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Lack of demand main hurdle for revival of MSMEs, say stakeholders

Micro Small Medium Enterprises (MSME) identified lack of demand as the main hurdle for revival of the sector during the ongoing pandemic crisis.

Stakeholders of the sector said that, poor demand is a large and looming problem.  “While shortage of raw material, liquidity and labour can be addressed through interventions, unless there is demand for products and services, the sector will not be able to spring back to normalcy,” they said during a webinar on Atma Nirbhar Bharat Package for MSMES: Challenges and Opportunities.

R Ramamurthy, president of the Coimbatore District Small Scale Industries Association (Codissia), said only if there was demand in the market could units hope to revive. “If Rs 3 lakh crore announced as relief for the MSME sector enters into the economy adequate demand would be created,” he said.

P Udayakumar, director of planning and marketing, National Small Industries Corporation (NSIC), said the crisis faced by the sector now boils down to demand. “Finance and raw materials are available, but demand is lacking,” he said and added that if money was infused into other sectors, there would be activity and it would increase demand for MSME products and services. 

Of the Rs 3 lakh crore under the emergency credit line guarantee (ECLG) scheme loans, only Rs 1.2 lakh crore has been sanctioned, of which, only Rs 68,311crore has been disbursed to MSMEs, said Udayakumar.  “Only if there is demand for products, MSMEs would borrow (funds from banks),” he said.

Goa was represented by Manguirish Pai Raiker, chairman, National Council for MSME, the Associated Chambers of Commerce and Industry of India (Assocham). Raiker disclosed that, MSMEs were now cautious of availing loans. “Unit owners are waiting for demand to pick up,” he said.

  The Southern Railway is ready to offer transport services for MSMEs. If transportation cost comes down, MSMEs can cut costs by one-third and can become competitive,” said. Ramamurthy. He pointed out that, bodies such as the NSIC must procure raw materials in bulk and provide it to MSMEs, so that undue profit would be eliminated from the value chain at this critical juncture

The webinar on ‘Aatma Nirbhar Bharat Packages for MSMEs: Challenges and Opportunities’, was organized by Assocham.

Revival of MSMEs is said to be crucial for the overall recovery of the Indian economy as the sector contributes around 6.1 per cent of the manufacturing GDP and 24.6 per cent of the GDP from service activities. However there are several issues facing the sector.

During the ongoing pandemic the classification of MSME was changed by the ministry of MSMEs, the government announced a special package for revival of the sector under the Atma Nirbhar Bharat Abiyan and a US $750 million fund was approved for the sector by the World Bank.

The webinar on July 28, sought to discuss the issues facing MSMEs and also chart out the roadmap to boost manufacturing by units.

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