Centre, Tamil Nadu blamed for 50,000 industries shutting down

Coimbatore’s industrialists point to demonetisation, GST, power problems and pending subsidies for the downfall of micro and small industrial units across Tamil Nadu.
Image used for representational purpose.
Image used for representational purpose.

COIMBATORE: Tamil Nadu government’s official announcement that about 50,000 micro and small industries shut down in the past one year, directly affecting employment of over five lakh people, has come as a shock to industrialists in Coimbatore region. Though several factors had contributed to the decline of the industries, they placed the blame squarely on the Central and State governments and cited their negligence as the primary reason.

Electricity has been one recurrent issue for industries in Tamil Nadu. The power scarcity that came about in 2008-13 during the then DMK regime had pushed several sectors into crisis. Job orders were lost to other states, forcing micro and small industries to shut down in hordes. Industrialists were compelled to look for alternative avenues to survive the downfall. However, industries eventually started to revive and witness growth post 2013. That was when the Centre introduced demonetisation — a severe blow to the micro and small units that were primarily run on liquid cash. Then came implementation of Goods and Service Tax (GST).

GST turned out to be an unpleasant surprise for industries. While many had been eagerly awaiting the new regime, the high tax rates — fixed without the ground-level problems being taken into account — was not what they were looking forward to. Before GST, the exemption limit under the Central excise had been `1.5 crore; however, with GST, it was decreased to `20 lakh.

This brought almost all micro and small industries into the system. Pushed into crisis, micro and small industries across sectors had appealed to the Centre and State governments to make reasonable amendments to the GST norms. However, the governments have been mute to most of the demands, they claimed.

According to the government’s announcement on Thursday,  the number of micro and small industries had come down from 2,67,000 in 2016-17 to 2,17,000 in 2017-18. The number of workers employed had come down from 18,97,617 to 13,78,544. The investments had come down from `36,221 crore to `25,373 crore. This information has shocked the industrialists at Coimbatore region — one of the largest employment-generating industrial hubs in the State.

The problems for the industries were not limited to demonetisation and GST. Tamil Nadu Association of Cottage and Micro Enterprises (TACT) District President J James said, “The 15 per cent subsidy by the Central government for purchase of machinery has been kept pending for over a year. The 25 per cent subsidy by the State government has also been delayed for long. Hence, micro industries do no purchase raw materials or sell products. They only engage in job work. However, the Centre slapped an 18 oer cent tax on job work order, further affecting their business.”
He pointed out that the request to establish an industrial estate at Coimabtore had been kept pending for over 10 years.

It is high time for both the governments to take steps to safeguard the micro and small industries. Otherwise, next year, the number of industries shutting down would be over one lakh and over 15 lakh people may stand to lose their jobs. The State government should take steps to hear the grievances faced by the micro and small industries,” he suggested.

Coimbatore Tiny and Small Foundry Owners Welfare Association (COSMOFAN) President A Siva Shanmuga Kumar said, “Central government is worried only about the development of big and corporate industries. Initially, the revenue under the GST scheme was low. Hence, the government showed interest in reducing the tax rates.

However, with revenue collection having picked up, it does not want to address the issues of the micro and the small industries. Abnormal price hike of the raw materials and the high tax rates under the GST has pushed the industries into crisis.

The request sent by tiny and small foundries have been kept pending for many months. If this situation continues, more tiny and small industries will be closed in the coming years.”

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