MSMEs still reeling under impact of Covid-19

MSMEs still reeling under impact of Covid-19
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MSMEs still reeling under impact of Covid-19

Highlights

Several industrial units will shut operations if crisis continues for long, says TIF president

Hyderabad: Thousands of micro, small and medium enterprises (MSMEs) are still reeling under the adverse impact of Covid-19 and its associated curbs, and they need support from the Centre and State government to tide over the crisis, says K Sudhir Reddy, president, Telangana Industrialists Federation (TIF).

Speaking to The Hans India, Reddy said that majority of MSMEs in Telangana were operating at just around 60 per cent capacity as new orders dried up and labour shortage continued to haunt the sector. "In the wake of Covid-19 pandemic, demand for non-essential goods has come down drastically.

As a consequence, most of the MSMEs which operate in non-essential goods sectors are not getting new orders. Further, there is an acute labour shortage as around 2 lakh migrant workers who were employed in the MSME sector returned to their native places in other States during the lockdown. As a result, MSMEs are still not in a position to operate at full capacity," he said.

According to him, industrial units that supply raw materials to the construction industry are in more trouble. "Companies in this segment are not able to utilise even 50 per cent of their capacity as the construction sector is yet to recover," he said.

Reddy said that several MSMEs would have to shut their operations if this crisis continued for long. "MSME owners are somehow managing to run operations and pay salaries even though revenues have dwindled. But they can't continue operations for long if revenues don't improve and new orders don't flow in," he said.

The TIF president underlined the need for support from the Centre and State government. "The central government should bring down interest rates on loans offered to MSMEs by at least three percentage points. That will reduce financial burden on MSMEs. Just offering loans at high interest rates will not serve the purpose," he said.

Reddy pointed out that several government organisations and companies which procured products and materials from MSMEs had not cleared bills. "MSMEs will get some relief if these dues are cleared," he said.

He also urged the Telangana government to release pending incentives for MSMEs in the State. "Total pending industrial incentives in Telangana amount to Rs 2,700 crore. Of these, Rs 1,200 crore belong to MSMEs.

We requested the State government to release the pending incentives of MSMEs in installments. We are hopeful that the State government will come to the rescue of MSMEs by releasing these incentives at the earliest," he said.

On labour shortage, he said that MSMEs are now heavily dependent on labour from Madhya Pradesh, Bihar, West Bengal and other States.

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