With the nationwide lockdown severely hitting micro, small and medium enterprises (MSME), where work from home is applicable to less than 8% of the core operations, industry bodies have been demanding a variety of incentives to revive more than six lakh small and medium enterprises in Karnataka.
Karnataka Small Scale Industries Association (KASSIA) has urged the State government to provide relief for payment of fixed charges, electricity and water bills by MSMEs for the next three months as it would be critical for them to start industries again.
Speaking to The Hindu, C.R. Janardhana, president of FKCCI, demanded deferment of payment of minimum wages for one year. KASSIA also urged the State government to permit industries to extend working hours of employees by two hours temporarily to recoup the lost man-days.
The industry body has demanded that banks charge rate of interest on loans granted to MSMEs on par with the interest rate on housing and vehicle loans. R. Raju, president of KASSIA, said small-scale industries have urged the RBI to waive three months’ interest on all loans. “These measures will be essential in order to meet the impending challenges,” Mr. Raju said.
Noting difficulties faced by entrepreneurs, Sampath Raman, chairman, State unit of All India Manufacturers Organisation (AIMO), said the Centre should instruct banks to not make entrepreneurs’ as non-performance asset (NPA) for non-payment of interest till December 31, 2020.
‘Why not bail us out?’
AIMO maintained that “if certain banks, airlines and corporates can be bailed out”, what can prevent the Centre from bailing out MSMEs, considering the sector directly employs over 121 million people in the country. “Work from home has seen a drop in over 63% productivity in the service industry. The industry and services sectors have seen mass migration of labour to their villages,” Mr. Raman argued.
Noting the crisis of MSME/start-up can be called “national calamity”, AIMO demanded that Union and State governments waive bank interest like it was done for farmers, freezing litigations for six months to enable entrepreneurs to find their feet and focus on business. Their other demands include provide a stipend of ₹6,000 per month per worker employed by MSMEs/start-ups directly to the employees for a period of six months; and provide a scheme for relaxation of statutory payments from MSMEs for a period of six months to ESI and PF.
The Centre should come out with an economic package to deal with the current crisis, especially for the MSME sector that contributes 29% of India’s GDP, said the Bangalore Chamber of Industry and Commerce.
Representatives of MSME and trade bodies said sectors such as automobile, hospitality, apparel, consumer durables, electronics, hotels, tourism, restaurants, entertainment industry, seafood and livestock, construction, and transportation are among the worst hit by COVID-19.
AITUC demands compensation
The All India Trade Union Congress (AITUC) has urged Chief Minister B.S. Yediyurappa to pay compensation of ₹5,000 per month to each of the six lakh taxi and autorickshaw drivers in the State who depend on daily income/wages for their livelihood.
