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MSMEQ & A

MSMEs’ endless crises Better initiatives required

Q. You are now the President of the TTC MIDC Industries Association for two years. How do you assess the issues faced by industrial units located in the MIDC region?

A. TTC-MIDC Industries Association (TAMIA), formerly known as Small Scale Entrepreneurs Association (SSEA), as the name itself indicates, is an association of small and mid-sized entrepreneurs. Many of the units belonging to the association are too small. Other than the members, there are hundreds of smaller and very largeindustrial units in the sprawling region. Each one has its own set of issues. Small units have bigger issues ranging from tax to right labour supply and from negligence of law to dishonest elements crept in the ecosystem. Industries still face the legacy of trade unionism and plenty of local governing rules, besides State and Central level industrial regimes. such heavy rules and regulations find the road ahead a bit tougher. The small entrepreneurs feel being orphaned when they land in crises not created by them but by the regime that binds them. The legacy of infrastructure issues continues. While taxpayers are neglected, certain populated clusters in the periphery are given a piecemeal.

Q. What are the common issues, which the industrial units in the region faced, as you have understood?

A. Those issues are not homogeneous. There may be some common issues like taxation and late receivables. The MSME Act may have clauses about the payment period after invoicing. But enforcement of such rules as per the fine print brings problems also for MSMEs. By and large, I can say, almost every unit has been facing a tough time in the last five years. The pandemic and Industrial units with the burden of the consequent lockdown further shattered their hopes. Many units have been closed and many units are up for sale. While some units, especially mid-sized units, are
moving away, very small ones are on the verge of closure.

Q. Do you think once the industrial sentiments improve there are chances of troubled units’ revival?

A. Given the intensity of the troubles that they have faced I doubt the prospects of their revival in a short period. Closure of more industrial units is only an indicator of a weak MSME operating ecosystem, consequent revenue loss to the exchequer and socioeconomic crisis due to job loss for small wage earners. Even worse is the fear of more units falling sick or closing their gates to move into other friendly locations if issues are unaddressed on an emergency basis.

Q. How according to you, are the chances of reopening the units which are closed since last year due to the pandemic?

A. As I mentioned above, their chances of returning to the business in the same location are bleak in most cases. Those who have closed their units because of local reasons are unlikely to rethink or their decision. As an Association, TMIA takes maximum care of them. But policies, taxations, vendors’ conducts, etc are not within our limit.

Q. In the lockdown period the government announced many schemes to boost the business of small units. Do you think the benefits of the scheme haven’t reached small units?

A. Debt support by banks was one of the main announcements. For most of the small manufacturing units, unless there is a growth in business and payment realisation on time, debts can lay only a bigger trap. The number of companies, which were forced to pull down their shutters due to being in debt-trap is very large. Every loan that an entrepreneur takes is repayable on time. A small unit usually depends on orders from large companies. In a situation of
late closure of the contract for the reason of the large buyers’ delinquency, the seller (small units) or the vendor runs up and down with the finished material after spending a huge sum on the works. Many small units used to wait for a
long time to see the buyer taking the delivery. The delay in delivery acceptance creates huge problems. Many of the units even do not have sufficient places to keep them for a long period. Moreover, even now, many units have huge outstanding from their large corporate buyers. If the buyers delay in taking the delivery, the payments are naturally delayed. They also face the risk of cancellation by the buyers who have placed the orders. Small units are unable to fight a legal battle for two reasons; one is the lack of resources to meet the cost of legal action and the other is the risk
of losing the business from the same client. So small units can only be silent victims of system malfunctioning and
other’s dishonesty. We need to open a new avenue for MSMEs’ rescue.

Q. Workers’ do not need to worry about their present and to some extent future also? Don’t you think, many labour-focused schemes like the government’s support for PF contribution, are giving considerable ease to the small units?

A. I agree, there are many schemes in place. But the effectiveness of each scheme is not in tune with the spirit of the scheme. I also agree that each scheme has a good connotation. Nevertheless, there is a big gap between cup and lip.
As far as workers’ facilities are concerned, we need to go a long way in ensuring the value of service against the price the workers pay. The quality of service given by ESIC hospitals is one of the best examples. If we have good rules in place, we need to go by the spirit of the fine print. Let no worker and industrial unit be subjects of exploitation. While industrial units are taxpayers and job creators, workers welfare builds a strong socioeconomic environment. We must think about this honestly, instead of boasting about what we do.

By K.R.Gopi

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