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Monday, June 14, 2021

Pune: SMEs stare at uncertain future although economic indicators paint healthy picture

Since the start of the lockdown, most SMEs have been faced economic downturn even though the state government has allowed them to function with restrictions.

Written by Parthasarathi Biswas | Pune |
Updated: June 4, 2021 9:32:09 am
A saree shop operates with precautionary measures in Lakshmi Road, Pune.

Small and medium scale enterprises (SME) in Pimpri Chinchwad and Pune face an uncertain future with spiralling input and reduced demand amid the pandemic. SMEs, which form the backbone of the industrial landscape of the district, have reported this downturn even as the state on a whole have seen good economic activities.

Since the start of the lockdown, most SMEs have been faced economic downturn even though the state government has allowed them to function with restrictions. Units which are associated with exports or with production of the essential industries, have been allowed to function with 100 per cent of their staff strength. The start of the lockdown had seen migration of labour from Pune which has affected the sector. Various estimates have said that around 20-25 per cent of the over 3-4 lakh people employed in the sector have already left the district.

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Abhay Bhor, the president of the Forum of Small Scale Industries pointed out to the present situation has seen the sector being badly hit. “Our surveys showed that around 30,000 of the 70,000 units operational in the area have little or no work- such industries see no uptake in their fortune soon,” he said. These units which employ between 5 to 10 people on an average are unable to find raw materials easily as the supply chain is broken.

Another hit which the the sector has faced is the slow down in the automobile industry. Other than the problems with procurement of raw materials, the government ban on usage of oxygen for industrial purposes have hit the sector hard. Dip in sales of automobiles have also affected them. “These SMEs are vendors or sub vendors of the automobile OEMs. So there is a domino effect if the OEMs do not have enough sales,” he said.

Data released by the Society of Indian Automobile Manufacturers show that for the month of April sale of passenger vehicles have dipped by 10.07 per cent as compared to March. Similar dip in sale of two and three wheelers was 33.52 and 57.0 1 per cent respectively. With vehicles mostly off the road, demand for spare parts which the SMEs manufacture have also tanked.

While the SME sector braves another lockdown induced wash out, the main economic indicators of the state have shown a healthy growth. Thus Maharashtra saw the highest GST collection as well as a healthy influx of FDI for April. Bhor and other members of the sector however said the economic downturn is forcing many entrepreneurs to exit their business. “With no income, how are they supposed to repay their bank loans or pay government dues?” they said.

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