The All India Manufacturers Organisation (AIMO), an apex trade body that focuses on the interests of the micro, small and medium enterprises (MSMEs) of the country, has sought urgent steps from the Modi government to relieve the sector of the enormous adverse economic fallout it faces due to the coronavirus crisis.
In a strong statement released on Wednesday, 25 March, AIMO asserted that if the right support were not provided to save MSMEs at this time, “the lockdown could well turn into a Shutdown India” for the sector.
The Staggering Economic Fallout
“According to our reports from our members and state boards and their clusters of the MSME sector over the past few weeks, across the country, over 60-odd million MSMEs are in real danger due to market issues with over 92% drop in domestic sales compared to the same time last year. Our members and their associates are unable to pay wages to staff due to lack of revenue and lack of production.”Sushil Vyas, AIMO Secretary
Vyas also added that there has been “over a 100% drop in export sales compared to the same time last year.”
“Apart from the manufacturers, our services industry players in tourism, hotels, retail and entertainment have suffered a major impact. Contrary to popular opinion, even our online startups (except healthcare startups) have seen a huge decline in demand and some even have an unsold inventory increase of about 58% currently. MSMEs are feeling the impact of inter-state restrictions on transportation of goods. Impact of import restrictions from China has also hit many of our entrepreneurs since the country is a major source of raw materials.”
The ‘Save MSMEs’ Plea
According to the Confederation of Indian Industry (CII), “With around 63.4 million units throughout the geographical expanse of the country, MSMEs contribute around 6.11% of the manufacturing GDP and 24.63% of the GDP from service activities as well as 33.4% of India's manufacturing output. They have been able to provide employment to around 120 million persons and contribute around 45% of the overall exports from India.”
Stating that “the crisis of MSMEs and startups is also a national calamity and needs to be addressed”, AIMO has sought the following measures from the Centre:
Announce a waiver on bank interest and instruct banks not to list entrepreneur loans as NPAs for lack of interest payment till 31 December 2020
Freeze on litigations for a period of 6 months to enable entrepreneurs to find their feet back and focus on business
Provide a stipend of Rs 6,000 per month per worker employed by MSMEs and startups, to be transferred directly to the employees for a period of 6 months or till the coronavirus crisis is under control.
Announce a scheme for relaxation of Statutory Payments from MSMEs for a period of 6 months to ESI and PF
Consider implementing policies of Universal Basic Income and unemployment insurance to tackle the economic fallout of the health crisis
“If certain banks and airlines and corporates are bailed out, then even certain MSMEs should be bailed out considering that MSMEs employ over 121 million people in this country.”Sushil Vyas, AIMO Secretary
Shrikant Dalmia, AIMO Zonal Vice President (West), added, “Several sectors like automobiles, aviation, hospitality, apparels, consumer durables, electronics, hotels, tourism, restaurants and bars, the entertainment industry, BPO, seafood and livestock, construction and real estate, transportation are among the worst hit by this epidemic. All the MSMEs, self-employed Individuals and entrepreneurs associated with these sectors, or whose revenues depend either directly or indirectly on them, have been on the verge of a shutdown situation.”
Dalmia stressed that the option to ‘work from home’ (WFH) and continue operations is currently applicable to only a fraction of the core MSME and services sectors.
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