30 percent of city MSMEs on the verge of closure
Coronavirus Update, COVID-19, News

30 percent of city MSMEs on the verge of closure

December 17, 2020

Unrelenting COVID contagion, spiralling raw material prices, back-to-back strikes main factors

Mysore/Mysuru: Over 30 percent of Micro, Small and Medium Enterprises (MSMEs), which are reeling under the impact of economic slowdown and COVID-19, are on the verge of closure by the end of this year, claim industry bodies at a meeting of industries associations of Mysuru including Mysore Chamber of Commerce and Industry (MCCI), Hebbal Industrial Estate Manufacturers Association (HIEMA), Mysore District Small Scale Industries Association (MDSSIA). The meeting was held at HIEMA office in Hebbal last evening.  

Spiralling raw material cost

HIEMA Honorary Secretary C.M. Subramanian told Star of Mysore that since the last two to three weeks, there has been 35 to 50 percent increase in input and raw material costs.

“Usually, the normal profit for industries is around 10 percent. If the cost of input materials increased between 35 to 50 percent, it is impossible to supply finished products to customers. Most of the industries have entered into long-term contracts with customers and this steep increase in raw materials is driving them towards bankruptcy,” Subramanian said. 

Both Subramanian and MCCI President A.S. Satish were of the opinion that despite the Government claims that COVID pandemic has declined, industrial production has not looked up. “Our production depends on various other factors and we are dependent on other States for raw materials. Sadly for us, even the Government is not intervening and controlling the spiralling prices of raw materials,” they said. 

Banks debiting interest

Even banks and financial institutions have a role in the crisis faced by the MSMEs. “Banks have started debiting COVID-era interest and loan repayments since last month. This move will kill all the small and medium industries,” they added. 

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“We are under financial obligation for payment of taxes, repayment of monthly instalments of loans taken from formal and informal sources, EMIs, water and electricity bills, payment of interest, payment of wages to the labour and various other payments,” they said.

They appealed to State-level and apex industry bodies like Federation of Karnataka Chambers of Commerce and Industry (FKCCI), Karnataka Small Scale Industries Association (KASSIA) and Confederation of Indian Industry (CII) to impress upon State and Central Governments to come to the rescue of MSMEs before they wind up business.

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