COVID-19: Lockdown-hit MSMEs in Andhra Pradesh stare at bleak future

Industry sources said disruption of production at MSME units will have a huge impact on the economy of the State.
For representational purposes (Photo | PTI)
For representational purposes (Photo | PTI)

VISAKHAPATNAM/VIJAYAWADA/SRIKAKULAM: All was well for Gopal Technocare Pvt Ltd, a fabrication unit at Autonagar in Visakhapatnam, where 35 employees are working, till March 21 when the nation-wide lockdown was announced. However, Ramanujam, its managing director, says they are now clueless as to when the lockdown will end and normal production will resume. In March, 50 per cent of production was hit, while it is zero in April till date.

Even payments are not received and the working capital is getting exhausted and interest on the loans is only getting increased. He says MSMEs will hardly have 15 days buffer time to sustain and beyond that it will be hard for almost all of them. Despite the difficult situation, the company paid salaries to all its staff on April 7 on humanitarian grounds, he said and added that he cannot predict whether they can pay salaries to staff or not if the lockdown continues. As all supply chains are snapped, it is a difficult situation for all MSMEs, he added.

A large number of micro and small industries in the State are facing a similar situation. Lockdown following COVID-19 pandemic has shattered hopes of a large number of MSMEs (micro, small and medium enterprises). The sector has second highest employment potential after agriculture in the State and now the MSMEs are looking for government help for revival of the industry. In fact, many were on the revival path after the recession.

MSMEs contribute eight per cent of the country’s GDP and 45 per cent of the manufacturing output and 40 per cent of exports. Almost 95 per cent of the MSMEs across the State are closed after the lockdown was announced, rendering over a million employees jobless temporarily. Bleak future stares at these employees.

The Confederation of Indian Industry (CII) has set up a strategic group to help those in need, according to KVV Raju of CII Vizag. The survival of the majority of the industries in the MSME sector has now become a million dollar question, he opined.

Impact on economy

Industry sources said disruption of production at MSME units will have a huge impact on the economy of the State. Around  86,000 MSMEs were eagerly waiting for hand-holding under the Navasakam scheme of the YSRC government as `4,000 crore incentives promised by the previous TDP government have been pending. But now it looks a distant possibility to get the government aid for working capital and incentives. “More than one lakh registered MSMEs are there in the State. Another one lakh odd MSMEs in the State either don’t require registration or are yet to be registered,” a higher official of the Industries Department said.

According to him,  the records show that more than 10 lakh (average 10 per unit) people are working in the registered MSMEs in the State. There will be at least five lakh workers in the one lakh unregistered MSMEs, he added.

Referring to payment of wages to employees during the lockdown period, the official said, “When the government itself is not in a position to pay salaries to the employees because of the precarious finances due to the shutdown, we cannot insist on the managements of the MSMEs to pay wages to employees.”
Asserting that the moratorium issued by the RBI will not give the fillip to the industry sector, Andhra

Chamber of Commerce and Industry Association general secretary P Bhaskara Rao said that apart from waiving the electricity charges for the sector as there is no operation in almost all the industries except those exempted by the government, both the Centre and State governments should come up with an exclusive package for bailing out the industry sector. The governments, both State and Centre, should chip in to help the vital sector of the industry, he demanded.

President of Visakhapatnam Autonagar Small-scale Industries Welfare Association AK Balajee said there was no activity in 6,000 MSME units in Autonagar in the city. The association urged the State government to extend hand-holding to the MSMEs by way of concessions in taxes and remission of municipal taxes. The lockdown was a shocker for the units, he said and urged the government to reschedule loans and sanction working capital.

“Only units under essential services such as water, food and bakery, pharma, cold storages and IT are functioning,” former president of AP Chambers of Commerce and Industry Federation G Sambasiva Rao said. “No one can predict the future of the industry in the present scenario. Even Europe and America are shivering and India is no exception,” he said. Ninety per cent of families of employees are affected. They have no clue as to when the situation will ease and how long it will continue, he pointed out.

President of Vizag Development Council O Naresh Kumar said bankers were not honouring the Centre’s directive on moratorium on loans. There were dues pending from large PSUs such as steel plants to the MSMEs. Owing to the shutdown, micro and small industries were the worst affected, Naresh Kumar said. He said refund of TDS from Income Tax department was not reimbursed and many payments from Central and state government agencies were pending for the last 10 months. The State government should give relief to the MSME sector by way of remission of municipal and power bills for the quarter. It will take at least three to four months to resume normal production even if the lockdown is lifted now. Both State and Centre should reach out to the industry with relief measures,” he demanded.

In Srikakulam, with the shutdown of several small and medium scale industries in Pydibheemavaram industrial area, around 8,000 workers and employees are in dire straits. As many as 12 MSMEs have been shut down in Pydibheemavaram. Similarly, thousands of migrant workers have left jobless with the shutdown of industries. Besides local people, several migrant workers from other States have been working in various industries at Pydibheemavaram industrial area.  

Though the Centre has issued directives to pay the salaries to the industrial workers, the State government is yet to release a GO, said CITU Srikakulam district general secretary P Tejeswara Rao.

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