raw materials from China and other States in the country, is also a major problem, says P.N. Raghunantha Raja, president, Kappalur Industrial Association.
Barring rice, other food products such as wheat, pulses and oilseeds are imported from other States. With restriction at the borders, inflow of the products has drastically reduced, says S.P. Jeyaprakasam, president, Tamil Nadu Foodgrains Merchants’ Association. “This has affected hundreds of rice mills in Madurai. Also, the prices of essential foodgrains will increase gradually, causing problems for customers.”
He adds that many firms from Europe and the United States have cancelled orders from a considerable number of textile and garment industries in the Industrial Estate in the last week.
“This amounts to a loss of around ₹4crore every day,” he points out.
The situation creates a chain reaction and has effects on multiple stakeholders, explains K.R. Gnanasambandan, former president of Madurai District Tiny and Small Scale Industries Association.
“In the current scenario, the customers are also delaying payments due to weak market sentiments. As a result, the businesses are unable to pay their monthly instalments on time,” he says.
Nearly six units in Kappalur Industrial Estate are on the verge of shutting down, says Mr. Raghunantha Raja. “Since many units do not have many business orders now, they have temporarily stopped operations. This has directly affected the livelihood of thousands of workers, who are daily wage earners.”
As a relief measure to the important sector, the government can extend the time for repayment of bank loans and interest for delayed payment of dues must also be waived off, says Mr. Rethinavelu.
Mr. Gnansambandan says a three-month holiday from payment of GST needs to be awarded to help MSMEs recover from losses incurred during the period.
