MSME’s losses pegged at Rs. 14,500 cr.

The Industrial Estate Manufacturers Association has come out with a survey report which says that 20,000 MSME units have been affected owing to the recent floods displacing more than two lakh workers. After evaluating these units through associations at various industrial estates, the analysis shows a production loss of Rs. 10,000 crore, loss of machinery of Rs. 2,000 crore and raw material loss of Rs. 2,500 crore. The survey included both registered and unregistered units.

“Fifty per cent of the industries rely on machines and getting them back to normality is a tedious task. In most firms, the motors are damaged. For a machine worth of Rs. 10 lakh, the motor cost would be 1 lakh,” said V.S. Narasihman, president, SIMA, and former president of Tamil Nadu Small and Tiny Industries Association (Tanstia). He said that less than 30 per cent of these units are covered under insurance, but again many have fire insurance and not flood insurance. Sadly, many did not know that they could insure their machines and inventory.

The association has also drawn an action plan which they feel, if implemented, would help heal the wounds and scars left by the recent rains and floods. One, they want units that have suffered loss to be treated as new units so that they will be eligible for State capital scheme of 25 per cent.

“Any new unit gets a subsidy of 25 per cent. But this 25 per cent is given only after the unit is operational and assets are purchased. If the government can extend this scheme to the units hit by the rains, it would help them restore business,” explained Mr. Shanmugavelayuthan. “The government can disburse this subsidy upfront and credit it to the bank account treating it as margin,” he added.

Another point put forward by the association is that units have suffered enormous production losses which lead to a revenue loss. “If these units are permitted through a modified IFST (Interest Free Sales Tax) deferral scheme in which case, the tax dues may be collected, retained by the units and repaid after a few years without interest, it would be beneficial for the firms,” said Mr. Narasihman. This scheme was introduced by the State government in 1994. “It was scrapped a few years ago. If this is re-implemented, it would be of great relief to the industry,” Mr. Shanmugavelayuthan said.

Some of the firms have also suggested that employees who are insured should be treated as accident victims. ESI should help the ailing units they said.

‘50 % of industries rely on machines and getting them back to normality is a tedious task’