MSMEs see no benefit so far from anti-China chorus; expect business normalcy in 12 months

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Published: July 12, 2020 2:48 PM

Ease of Doing Business for MSMEs: MSME Minister Nitin Gadkari has been urging MSMEs to take benefit of the current crisis faced by China as an opportunity to grow. The minister had asked the industry to attract investments from businesses as “some countries are looking to move away their investments from China."

msme day, msme boost, nitin gadkari, msme ministerMSMEs were expected to benefit with increased with the number of orders from manufacturers instead of latter importing goods from China.

Ease of Doing Business for MSMEs: The prevailing anti-China sentiments, triggered by the Galwan valley skirmish last month between armed forces of India and China, hasn’t brought about noteworthy changes in terms of new business opportunities for MSMEs, according to a survey. 79 per cent of the 345 MSME respondents surveyed recently by credit rating agency Care Ratings said that they are not getting new contracts from large manufacturers despite the growing chorus to boycott import and use of Chinese goods. MSMEs were expected to benefit with increased with the number of orders from manufacturers instead of latter importing goods from China.

MSME Minister Nitin Gadkari has also been urging MSMEs to take benefit of the current crisis faced by China as an opportunity to grow. The minister had asked the industry to attract investments from businesses as “some countries are looking to move away their investments from China,” Gadkari had told FICCI representatives in April this year.

MSMEs are expected to play a key role for India to benefit from the relocation of factories and companies from China, according to an SBI report. This is particularly for food product manufacturing sector where there is a lack of competitiveness in exports. Hence, the government can give it a direct push for its MSMEs to benefit, SBI had said in its Ecowrap report in May this year. This is because India has a greater Revealed Comparative Advantage (RCA) than China in the overall consumer goods sector.

Also read: PM Modi’s Make in India: Apple iPhone maker Foxconn doubles down on India expansion; to put $1 billion

The survey further revealed that 65 per cent respondents expected 12 months and more required for their business to get back to normal while nearly half of respondents hoped their business to improve in the next six months. MSMEs have taken a maximum hit amid Covid and lockdown as the majority of them had suffered shutdowns or negligible operations leading to salary cuts and layoffs. A third of the respondents said that faced revenue losses of over 50 per cent in the last three months. Also, more than 60 per cent of respondents admitted that have not been able to pay full salaries to their staff. However, only a quarter of those surveyed has retrenched their staff.

According to the survey, nearly 70 per cent respondents have approached banks for collateral-free loans. Majority intended to borrow less than Rs 1 crore. The collateral-free loan scheme was part of the Rs 20 lakh crore stimulus package announced by PM Modi in May. The amount disbursed by public and private sector banks under the scheme stood at Rs 56,091.18 crore as of July 4, according to the data shared by Finance minister Nirmala Sitharaman’s office. The amount was disbursed to 15,24,691 MSME accounts out of the sanctioned 36,28,444 accounts.

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