MSMEs seek relief package from both central and state governments

Even as the government has allowed industries to work with 50% staff, a large number of micro, small and medium enterprises are unlikely to resume their operations due to a steep rise in the prices of raw materials, shortage of workers, and rising operational costs.

The MSME sector will not be able to sustain the current rise in operational costs unless the government provides a special relief package, KB Arasappa, President, Karnataka Small Scale Industries Association (Kassia) said.

According to him, the prices of the majority of the raw materials used by the small-scale industries have gone up sharply in the last year, whereas the consumers are not accepting a rise in the prices of finished goods, thereby making it difficult for the industries to survive.

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For example, the prices of mild steel (MS) have gone up by 25%-58% for different grades to Rs 95 per kg, while copper (8 mm rod) prices are up 76% to Rs 765 per kg. Similarly, prices of brass and aluminium are up by 20% and 44% respectively to Rs 480 per kg and 72 per kg respectively over the last year. In addition to this, the rise in electricity charges twice in November last year and June this year and the daily increase in diesel prices has left small industries in deep distress.

“Many of our members have reduced their daily production to almost 50% of annual capacities due to a steep rise in raw material prices. While we are forced to pay higher prices for raw materials, our customers are not ready to bear more than 2-3% rise in the final product prices,” Arasappa said.

According to S K Shanmukha, who runs a metal cutting and fabrication unit in Peenya said over and above the sharp rise in steel, there is not enough quantity available in Bengaluru. Suppliers of SAIL and JSW Steel are not supplying enough quantities, he said.

“With the demand for oxygen increasing from hospitals to treat Covid-19 patients, the government has drastically reduced the allocation of oxygen for industries. We are getting only 20 tonnes per day as against 60 tonnes required every day. Moreover, the private suppliers have raised prices by 170% to Rs 40 per kg from Rs 15 per kg earlier, thereby making it difficult for small industries to survive,” Shanmukha told DH.

Relief package

Stating that a relief package is absolutely necessary to enable MSMEs to survive in the current scenario, Kassia president demanded the government to announce a waiver of interest on term loans for April to July, a moratorium of 6 months for repaying current loan dues.

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The chamber has also demanded soft loans at 6%, a reduction in TDS by 50% on all slabs to ease working capital scarcity, an extension of the deadline for filing of GSTR3B return for six months (now extended for one month only) for units with less than Rs 5 crore and by 3 months for industries with more than Rs 5 crore business.

Kassia also appealed to the Karnataka government to extend the time for payment of electricity charges for April to June without interest, and penalty (and not just fixed charges as permitted by it).

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