HYDERABAD: The micro, small and medium enterprises (MSMEs) that were hit hard by the Covid-19 pandemic, are now facing the heat of inflation with the costs of steel, plastic, aluminum and several other raw materials rising sharply.As inflation, which is hovering around 6 to 7 per cent, remains a concern, the MSMEs are facing a tough time in the last few months, especially small and micro scale industries as they could not run the business due to spiralling costs and falling profits.
Adding to their woes are labourers’ demand for high wages, which has further dampened the business prospects of small-scale industries like food processing and engineering units and metal industries. Some MSMEs in places like Balanagar, Cherlapally, Moula Ali and Kushaiguda had to shut their business temporarily while many of these units witnessed 50 per cent drop in revenues. The impact was even more adverse on units making plastic and steel products, which are widely used in manufacturing industries, as the cost of steel remained at Rs 55,000 per tonne and plastic prices escalated by 15 per cent.
According to Federation of Telangana Chambers of Commerce and Industry (FTCCI), in the last two-and-a-half years, the supply chain has been disrupted, resulting in costs going northwards.As much as 70 per cent of the operating cost goes towards resources, intermediate and raw materials while 20 per cent is spent on rentals and wages. That leaves owners of small and micro industries just eight to 10 per cent profit.
Speaking to Express, Srinivas Garimella, Chairman of Industrial Development Committee, FTCCI said that prices of raw material have increased by 35 per cent which is a major burden on MSMEs.“We urge the State government to release pending subsidies and incentives. We also request the government to cut bank interest rates for MSMEs as the repo rate has gone up,” he said.
Anand Kumar of Navodaya Industries Association, Cherlapally said: “Since the labour costs have increased, we were not able to pay wages. Owners of micro and small enterprises are finding it difficult to stay in the field.”
Telangana state home to 2.6 million MSMEs
As per government figures, Telangana is home to around 2.6 million MSMEs, out of which 56% are in rural areas. Since formation of the State, as many as 63.388 million MSME units commenced operations with an investment of about Rs 11,487 crore