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MSMEs hit by Raw Materials’ Price Rise, Entrepreneurs Down Shutters in Protest

After facing severe setbacks due to demonetisation, hasty implementation of GST, and the ill-conceived COVID-19 lockdown, the MSMEs are gasping due to a steep rise in raw material prices.
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The protest was attended by huge number of entrepreneurs in Coimbatore  (Image Courtesy: Theekkathir)

In a first, the entrepreneurs of the micro medium and small enterprises (MSME) went on a one-day strike across the country on Monday. Affected severely by the policies of the Union government, the ill-planned lockdown in March 2020, and now by the steep increase in raw materials, the All India Council of Association of MSMEs (AICA), with around 170 organisations in the MSME sector, have downed the shutters in protest today. 

Various organisations in the MSME sector have been seeking the attention of the Union government to find solutions for the pressing issues of increasing input costs and financial aid, but to no avail. 

A production loss of Rs 25,000 crore has been estimated, while the loss in Tamil Nadu has been pegged at Rs 4,000 crore. The strike had impacted production in Chennai and its suburbs and Coimbatore–the two important hubs of MSMEs in Tamil Nadu.

‘RAW MATERIAL PRICES ALMOST DOUBLED’

The strike called today is claimed to be the first of its kind, with the entrepreneurs deciding to stop work. 

“In my four decades as an entrepreneur, it is the first occasion witnessing a strike by employers. Has the government become so ignorant with the issues of entrepreneurs? To an extent, they need to draw the government’s attention,” said K E Raghunathan, convenor of the Consortium of Indian Associations (CIA).

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Demonstration by organisations affiliated to AICA in Coimbatore (Image Courtesy: Theekkathir)

An expected 20 lakh companies from the sector are participating in the strike against the steep increase in the prices of raw materials.

“The prices of raw materials like aluminium, copper, steel and engineering plastics have increased by 70-100% in the recent months. This is unbearable for the already struggling MSME sector,” he said.

A section of entrepreneurs in the industrial estates in Chennai and its surroundings stayed away from the strike, but they participated in the protest demonstrations.

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An MSME closed as part of the national strike of the entrepreneurs  (Image Courtesy: Theekkathir)

The Communist Party of India (Marxist) (CPI[M]) held protests in solidarity with the MSME organisations in several places including Coimbatore, where its polit bureau member G Ramakrishnan also participated.

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‘MP MOVES ADJOURNMENT MOTION’

Considering the dire status of the MSMEs and the consequences including heavy job losses, MP from Madurai, Su Venkatesan filed an adjournment motion in the Lok Sabha. 

“The abnormal increase in the raw materials in the last one year, has put the MSMEs in a precarious situation. The MSMEs in Madurai are also affected and MADITISSIA, an organisation of MSMEs is also participating in the strike,” the MP noted.

MSMEs in other parts of the state, including Coimbatore are also badly hit by the increasing prices.  “The textile industry has been affected due to the increase in yarn prices, leading to cascading impact on the livelihood of lakhs of workers in Tirupur, Erode and Coimbatore,” Venkatesan said in a statement. 

The MP also highlighted the demands of the MSMEs, including the intervention of the Union government in containing the price of raw materials and implementing a proper mechanism to monitor price levels and check undervaluation of imports. 

‘NEED FINANCIAL AID AND SUPPORT’

The industry is in desperate need of financial aid and support from the Union government, which has remained elusive for the past several years. The stimulus announced by the Union finance ministry has hardly helped the industry.

“Even after 18 months, even after enlarging eligibility of users, the disbursement is not even 80% of Rs 3 lakhs crore. But we still extend by Rs.1.5 lakh crore to call it Stimulus 2. Whom are we fooling?” asked Raghunathan. 

In a response to a question raised in the Lok Sabha by Congress MP Rahul Gandhi, the MSME minister Narayan Rane responded that 9% of the MSMEs have been closed. 

“The National Small Industries Corporation Limited has conducted an online survey in August 2020 covering around 5,774 MSMEs in 32 states and UT to assess the impact of the COVID-19 pandemic. It is found that 91% of the MSMEs are functional and 9% are closed due to the impact of the COVID-19,” the reply said. 

The reply also accepted that 9,052 and 11,716 self-employed individuals in 2019 and 2020, respectively, committed suicides, and that the government had no record of deaths separately for the MSME sector.

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