Micro, small and medium enterprises have been hit hard by the high raw material cost. They have sought the government’s help to resolve their issues, including funding.
A.N. Gireeshan, president, the Ambattur Industrial Estate Manufacturers Association, said these units had got over the impact of the COVID-19 pandemic, and guestworkers had returned from Bihar and Odisha. But the higher raw material cost, a global phenomenon, was hurting them. “The cost of copper, aluminium and other raw materials has gone up 40%-100%. But original equipment manufacturers are not allowing a commensurate increase in prices,” he said.
Mr. Gireeshan also called for proactive measures from the government. He pointed out the Tamil Nadu government promptly intervened in the labour issue at Foxconn and said the States Industries Promotion Corporation of Tamil Nadu was constructing hostels at a cost of ₹570 crore at Vallam Vadagal in Sriperumbudur. “We welcome the move. But we have been demanding such a facility for our cluster for long. But nothing has come through,” he said.
M.V. Ramesh Babu, president, Coimbatore District Small Industries Association, said the second wave of COVID-19 had resulted in hardships for the small and medium units. “There is a slowdown in the market and a fall in demand. Almost 40% of the MSMEs in Coimbatore are vendors to larger units and these are the worst hit. Be it pump, wet grinder or casting manufacturers, there is a fall in demand. The industry needs funds to revive,” he said.
Lack of adequate bank support, non-availability of funds, a steep hike in raw material prices and the slowdown in market are crippling the industry. Workers who went home during the second wave are returning now, Mr. Babu said. “The Emergency Credit Line Guarantee Scheme did not support the MSMEs much. We have appealed to the government for a series of measures. The government should convert the working capital to term loans and give five years to repay the loans,” he added.
Srivats Ram, president of the Madras Chamber of Commerce and Industry, pitched for exclusions in the RBI circular that states that non-banking finance companies can upgrade their loan accounts to standard from the non-performing asset only if all the arrears of interest and principal are paid.
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