The industrial production capacity of micro, small and medium enterprises (MSME) in Tamil Nadu has declined by over 40 per cent in the past two years alone due to power crisis, and, if the trend continues, small industries will face a bleak future, according to K.R. Thangaraj, president of the Tamil Nadu Small and Tiny Industries Association (TANSTIA).
Speaking to The Hindu , he said that while small industries utilised diesel-powered generators to make up the power shortfall during early days of the crisis, it was no longer viable as the prices of diesel had increased sharply in recent days as had the quantum of power shortfall.
Plummeting production
According to a survey by the Union Ministry of MSME, the daily industrial production in Tamil Nadu has plummeted to around Rs. 600 crore this year from Rs. 1,500 crore last year.
While Tamil Nadu has the highest per capita investment in the MSMEs and also the largest number of MSME units, it has slipped to the seventh position in terms of production efficiency. Combined with the power crisis, an acute shortage of skilled labour was also punishing the small units here.
When the power crisis broke in 2006-07, there was only a power shortfall of 20 to 30 per cent with the daily power outages limited to three hours.
At present, he said, power cuts had increased to 14 hours a day and the shortfall was hovering at 60 per cent, sapping the small industries dry. The cost of using diesel generators had also escalated sharply with the cost working out to Rs. 23 per unit now after the recent price hike.
Taxes on diesel
“The cost of power supplied by the government, after factoring in surcharges, works out to Rs. 7.50 unit. While we could make up for 20 per cent shortfall with generators, it would be economically unviable to do the same when the shortfall is 60 per cent.”
While industries have to operate with at least 80 per cent efficiency to recoup capital investments, service loans and pay employees, many small units in Tamil Nadu are cutting down on orders and working only at 30 to 40 per cent capacity due to the power shortage.
To aid small units tackle the power crisis, Mr. Thangaraj said that the government must at least scrap the taxes on diesel or provide tax credits on its purchase to MSMEs. “We do not want subsidies or free diesel. Removing the taxes alone will help the small units greatly.”
He was in the city on Thursday to attend the inaugural function of Indexpo, a four-day industrial exhibition being organised by Madurai District Tiny and Small Scale Industries Association (MADITSSIA).
Published - September 22, 2012 10:34 am IST
