The variety of MSMEs (micro, small and medium enterprises) shutting down their operations within the post-Covid interval continues to rise amid the opening up of newer progress alternatives by way of a number of programmes of the Central authorities.
As per the Udyam Registration portal, the overall variety of MSMEs that closed their operations between July 1, 2020, and December 12, 2023, stood at 32,477.
FY23 witnessed the very best variety of shutdowns within the MSME section as 13,290 Udyam-registered MSMEs wind-downed operations in contrast with 6,222 items that closed retailers in FY22 and 175 items in FY21.
Nonetheless, the present fiscal has additionally seen an enormous enhance within the closure of operations by MSMEs. As of December 12, 2023, 12,790 items downed their shutters, indicating the persevering with stress within the section within the post-Covid period.
The nation had over 6.25 crore MSMEs in 2016, however the quantity has dwindled to three.25 crore as per Udyam portal.
“Greater than 60 per cent of the traditional micro-enterprises, which have been engaged in enterprise actions for greater than 10 years have perished. It is extremely evident from the info supplied by the MSME Ministry that the quantity has come down to three.25 crore items regardless of revised reclassification,” factors out Ok E Raghunathan, Nationwide Chairman – Affiliation of Indian Entrepreneurs.
A number of modifications
India has been going by an entire transformation within the final eight years by way of doing enterprise. The federal government introduced in a number of modifications – cashless (digital) transactions, documented providers, unified taxation, e-commerce advertising, international requirements, stringent labour legal guidelines, and social safety mandates amongst others.
“All these have shaken up the traditional entrepreneurs who weren’t used to such rules. Additionally, many of the micro items couldn’t deal with the sudden shift to cashless transactions spurred by demonetisation. Practically 30 per cent of the items exited due to this. Then, the GST, with over 700 amendments, has all of a sudden made them focus extra on documentation slightly than actual enterprise. There’s hardly any MSME entrepreneur with out getting any discover from authorities, he provides.
Whereas the working surroundings is totally completely different now for the MSMEs, new progress avenues have additionally opened up for MSMEs.
Raghunathan says the rising sectors corresponding to electrical autos, drones, defence and aerospace, robotics, refined digital devices, and cellphones haven’t supplied any alternatives for standard entrepreneurs. The central authorities’s PLI schemes additionally supplied very restricted alternatives for native MSMEs to rework and get tailored.
Nonetheless, a report by UBS Securities India states that greater than 100 MSMEs are among the many PLI beneficiaries in sectors corresponding to bulk medicine, medical units, telecoms, white items, and meals processing.
Business representatives recommend a couple of measures to assist and facilitate progress for MSMEs within the new working surroundings. Entrepreneurs, who’re eager to exit from their hitherto standard companies that haven’t any scope now, ought to be given a possibility for an honourable exit with a one-time settlement.
For entrepreneurs who’re eager to maneuver to newer applied sciences and companies, the federal government ought to assist them by offering help by way of know-how upgradation/transformation fund and allow them tie up with bigger corporates with obligatory situations of utilizing native suppliers to an extent of fifty per cent.
The federal government must also assist them embrace e-commerce platforms as MSMEs have been severely impacted by the entry of world e-commerce gamers into the nation.
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