KOLLAM: The recent report of the Kerala state action plan on climate change put nine districts — Wayanad, Kozhikode, Kasaragod, Palakkad, Alappuzha, Idukki, Kannur, Malappuram, and Kollam — in the “highly vulnerable” category. And with rapid industrialisation being identified as a leading driver of the climate crisis, how the categorisation will impact leading destinations for micro, small and medium enterprises (MSMEs) in the state is a question for all stakeholders to tackle.
Kollam district added about 11,000 MSME units in the first three quarters of this fiscal year. This generated more than 20,000 jobs and more than Rs 500 crore in investment in the sector. Vincent Vijayan, head of the economics department at SN College, says the climate change scenario will harm the MSME sector, particularly in Kollam district, where traditional industries such as cashew, coir, handloom, etc, have always dominated.
“The climate-change scenario will adversely impact traditional industries and the fishing sector. The cashew industry is already on the verge of collapse due to competition from Vietnam and other states like Tamil Nadu and Andhra Pradesh. The production of raw cashews will now be impacted by the scenario of a changing environment. Furthermore, the output of raw cashew will suffer,” Vijayan said.
According to Godwin S K, professor at Thiruvananthapuram’s University College, dealing with the climate change scenario would be relatively easy for companies with higher market cap, because big firms have financial backing and can adopt cutting-edge technologies to deal with climate change. However, MSMEs lack the financial resources and technological capabilities to adapt to the changing climate scenario. As a result, MSME industries will be completely wiped out in the long run.
“Climate change is never a big issue for big corporations.” Because they have all the resources, they can easily adapt to changing scenarios. However, MSMEs will bear the brunt of climate change. The sector is already collapsing after demonetization and post GST.” They will now be extinct due to climate change. “As a result, the government must subsidise MSMEs to help them adapt to climate change,” he said.
Additionally, the MSME sector has faced significant challenges in obtaining loans from the formal banking system, which may impede the development of new products or services in response to market demands under climate change, said Kiran Kumar Kakarlapudi, assistant professor at the Gulati Institute of Finance and Taxation.
“MSMEs cannot compete in climate-change scenarios unless they receive financial assistance. Furthermore, the sector’s vulnerability to climate change is exacerbated by the fact that many operate outside of the formal sector. These sectors have limited access to the public safety net, formal finance channels, and post climatic disaster insurance, making it difficult for them to recover quickly,” Kiran explained.