NEW DELHI: Ashish Banerjee, director of Faridabad-based SSP Pvt. Ltd., a Rs 180-crore turnover maker of industrial dryers and dairy equipment, is a worried man. The homegrown rival to global giant Alfa Laval, is finding it difficult to complete orders and get payments. Machinery for plants in Vietnam and Egypt lie idle at SSP’s factory as these have to be sent along with teams of technicians who will set them up on site. “Orders worth more than Rs 100 crore can’t be completed as travel to these destinations is impossible now,” said Banerjee.
The domestic market is sluggish and selling machines to buyers has been tough. SSP is just one of tens of thousands of firms, mostly in the MSME sector, facing problems ranging from restrictions to low demand and credit issues, despite India going in for ‘Unlock 5’, the fifth tranche of a plan which promises to open more sectors to help India’s GDP get back its mojo after contracting by nearly 24 per cent in the April-June quarter.
A survey done by Care Ratings called ‘Unlock India - State of Business’, shows that while majority of large scale enterprises said they had reached at least 50 per cent of production compared to pre-Covid levels, a majority of medium, small and micro enterprises said they had reached less than half their per-Covid period sales. The patchy growth story where large firms have recovered faster, while smaller ones still struggle is at the root of the problem, say analysts.
MSMEs account for 30 per cent of GDP, 120 million jobs and 45 per cent of exports. Their revival could be the key to Unlock India’s success. “MSMEs are facing a time lag in pick up for demand … Many of them supply to larger firms who will increase their demand only when they reach full capacity,” said N R Bhanumurthy, Vice Chancellor of Dr B.R Ambedkar School of Economics University, Bengaluru.
“It’s true restrictions and credit flow remain concerns for many firms … but the government is helping out there by guaranteeing credit to MSMEs,” said Sanjay Bhattacharyya, former Managing Director, State Bank of India. Despite schemes for guaranteeing and augmenting flow of credit to the MSME sector, the survey said 76 per cent of micro and 45 small and medium firms faced credit availability issues. However, September reported one of the fastest growth in Purchasing Managers Index (PMI) at 56.8. The Nikkei PMI calculated by IHS Markit, considers values above 50 as signifying growth in economic activity. “There is hope for the days ahead, we do see a positive trend,” noted Bhanumurthy.
Flipkart enables MSMEs surmount Covid-19 crisis
Homegrown e-commerce major Flipkart said that its six-day flagship event of the year— Big Billion Days Sale — which will commence October 16 will set a platform for millions of sellers, artisans, and brands to come together while also providing growth opportunities to MSMEs and sellers across the country. It has already onboarded several sellers and seeks to support them with insights in matters of product cataloguing, advertising and speed, the e-tailer said.