Already on a slide over the past few years, the MSME sector has been hit hard by successive lockdowns since late March. While the inability to get e-passes has cut down production during the current lockdown, another shutdown could sound the death knell for the industry, stakeholders say.
“Many units have started to lose out on orders to north Indian vendors, as OEMs (original equipment manufacturers) have either threatened to move away from Chennai-based vendors or have initiated action for long-term import of parts from their parent company. This will result in a serious loss of business,” said Hariharan Ramamoorthy, national vice-president, Laghu Udyog Bharati - Tamil Nadu, an all-India organisation of micro and small industries.
The past week has been a nightmare for MSMEs in and around Chennai. Many unit owners and their immediate supervisors/managers have not been able to visit their premises due to the non-availability of e-passes. “Only 20% of our members were able to receive e-passes, and the operations of many MSME units have been crippled. Some units have had to shut due to the non-availability of supervisory staff. Even in respect of those who have got e-passes, only one e-pass has been provided for each company, and this has raised the risk of deviation from safety and quality standards and systems and procedures,” Mr. Ramamoorthy said.
K.E. Raghunathan, immediate former president, the All India Manufacturers’ Organisation, said, “We are groping in the dark, and only assurances have been put forth as solutions. In Chennai alone, order cancellations at Ambattur, Guindy, Gummidipoondi, Irungattukottai, MEPZ and other estates have reached ₹6,800 crore in the last five days, as customers wanted early deliveries, but we couldn’t assure them of any confirmed schedule. Orders have been going to other States.”
Of the 370 units at the Thirumudivakkam Industrial Estate, only 20 have got passes and are operating at the moment. At the Thirumazhisai Industrial Estate, orders are being executed with limited manpower, and many units are yet to get e-passes.
“Despite having obtained an e-pass, some unit owners have been keeping their factories closed for want of orders,” said R.G. Chakrapani, secretary of the Thirumazhisai Industrial Estate.
Manufacturers’ woes
A.N. Sujeesh, president, Ambattur Industrial Estate Manufacturers’ Association, said that the Secretaries of various government departments had been helpful, but the situation was getting worse. “If the lockdown continues, we will start losing orders. It takes five years to establish a customer,” he said.
Around 25-30% of the products made at the Ambattur Industrial Estate are exported, and this market has been badly hit. “The earlier lockdown had already sapped the energy of MSME units, and just when they were limping back to normalcy, the second lockdown was brought into force, putting a question mark over the survival of the units,” said K. Baskaran, secretary of the Kakkalur Industrial Estate Manufacturers’ Association. “Since all auto majors and their tier-I units in several regions of Tamil Nadu and across the country are working, they require supplies of components and parts. But MSME units are handicapped due to the following issues — restrictions on the provision of e-passes and prevention of the movement of goods vehicles,” he noted.
Many MSME loans sanctioned earlier are yet to be disbursed due to the requirement of the extension of the memorandum of deposit (MOD).
The units have requested the MSME Secretary to advise the Commercial Taxes and Registration Secretary to waive the MOD charges for these COVID-19 loans and provide three months’ time for the registration of MOD.
