MSMEs not to be affected by recession: Government
According to a government official, most countries import Indian petroleum products, chemicals & drugs and pharma items, for which demand will never fade.
NEW DELHI: The government seems to be optimistic about the future of micro, small and medium-sized enterprises (MSME) amid inflationary pressure and recession fears in Europe and the US. According to a government official, most countries import Indian petroleum products, chemicals & drugs and pharma items, for which demand will never fade, hence there is no need to worry for at least two to three years. Within the country too, with the economy picking up, there is a pent-up demand so the market sentiments are positive.
“We majorly export products which have inelastic demand like petroleum products, chemicals and pharma items. So even inflation or other disturbances like recession etc won’t impact the exports by MSME sector,” the official said. “While China is still reeling under the burden of Covid effects, India’s MSME sector has come back to normalcy despite high commodity prices and disruptions in the supply chain,” he further added. Domestically, there is a good demand for MSME goods, he said.
When asked about the vulnerability of the MSME sector as the recession is looming over powerful economies like the US, Europe and China, the official stated, that it may affect the country in the long haul. But for the next two to three years from now, there is no need to worry, he said. MSME sector contributes nearly 30% to the GDP of the country and it deals in nearly 7,000 products. In global trade, it contributes about 48% to the exports of the country.
The US, Europe, and China are among the top destinations where Indian goods and services are supplied. “After the second wave of the Covid pandemic, the MSME sector was limping back to normalcy when they were again hit by Tsunami of hike in commodities. Initially, it was due to disruption in supply chains including movements of ships and shortage of containers, later it was exacerbated by the Ukraine war which fuelled the hike further particularly of petroleum products.
The sudden spurt in iron and steel, copper, aluminium, polymers, chemicals and even cotton, three finances of MSMEs out of gear,” said Anil Bhardwaj, Secretary General at Federation of Indian Micro and Small & Medium Enterprises (FISME).
“Slowly, things are turning to normalcy now. The commodities prices have peaked and heading southward. Although the domestic demand has contracted especially with regards to the food basket, the sentiments in the market remain positive for growth,” he further added.
Indian exports unlikely to get impacted
A govt official says most countries import Indian petroleum products, chemicals & drugs and pharma items, for which demand will never fade, hence there is no need to worry for at least 2 to 3 yrs