BENGALURU: Even after relaxation in lockdown restrictions last year, the Micro, Small & Medium Enterprises (MSMEs) found it difficult to continue operations and many of them are on the verge of closure. Along with the pandemic, hike in prices of raw materials has hurt them.
In an exclusive interview, IS Prasad, president, Federation of Karnataka Chambers of Commerce & Industry (FKCCI), speaks about the problems faced by the industries, the solution, and their expectations from the State and Central Governments in the upcoming budgets.
He has appealed to the state and Union governments to provide interest-free loans and one-time tax waiver to help industries bounce back, which will ultimately improve the state economy, too.
How has COVID affected industry in the state?
Most industries in Bengaluru employed migrant workers - from within and from outside the state. During the first and second waves of the COVID-19 pandemic, fear forced them to return to their hometowns. After the cases came down, most of them returned. However, the government did not impose any restrictions on industries during the second or third wave and they remained functional.
Then what hit the industry?
More than the pandemic, many other issues, mainly the hike in prices of raw materials, affected the industry. If the pandemic affected the industry 15 per cent, up to 85 per cent was the impact of the raw material price hike.
Small and medium enterprises (SMEs) have faced many issues. The SME sector even staged protests across the country opposing the price hike of raw materials.
Which sectors have particularly taken a hit?
Industries were allowed to work. The IT industry allowed their employees to work from home. But hotels and the hospitality industry were particularly hit due to restrictions being imposed. Even now, the night curfew continues, which means this industry will continue to get impacted as they have to wind up much before time.
Experts say we need to live with the virus. How can industries sustain productivity and profitability even as we live with the virus?
COVID clusters among industries are very less in the state. This is because industries know they have to survive. They ensure that their employees follow all the COVID-appropriate behaviour like maintaining social distance, wearing masks while working, maintaining hygiene. They have and are taking all the measures. Also, all our employees are over 18 years of age and are vaccinated.
How can the government help industries? What are your suggestions to the government, given
this scenario?
The government should give subsidies, interest-free loans and waive taxes and power bills for some time, which will help industries recover losses to some extent and allow them to bounce back. It will have a beneficial effect on the economy too. We have asked both the State and Union Governments to support us in this regard.
One of the unpleasant outcomes of the restrictions was the firing of employees to cut costs. What can be done to ensure the well-being of the human resources, which is so crucial to industrial productivity and progress?
When industries do not make profits, or generate work orders, it translates into adverse impacts like cost cutting and removal of employees. Ours is the only sector (industrial) to provide work to people even if they have not gone to school or college. We train on the job.
We also pay the state government in terms of tax. The government should also help by supporting us, which will ultimately help us in avoiding such unpleasant decisions that we were forced to take.
What else, other than the pandemic, is ailing the economy?
The cost of raw material including steel, copper and other materials keeps changing between morning and evening. There needs to be some cap on it. The State Government should open a portal and provide raw material to industries at better prices that will help keep production costs within limits.
What kind of push are you looking for in the upcoming budget?
The State Government should do a survey on industries. Not all need government help. But industries that need government support should be given interest-free loans, working capital, and other subsidies. We have appealed to CM Basavaraj Bommai as well as Union Finance Minister Nirmala Sitharaman. If timely support is given now, in a year’s time, we will bounce back.